PIPE Subscription Agreements
On April 3, 2022 and concurrently with the execution of the Business Combination Agreement, Hypebeast entered into subscription agreements (the “PIPE Subscription Agreements”) with certain third-party investors (the “PIPE Investors”), pursuant to which the PIPE Investors agreed to purchase, severally and not jointly, and Hypebeast agreed to issue, allot and credit as fully paid-up to PIPE Investors, 1,333,500 ordinary shares of Hypebeast (after taking into account the Recapitalization) at a price of $10.00 per share.
On July 28, 2022, Hypebeast entered into a subscription agreement in substantially the same form as the PIPE Subscription Agreements (a “Permitted Equity Subscription Agreement”), including with respect to registration rights, with one third-party investor (the “Additional PIPE Investor”), pursuant to which the Additional PIPE Investor agreed to subscribe for, and Hypebeast agreed to allot and issue to the Additional PIPE Investor, an aggregate of 200,000 ordinary shares of Hypebeast (after taking into account the Recapitalization) (the “Additional Subscription Shares”) at a subscription price of $10.00 per share (such subscription and issuance, the “Additional PIPE Investment”).
Liquidity and Capital Resources
On June 11, 2021, we consummated the Initial Public Offering of 15,000,000 shares of Class A common stock (the “Public Shares”) at $10.00 per Public Share, generating gross proceeds of $150,000,000. Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 1,090,000 shares of Class A common stock at a price of $10.00 per share (the “Private Placement Shares”), generating gross proceeds of $10,900,000.
On June 16, 2021, the underwriters partially exercised their over-allotment option and purchased an additional 1,680,000 shares (the “Over-Allotment Shares”), and the sale of an additional 100,800 shares (the “Over-Allotment Private Placement Shares”) at $10.00 per share, generating total gross proceeds of $1,008,000.
For the nine months ended September 30, 2022, net cash used in operating activities was $685,079, which was due to our net loss of $9,226,679 and interest income on the trust account of $930,531, offset in part by changes in working capital of $9,472,131.
For the period from January 22, 2021 (inception) through September 30, 2021, net cash used in operating activities was $986,643, which was due to our net loss of $606,308, changes in working capital of $321,821, gain on issuance of over-allotment option of $62,100, and interest income on the Trust Account of $3,533 partially offset by Operating costs allocated to the issuance of the over-allotment option of $7,119.
For the nine months ended September 30, 2022, we had no cash flows from investing activities.
For the period from January 22, 2021 (inception) through September 30, 2021, net cash used in investing activities of $173,472,000 was the result of the amount of net proceeds from the Initial Public Offering and the sale of Private Placement Shares being deposited to the Trust Account.
For the nine months ended September 30, 2022, net cash provided by financing activities was $325,000, which was the due to proceeds received from a convertible note from related party our Sponsor of $395,000, partially offset by payment of offering costs of $70,000.
For the period from January 22, 2021 (inception) through September 30, 2021, net cash provided by financing activities was $175,126,874, which was comprised of the net proceeds from the initial public offering, net of underwriter’s discount paid of $163,464,000, proceeds from the sale of private placement shares of $11,908,000, proceeds from the advance from a related party of $60,000 and proceeds from the sale of common stock to the Sponsor of $25,000, offset in part by payment of offering costs of $330,126.
Going Concern Consideration
As of September 30, 2022, we had $134,614 in cash held outside of the Trust Account and working capital deficit of $9,718,637. we incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. We anticipate that the cash held outside of the Trust Account as of September 30, 2022, will not be sufficient to allow us to operate until June 11, 2023, the date at which the Company must complete a Business Combination. While we expect to have sufficient access to additional sources of capital under Working Capital Loans, there is no current commitment on the part of any financing source to provide additional capital and no