| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Cayman Islands | 001-40948 | 66-0969672 | ||
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) | ||
CO Services Cayman Limited P.O. Box 10008 Willow House, Cricket Square Grand Cayman, Cayman Islands | KY1-1001 | |||
(Address Of Principal Executive Offices) | (Zip Code) | |||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one Class A ordinary share, $0.0001 par value per share and one-half of one redeemable warrant | GTACU | The NASDAQ Stock Market LLC | ||
Class A ordinary shares, par value $0.0001 per share | GTAC | The NASDAQ Stock Market LLC | ||
Redeemable warrants, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50 per share | GTACW | The NASDAQ Stock Market LLC |
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
| Emerging growth company | ☒ | |||||
GLOBAL TECHNOLOGY ACQUISITION CORP. I
Form 10-Q
For the Quarter Ended September 30, 2023
CONTENTS
| Page | ||||||
| 3 | ||||||
Item 1. | Condensed Financial Statements | 3 | ||||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 22 | ||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 30 | ||||
Item 4. | Controls and Procedures | 30 | ||||
| 30 | ||||||
Item 1. | Legal Proceedings | 30 | ||||
Item 1A. | Risk Factors | 31 | ||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33 | ||||
Item 3. | Defaults upon Senior Securities | 33 | ||||
Item 4. | Mine Safety Disclosures | 33 | ||||
Item 5. | Other Information | 33 | ||||
Item 6. | Exhibits | 33 | ||||
September 30, 2023 | December 31, 2022 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 147,000 | $ | 744,000 | ||||
| Prepaid expenses | 18,000 | 167,000 | ||||||
| Total current assets | 165,000 | 911,000 | ||||||
Non-current asset – Investments held in Trust Account | 22,628,000 | 206,946,000 | ||||||
Total assets | $ | 22,793,000 | $ | 207,857,000 | ||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | 55,000 | 73,000 | ||||||
| Accrued liabilities | 63,000 | 19,000 | ||||||
| Total current liabilities | 118,000 | 92,000 | ||||||
| Other liabilities: | ||||||||
| Warrant liabilities | 820,000 | 615,000 | ||||||
| Deferred underwriting compensation | 3,675,000 | 3,675,000 | ||||||
| Total liabilities | 4,613,000 | 4,382,000 | ||||||
| Commitments and Contingencies (see Note 8) | ||||||||
Class A ordinary shares subject to possible redemption: 2,089,996 and20,000,000 shares, respectively, at September 30, 2023 and December 31, 2022 (at $10.83 and $10.35 per share, respectively) | 22,628,000 | 206,946,000 | ||||||
SHAREHOLDERS’ DEFICIT | ||||||||
| Preferred shares, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding | — | — | ||||||
Class A ordinary shares, $0.0001 par value, 200,000,000 authorized shares, none issued or outstanding (excluding 2,089,996 and20,000,000 shares, respectively, subject to possible redemption) as of September 30, 2023 and December 31, 2022 | — | — | ||||||
| Class B ordinary shares, $0.0001 par value, 20,000,000 authorized shares, 5,000,000 shares issued and outstanding, at September 30, 2023 and December 31, 2022 | 1,000 | 1,000 | ||||||
Additional paid-in-capital | — | — | ||||||
| Accumulated deficit | (4,449,000 | ) | (3,472,000 | ) | ||||
| Total shareholders’ deficit | (4,448,000 | ) | (3,471,000 | ) | ||||
Total liabilities and shareholders’ deficit | $ | 22,793,000 | $ | 207,857,000 | ||||
For the three months ended September 30, 2023 | For the three months ended September 30, 2022 | For the nine months ended September 30, 2023 | For the nine months ended September 30, 2022 | |||||||||||||
| General and administrative expenses | $ | 196,000 | $ | 166,000 | $ | 772,000 | $ | 509,000 | ||||||||
| Loss from operations | (196,000 | ) | (166,000 | ) | (772,000 | ) | (509,000 | ) | ||||||||
| Other income: | ||||||||||||||||
| Interest income on Trust Account | 258,000 | 921,000 | 3,157,000 | 1,216,000 | ||||||||||||
| Change in fair value of warrant liability | 615,000 | (205,000 | ) | (205,000 | ) | 7,790,000 | ||||||||||
| Total other income | 873,000 | 716,000 | 2,952,000 | 9,006,000 | ||||||||||||
| Net income (loss) | $ | 677,000 | $ | 550,000 | $ | 2,180,000 | $ | 8,497,000 | ||||||||
Weighted average Class A ordinary shares outstanding - basic and diluted | 2,090,000 | 20,000,000 | 8,913,000 | 20,000,000 | ||||||||||||
| Net income (loss) per Class A ordinary share – basic and diluted | $ | 0.10 | $ | 0.02 | $ | 0.16 | $ | 0.34 | ||||||||
| Weighted average Class B ordinary shares outstanding – basic and diluted | 5,000,000 | 5,000,000 | 5,000,000 | 5,000,000 | ||||||||||||
| Net income (loss) per Class B ordinary share – basic and diluted | $ | 0.10 | $ | 0.02 | $ | 0.16 | $ | 0.34 | ||||||||
Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
| Balance, June 30, 2023 | 5,000,000 | $ | 1,000 | $ | — | $ | (4,868,000 | ) | $ | (4,867,000 | ) | |||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | (258,000 | ) | (258,000 | ) | |||||||||||||
| Net income | — | — | — | 677,000 | 677,000 | |||||||||||||||
| Balance, September 30, 2023 | 5,000,000 | $ | 1,000 | $ | — | $ | (4,449,000 | ) | $ | (4,448,000 | ) | |||||||||
Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
| Balance, December 31, 2022 | 5,000,000 | $ | 1,000 | $ | — | $ | (3,472,000 | ) | $ | (3,471,000 | ) | |||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | (3,157,000 | ) | (3,157,000 | ) | |||||||||||||
