Financial Performance - For the three months ended March 31, 2023, the company reported a net loss of $143,746, with operating costs of $1,323,082, offset by a change in fair value of warrant liability of $1,176,750 and interest income of $2,586 [150]. - Cash used in operating activities for the three months ended March 31, 2023, was $198,953, influenced by changes in operating assets and liabilities totaling $1,519,449 [153]. - The company generated non-operating income primarily from changes in fair value of warrant liability and interest income, but does not expect to generate operating revenues until after completing the initial business combination [149]. Cash and Securities - As of March 31, 2023, the company had cash and marketable securities held in the Trust Account amounting to $29,385,397, a decrease from $99,222,704 as of December 31, 2022 [158]. - The company withdrew $187,982 of interest earned on the Trust Account during the period ended March 31, 2023 [158]. Business Combination - The proposed business combination with LMA and Abacus is expected to be consummated in the first half of 2023, with an aggregate merger consideration of approximately $531.8 million [147]. - The company has committed to repay loans from the Sponsor upon consummation of a business combination, with up to $1,500,000 of such loans potentially convertible into warrants [160]. - As of April 17, 2023, the Sponsor has loaned a total of $1,500,000 for working capital purposes, which is interest-free and repayable upon the completion of a business combination [170]. Debt and Liabilities - The company has no long-term debt or off-balance sheet arrangements as of March 31, 2023 [166]. - The company has negative working capital of $16,167,458 as of March 31, 2023, primarily due to accrued expenses related to searching for target businesses and negotiating business combination agreements [152]. - As of March 31, 2023, the balance under the First Extension Note was $1,924,356, and under the Second Extension Note was $282,500 [171]. - By May 24, 2023, $377,000 had been deposited under the Second Extension Note, with monthly deposits of $94,250 until July 27, 2023 [171]. - The First Extension Note allows conversion of up to $1,500,000 into warrants at a price of $1.50 per share, while the Second Extension Note allows conversion of up to $500,000 under the same terms [172]. Internal Controls - The company reported that its disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting [180]. - Management plans to enhance internal controls by improving access to accounting literature and increasing communication with third-party professionals [181]. - There were no changes in internal control over financial reporting during the most recent fiscal quarter that materially affected the company's internal controls [182]. - The company has identified critical accounting policies that may materially differ from actual results, impacting reported amounts of assets and liabilities [173]. - The company adopted ASU 2020-06 on January 1, 2022, which had no impact on its accounting practices [177]. Administrative Expenses - The company incurred $60,000 in fees for office space and administrative support for the three months ending March 31, 2023, consistent with the previous year [167]. Equity - The Class A common stock subject to possible redemption is classified as temporary equity, reflecting certain redemption rights outside the company's control [175].
ET.RES.ACQ(ERESW) - 2023 Q1 - Quarterly Report