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utr:Month iso4217:USD xbrli:shares gtac:Vote
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM
10-Q
 
 
 
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
OR
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
 
 
GLOBAL TECHNOLOGY ACQUISITION CORP. I
(Exact name of registrant as specified in its charter)
 
 
 
Cayman Islands
  
001-40948
  
66-0969672
(State or other jurisdiction of
incorporation or organization)
  
(Commission
File Number)
  
(IRS Employer
Identification No.)
   
19 W 24th St.
10th Floor
New York, New York
  
10010
(Address Of Principal Executive Offices)
  
(Zip Code)
(323)
577-9874
Registrant’s telephone number, including area code
Not Applicable
(Former name or former address, if changed since last report)
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
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
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer   ☐    Accelerated filer   ☐
       
Non-accelerated
filer		   ☒    Smaller reporting company   ☒
       
Emerging growth company   ☒         
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  ☒    No  ☐
As of
 August
 
1
5
,
2022, 20,000,000 Class A ordinary shares, par value $0.0001 per share, and 5,000,000 Class B ordinary shares, par value $0.0001 per share, were issued and o
utstanding, respectively.
 
 
 
 
GLOBAL TECHNOLOGY ACQUISITION CORP. I
Form
10-Q
For the Quarter Ended June 30, 2022
Table of Contents
 
 
  
 
  
Page
 
  
 
1
 
Item 1.
  
  
 
1
 
  
  
 
1
 
  
  
 
2
 
  
  
 
3
 
  
  
 
5
 
  
  
 
6
 
Item 2.
  
  
 
18
 
Item 3.
  
  
 
25
 
Item 4.
  
  
 
26
 
  
 
27
 
Item 1.
  
  
 
27
 
Item 1A.
  
  
 
27
 
Item 2.
  
  
 
27
 
Item 3.
  
  
 
27
 
Item 4.
  
  
 
27
 
Item 5.
  
  
 
27
 
Item 6.
  
  
 
27
 
  
 
29
 
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
GLOBAL TECHNOLOGY ACQUISITION CORP. I
CONDENSED BALANCE SHEETS
 
 
 
 
 
 
 
 
 
 
    
June 30,

2022
    
December 31,
2021
  
    
(unaudited)
    
(audited)
  
ASSETS
                 
Current assets:
                 
Cash
    $ 1,011,000     $ 1,326,000  
Prepaid expenses
      314,000       409,000  
    
 
 
    
 
 
  
Total current assets
      1,325,000       1,735,000  
Non-current
asset – Investments held in Trust Account
      204,300,000       204,004,000  
    
 
 
    
 
 
  
Total assets
    $ 205,625,000     $ 205,739,000  
    
 
 
    
 
 
  
LIABILITIES AND SHAREHOLDERS’ DEFICIT
                 
Current liabilities:
                 
Accounts payable, including approximately $70,000 of offering costs
      112,000       147,000  
Accrued liabilities
      47,000       79,000  
    
 
 
    
 
 
  
Total current liabilities
      159,000       226,000  
Other liabilities:
                 
Warrant liabilities
      3,075,000       11,070,000  
Deferred underwriting compensation
      7,000,000       7,000,000  
    
 
 
    
 
 
  
Total liabilities
      10,234,000       18,296,000  
Commitments and Contingencies (see Note 7)
            
Class A ordinary shares subject to possible redemption: 20,000,000 shares (at $10.22
per share at June 30, 2022 and $10.20 per share at December 31, 2021)
      204,300,000       204,000,000  
SHAREHOLDERS’ DEFICIT:
                 
Preferred shares, $0.0001 par value; 1,000,000 shares authorized, none issued or
outstanding (excluding 20,000,000 shares subject to possible redemption) as of June 30, 2022 and December 31, 2021
      —         —    
Class A ordinary shares, $0.0001 par value, 200,000,000 authorized shares, none issued or outstanding
      —         —    
Class B ordinary shares, $0.0001 par value, 20,000,000 authorized shares, 5,000,000 shares issued and outstanding, at June 30, 2022 and December 31, 2021 ($500, rounded to $1,000 and $1,000)
      1,000       1,000  
Additional
paid-in-capital
      —         —    
Accumulated deficit
      (8,910,000 )      (16,558,000 ) 
    
 
 
    
 
 
  
Total shareholders’ deficit
      (8,909,000 )      (16,557,000 ) 
    
 
 
    
 
 
  
Total liabilities and shareholders’ deficit
    $ 205,625,000     $ 205,739,000  
    
 
 
    
 
 
  
 
See accompanying notes to unaudited condensed financial statements
1
GLOBAL TECHNOLOGY ACQUISITION CORP. I
CONDENSED STATEMENTS OF OPERATIONS
 

 
  
For the three

months ended

June 30,

2022
 
 
For the three

months ended

June 30,

2021
 
 
For the six
months ended
June 30,

2022
 
 
For the period
from February

9, 2021

(inception) to
June 30,

2021
 
 
  
(unaudited)
 
 
(unaudited)
 
 
(unaudited)
 
 
(unaudited)
 
General and administrative expenses
    $ 167,000     $ 49,000     $ 343,000     $ 54,000  
    
 
 
    
 
 
    
 
 
    
 
 
  
Loss from operations
      (167,000 )      (49,000 )      (343,000 )      (54,000 ) 
    
 
 
    
 
 
    
 
 
    
 
 
  
Other income:
                                 
Interest income on Trust Account
      275,000       —         296,000       —    
Change in fair value of warrant liability
      4,100,000       —         7,995,000       —    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total other income
      4,375,000       —         8,291,000       —    
    
 
 
    
 
 
    
 
 
    
 
 
  
Net income (loss)
   
$
 4,208,000     $ (49,000 )    $ 7,948,000     $ (54,000 ) 
    
 
 
    
 
 
    
 
 
    
 
 
  