| Net income | — | — | — | 2,180,000 | 2,180,000 | |||||||||||||||
| Balance, September 30, 2023 | 5,000,000 | $ | 1,000 | $ | — | $ | (4,449,000 | ) | $ | (4,448,000 | ) | |||||||||
Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
| Balance, June 30, 2022 | 5,000,000 | $ | 1,000 | $ | — | $ | (8,910,000 | ) | $ | (8,909,000 | ) | |||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | (920,000 | ) | (920,000 | ) | |||||||||||||
| Net income | — | — | — | 550,000 | 550,000 | |||||||||||||||
| Balance, September 30, 2022 | 5,000,000 | $ | 1,000 | $ | — | $ | (9,280,000 | ) | $ | (9,279,000 | ) | |||||||||
Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Deficit | |||||||||||||||||
Shares | Amount | |||||||||||||||||||
| Balance, December 31, 2021 | 5,000,000 | $ | 1,000 | $ | — | $ | (16,558,000 | ) | $ | (16,557,000 | ) | |||||||||
| Remeasurement of Class A ordinary shares subject to redemption | — | — | — | (1,219,000 | ) | (1,219,000 | ) | |||||||||||||
| Net income | — | — | — | 8,497,000 | 8,497,000 | |||||||||||||||
| Balance, September 30, 2022 | 5,000,000 | $ | 1,000 | $ | — | $ | (9,280,000 | ) | $ | (9,279,000 | ) | |||||||||
For the nine months ended September 30, 2023 | For the nine months ended September 30, 2022 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | 2,180,000 | $ | 8,497,000 | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Income from cash and investments held in Trust Account | (3,157,000 | ) | (1,216,000 | ) | ||||
| Change in fair value of warrant liability | 205,000 | (7,790,000 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Decrease in prepaid expenses | 149,000 | 172,000 | ||||||
| (Decrease) increase in accounts payable | (18,000 | ) | (53,000 | ) | ||||
| Increase (decrease) in accrued liabilities and other | 44,000 | (24,000 | ) | |||||
| Net cash used in operating activities | (597,000 | ) | (414,000 | ) | ||||
| Cash flows from investing activities: | 187,475,000 | — | ||||||
| Cash withdrawn from Trust Account | ||||||||
| Net cash provided by investing activities | 187,475,000 | — | ||||||
| Cash flows from financing activities: | ||||||||
| Redemption of 17,910,004 Class A ordinary shares | (187,475,000 | ) | — | |||||
| Net cash used in financing activities | (187,475,000 | ) | — | |||||
| Net change in cash | (597,000 | ) | (414,000 | ) | ||||
| Cash and cash equivalents at beginning of period | 744,000 | 1,326,000 | ||||||
| Cash and cash equivalents at end of period | $ | 147,000 | $ | 912,000 | ||||
Supplemental disclosure of non-cash financing activities: | ||||||||
| Remeasurement of carrying value to redemption value of Class A ordinary shares subject to redemption | $ | 3,157,000 | $ | 1,220,000 | ||||
For the three months ended September 30, 2023 | For the three months ended September 30, 2022 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Numerator: | ||||||||||||||||
| Allocation of income – basic and diluted | $ | 200,000 | $ | 477,000 | $ | 440,000 | $ | 110,000 | ||||||||
Denominator: | ||||||||||||||||
| Basic and diluted weighted average ordinary shares outstanding | 2,090,000 | 5,000,000 | 20,000,000 | 5,000,000 | ||||||||||||
| Basic and diluted net income per ordinary share | $ | 0.10 | $ | 0.10 | $ | 0.02 | $ | 0.02 | ||||||||
For the nine months ended September 30, 2023 | For the nine months ended September 30, 2022 | |||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||
Numerator: | ||||||||||||||||
| Allocation of income – basic and diluted | $ | 1,397,000 | $ | 783,000 | $ | 6,798,000 | $ | 1,699,000 | ||||||||
Denominator: | ||||||||||||||||
| Basic and diluted weighted average ordinary shares outstanding | 8,913,000 | 5,000,000 | 20,000,000 | 5,000,000 | ||||||||||||
| Basic and diluted net income per ordinary share | $ | 0.16 | $ | 0.16 | $ | 0.34 | $ | 0.34 | ||||||||
| • | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| • | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| • | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
| Dollars | Shares | |||||||
| Gross proceeds of Public Offering | $ | 200,000,000 | 20,000,000 | |||||
| Less: Proceeds allocated to Public Warrants | (7,900,000 | ) | — | |||||
| Offering costs | (11,234,000 | ) | — | |||||
| Plus: Remeasurement of carrying value to redemption value at Public Offering date | 23,134,000 | — | ||||||
| Subtotal at the date of the Public Offering and at December 31, 2021 | 204,000,000 | 20,000,000 | ||||||
| Plus: Remeasurement of carrying value to redemption value at December 31, 2022 | 2,946,000 | — | ||||||
| Subtotal at December 31, 2022 | 206,946,000 | 20,000,000 | ||||||
| Less: Payments to shareholders who elected to redeem 17,910,004 Class A ordinary shares in connection with the Extension (as defined below) on or around April 21, 2023 | (187,475,000 | ) | (17,910,004 | ) | ||||
| Plus: Remeasurement of carrying value to redemption value at September 30, 2023 | 3,157,000 | — | ||||||
| Class A ordinary shares subject to redemption at September 30, 2023 | $ | 22,628,000 | 2,089,996 | |||||
Description | Quoted Prices in Active Markets December 31, 2022 (Level 1) | |||
| Assets: | ||||
| Money market funds | $ | 206,946,000 | ||
Description | September 30, 2023 | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||
| Warrant Liabilities: | ||||||||||||||||
