Amendment to Underwriting Agreement
On April 26, 2024, the Company and EF Hutton amended the Underwriting Agreement signed on December 10, 2021. In lieu of the Company paying the full Deferred Underwriting Commission, EF Hutton agreed to accept a $1,500,000 cash payment at the Closing of a Business Combination Once this payment is made according to the new terms, the Company’s obligation to deliver the Deferred Underwriting Commission will be fulfilled.
Backstop Subscription Agreement
On April 22, 2024, the Sponsor entered into a backstop subscription agreement (the “Backstop Subscription Agreement”) with the Company and Blaize. Pursuant to the Backstop Subscription Agreement, in the event that the amount of cash in the Company’s trust account following redemptions and before payment of expenses (the “Trust Amount”) is less than $30,000,000 (the “Backstop Amount”), the Sponsor shall purchase, prior to or substantially concurrently with the closing of the Business Combination, a number of shares of Class A common stock of the Company equal to the quotient of (a) the difference of (x) $30,000,000 minus (y) the Trust Amount divided by (b) $10.00, at a per share purchase price of $10.00 per share.
The Company accounts for its Backstop Subscription Agreement in accordance with the guidance contained in ASC 815-40, “Derivatives and Hedging”, under which the Backstop Subscription Agreement does not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company classified the Backstop Subscription Agreement as a liability at its fair value and adjusts the Backstop Subscription Agreement to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in the statements of operations (see Note 8).
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities through June 30, 2024 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate non-operating income in the form of interest dividends on marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence and transaction expenses.
For the three months ended June 30, 2024, we had a net loss of $600,213, which consisted of $748,339 in operating costs and franchise taxes, change in fair value of backstop agreement of $356,847 and provision for income taxes of $120,943, offset by interest from investments held in our Trust Account of $625,916.
For the six months ended June 30, 2024, we had a net loss of $610,846, which consisted of $1,224,151 in operating costs and franchise taxes, change in fair value of backstop agreement of $356,847 and provision for income taxes of $283,838, offset by interest from investments held in our Trust Account of $1,253,990.
For the three months ended June 30, 2023, we had a net income of $98,772, which consisted of interest from marketable securities held in our Trust Account of $823,682, offset by operating costs and franchise taxes of $556,455 and provision for income taxes of $168,455.
For the six months ended June 30, 2023, we had a net income of $1,673,563, which consisted of interest from marketable securities held in our Trust Account of $3,899,411, offset by $1,452,265 in operating costs and franchise taxes and provision for income taxes of $773,583.
Liquidity and Going Concern
As of June 30, 2024, the Company had $26,944 in its restricted cash account and $48,885,820 in investments held in trust. Restricted cash is held exclusively for payment of current tax liabilities. As of June 30, 2024, $3,995,122 of the amount on deposit in the Trust Account represents interest income.
Our liquidity needs up to June 30, 2024 had been satisfied through a payment from our sponsor of $25,000 for the Founder Shares to cover certain offering costs, the loan under an unsecured promissory note from the Sponsor of $1,500,000, working capital advances from the Sponsor and the net proceeds from the consummation of the Initial Public Offering held outside of the trust account. As of June