Weighted average Class A ordinary shares outstanding - basic and diluted
      20,000,000       —         20,000,000       —    
    
 
 
    
 
 
    
 
 
    
 
 
  
Net income
(loss)
per Class A ordinary share – basic and diluted
    $ 0.17     $ —       $ 0.32     $ —    
    
 
 
    
 
 
    
 
 
    
 
 
  
Weighted average Class B ordinary shares outstanding – basic and diluted
      5,000,000       3,750,000       5,000,000       3,750,000  
    
 
 
    
 
 
    
 
 
    
 
 
  
Net income (loss) per Class B ordinary share – basic and diluted
    $ 0.17     $ (0.01 )    $ 0.32     $ (0.01 ) 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
See accompanying notes to unaudited condensed financial statements
2
GLOBAL TECHNOLOGY ACQUISITION CORP. I
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
For the three months ended June 30, 2022:
 
 
  
Class B

Ordinary Shares
 
  
Additional
Paid-in
 
  
Accumulated
 
 
Total
Shareholders’
 
 
  
Shares
 
  
Amount
 
  
Capital
 
  
Deficit
 
 
Deficit
 
Balance, March 31, 2022 (unaudited)
  
 
5,000,000
 
  
 
1,000
 
  
 
—  
 
  
 
(12,818,000
) 
 
 
(12,817,000
) 
Accretion in value of Class A ordinary shares subject to redemption
      —        $ —        $ —        $ (300,000 )    $ (300,000 )
Net income
      —          —          —          4,208,000       4,208,000  
    
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Balance, June 30, 2022 (unaudited)
      5,000,000      $ 1,000      $ —        $ (8,910,000 )   $ (8,909,000 )
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the six months ended June 30, 2022:
 
 
  
Class B

Ordinary Shares
 
  
Additional
Paid-in
 
  
Accumulated
 
 
Total
Shareholders’
 
 
  
Shares
 
  
Amount
 
  
Capital
 
  
Deficit
 
 
Deficit
 
Balance, December 31, 2021 (audited)
  
 
5,000,000
 
  
 
1,000
 
  
 
—  
 
  
 
(16,558,000
) 
 
 
(16,557,000
) 
Accretion in value of Class A ordinary shares subject to redemption
      —        $ —        $ —        $ (300,000 )    $ (300,000 ) 
Net income
      —          —          —          7,948,000       7,948,000  
    
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Balance, June 30, 2022 (unaudited)
      5,000,000      $ 1,000      $ —        $ (8,910,000 )   $ (8,909,000 )
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to unaudited condensed financial statements
3
GLOBAL TECHNOLOGY ACQUISITION CORP. I
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
 
For the three months ended June 30, 2021:
 
 
  
Class B

Ordinary Shares
(1)
 
  
Additional
Paid-in
 
  
Accumulated
 
 
Total
Shareholders’
 
 
  
Shares
 
  
Amount
 
  
Capital
 
  
Deficit
 
 
Deficit
 
Balance, March 31, 2021
 (unaudited)
      5,000,000      $ 1,000      $ 24,000      $ (5,000 )    $ 20,000  
Net 
loss
      —          —          —          (49,000 )      (49,000 ) 
    
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
Balance, June 30, 2021 (unaudited)
      5,000,000      $ 1,000      $ 24,000      $ (54,000 )    $ (29,000 ) 
    
 
 
     
 
 
     
 
 
     
 
 
    
 
 
  
For the period from February 9, 2021 (inception) to
June 30, 2021:
 

 
  
Class B

Ordinary Shares
(1)
 
  
Additional
Paid-in
 
  
Accumulated
 
  
Total
Shareholders’
 
 
  
Shares
 
  
Amount
 
  
Capital
 
  
Deficit
 
  
Deficit
 
Balance, February 9, 2021 (inception)
      —        $ —        $ —        $ —        $ —    
Issuance of Class B ordinary shares to Sponsor at approximately $0.005 per share
(1)
      5,000,000        1,000        24,000        —          25,000  
Net loss
      —          —          —          (54,000 )       (54,000 ) 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Balance, June 30, 2021 (unaudited)
      5,000,000      $ 1,000      $ 24,000      $ (54,000 )     $ (29,000 ) 
    
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
 
 
(1)
Share amounts have been retroactively restated to reflect the surrender of 2,156,250 Class B ordinary shares by
the
Sponsor on June 30, 2021 which reduced Class B ordinary shares outstanding (see Note
5
) and the share recapitalization on October 21, 2021 which increased Class B ordinary shares outstanding to 5,031,250 shares and the forfeiture of 31,250 Class B ordinary shares in December 2021 resulting from the underwriters’ partial exercise of their overallotment option.
 
See accompanying notes to unaudited condensed financial statements
4
GLOBAL TECHNOLOGY ACQUISITION CORP. I
CONDENSED STATEMENTS OF CASH FLOWS
 
 
  
For the

Six months ended

June 30,

2022
 
 
For the

period from

February 9,
2021

(inception) to

June 30,

2021
 
 
  
(unaudited)
 
 
(unaudited)
 
Cash flows from operating activities:
  
 
Net income (loss)
    $ 7,948,000     $ (54,000 ) 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
                 
Payment by Founders of formation costs
      —         5,000  
Income from cash and investments held in Trust Account
      (296,000 )      —    
Change in fair value of warrant liability
      (7,995,000 )      —    
Changes in operating assets and liabilities:
                 
Decrease in prepaid expenses
      95,000       —    
(Decrease) increase in accounts payable

      (35,000 )      4,000  
Decrease in accrued liabilities 
      (32,000 )      —    
    
 
 
    
 
 
  
Net cash used in operating activities
      (315,000 )      (45,000 ) 
    
 
 
    
 
 
  
Cash
flows
from financing activities:
                 
Proceeds from Sponsor Note
      —         170,000  
Payment of deferred offering costs
      —         (64,000 ) 
    
 
 
    
 
 
  