| Public Warrants | $ | 400,000 | $ | — | $ | 400,000 | $ | — | ||||||||
| Private Placement Warrants | $ | 420,000 | $ | — | $ | 420,000 | $ | — | ||||||||
Warrant liabilities at September 30, 2023 | $ | 820,000 | $ | — | $ | 820,000 | $ | — | ||||||||
Description | December 31, 2022 | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | ||||||||||||
| Warrant Liabilities: | ||||||||||||||||
| Public Warrants | $ | 300,000 | $ | 300,000 | $ | — | $ | — | ||||||||
| Private Placement Warrants | $ | 315,000 | $ | — | $ | 315,000 | $ | — | ||||||||
Warrant liabilities at December 31, 2022 | $ | 615,000 | $ | 300,000 | $ | 315,000 | $ | — | ||||||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
References to the “Company,” “our,” “us” or “we” refer to Global Technology Acquisition Corp. I. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited interim condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”). Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report on Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the risk factors described in Part I, Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”) filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 16, 2023, Item 1A, Part II “Risk Factors” of the Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 filed with the SEC on August 11, 2023, as well as Item 1A, Part II of this Quarterly Report. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated on February 9, 2021 as a Cayman Islands exempted company for the purpose of effecting a Business Combination that we have not yet identified. We are an emerging growth company and, as such, we are subject to all of the risks associated with emerging growth companies. We intend to effectuate our initial Business Combination using cash from the proceeds of the Public Offering and the sale of the Private Placement Warrants, our shares, debt or a combination of cash, equity and debt.
The issuance of additional shares in a Business Combination:
| • | may significantly dilute the equity interest of investors in the Public Offering, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares; |
| • | may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares; |
| • | could cause a change in control if a substantial number of our Class A ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; |
| • | may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and |
22
| • | may adversely affect prevailing market prices for our Units, Class A ordinary shares and/or warrants; and may not result in adjustment to the exercise price of our warrants. |
Similarly, if we issue debt or otherwise incur significant debt, it could result in:
| • | default and foreclosure on our assets if our operating revenues after an initial Business Combination are insufficient to repay our debt obligations; |
| • | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
| • | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
| • | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
| • | our inability to pay dividends on our Class A ordinary shares; |
| • | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
| • | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
| • | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and |
| • | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
As indicated in the accompanying unaudited condensed financial statements, as of September 30, 2023 we had approximately $147,000 of cash and cash equivalents and approximately $47,000 of working capital. Further, we expect to incur significant costs in the pursuit of our initial Business Combination. We cannot assure you that our plans to complete our initial Business Combination will be successful.
Recent Developments
Extension of Time to Complete Business Combination, Related Redemptions of Class A Ordinary Shares and Related Matters:
The Company’s amended and restated memorandum and articles of association previously provided that the Company had until April 25, 2023 to complete a Business Combination (or until October 25, 2023 in two separate three-month extensions subject to satisfaction of certain conditions, including the deposit of up to $0.10 per Unit in each case (or up to approximately $209,000 after giving effect to the Company’s shareholders’ redemptions made in connection with the Extension Proposal) for each three-month extension, into the Trust Account, or as extended by the Company’s shareholders in accordance with the Company’s amended and restated memorandum and articles of association). On April 14, 2023, at the Extraordinary General Meeting, the Voting Shareholders approved an amendment and restatement of the amended and restated memorandum and articles of association to extend the date by which the Company must complete a business combination from April 25, 2023, to April 25, 2024 (or until October 25, 2024 in two separate three-month extensions subject to satisfaction of certain conditions, including the deposit of $0.10 per Unit in each case (or up to approximately $209,000 after giving effect to the Company’s shareholders’ redemptions made in connection with the Extension Proposal) for each three-month extension, into the Trust Account, or as extended by the Company’s shareholders in accordance with the Company’s Second Amended and Restated Memorandum and Articles of Association).
