Liquidity and Capital Resources
Until the consummation of the initial public offering, its only source of liquidity was an initial purchase of common stock by the Sponsor and loans from its Sponsor.
On March 25, 2021, we consummated the initial public offering of 12,000,000 units, at a price of $10.00 per unit, generating gross proceeds of $120,000,000. Simultaneously with the closing of the initial public offering, we consummated the sale of 390,000 placement units at a price of $10.00 per placement unit in a private placement to Sponsor and EarlyBirdCapital, Inc., generating gross proceeds of $3,900,000. On March 30, 2021, the underwriters exercised the over-allotment option in part and purchased an additional 843,937 units, generating gross proceeds of $8,439,370. In connection with the underwriters’ partial exercise of the over-allotment option, the Company sold an additional 16,879 placement units at a price of $10.00 per placement unit in a private placement to Sponsor and EarlyBirdCapital, Inc., generating gross proceeds of $168,790.
Following the initial public offering and the private placement, a total of $128,439,370 was placed in the trust account. We incurred $3,006,105 in transaction costs, including $2,568,790 of underwriting fees and $437,315 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 to complete its business combination. We may withdraw interest to pay taxes. To the extent that its capital stock or debt is used, in whole or in part, as consideration to complete its 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 its growth strategies.
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.
In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, its Sponsor or an affiliate of its Sponsor or certain of its officers and directors may, but are not obligated to, 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 its trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit, at the option of the lender. The units would be identical to the placement units.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating its business. However, if its 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 its business prior to its business combination. Moreover, we may need to obtain additional financing either to complete its business combination or because we become obligated to redeem a significant number of its public shares upon consummation of its business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of its business combination. If we are unable to complete its business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following its business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet its obligations.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2021.