Net cash provided
by
financing activities
      —         106,000  
Net change in cash
      (315,000 )      61,000  
Cash at beginning of period
      1,326,000       —    
    
 
 
    
 
 
  
Cash at end of period
    $ 1,011,000     $ 61,000  
    
 
 
    
 
 
  
Supplemental disclosure of
 
non-cash
 
financing activities:
                 
Sale of 6,468,750 of Class B ordinary shares to Founders and deposited with counsel for formation and deferred offering costs
    $ —       $ 25,000  
    
 
 
    
 
 
  
Payment by Founders of deferred offering costs
    $ —       $ 20,000  
    
 
 
    
 
 
  
Deferred offering costs included in accounts payable and accrued liabilities
    $ —       $  281,000  
    
 
 
    
 
 
  
 
See accompanying notes to unaudited condensed financial statements
5
GLOBAL TECHNOLOGY ACQUISITION CORP. I
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1—Description of Organization, Business Operations and Liquidity
Organization and General:
Global Technology Acquisition Corp. I (the “Company”) was incorporated in the Cayman Islands as an exempted company on
February 9, 2021
. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, or the “Securities Act,” as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
At June 30, 2022, the Company had not commenced any operations. All activity for the period from February 9, 2021 (inception) to June 30, 2022 relates to the Company’s formation and the initial public offering (“Public Offering”) described below and, subsequent to the Public Offering, identifying and completing a suitable Business Combination. The Company will not generate any operating revenues until after completion of its initial Business Combination, at the earliest. The Company generates
non-operating
income in the form of interest income on cash and cash equivalents from the proceeds derived from the Public Offering.
Sponsor and Public Offering:
The Company’s sponsor is Global Technology Acquisition I Sponsor LP, an exempted limited liability partnership registered in the Cayman Islands (the “Sponsor”). The Company intends to finance a Business Combination with proceeds from the $200,000,000 Public Offering (Note 3) and a $10,500,000 private placement (the “Private Placement”) (Note 4). Upon the closing of the Public Offering and the Private Placement on October 25, 2021, $204,000,000 was deposited to be held in a trust account (the “Trust Account”).
The Trust Account:
The funds in the Trust Account will be invested only in U.S. government treasury bills with a maturity of one hundred and eighty-five (185) days or less or in money market funds meeting certain conditions under
Rule 2a-7
under the Investment Company Act of 1940 which invest only in direct U.S. government obligations. Funds will remain in the Trust Account until the earlier of (i) the consummation of its initial Business Combination or (ii) the distribution of the Trust Account as described below. The remaining funds outside the Trust Account may be used to pay for business, legal and accounting due diligence on prospective acquisition targets and continuing general and administrative expenses.
The Company’s amended and restated memorandum and articles of associating provides that, other than the withdrawal of interest to pay tax obligations, if any, less up to $100,000 interest to pay dissolution expenses, none of the funds held in trust will be released until the earliest of: (a) the completion of the initial Business Combination, (b) the redemption of any Class A ordinary shares included in the Units (defined below) sold in the Public Offering (the “Public Shares”) properly submitted in connection with a shareholder vote to amend the Company’s amended and restated certificate of incorporation (i) to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete the initial Business Combination within 18 months from the closing of the Public Offering (or up to 24 months from the date of closing of the Public Offering in two separate three month extensions subject to satisfaction of certain conditions, including the deposit of $2,000,000 for each three month extension, into the Trust Account, or as extended by the Company’s shareholders in accordance with our amended and restated memorandum and articles of association)) or (ii) with respect to any other provision relating to shareholders’ rights or
pre-Business
Combination activity, and (c) the redemption of the Public Shares if the Company is unable to complete the initial Business Combination within 24 months as previously described. The proceeds deposited in the Trust Account could become subject to the claims of creditors, if any, which could have priority over the claims of our Class A ordinary shareholders.
 
6
Business Combination:
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating a Business Combination with (or acquisition of) a Target Business. As used herein, “Target Business” is one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any taxes payable on interest earned) at the time of signing a definitive agreement in connection with the Company’s initial Business Combination. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company, after signing a definitive agreement for a Business Combination, will either (i) seek shareholder approval of the Business Combination at a meeting called for such purpose in connection with which shareholders may seek to redeem their shares, regardless of whether they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest but less taxes payable and amounts released for taxes, or (ii) provide shareholders with the opportunity to have their shares redeemed by the Company by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to commencement of the tender offer, including interest but less taxes payable and amounts released to the Company for working capital. The decision as to whether the Company will seek shareholder approval of the Business Combination or will allow shareholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek shareholder approval unless a vote is required by the rules of the NASDAQ Global Market. If the Company seeks shareholder approval, it will complete its Business Combination only if a majority of the outstanding shares of Class A and Class B ordinary shares voted are voted in favor of the Business Combination. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets (total assets less intangible assets and liabilities) to be less than $5,000,001 upon consummation of a Business Combination. In such case, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and instead may search for an alternate Business Combination.
If the Company holds a shareholder vote or there is a tender offer for shares in connection with a Business Combination, a Public Share shareholder will have the right to redeem its shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the initial Business Combination, including interest but less taxes payable and amounts released to the Company for working capital. As a result, such shares of Class A ordinary shares are recorded at redemption amount and classified as temporary equity upon the completion of the Public Offering, in accordance with Financial Accounting Standards Accounting Standards Board Codification (“FASB ASC 480”), “Distinguishing Liabilities from Equity.” The amount in the Trust Account, upon closing of the Public Offering on October 25, 2021, was initially $10.20 per Public Share ($204,000,000 held in the Trust Account divided by 20,000,000 Class A ordinary shares).
The Company will have 18 months from the closing date of the Public Offering, October 25, 2021, (or up to 24 months as previously described) to complete its initial Business Combination. If the Company does not complete a Business Combination within this period of time, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares for a per share pro rata portion of the Trust Account, including interest, but less taxes payable and amounts released to the Company for working capital (less up to $100,000 of such net interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of the Company’s net assets to its creditors and remaining shareholders, as part of its plan of dissolution and liquidation. The initial shareholders have entered into letter agreements with us, pursuant to which they have waived their rights to participate in any redemption with respect to their initial shares; however, if the initial shareholders or any of the Company’s officers, directors or affiliates acquire shares of Class A ordinary shares in or after the Public Offering, they will be entitled to a pro rata share of the Trust Account upon the Company’s redemption or liquidation in the event the Company does not complete a Business Combination within 18 months from the closing of the Public Offering (or 24 months as previously described).
 