23
In connection with the Extension, a total of 167 Class A ordinary share shareholders elected to redeem an aggregate of 17,910,004 Class A ordinary shares, representing approximately 89.55% of the Class A ordinary shares then issued and outstanding, for an aggregate of approximately $187,475,000 in cash, which was paid on or around April 21, 2023.
Working Capital Loan:
On June 29, 2023, the Company, entered into the Note with the Sponsor, providing for an aggregate amount of loans up to $1,500,000 to fund the Company’s operating expenses. At September 30, 2023, no amounts have been borrowed under the Note.
The Note bears no interest. All unpaid principal under the Note will be payable on the Maturity Date). In the event the Company consummates its initial Business Combination, the Sponsor has the option on the Maturity Date to convert up to an aggregate of $1,500,000 of the principal outstanding under the Note into Working Capital Warrants equal to the portion of the principal amount of the Note being converted divided by $1.00. The terms of the Working Capital Warrants, if any, would be identical to the Private Placement Warrants. The Note is subject to customary events of default, the occurrence of certain of which automatically triggers the unpaid principal balance of the Note, and all other sums payable with regard to the Note becoming immediately due and payable.
The issuance of the Note was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard:
On June 28, 2023, the Company received the First Notice from the Nasdaq Staff of Nasdaq notifying the Company that, for 30 consecutive business days, the Company’s MVLS was below the minimum of $50 million required for continued listing on the Nasdaq Global Market pursuant to the Market Value Standard. The Nasdaq Staff also noted that the Company does not meet the requirements under Nasdaq Listing Rules 5450(b)(1)(A) (Equity Standard) and 5450(b)(3)(A) (Total Assets/Total Revenue Standard). An indicator is displayed with quotation information related to the Company’s securities on NASDAQ.com and NSDAQTrader.com and may be displayed by other third party providers of market data information, however the Notice does not impact the listing of the Company’s securities on the Nasdaq Global Market at this time.
The First Notice provided that, in accordance with the Compliance Period Rule, the Company has a period of 180 calendar days from the date of the First Notice, or until the Compliance Date, to regain compliance with the Market Value Standard. During this period, the Company’s securities will continue to trade on the Nasdaq Global Market. If at any time before the Compliance Date the Company’s MVLS closes at or above $50 million for a minimum of 10 consecutive business days as required under the Compliance Period Rule, the Nasdaq Staff will provide written notification to the Company that it has regained compliance with the Market Value Standard and will close the matter (unless the Nasdaq Staff exercises its discretion to extend this 10 business-day-period pursuant to Nasdaq Listing Rule 5810(c)(3)(H)).
The Company intends to monitor its MVLS between now and the Compliance Date, and may, if appropriate, evaluate available options to resolve the deficiency under the Market Value Standard and regain compliance with the Market Value Standard. Additionally, the Company may consider applying to transfer the listing of its securities to the Nasdaq Capital Market (provided that it then satisfies the requirements for continued listing on that market). However, there can be no assurance that the company will be able to regain or maintain compliance with the Market Value Standard.
If the Company does not regain compliance with the Market Value Standard by the Compliance Date, the Nasdaq Staff will provide a written notification to the Company that its securities are subject to delisting. At that time, the Company may appeal the Nasdaq Staff’s delisting determination to the Panel. However, there can be no assurance that, if the Company receives a delisting notice and appeals the delisting determination by the Nasdaq Staff to the Panel, such appeal would be successful.
24
Subsequent to September 30, 2023, on October 9, 2023, the Company received the “Second Notice from the Nasdaq Staff notifying the Company that the Company was not in compliance with the Minimum Public Holders Rule, which requires the Company to maintain a minimum of 400 public holders for continued listing on the Nasdaq Global Market. The Second Notice is only a notification of deficiency, not of imminent delisting, and has no immediate effect on the listing or trading of the Company’s securities on the Nasdaq Global Market.
The Second Notice states that the Company has 45 calendar days to submit a plan to regain compliance with the Minimum Public Holders Rule. The Company intends to submit a plan to regain compliance with the Minimum Public Holders Rule within the required timeframe. Additionally, the Company may consider applying to transfer the listing of its securities to the Nasdaq Capital Market (provided that it then satisfies the requirements for continued listing on that market). If Nasdaq accepts the Plan, Nasdaq may grant the Company an extension of up to 180 calendar days from the date of the Second Notice to evidence compliance with the Minimum Public Holders Rule. If Nasdaq does not accept the Plan, the Company will have the opportunity to appeal the decision to thePanel.
There can be no assurance that Nasdaq will accept the Plan, that any appeal to the Panel would be successful if Nasdaq does not accept the Plan, or that the Company will be able to regain or maintain compliance with the Minimum Public Holders Rule.
Results of Operations and Known Trends or Future Events
Our entire activity from February 9, 2021 (inception) through October 25, 2021, was in preparation for a Public Offering, and since our Public Offering through September 30, 2023, our activity has been limited to identifying and completing a suitable initial Business Combination. We will not generate any operating revenues until the closing and completion of our initial Business Combination.
