For the period from January 6, 2021 (inception) through March 31, 2021, we had a net loss of $819, which consisted of formation and operating costs.
Liquidity and Capital Resources
Until the consummation of the IPO, our only source of liquidity was an initial purchase of common stock by the Sponsor and loans from our Sponsor.
On July 19, 2021, we consummated the IPO of 4,000,000 units at a price of $10.00 per unit (the “Public Units”), generating gross proceeds of $40,000,000. Each Public Unit consists of one share of our common stock, par value $0.0001 per share (the “common stock”) and one half of one redeemable warrant (the “warrant”), each whole warrant entitling the holder to purchase one share of the common stock. Simultaneously with the closing of the IPO, we consummated the sale of 295,000 common stock as Private Placement Shares to the Sponsor at a price of $10.00 per share generating gross proceeds of $2,950,000.
On July 21, 2021, in connection with the underwriters’ exercise of their over-allotment option, we issued an additional 430,000 Public Unit at a price of $10.00 per unit (the “Option Units”), generating gross proceeds of $4,300,000, and simultaneously with such closing consummated the sale of 17,200 shares of common stock as Private Placement Shares to the Founders at a price of $10.00 per share, among which, the Sponsor purchased 13,760 additional Private Placement Shares and Tradeup INC. purchased 3,440 additional Private Placement Shares, generating gross proceeds of $172,000. Following the expiration of the remaining over-allotment option, 42,500 founder shares were subsequently forfeited.
Following the closings of the IPO on July 19, 2021, the sales of over-allotment option unit, and the sales of the Private Placement Shares on July 21, 2021, a total of $45,186,000 was placed in a trust account, established for the benefit of the Company’s public stockholders and the underwriters of the IPO with Wilmington Trust, National Association acting as trustee (the “Trust Account”), and we had $767,026 of cash held outside of the Trust Account, after payment of costs related to the IPO, and available for working capital purposes. In connection with the IPO, we incurred $3,019,474 in transaction costs, including $886,000 of underwriting fees, $1,550,500 of fees payable to underwriters under a business combination marketing agreement upon the consummation of an Initial Business Combination, and $582,974 of other offering costs.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account, excluding deferred underwriting commissions, to complete our Business Combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a 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 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, structure, negotiate and complete a Business Combination.
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, loan us funds as may be required. If the Company completes the initial Business Combination, it would repay such loaned amounts. In the event that the initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used for such repayment. Up to $1,200,000 of such loans may be convertible into Class A common stock, at a price of $10.00 per share at the option of the lender. In the event that the Initial Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from the Trust Account would be used for such repayment.
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, we may have insufficient funds available to operate our business prior to our initial 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 completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.