7
In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the price per Unit (as defined below) in the Public Offering.
Risks and Uncertainties:
COVID-19
—
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.
Conflict in Ukraine
—
In February 2022, the Russian Federation and Belarus commenced a military action against the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. The impact of this action and related sanctions on the world economy are not determinable as of the date of these condensed financial statements.
Liquidity and Going Concern:
Management believes that the funds which the Company has available following the completion of the Public Offering on October 25, 2021, is sufficient at June 30, 2022 to enable it to sustain operations for a period of at least one year after the issuance date of these condensed financial statements. However, if the Company cannot complete a Business Combination prior to April 25, 2023, it could be forced to wind up its operations and liquidate unless it receives an extension approval from its shareholders. 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 that the financial statements are issued. The Company’s plan to deal with this uncertainty is to complete a Business Combination prior to April 25, 2023 (or up to October 25, 2023 in two separate three month extensions subject to satisfaction of certain conditions, including the deposit of
$2,000,000 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). There is no assurance that the Company’s plans to consummate a Business Combination will be successful or successful within 18 months from the closing of the Public Offering (or 24 months as previously described). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2—Summary of Significant Accounting Policies
Basis of Presentation:
The accompanying unaudited condensed interim financial statements of the Company are presented in U.S. dollars and in conformity with accounting principles generally accepted in the United States of America (“GAAP”) pursuant to the rules and regulations of the Securities and Exchange Commission ( the “SEC”), specifically Article 8.03 of regulation S-X, and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position as of June 30, 2022, and the results of operations and cash flows for the periods presented. Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. Interim results are not necessarily indicative of results for a full year.
The accompanying unaudited condensed interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in the Company’s final prospectus dated October 22, 2021 as well as the Company’s Annual Report on Form
10-K
filed on March 16, 2022.
All dollar amounts are rounded to the nearest thousand dollars.
 
8
Emerging Growth Company:
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging
growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
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 ordinary 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 warrants sold in the Public Offering (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 June 30, 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
June 30, 2022
 
  
For the six months ended
June 30, 2022
 
 
  
Class A
 
  
Class B
 
  
Class A
 
  
Class B
 
Numerator:
  
  
  
  
Allocation of income – basic and diluted
      3,366,000        842,000        6,358,000        1,590,000  
Denominator:
                                    
Basic and diluted weighted average ordinary shares outstanding
      20,000,000        5,000,000        20,000,000        5,000,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Basic and diluted net income per ordinary share
    $ 0.17      $ 0.17      $ 0.32      $ 0.32  
    
 
 
     
 
 
     
 
 
     
 
 
  
 
9
The Company did not have two classes of shares outstanding during the periods ended June 30, 2021 and therefore net loss of approximately $49,000 and $54,000, respectively, in the three months ended June 30, 2021 and the period from February 9, 2021 (inception) to June 30
,
2021 was allocated 100% to Class B shareholders, net of shares that were subject to forfeiture, leading to net loss per share
in
that period of $0.01 and $0.01 respectively.
Investments held in Trust Account:
The Company complies with FASB ASC 820, “Fair Value Measurements,” for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
Upon the closing of the Public Offering and the Private Placement, a total of $204,000,000 was deposited into the Trust Account. The proceeds in the Trust Account may be invested in either U.S. government treasury bills 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 of 1940, as amended, and that invest solely in U.S. government treasury obligations.
The Company classifies its U.S. government treasury bills and equivalent securities as held-to-maturity in accordance with FASB ASC 320, “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity U.S. government treasury bills are recorded at amortized cost on the balance sheets and adjusted for the amortization of discounts.
Cash and cash equivalents:
The Company considers all highly liquid instruments with maturities of three months or less when acquired to be cash equivalents. The Company has no cash equivalents at June 30, 2022 or December 31, 2021.
Concentration of Credit Risk:
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Financial Instruments:
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheets, primarily due to their short-term nature.
Fair Value Measurements:
The Company complies with FASB ASC 820, “Fair Value Measurements and Disclosures,” for its financial assets and liabilities that are
re-measured
and reported at fair value at each reporting period, and
non-financial
assets and liabilities that are
re-measured
and reported at fair value at least annually.
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
 
  •  
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.
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Use of Estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed as of June 30, 2022, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
 
10
Offering Costs:
The Company complies with the requirements of the FASB ASC
340-10-S99-1
and SEC Staff Accounting Bulletin (SAB) Topic 5A—“Expenses of Offering.” Costs incurred in connection with preparation for the Public Offering were approximately $11,725,000 including approximately $725,000 of Company costs together with $11,000,000 of underwriters’ discount. Such costs have been allocated to equity instruments ($11,234,000) and warrant liability ($491,000), based on their relative values, and charged to equity or expense (in the case of the portion allocated to warrant liability) upon completion of the Public Offering. The Company retained an independent financial advisor in connection with the Public Offering and paid an agreed amount of $175,000 that was included in offering costs,
net of full reimbursement by the underwriters.
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 (as defined below) in the Public Offering discussed in Note 3 contain a redemption feature which allows for the redemption of common shares under the Company’s liquidation or tender offer/stockholder approval provisions. 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, its articles of association provide that in no event will it redeem its Public 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 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 June 30, 2022 and December 31, 2021, 20,000,000 of the 20,000,000 Public Shares were classified outside of permanent equity. Class A ordinary shares subject to redemption consist of:
 