For the three and nine months ended September 30, 2023, we had net income of approximately $677,000 and $2,180,000, respectively, which consisted of an approximately $615,000 and ($205,000), respectively, in change in fair value of derivative warrant liabilities, and approximately $258,000 and $3,157,000, respectively, of interest income on cash and investments held in Trust Account, partly offset by approximately $196,000 and $772,000, respectively, of loss from operations. The loss from operations consists primarily of our costs of operating as a public company, as well as costs of searching for a Business Combination.
For the three and nine months ended September 30, 2022, we had net income of approximately $550,000 and $8,497,000, respectively, which consisted of an approximately ($205,000) and $7,790,000, respectively, in change in fair value of derivative warrant liabilities, and approximately $921,000 and 1,216,000, respectively, of interest income on investments held in Trust Account, partly offset by approximately $166,000 and $509,000, respectively, of loss from operations. The loss from operations consists primarily of our costs of operating as a public company, as well as costs of searching for a Business Combination.
As discussed further in Note 5 to our condensed financial statements included in Part I, Item 1 of this Quarterly Report (and below), the Company accounts for its outstanding Public Warrants and Private Placement Warrants as derivative liabilities in the accompanying unaudited condensed financial statements. As a result, the Company is required to measure the fair value of the Public Warrants and Private Placement Warrants at the end of each reporting period and recognize changes in the fair value from the prior period in the Company’s operating results for each current period.
In addition, since we are organized as an exempt company in the Cayman Islands we are not subject to income tax in either the Cayman Islands or the United States.
We have entered into an administrative services agreement pursuant to which we pay our Sponsor or an affiliate thereof $10,000 per month (which is a portion of the amounts of operating costs referenced above) for office space, utilities, secretarial and administrative services provided to members of our management team, as well as the services provided by one or more investment professionals, creation and maintenance of our website, and miscellaneous additional services and other expenses and obligations of our Sponsor. Furthermore, we may enter into consulting arrangements directly or indirectly with individuals (who will not be our executive officers) to provide similar services.
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Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have an effect on the Company’s financial position, results of its operations and/or search for a target company and/or a target company’s financial position and results of its operations, the specific impact is not readily determinable as of the date of these condensed financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Liquidity and Capital Resources
Our liquidity needs were satisfied prior to the completion of the Public Offering through (i) $25,000 paid by our Sponsor to cover certain of our offering and formation costs in exchange for the issuance of the Founder Shares to our Sponsor and (ii) the receipt of loans to us of up to $240,000 by our Sponsor under an unsecured promissory note through closing of the Public Offering on October 25, 2021 and upon closing of the Public Offering, the entire balance of $240,000 was repaid.
The net proceeds from (i) the sale of the Units in the Public Offering, after deducting offering expenses of approximately $725,000, underwriting commissions of $4,000,000 including the commission on the underwriters’ over-allotment option exercise (excluding deferred underwriting commissions of $7,000,000, including the deferred commission on the underwriters’ over-allotment option, 47.5% of which has been forfeited on October 3, 2022 by one of the underwriters in the Company’s October 25, 2021 Public Offering, and including the deferred commission on the underwriters’ over-allotment option), and (ii) the sale of the Private Placement Warrants for a purchase price of $10,500,000 including the amount paid in connection with the underwriters’ over-allotment option exercise were approximately $205,775,000. Of this amount, $204,000,000 was deposited in the Trust Account, which includes the deferred underwriting commissions described above. The proceeds held in the Trust Account is required to be, and is invested only in cash or U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. The remaining $1,775,000 has not been held in the Trust Account.
On April 14, 2023, in connection with the amendment of the Company’s amended and restated memorandum and articles of association, the Company directed the Trust Account trustee to deliver approximately $187,475,000 to the shareholders that requested redemption. Accordingly, approximately $22,628,000 remained in the Trust Account as of September 30, 2023.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes payable and deferred underwriting commissions) to complete our initial Business Combination. We may withdraw interest income (if any) to pay income taxes, if any. Since we are an exempt Cayman Islands company, we do not expect to pay income taxes in the Cayman Islands or in the United States. To the extent that our equity or debt is used, in whole or in part, as consideration to complete our initial 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 our growth strategies. Prior to the completion of our initial Business Combination, we had available to us the initial $1,775,000 of proceeds held outside the Trust Account, as well as certain funds from loans from our Sponsor, its affiliates or members of our management team. We are using these funds to primarily 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.
We do not believe we will need to raise additional funds following the Public Offering in order to meet the expenditures required for operating our business prior to our initial Business Combination, other than funds available from loans from our Sponsor, its affiliates or members of our management team. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. See Recent Developments—Working Capital Loan.
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If we complete our initial Business Combination, we may repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that our initial 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 our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants of the post-Business Combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Placement Warrants. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans. Prior to the completion of our initial Business Combination, we do not expect to seek loans from parties other than our Sponsor, its affiliates or our management team as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.
