lective Audience(CAUD) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Unaudited Financial Statements The unaudited financial statements for the period ended September 30, 2022, show a net loss and stockholders' deficit, driven by SPAC formation and business combination search activities Condensed Balance Sheets Condensed Balance Sheet Data (Unaudited) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $175,074 | $154,942 | | Marketable securities held in Trust Account | $58,175,785 | $57,340,207 | | Total Assets | $58,659,402 | $57,816,739 | | Liabilities & Equity | | | | Total Liabilities | $5,308,674 | $2,358,398 | | Common stock subject to possible redemption | $56,021,637 | $52,323,289 | | Total stockholders' equity (deficit) | ($2,670,909) | $3,135,052 | - As of September 30, 2022, the company had a working capital deficit of $1,622,206, calculated from total current assets of $483,617 and total current liabilities of $2,105,823[11][40] Condensed Statements of Operations Condensed Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | Total operating expenses | $727,702 | $2,628,016 | | Interest income | $297,022 | $378,995 | | Change in fair value of warrant liability | $32,406 | $141,408 | | Net Loss | ($398,274) | ($2,107,613) | - The net loss per non-redeemable share was ($0.24) for the three months and ($0.78) for the nine months ended September 30, 2022[15] Condensed Statements of Changes in Stockholders' Equity (Deficit) - Total stockholders' equity shifted from a positive $3,135,052 at the start of 2022 to a deficit of ($2,670,909) by September 30, 2022, primarily driven by the net loss for the period and the accretion of common stock to its redemption value[16] Condensed Statements of Cash Flows Cash Flow Summary for Nine Months Ended Sep 30, 2022 (Unaudited) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash used in operating activities | ($1,079,868) | | Net cash used in investing activities | ($573,392) | | Net cash provided by financing activities | $1,673,392 | | Net Change in Cash | $20,132 | - Financing activities for the nine months ended September 30, 2022, were primarily funded by proceeds from convertible promissory notes and other notes from a related party, totaling $1.67 million[18] Notes to Financial Statements (Unaudited) The notes detail the company's SPAC nature, business combination efforts including a new merger agreement, and management's conclusion of substantial doubt about its going concern ability - The company is a SPAC incorporated on March 18, 2021, with the purpose of effecting an Initial Business Combination, and has not commenced core operations, generating non-operating interest income from its Trust Account[20][21] - The company extended its deadline to complete a business combination to February 12, 2023, by making two deposits of $573,392 each into the Trust Account on August 12, 2022, and November 1, 2022[24][37] - Management has concluded that there is substantial doubt about the company's ability to continue as a going concern due to its working capital deficit and the need for additional funding to sustain operations until a business combination is consummated[40][41] - On July 22, 2022, the company mutually terminated its merger agreement with Apifiny Group Inc., and subsequently, on September 9, 2022, entered into a new merger agreement with DLQ, Inc. for a total consideration of $114 million in stock[97][100][101] - The company accounts for its Private Warrants as a liability at fair value, which is re-measured each reporting period, with the fair value of the warrant liability decreasing by $141,408 during the nine months ended September 30, 2022[52][136] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's status as a blank check company, detailing net loss drivers, a significant working capital deficit, and substantial doubt about its going concern ability, with liquidity supported by Sponsor loans Results of Operations Summary | Period | Net Loss | Key Components | | :--- | :--- | :--- | | Nine Months Ended Sep 30, 2022 | $2,107,613 | Operating costs of $2,628,016, offset by interest income of $378,995 and a $141,408 gain on warrant liability | | Three Months Ended Sep 30, 2022 | $398,274 | Operating costs of $727,702, offset by interest income of $297,022 and a $32,406 gain on warrant liability | - The company had a working capital deficit of $1,622,206 as of September 30, 2022, and relies on its Sponsor for loans to meet liquidity needs, raising substantial doubt about its ability to continue as a going concern[163][165] - The company terminated its merger agreement with Apifiny on July 22, 2022, and has extended the deadline to consummate an initial business combination to February 12, 2023[155][157] - Contractual obligations include a $10,000 monthly fee to the Sponsor for administrative support and a deferred underwriting commission of $1.5 million (3.0% of gross proceeds) payable upon completion of an Initial Business Combination[167][168] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide disclosures regarding quantitative and qualitative market risk - The company is not required to make disclosures under this item as it qualifies as a smaller reporting company[173] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation as of September 30, 2022, the company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective[175] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[177] PART II. OTHER INFORMATION Legal Proceedings The company reports no legal proceedings - The company has no legal proceedings to report[179] Risk Factors The company highlights risks including increased SPAC competition, potential adverse effects from proposed SEC rules, and the new 1% excise tax on stock redemptions from the Inflation Reduction Act of 2022 - A substantial increase in the number of SPACs has intensified competition for attractive target companies, potentially increasing costs and delaying or preventing the company from completing a business combination[181][182][183] - Proposed SEC rules on March 30, 2022, related to SPACs could, if adopted, materially and adversely affect the company's ability to negotiate and complete its Initial Business Combination and may increase associated costs and time[185] - The Inflation Reduction Act of 2022 imposes a 1% excise tax on stock repurchases by publicly traded domestic corporations after December 31, 2022, which may apply to redemptions of the company's common stock, potentially reducing the cash available for a business combination[187][188][189] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities or use of proceeds - None reported[190] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported[191] Mine Safety Disclosures This item is not applicable to the company - Not applicable[192] Other Information The company reports no other information - None reported[193] Exhibits This section lists exhibits filed with the Quarterly Report, including officer certifications and Inline XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by the Sarbanes-Oxley Act[195] - Inline XBRL data files are included as exhibits to the report[195]