Gross proceeds of Public Offering
    $ 200,000,000  
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  
Remeasurement of carrying value to redemption value at June 30, 2022
      300,000  
  
 
 
  
Class A ordinary shares subject to redemption
    $ 204,300,000  
  
 
 
  
Income Taxes:
FASB ASC 740 “Income Taxes” prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be
more-likely-than-not
to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of June 30, 2022 and December 31, 2021. The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued fo
r the p
ayment
of
interest and penalties at June 30, 2022 and December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The Company is considered an exempted Cayman Islands company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero for the periods presented.
The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes”. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
 
11
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. There were no derivative financial instruments as of June 30, 2022 and December 31, 2021.
Recent Accounting Pronouncements:
In August 2020, the FASB issued ASU
2020-06,
Debt — Debt with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic
815-40)
(“ASU
2020-06”)
to simplify accounting for certain financial instruments. ASU
2020-06
eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU
2020-06
amends the diluted earnings per share guidance, including the requirement to use the
if-converted
method for all convertible instruments. ASU
2020-06
is effective January 1, 202
4
 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company is currently evaluating the impact that the pronouncement will have on the financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s financial statements.
Subsequent Events:
The Company evaluated subsequent events and transactions that occurred after the date of the balance sheet through the date that the financial statements were issued. All such events that would require adjustment or disclosure in the condensed financial statements have been recognized or disclosed.
Note 3—Public Offering
On October 25, 2021, the Company closed on the Public Offering and sale, including the underwriters’ partial exercise of their over-allotment option, of 20,000,000 units at a price of $10.00 per unit (the “Units”). Each Unit consists of one share of the Company’s Class A ordinary shares, $0.0001 par value, and
one-half
of one Public Warrant. Each whole Public Warrant offered in the Public Offering is exercisable to purchase one share of our Class A ordinary shares, See Note 6.
The Company granted the underwriters a
45-day
option to purchase up to 2,625,000 additional Units to cover any over-allotments, at the Public Offering price less the underwriting discounts and commissions. At the closing of the Public Offering on October 25, 2021, the underwriters’ exercised 2,500,000 Units of such over-allotment option. The warrants that were issued in connection with 2,500,000 over-allotment units exercised are identical to the Public Warrants and have no net cash settlement provisions. As discussed further in Note 4, after the closing of the Public Offering on October 25, 2021, 31,250 of the outstanding Class B ordinary shares remained forfeitable and in December 2021 those 31,250 shares were surrendered and retired.
 
12
The Company paid an underwriting discount of 2.0% of the per Unit price, $4,000,000, to the underwriters at the closing of the Public Offering and is obligated to
pa
y a deferred underwriting fee of 3.5% of the per Unit price, $7,000,000, upon the completion of the Company’s initial Business Combination.
Note 4—Trust Account and Fair Value Measurement
At June 30, 2022 and December 31, 2021, the proceeds of the Trust Account were invested primarily in money market funds meeting certain conditions described above.
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. Since all of the Company’s permitted investments at June 30, 2022 and December 31, 2021 consisted of money market funds that invest only in U.S. government treasury bills, fair values of its investments are determined by Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets or liabilities as follows:
 
Description
  
Quoted Price
Prices in Active
Markets (Level 1)
 
Assets:
  
      
Money market funds
  
$
204,300,000
 
     
Description
   
Quoted Price
Prices in Active
Markets (Level 1)
  
Assets:
  
      
Money market funds
  
$
204,004,000
 
Note 5—Related party transactions
Founder Shares:
On February 10, 2021, the Sponsor purchase
d
6,468,750
Class B ordinary shares (the “Founder Shares”) for $
25,000
or approximately $
0.004
per share (up to
843,750
of which were subject to forfeiture to the extent the underwriters’ over-allotment option was not exercised in full). The Founder Shares are substantially identical to the Class A
 
13
ordinary shares included in the Units being sold in the Public Offering except that the Founder Shares automatically convert into shares of Class A ordinary shares at the time of the initial Business Combination, or at any time prior thereto at the option of the holder, and are subject to certain transfer restrictions, as described in more detail below. On June 30, 2021, the Sponsor surrendered 2,156,250 Class B ordinary shares for no consideration, resulting in 4,312,500 shares outstanding of which 562,500 were subject to forfeiture in the event the underwriters’ over-allotment option was not exercised. On October 21, 2021, the Company executed a share capitalization that increased the number of Class B ordinary shares outstanding to 5,031,250, 656,250 of which were subject to forfeiture to the extent the underwriters’ over-allotment option was not exercised in full. After the closing of the Public Offering on October 25, 2021, 31,250 of such shares remained forfeitable and were forfeited in December 2021.
The Company’s initial shareholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the Company’s initial Business Combination, or (B), subsequent to the Company’s initial Business Combination, if (x) the last sale price of the Company’s Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any
30-trading
day period commencing at least 150 days after the Company’s initial Business Combination or (y) the date on which the Company completes a liquidation, merger, share exchange or other similar transaction after the initial Business Combination that results in all of the Company’s shareholders having the right to exchange their shares of ordinary shares for cash, securities or other property.
Private Placement Warrants:
In connection with the closing of the Public Offering on October 25, 2021 (Note 3), the Sponsor purchased from the Company an aggregate of 10,500,000 warrants at a price of $1.00 per warrant (a purchase price of $10,500,000, in the Private Placement which occurred simultaneously with the completion of the Public Offering (the “Private Placement Warrants”). Each Private Placement Warrant entitles the holder to purchase one Class A ordinary shares at $11.50 per share. The purchase price of the Private Placement Warrants was added to the proceeds from the Public Offering, net of expenses of the offering and working capital to be available to the Company, to be held in the Trust Account pending completion of the Company’s initial Business Combination. The Private Placement Warrants (including the Class A ordinary shares issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of the initial Business Combination and they will be
non-redeemable
so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants. Otherwise, the Private Placement Warrants have terms and provisions that are identical to those of the Public Warrants and have no net cash settlement provisions.
If the Company does not complete a Business Combination, then the proceeds from the sale of the Private Placement Warrants will be part of the liquidating distribution to the Public Share shareholders and the Private Placement Warrants issued to the Sponsor will expire worthless.
In addition, if (x) the Company issues additional shares of Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the board of directors and, in the case of any such issuance to
the Company’s
initial stockholders or their affiliates or
the Company’s
anchor investor, without taking into account any Founder Shares or warrants held by
the Company’s
initial stockholders or such affiliates, as applicable, or our anchor investor, as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of the initial Business Combination on the date of the consummation of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of Class A ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of the Market Value and the Newly Issued Price, the $18.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
 