In addition, we could use a portion of the funds not being placed in trust to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed Business Combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific Business Combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
Moreover, we may need to obtain additional financing to complete our initial Business Combination, either because the transaction requires more cash than is available from the proceeds held in our Trust Account, or because we become obligated to redeem a significant number of our Class A ordinary shares upon completion of the Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. If we have not consummated our initial Business Combination within the required time period because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account.
Going Concern Consideration:
In connection with the assessment of going concern considerations in accordance with the Financial Accounting Standard Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 205-40, “Presentation of Financial Statements-Going Concern,” the Company has until April 25, 2024 (or until October 25, 2024, as described above) to consummate an initial Business Combination. It is uncertain that the Company will be able to consummate an initial Business Combination by this time. If an initial Business Combination cannot be completed prior to April 25, 2024, there will be a mandatory liquidation and subsequent dissolution of the Company unless, prior to such date, the Company receives an extension approval from its shareholders or elects to extend the date on which an initial Business Combination must be consummated (the Company may extend the date on which an initial Business Combination must be consummated to October 25, 2024 in two separate three-month extensions subject to satisfaction of certain conditions, including the deposit of $0.10 per Unit in each case (or up to approximately $209,000 after giving effect to the Company’s shareholders’ redemptions made in connection with the Extension Proposal) for each three-month extension).
Further, as shown in the accompanying condensed financial statements, the Company had $147,000 in cash and cash equivalents at September 30, 2023 and negative cash flows from operations of approximately $597,000 for the nine months ended September 30, 2023. The Company also has credit available from its Sponsor of up to $1,500,000 in working capital loans as described in Note 5. If the Company were to extend the April 25, 2024 date to October 25, 2024, the Company would have to make extension payments aggregating approximately $418,000 for two three-month extensions. The Company may not have sufficient funds, or funds available, at September 30, 2023 to enable it to sustain operations for a period of at least one year after the issuance date of these condensed financial statements. Further, the Company may not have sufficient funds to extend the date on which an initial Business Combination must be consummated beyond April 24, 2024 as required by the Company’s Second Amended and Restated Memorandum and Articles of Association at the time it may intend to elect so extend.
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Given a Company-elected extension may require up to a $209,000 deposit commencing in April 2024 per three-month extension, should it elect to so extend, the Company may need to raise additional capital through loans or additional investments from its Sponsor, shareholders, officers, directors or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company may not be able to obtain additional financing. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.
Management has determined that these conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of time within one year after the date these condensed financial statements are released. The Company intends to address this by completing a Business Combination within the proscribed timeframe, however there is no assurance that this can be done. The condensed interim financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Accounting Policies:
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. The Company has identified the following as its critical accounting policies:
Net Income (Loss) per Ordinary Share:
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” Net income or loss per ordinary share is computed by dividing net income or loss applicable to the Ordinary Shares shareholders by the weighted average number of ordinary shares outstanding during the period plus, to the extent dilutive, the incremental number of ordinary shares to settle warrants, as calculated using the treasury stock method.
The Company has not considered the effect of the Public Warrants and Private Placement to purchase an aggregate of 20,500,000 Class A ordinary shares in the calculation of diluted income (loss) per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted income (loss) per ordinary share is the same as basic income (loss) per ordinary share for the periods presented.
At September 30, 2023 and 2022, the Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata among the two classes of shares. Net income (loss) per ordinary share is calculated by dividing the net income (loss) by the weighted average number of ordinary shares outstanding during the respective period.
The following table reflects the net income per share after allocating income between the shares based on outstanding shares.
| For the three months ended September 30, 2023 | For the three months ended September 30, 2022 | |||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||
Numerator: | ||||||||||||||||
Allocation of income – basic and diluted | $ | 200,000 | $ | 477,000 | $ | 440,000 | $ | 110,000 | ||||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average ordinary shares outstanding | 2,090,000 | 5,000,000 | 20,000,000 | 5,000,000 | ||||||||||||
Basic and diluted net income per ordinary share | $ | 0.10 | $ | 0.10 | $ | 0.02 | $ | 0.02 | ||||||||
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| For the nine months ended September 30, 2023 | For the nine months ended September 30, 2022 | |||||||||||||||
| Class A | Class B | Class A | Class B | |||||||||||||
| Numerator: | ||||||||||||||||
Allocation of income – basic and diluted | $ | 1,397,000 | $ | 783,000 | $ | 6,798,000 | $ | 1,699,000 | ||||||||
Denominator: | ||||||||||||||||
Basic and diluted weighted average ordinary shares outstanding | 8,913,000 | 5,000,000 | 20,000,000 | 5,000,000 | ||||||||||||
Basic and diluted net income per ordinary share | $ | 0.16 | $ | 0.16 | $ | 0.34 | $ | 0.34 | ||||||||
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Class A Ordinary Shares Subject to Possible Redemption:
All of the 20,000,000 Class A ordinary shares sold on October 25, 2021 as part of a Unit in the Public Offering discussed in Note 3 to our condensed financial statements included in Part I, Item 1 of this Quarterly Report. contain a redemption feature which allows for the redemption of the Ordinary Shares under the Company’s liquidation or tender offer/shareholder approval provisions. In connection with the Extension, a total of 167 Class A ordinary share shareholders elected to redeem an aggregate of 17,910,004 Class A ordinary shares, representing approximately 89.55% of the Class A ordinary shares then issued and outstanding, for an aggregate of approximately $187,475,000 in cash, which was paid on or around April 21, 2023. As such, there remain 2,089,996 Class A ordinary shares outstanding as of September 30, 2023, all of which are subject to redemption.
