For the three months ended March 31, 2023, we had a net loss of $255,872. We incurred $913,729 of operating costs consisting mostly of legal fees and had a change in fair value of warrant liability of $1,421,333, partially offset by income on our trust account for $1,701,319 and settled payables and amounts due to related parties of $377,871.
For the three months ended March 31, 2022, we had a net income of $3,356,489. We incurred $1,214,304 of operating costs consisting mostly of legal fees, generated income on our trust account for $22,526, and had a change in fair value of warrant liability of $4,548,267.
Liquidity, Capital Resources and Going Concern
On February 11, 2021, we consummated our IPO of 27,600,000 Units, at a price of $10.00 per Unit, which included the exercise of the underwriters’ option to purchase an additional 3,600,000 Units at the IPO price to cover over-allotments. The Units were sold, generating gross proceeds of $276,000,000. Substantially concurrently with the closing of the IPO, we completed the private sale of 5,013,333 Private Placement Warrants to Crown PropTech Sponsor and the Anchor Investor at a purchase price of $1.50 per Private Placement Warrant, generating gross proceeds to the Company of $7,520,000.
Following the IPO, the sale of the Private Placement Warrants, and the underwriters’ election to fully exercise their over-allotment option, a total of $276,000,000 was placed in the Trust Account at J.P. Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee, and we had $1,919,091 of cash held outside of the Trust Account, after payment of costs related to the IPO, and available for working capital purposes. We incurred $16,505,915 in transaction costs, including $5,520,000 of underwriting fees, $9,660,000 of deferred underwriting fees, $795,825 of excess fair value of the Anchor Investor shares and $530,090 of other offering costs. In December 2022, the underwriters agreed to waive their right to receive any additional deferred underwriting discount.
For the three months ended March 31, 2023, cash used in operating activities was $221,839, resulting primarily from the net loss of $255,872 which was impacted by unrealized loss on change in fair value of warrant liabilities of $1,421,333, settlement of payables and amount due to related parties of $377,871, trust dividend income of $1,701,319 and changes in operating assets and liabilities used $691,890 of cash from operating activities.
For the three months ended March 31, 2022, cash provided by operating activities was $23,696, resulting primarily from the net income of $3,356,489 which was impacted by unrealized gain on change in fair value of warrant liabilities of $4,548,267 and trust dividend income of $22,526 and offset by changes in operating assets and liabilities used $1,238,000 of cash from operating activities.
As of March 31, 2023 and December 31, 2022, we had cash outside the trust account of $1,373 and $80,212 available for working capital needs and working capital deficits of $2,040,513 and $1,512,654, respectively. All remaining cash held in the trust account is generally unavailable for our use, prior to an initial business combination, and is restricted for use either in a business combination or to redeem ordinary shares. As of March 31, 2023 and December 31, 2022, none of the amount in the trust account was available to be withdrawn as described above.
Through March 31, 2023, our liquidity needs were satisfied through receipt of $25,000 from the sale of the Founder Shares, the remaining net proceeds from the Initial Public Offering, the sale of Private Placement Warrants, the Promissory Note and the Convertible Note (as defined below) and capital contributions from Crown PropTech Sponsor of $355,721.
On November 30, 2021, we entered into a convertible note with Richard Chera, our former Chief Executive Officer and Director, pursuant to which Mr. Chera agreed to loan us up to an aggregate principal amount of $1,500,000 (the “Convertible Note”). The Convertible Note was non-interest bearing and due on the earlier of: (i) 12 months from the date thereof or (ii) the date on which we consummate a business combination. If we do not consummate a business combination, we may use a portion of any funds held outside the trust account to repay the Convertible Note; however, no proceeds from the trust account may be used for such repayment if we do not consummate a business combination. On May 31, 2023, and effective as of January 17, 2023, the Convertible Note was amended and restated (the “A&R Note”) in the aggregate principal amount of up to $1,000,000 to be due on the earlier of: (i) February 11, 2024; (ii) the date on which the Company consummates a Business Combination or (iii) the effective date of a liquidation of the Company. Additionally, due to a waiver by Mr. Chera, the A&R Note no longer provides for the Conversion Right.
We have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. We lack the financial resources we need to sustain operations for a reasonable period of time, which is considered to be one year for the issuance date of the financial statements. Although no formal agreement exists, our sponsors are committed to extend loans as needed. Accordingly, we may not be able to obtain additional financing. If we are unable to raise additional capital, we may be required to take additional measures to conserve liquidity, which could include, but are not limited to, curtailing operations, suspending the pursuit of a potential merger target, and reducing overhead expenses. We cannot provide any assurance that new financing will be available to us on commercially acceptable terms, if at all, or that our plans to consummate an initial business combination will be successful.
In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” we have determined that the mandatory liquidation and subsequent dissolution, should we be unable to complete a business combination, raises substantial doubt about our ability to continue as a going concern. We have until February 2024 (as extended), or the end of any extension to the Combination Period, to consummate a business combination. If a business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution.
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