14
Registration Rights:
The Company’s initial shareholders and the holders of the Private Placement Warrants are entitled to registration rights pursuant to a registration and shareholder rights agreement executed in connection with the closing of the Public Offering on October 25, 2021. These holders are entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by the Company. The Company will bear the expenses incurred in connection with the filing of any such registration statements. There will be
no
penalties associated with delays in registering the securities under the Public Offering registration and shareholder rights agreement.
Related Party Loans:
In February 2021, the Sponsor agreed to loan the Company an aggregate of $300,000 by drawdowns of not less than $10,000 each against the issuance of an unsecured promissory note (the “Note”) to cover expenses related to the Public Offering. The Note was
non-interest
bearing and payable on the earlier of December 31, 2021 or the completion of the Public Offering. The Company borrowed a total of $240,000 under the Note prior to October 25, 2021. Upon the closing of the Public Offering on October 25, 2021, the Note was repaid in full and there was no amount outstanding at June 30, 2022 or
December 31, 2021
.
Working Capital Loans:
If the Sponsor, an affiliate of the Sponsor or certain of
the Company’s
officers and directors make any working capital loans, up to $1,500,000 of such loans may be converted into warrants, at the price of $1.00 per warrant, at the option of the lender. Such warrants would be identical to the Private Placement Warrants. As of
June 30, 2022 and December 31, 2021, the Sponsor has not made any working capital loans to the Company.
Administrative Services Agreement:
The Company has agreed to pay $10,000 a month to the Sponsor under an Administrative Services Agreement for the services to be provided by one or more investment professionals, creation and maintenance of
the Company’s
website, and miscellaneous additional services. Services commenced on October 21, 2021, the date the Company’s securities were first listed on the NASDAQ Global Market and will terminate upon the earlier of the consummation by the Company of an initial Business Combination or the liquidation of the Company. The Company charged $60,000 and
$-0-
to operations in the six months ended June 30, 2022 and the period from February 9, 2021 (inception) to June 30, 2021. There was approximately $10,000 and $14,000, respectively, included in accrued liabilities at June 30, 2022 and December 31, 2021.
Note 6—Warrant liabilities
At June 30, 2022 and December 31, 2021, the Company had a total of 20,500,000 warrants outstanding, including 10,000,000 Public Warrants and 10,500,000 Private Placement Warrants.
The Company accounts for its warrants outstanding consistent with the “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies” (the “Staff Statement”) issued on April 12, 2021 by the staff (the “Staff”) of the Division of Corporation Finance of the SEC. The Company’s management has evaluated its warrants under ASC Subtopic
815-40,
Contracts in Entity’s Own Equity including the assistance of accounting and valuation consultants and concluded that the Company’s warrants are not indexed to the Company’s shares in the manner contemplated by ASC
Section 815-40-15
because the holder of the instrument is not an input into the pricing of a
fixed-for-fixed
option on equity shares. Therefore, the company accounts for its warrants as warrant liabilities.
The Company has recorded approximately $491,000 of costs to the statements of operations at inception of the warrants to reflect an allocation of total offering and issue costs to warrant issuance costs based on the relative fair values of the equity and warrant instruments.
 
15
The following table presents information about the Company’s warrant liabilities that are measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Description
   
June 30,
2022
     
Quoted Prices
in Active
Markets
(Level 1)
     
Significant
Other
Observable
Inputs
(Level 2)
     
Significant
Other
Unobservable
Inputs
(Level 3)
  
Warrant Liabilities
:
                                    
Public Warrants
    $ 1,500,000      $ 1,500,000      $ —        $ —    
Private Placement Warrants
    $ 1,575,000      $ —        $ 1,575,000      $ —    
    
 
 
     
 
 
     
 
 
     
 
 
  
Warrant liabilities at June 30, 2022
    $ 3,075,000      $ 1,500,000      $ 1,575,000      $ —    
    
 
 
     
 
 
     
 
 
     
 
 
  
 
Description
  
December 31,
2021
 
  
Quoted Prices
in Active
Markets
(Level 1)
 
  
Significant
Other
Observable
Inputs
(Level 2)
 
  
Significant
Other
Unobservable
Inputs
(Level 3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Warrant Liabilities
:
                                    
Public Warrants
    $ 5,400,000      $ 5,400,000      $ —        $ —    
Private Placement Warrants
    $ 5,670,000      $ —        $ 5,670,000      $ —    
    
 
 
     
 
 
     
 
 
     
 
 
  
Warrant liabilities at December 31, 2021
    $ 11,070,000      $ 5,400,000      $ 5,670,000      $ —    
    
 
 
     
 
 
     
 
 
     
 
 
  
