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 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 Annual Report on Form 10-K 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 otherSEC filings.
Overview
We are a blank check company incorporated on
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The issuance of additional shares in a Business Combination:
• may significantly dilute the equity interest of investors in the Initial
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;
• 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 financial statements, as of
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Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities since inception have been organizational activities and
those necessary to prepare for the Initial Public Offering and, subsequent to
the Initial Public Offering, identifying and completing a suitable Business
Combination. Following the Initial Public Offering, we will not generate any
operating revenues until after completion of our initial Business Combination.
For the periods from
Loss from operations -
For the period from
Other income -
In addition to operating costs, the Company had net other income of
approximately
As discussed further in Note 6 to the financial statements (and below), the Company accounts for its outstanding public and private warrants as components as derivative liabilities in the accompanying financial statements. As a result, the Company is required to measure the fair value of the public and private 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
Liquidity and Capital Resources
Our liquidity needs have been satisfied prior to the completion of the Initial
Public Offering through (i)
The net proceeds from (i) the sale of the Units in the Initial Public Offering,
after deducting offering expenses of approximately
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We believe that we have sufficient working capital at
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
We do not believe we will need to raise additional funds following the Initial 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.
We expect our primary liquidity requirements during that period to include
approximately
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"
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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 Estimates and Policies
The preparation of financial statements and related disclosures in conformity
with
Accounting estimates:
A critical accounting estimate to our financial statements is the estimated fair value of our warrant liability. 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.
At inception of the warrants,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 atOctober 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 theU.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. 76
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Since the hierarchy gives the highest priority to unadjusted quoted prices in
active markets, at
The difference between the estimated fair value at
Net Income or 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 Share 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 Initial 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 period presented.
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.
December 31, 2021 Class A Class B
Numerator:
Basic and diluted net income per Ordinary Share: Allocation of income - basic and diluted$ 2,050,000 $ 2,296,000
Denominator:
Basic and diluted weighted average Ordinary Shares: 4,986,000 4,452,000
Basic and diluted net income per Ordinary Share
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 sheet, primarily due to their short-term nature.
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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:
• our ability to complete our initial Business Combination;
• our success in retaining or recruiting, or changes required in, our
officers, key employees or directors following our initial Business
Combination;
• our officers and directors allocating their time to other businesses and
potentially having conflicts of interest with our business or in
approving our initial Business Combination, as a result of which they
would then receive expense reimbursements;
• our potential ability to obtain additional financing to complete our
initial Business Combination;
• our pool of prospective target businesses;
• the ability of our officers and directors to generate a number of
potential acquisition opportunities;
• our public securities' potential liquidity and trading;
• the lack of a market for our securities;
• the use of proceeds not held in the Trust Account or available to us from
interest income on the Trust Account balance; or
• our financial performance.
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.
Offering Costs:
The Company complies with the requirements of the FASB ASC
340-10-S99-1
and
Class A Ordinary Shares Subject to Possible Redemption:
All of the 20,000,000 Class A Ordinary Shares sold on
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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
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, atDecember 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 Initial Public Offering$ 200,000,000 Less: Proceeds allocated to Public Warrants (7,900,000 ) Offering costs (11,234,000 )
Plus: Accretion of carrying value to redemption value 23,134,000
Class A Ordinary Shares subject to redemption$ 204,000,000
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 sheet 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. The Company's warrant liability is a derivative financial instrument, see Note 5 to the financial statements.
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