In accordance with FASB ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of FASB ASC 480. Although the Company did not specify a maximum redemption threshold, the Company’s Second Amended and Restated Memorandum and Articles of Association provide that in no event will it redeem its Class A ordinary shares in an amount that would cause its net tangible assets (tangible assets less intangible assets and liabilities) to be less than $5,000,001. However, because all of the Class A ordinary shares are redeemable, all of the shares are recorded as Class A ordinary shares subject to redemption on the Company’s condensed balance sheets.
The Company recognizes changes immediately as they occur and adjusts the carrying value of the securities at the end of each reporting period. Increases or decreases in the carrying amount of redeemable Class A ordinary shares are affected by adjustments to additional paid-in capital. Accordingly, at September 30, 2023 and December 31, 2022, 2,089,996 of the 2,089,996 Class A ordinary shares and 20,000,000 of the 20,000,000 Class A ordinary shares were classified outside of permanent equity, respectively. Class A ordinary shares subject to redemption consist of:
| Dollars | Shares | |||||||
Gross proceeds of Public Offering | $ | 200,000,000 | 20,000,000 | |||||
Less: Proceeds allocated to Public Warrants | (7,900,000 | ) | — | |||||
Offering costs | (11,234,000 | ) | — | |||||
Plus: Remeasurement of carrying value to redemption value at Public Offering date | 23,134,000 | — | ||||||
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Subtotal at the date of the Public Offering and at December 31, 2021 | 204,000,000 | 20,000,000 | ||||||
Plus: Remeasurement of carrying value to redemption value at December 31, 2022 | 2,946,000 | — | ||||||
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Subtotal at December 31, 2022 | 206,946,000 | 20,000,000 | ||||||
Less: Payments to shareholders who elected to redeem 17,910,004 Class A ordinary shares in connection with the Extension on or around April 21, 2023 | (187,475,000 | ) | (17,910,004 | ) | ||||
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Plus: Remeasurement of carrying value to redemption value at September 30, 2023 | 3,157,000 | — | ||||||
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Class A ordinary shares subject to redemption at September 30, 2023 | $ | 22,628,000 | 2,089,996 | |||||
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Derivative Financial Instruments:
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with FASB ASC Topic 815, “Derivatives and Hedging.” For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value upon issuance, and the liability is then re-valued at each reporting date, as determined by the Company based upon a valuation report obtained from its independent third-party valuation firm, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheets as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
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The Company’s warrant liability is a derivative financial instrument. See Note 5 to our condensed financial statements included in Part 1 of this Quarterly Report.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item. As of September 30, 2023, we were not subject to any market or interest rate risk. The net proceeds of the Public Offering, including amounts in the Trust Account, will be invested in U.S. government securities with a maturity of 185 days or less or in money market funds that meet certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended, that invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk. The funds in the Trust Account will be maintained in cash in an interest-bearing demand deposit account at a bank until the earlier of our initial Business Combination and our liquidation. Interest on such deposit account is currently approximately 4.5% per annum, but such deposit account carries a variable rate, and we cannot assure you that such rate will not decrease or increase significantly.
We have not engaged in any hedging activities since our inception and we do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures:
Disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Our management evaluated, with the participation of our current executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of September 30, 2023, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that our disclosure controls and procedures were effective at September 30, 2023.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting:
There were no changes in our internal control over financial reporting that occurred during the three months ended September 30, 2023, covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
None.
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Item 1A. Risk Factors
Certain factors may have a material adverse effect on our business, financial condition and results of operation. An investment in our securities involves a high degree of risk. You should consider carefully the risks and uncertainties described below, in addition to the other information contained herein and our other filings with the SEC, including our financial statements and related notes herein and our other filings with the SEC. In addition to the information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 31, 2023 (the “Form 10-K”) and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 15, 2023 (“Q1 10-Q”) which could materially affect our businesses, financial condition, or future results. As of the date of this Quarterly Report, there have been no material changes in our risk factors from those described in our Form 10-K and Q1 10-Q, except for the below risk factor. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
We cannot assure that our securities will continue to be listed on Nasdaq in the future or prior to our initial Business Combination. In order to continue listing our securities on Nasdaq prior to our initial Business Combination, we must maintain certain financial, distribution and share price levels, such as a minimum market capitalization (generally $50,000,000) and a minimum number of holders of our securities (generally 300 public holders) Additionally, our Units will not be traded after completion of our initial Business Combination and, in connection with our initial Business Combination, we will be required to demonstrate compliance with Nasdaq initial listing requirements, which are more rigorous than Nasdaq continued listing requirements, in order to continue to maintain the listing of our securities on Nasdaq. For instance, our share price would generally be required to be at least $4.00 per share, our shareholders’ equity would generally be required to be at least $5 million and we would be required to have a minimum of 300 round lot holders of our unrestricted securities (with at least 50% of such round-lot holders holding unrestricted securities with a market value of at least $2,500). We may not be able to meet those listing requirements at that time, especially given the redemptions made in connection with the Extension and if there are a significant number of redemptions in connection with our initial Business Combination.