At June 30, 2022 and December 31, 2021, the Company valued its Public Warrants based on publicly observable inputs (Level 1 inputs) from the trading in the Public Warrants in an active market ($0.15 and $0.54, per warrant on June 30, 2022 and December 31, 2021, respectively). Since the Private Placement Warrants are substantially similar to the Public Warrants but do not trade, the Company valued them based on the value of the Public Warrants (significant other observable inputs – Level 2). The Company is required to record the warrants at fair value at each reporting period, with changes in fair value recognized in the statements of operations.
At inception of the warrants on October 25, 2021, the Company utilized an independent valuation consultant that used a binomial lattice model incorporating the
Cox-Ross-Rubenstein
methodology to value the warrants. The estimated fair value of the warrant liability at October 25, 2021 was determined using Level 3 inputs. Inherent in a binomial options pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its shares based on historical volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S.
Treasury zero-coupon yield
curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero.
The warrant liabilities are not subject to qualified hedge accounting.
Transfers between Levels 1, 2 or 3 at the balance sheet date, December 31, 2021, are discussed below. At December 31, 2021, the warrants were reclassified from Level 3 inputs at October 25, 2021 based on the different methodology used at December 31, 2021 as follows: Public Warrants were reclassified from Level 3 inputs to Level 1 inputs and Private Placement Warrants were reclassified from Level 3 inputs to Level 2 inputs. None of the values used at December 31, 2021 are level 3 inputs.
 
16
The following table presents the changes in the fair value of warrant liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    
Warrant
Liabilities
     
Public
Warrants
     
Private
Placement
  
Fair value at January 1, 2021
      —          —          —    
Initial measurement on October 25, 2021
    $ 16,195,000      $ 7,900,000      $ 8,295,000  
Change in valuation inputs or other assumptions
      (5,125,000 )       (2,500,000 )       (2,625,000 ) 
    
 
 
     
 
 
     
 
 
  
Fair value at December 31, 2021
    $ 11,070,000      $ 5,400,000      $ 5,670,000  
    
 
 
     
 
 
     
 
 
  
Change in valuation inputs or other assumptions
      (7,995,000 )       (3,900,000 )       (4,095,000 ) 
    
 
 
     
 
 
     
 
 
  
Fair value as of June 30, 2022
    $ 3,075,000      $ 1,500,000      $ 1,575,000  
    
 
 
     
 
 
     
 
 
  
Note 7—Shareholders’ Deficit
Ordinary Shares:
The authorized ordinary shares of the Company include 200,000,000 Class A ordinary shares, par value, $0.0001, and 20,000,000 Class B ordinary shares, par value, $0.0001, or 220,000,000 ordinary shares in total. Upon completion of the Public Offering, the Company may (depending on the terms of the Business Combination) be required to increase the authorized number of shares at the same time as its shareholders vote on the Business Combination to the extent the Company seeks shareholder approval in connection with its Business Combination. Holders of the Company’s Class A and Class B ordinary shares vote together as a single class and are entitled to one vote for each share of Class A and Class B ordinary shares.
At June 30, 2022 and December 31, 2021 there were 5,000,000 shares of Class B ordinary shares issued and outstanding and no Class A ordinary shares issued or
outstanding (excluding 20,000,000
shares subject to possible redemption) as of June 30, 2022 and December 31, 2021.
Preferred Shares:
The Company is authorized to issue 1,000,000 preferred shares, par value $0.0001, with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At June 30, 2022 and December 31, 2021, there were no preferred shares issued or outstanding.
Note 8—Commitments and Contingencies
Registration Rights:
The Company’s initial shareholders are, and the holders of the Private Placement Warrants will be, entitled to registration rights, as described in Note 4, pursuant to a registration and shareholder rights agreement signed in connection with the Public Offering.
 
17
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 Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other SEC filings.
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;
 
  •  
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;
 
18
  •  
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 condensed financial statements, as of June 30, 2022 we had approximately $1,011,000 of cash and approximately $1,166,000 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 raise capital or to complete our initial Business Combination will be successful.
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 June 30, 2022, our activity has been limited to the search for a prospective initial Business Combination. We will not generate any operating revenues until the closing and completion of our initial Business Combination.
For the three and six months ended June 30, 2022, we had net income of approximately $4,208,000
and
$7,948,000, respectively, which consisted of an approximately $4,100,000 and $7,995,000, respectively, in change in fair value of derivative warrant liabilities, and approximately $275,000 and 296,000, respectively, of interest income on investments held in Trust Account, partly offset by approximately $167,000 and $343,000, 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 months ended June 30, 2021 and the period from February 9, 2021 (inception) to June 30, 2021, our net loss and loss from operations was $49,000 and $54,000, respectively, consisting primarily of formation costs since our activities were primarily devoted or organizational activities and those activities necessary to preparation for our Public Offering.
As discussed further in Note 5 to the financial statements (and below), the Company accounts for its outstanding Public Warrants and Private Placement Warrants as derivative liabilities in the accompanying 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.
Liquidity and Going Concern
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 $300,000 by our Sponsor under an unsecured promissory note. Through closing of the Public Offering on October 25, 2021 we borrowed an aggregate of $240,000 and upon closing of the Public Offering, the entire balance of $240,000 was repaid.
 
19
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), 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 including the underwriters’ over-allotment option exercise. 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 will be invested only in 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.
We believe that we have sufficient working capital at June 30, 2022 to continue our operations for at least 12 months beyond when we report our current results and likely longer. However, if we cannot complete a Business Combination prior to April 25, 2023, we could be forced to wind up our operations and liquidate unless we receive an extension approval from our shareholders. These conditions raise substantial doubt about our ability to continue as a going concern for a period of time within one year after the date that the financial statements are issued. Our plan to deal with this uncertainty is to complete a Business Combination prior to April 25, 2023 (or up to October 25, 2023 in two separate three month extensions subject to satisfaction of certain conditions, including the deposit of $2,000,000 for each three month extension, into the Trust Account, or as extended by the Company’s shareholders in accordance with our amended and restated memorandum and articles of association). There is no assurance that our plans to consummate a Business Combination will be successful or successful within 18 months from the closing of the Public Offering (or 24 months as previously described). The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
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. 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.
 
 
20
We expect our primary liquidity requirements during that period to include approximately $300,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting successful Business Combinations; $260,000 for legal and accounting fees related to regulatory reporting obligations; $650,000 for office space, administrative and other support services; $500,000 for directors and officers insurance liability premiums; $55,000 for Nasdaq continued listing fees; and $135,000 for general working capital that will be used for miscellaneous expenses and reserves. 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 referenced in the immediately preceding sentence) for office space, utilities, secretarial and administrative services provided to members of our management team as well as the services to be 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.
These amounts are estimates and may differ materially from our actual expenses. 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 Public 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.
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:
 
21
Emerging Growth Company:
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to
non-emerging
growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when an accounting standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
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 ordinary 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 warrants sold in the Public Offering 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 June 30, 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
June 30, 2022
     
For the six months ended
June 30, 2022
  
    
Class A
     
Class B
     
Class A
     
Class B
  
Numerator:
                                    
Allocation of income – basic and diluted
      3,366,000        842,000        6,358,000        1,590,000  
Denominator:
                                    
Basic and diluted weighted average ordinary shares outstanding
      20,000,000        5,000,000        20,000,000        5,000,000  
    
 
 
     
 
 
     
 
 
     
 
 
  
Basic and diluted net income per ordinary share
    $ 0.17      $ 0.17      $ 0.32      $ 0.32  
    
 
 
     
 
 
     
 
 
     
 
 
  
 
22
The Company did not have two classes of shares outstanding during the periods ended June 30, 2021 and therefore net loss of approximately $49,000 and $54,000, respectively, in the three months ended June 30, 2021 and the period from February 9, 2021 (inception) to June 30, 2021 was allocated 100% to Class B shareholders, net of shares that were subject to forfeiture, leading to net loss per share in that period of $0.01 and $0.01 respectively.
Investments held in Trust Account:
The Company complies with FASB ASC 820, “Fair Value Measurements,” for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
Upon the closing of the Public Offering and the Private Placement, a total of $204,000,000 was deposited into the Trust Account. The proceeds in the Trust Account may be invested in either U.S. government treasury bills 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 of 1940, as amended, and that invest solely in U.S. government treasury obligations.
The Company classifies its U.S. government treasury bills and equivalent securities as held-to-maturity in accordance with FASB ASC 320, “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity U.S. government treasury bills are recorded at amortized cost on the balance sheets and adjusted for the amortization of discounts.
Cash and cash equivalents:
The Company considers all highly liquid instruments with maturities of three months or less when acquired to be cash equivalents. The Company has no cash equivalents at June 30, 2022 or December 31, 2021.
Concentration of Credit Risk:
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Financial Instruments:
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheets, primarily due to their short-term nature.
Fair Value Measurements:
The Company complies with FASB ASC 820, “Fair Value Measurements and Disclosures,” for its financial assets and liabilities that are
re-measured
and reported at fair value at each reporting period, and
non-financial
assets and liabilities that are
re-measured
and reported at fair value at least annually. Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
 
  •  
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.
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Use of Estimates:
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed as of June 30, 2022, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
 
23
Offering Costs:
The Company complies with the requirements of the FASB ASC
340-10-S99-1
and SEC Staff Accounting Bulletin (SAB) Topic 5A—“Expenses of Offering.” Costs incurred in connection with preparation for the Public Offering were approximately $11,725,000 including approximately $725,000 of Company costs together with $11,000,000 of underwriters’ discount. Such costs have been allocated to equity instruments ($11,234,000) and warrant liability ($491,000), based on their relative values, and charged to equity or expense (in the case of the portion allocated to warrant liability) upon completion of the Public Offering. The Company retained an independent financial advisor in connection with the Public Offering and paid an agreed amount of $175,000 that was included in offering costs, net of full reimbursement by the underwriters.
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 contain a redemption feature which allows for the redemption of common shares under the Company’s liquidation or tender offer/stockholder approval provisions. 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, its articles of association provide that in no event will it redeem its Public 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 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 June 30, 2022 and December 31, 2021, 20,000,000 of the 20,000,000 Public Shares were classified outside of permanent equity. Class A ordinary shares subject to redemption consist of:
 
Gross proceeds of Public Offering
    $ 200,000,000  
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
 
Remeasurement of carrying value to redemption value at June 30,
2022
   
 
300,000
 
  
 
 
  
Class A ordinary shares subject to redemption
    $ 204,300,000  
  
 
 
  
 
24
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. There were no derivative financial instruments as of June 30, 2022 and December 31, 2021.
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 June 30, 2022, 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.
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.
 
25
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Our management evaluated, with the participation of our current Chief Executive Officer and Chief Financial Officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of June 30, 2022, 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 June 30, 2022.
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 June 30, 2022, covered by this Quarterly Report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
 
26
PART
II-OTHER
INFORMATION
Item 1. Legal Proceedings
None.
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, 2021, filed with the SEC on March
 16, 2022, and our Quarterly Report on Form
10-Q
for the three months ended March
 31, 2022, filed with the SEC on May
 16, 2022 (“Q1 10Q”) 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.
We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC
.
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.
 
Exhibit
Number
   
Description
31.1*    Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*    Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*    Certification of Chief Executive Officer (Principal Executive Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*    Certification of Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS    Inline XBRL Instance Document
101.SCH    Inline XBRL Taxonomy Extension Schema Document
 
27
101.CAL    Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF    Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB    Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE    Inline XBRL Taxonomy Extension Presentation Linkbase Document
104    Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
 
*
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: August 15, 2022    
GLOBAL TECHNOLOGY ACQUISITION CORP. I
    By:  
/s/ Arnau Porto Dolc
    Name:   Arnau Porto Dolc
    Title:   Chief Executive Officer
 
Dated: August 15, 2022    
GLOBAL TECHNOLOGY ACQUISITION CORP. I
    By:  
/s/ Claudia Gast
    Name:   Claudia Gast
    Title:   Chief Financial Officer
 
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