On June 28, 2023, we received the First Notice from the Nasdaq Staff of Nasdaq notifying us that, for 30 consecutive business days, our MVLS was below the minimum of $50,000,000 required for continued listing on the Nasdaq Global Market pursuant to the Market Value Standard. The Nasdaq Staff also noted that we do not meet the requirements under Nasdaq Listing Rules 5450(b)(1)(A) (Equity Standard) and 5450(b)(3)(A) (Total Assets/Total Revenue Standard). An indicator is displayed with quotation information related to our securities on NASDAQ.com and NSDAQTrader.com and may be displayed by other third party providers of market data information, however the Notice does not impact the listing of our securities on the Nasdaq Global Market at this time.
The First Notice provided that, in accordance with the Compliance Period Rule, we have a period of 180 calendar days from the date of the First Notice, or until the Compliance Date, to regain compliance with the Market Value Standard. During this period, our securities will continue to trade on the Nasdaq Global Market. If at any time before the Compliance Date the Company’s MVLS closes at or above $50,000,000 for a minimum of 10 consecutive business days as required under the Compliance Period Rule, the Nasdaq Staff will provide us with written notification that we have regained compliance with the Market Value Standard and will close the matter (unless the Nasdaq Staff exercises its discretion to extend this 10 business-day-period pursuant to Nasdaq Listing Rule 5810(c)(3)(H)).
The Company intends to monitor its MVLS between now and the Compliance Date, and may, if appropriate, evaluate available options to resolve the deficiency under the Market Value Standard and regain compliance with the Market Value Standard. Additionally, the Company may consider applying to transfer the listing of its securities to the Nasdaq Capital Market (provided that it then satisfies the requirements for continued listing on that market). However, there can be no assurance that the company will be able to regain or maintain compliance with the Market Value Standard.
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If we do not regain compliance with the Market Value Standard by the Compliance Date, the Nasdaq Staff will provide us with a written notification that its securities are subject to delisting. At that time, we may appeal the Nasdaq Staff’s delisting determination to the Panel. However, there can be no assurance that, if we receive a delisting notice and appeal the delisting determination by the Nasdaq Staff to the Panel, such appeal would be successful.
Subsequent to September 30, 2023, on October 9, 2023, the Company received a written notice the Second NoticeNasdaq Staff notifying the Company that the Company was not in compliance with Listing Rule 5450(a)(2) (the “Minimum Public Holders Rule”), which requires the Company to maintain a minimum of 400 public holders for continued listing on the Nasdaq Global Market. The Second Notice is only a notification of deficiency, not of imminent delisting, and has no immediate effect on the listing or trading of the Company’s securities on the Nasdaq Global Market.
The Second Notice states that the Company has 45 calendar days to submit a plan to regain compliance with the Minimum Public Holders Rule. The Company intends to submit a plan to regain compliance with the Minimum Public Holders Rule within the required timeframe. Additionally, the Company may consider applying to transfer the listing of its securities to the Nasdaq Capital Market (provided that it then satisfies the requirements for continued listing on that market). If Nasdaq accepts the Plan, Nasdaq may grant the Company an extension of up to 180 calendar days from the date of the Notice to evidence compliance with the Minimum Public Holders Rule. If Nasdaq does not accept the Plan, the Company will have the opportunity to appeal the decision to the the Panel.
There can be no assurance that Nasdaq will accept the Plan, that any appeal to the Panel would be successful if Nasdaq does not accept the Plan, or that the Company will be able to regain or maintain compliance with the Minimum Public Holders Rule.
If Nasdaq delists our securities from trading on its exchange and we are not able to list our securities on another national securities exchange, we expect our securities could be quoted on an over-the-counter market. If this were to our, we could face significant material adverse consequences, including:
| • | a limited availability of market quotations for our securities; |
| • | reduced liquidity for our securities; |
| • | a determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| • | a determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
| • | a limited amount of news and analyst coverage; and |
| • | a decreased ability to issue additional securities or obtain additional financing in the future. |
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our Units, Class A ordinary shares and public warrants are listed on Nasdaq, our Units, Class A ordinary shares and public warrants qualify as covered securities under the statute. Although the states are preempted from regulating the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on Nasdaq, our securities would not qualify as covered securities under the statute and we would be subject to regulation in each state in which we offer our securities.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
Item 6. Exhibits.
| * | These certifications are furnished to the SEC pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: November 13, 2023 | GLOBAL TECHNOLOGY ACQUISITION CORP. I | |||||
| By: | /s/ Arnau Porto Dolc | |||||
| Name: | Arnau Porto Dolc | |||||
| Title: | Chief Executive Officer | |||||
| Dated: November 13, 2023 | GLOBAL TECHNOLOGY ACQUISITION CORP. I | |||||
| By: | /s/ Alexsander Baranski | |||||
| Name: | Aleksander Baranski | |||||
| Title: | Chief Financial Officer | |||||
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