The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K.
Overview
We are a blank check company incorporated on February 23, 2021, as a Cayman
Islands exempted company and for the purpose of effecting a merger,
amalgamation, share exchange, asset acquisition, share purchase, reorganization
or similar business combination with one or more businesses or entities. We
intend to effectuate our initial business combination using cash from the
proceeds of our initial public offering and our private placement of private
placement warrants.
Our sponsor is Gesher I Sponsor LLC, a Delaware limited liability company. The
registration statement for our initial public offering was declared effective on
October 12, 2021. On October 14, 2021, we consummated our initial public
offering of 10,000,000 units at $10.00 per unit, with each unit consisting of
one ordinary share and one-half of one warrant, with each whole warrant
entitling the holder thereof to purchase one ordinary share at a price of $11.50
per share.
Simultaneously with the consummation of the initial public offering, we
consummated the private placement of 4,550,000 warrants at a price of $1.00 per
warrant in a private placement, generating gross proceeds of $4,550,000.
On October 20, 2021, we issued an additional 1,500,000 Units in connection with
the full exercise by the underwriters of their over-allotment option, generating
gross proceeds of $15,000,000. Simultaneously with the closing of the
underwriters' full exercise of the over-allotment option, we sold an additional
450,000 Private Placement Warrants, at a price of $1.00 per Private Placement
Warrant, in a private placement (together with the Private Placement, the
"Private Placements") generating gross proceeds of $450,000.
Transaction costs amounted to $10,949,821 consisting of $2,300,000 of
underwriting commissions, $4,025,000 of deferred underwriting commissions,
$4,073,565 of incentives to Anchor Investors (see Note 3) and Forward Purchase
Investors (see Note 6), and $551,256 of other offering costs.
Following the closing of the IPO on October 14, 2021 and underwriters' full
exercise of their over-allotment option on October 20, 2021, $116,150,000
($10.10 per Unit) from the net proceeds of the sale of the Units and the sale of
the Private Placement Warrants was deposited into a trust account (the "Trust
Account"), invested in United States "government securities" within the meaning
of Section 2(a)(16) of the Investment Company Act with a maturity of 180 days or
less or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act which invest only in direct U.S.
government treasury obligations. Except with respect to interest earned on the
funds held in the Trust Account that may be released to the Company to pay its
income or other tax obligations as described in the IPO, the proceeds will not
be released from the Trust Account until the earlier of the completion of a
Business Combination or the redemption of 100% of the outstanding public shares
if the Company has not completed a Business Combination within the time required
time period.
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We have until April 14, 2023 (18 months from the closing of the initial public
offering) to complete the initial business combination. If we do not consummate
an initial business combination by such date, we will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible
but not more than ten business days thereafter, redeem 100% of the outstanding
public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including any interest not
previously released to us but net of taxes payable (and less up to $50,000 of
interest to pay liquidation expenses), divided by the number of then outstanding
public shares, which redemption will completely extinguish public shareholders'
rights as shareholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of the
remaining shareholders and the board of directors, dissolve and liquidate,
subject (in the case of (ii) and (iii) above) to our obligations under Cayman
Islands law to provide for claims of creditors and the requirements of other
applicable law.
On May 31, 2022, we entered into a Business Combination Agreement (the "Business
Combination Agreement") with Freightos Limited, a Cayman Islands exempted
company limited by shares ("Freightos"), Freightos Merger Sub I, a Cayman
Islands exempted company limited by shares and a direct wholly owned subsidiary
of Freightos ("Merger Sub I"), and Freightos Merger Sub II, a Cayman Islands
exempted company limited by shares and a direct wholly owned subsidiary of
Freightos ("Merger Sub II"), pursuant to which, among other transactions, on the
terms and subject to the conditions set forth therein, (i) Merger Sub I will
merge with and into the Company (the "First Merger"), with the Company surviving
the First Merger as a wholly owned subsidiary of Freightos, and (ii) the Company
will merge with and into Merger Sub II (the "Second Merger" and together with
the First Merger, collectively, the "Mergers"), with Merger Sub II surviving the
Second Merger as a wholly owned subsidiary of Freightos.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to raise capital or to
complete our initial Business Combination with Freightos or another target
business will be successful
Results of Operations
As of September 30, 2022, we have neither engaged in any operations nor
generated any revenues. All activity for the year ended September 30, 2022
relates to our formation, the initial public offering and our search for a
target business with which to consummate a business combination and in relation
thereto, entering into the Business Combination Agreement. We will not generate
any operating revenues until after the completion of our initial business
combination, at the earliest. We will generate non-operating income in the form
of interest income on cash and cash equivalents from the proceeds derived from
the initial public offering.
For the year ended September 30, 2022, we had a net loss of $2,995,719, which
was resulted from formation and operating costs amounting to $3,713,311,
partially offset by the interest income amounting to $673,042 and change in fair
value of over-allotment units amounting to $44,550.
For the Period from February 23, 2021 (inception) through September 30,2021, we
had a net loss of $14,946, which was resulted from formation and operating
costs.
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Liquidity and Capital Resources
As of September 30, 2022, we had $183,019 in cash and working capital deficit of
$2,704,513.
Prior to the completion of the Initial Public Offering, our liquidity needs had
been satisfied through a payment from the sponsor of $25,000 for the founder
shares to cover certain offering costs, and the loan under an unsecured
promissory note from the sponsor of $182,127. The promissory note was paid in
full on October 18, 2021. Subsequent to the consummation of the initial public
offering and private placement, our liquidity needs have been satisfied through
the proceeds from the consummation of the private placement not held in the
trust account and working capital loans described below.
On March 15, 2022, the Company entered into a promissory note agreement with the
Sponsor in the amount of $450,000. The promissory note would either be repaid
upon consummation of a Business Combination, without interest, or, at the
lender's discretion, convertible into warrants of the post-Business Combination
entity at a price of $1.00 per warrant. The warrants would be identical to the
Private Placement Warrants. The conversion feature was analyzed under ASC
470-20, "Debt with Conversion or Other Options", the note did not include any
premium or discounts. The conversion option did not include elements that would
require bifurcation under ASC 815-40, "Derivatives and Hedging."
On March 18, 2022, the Company entered into a promissory note agreement with the
Sponsor in the amount of up to $64,945 for expenses paid by the Sponsor on
behalf of the Company. As of September 30, 2022, the expenses paid by Sponsor on
behalf of the Company totaled $53,609. On May 10, 2022, the Company borrowed an
additional $11,336 under the promissory note. The promissory note would either
be repaid upon consummation of a Business Combination, without interest, or, at
the lender's discretion, convertible into warrants of the post-Business
Combination entity at a price of $1.00 per warrant. The warrants would be
identical to the Private Placement Warrants. The conversion feature was analyzed
under ASC 470-20, "Debt with Conversion or Other Options", the note did not
include any premium or discounts. The conversion option did not include elements
that would require bifurcation under ASC 815-40, "Derivatives and Hedging."
On May 3, 2022, the Company entered into a promissory note agreement with the
Sponsor in the amount of $250,000. The promissory note would either be repaid
upon consummation of a Business Combination, without interest, or, at the
lender's discretion, convertible into warrants of the post-Business Combination
entity at a price of $1.00 per warrant. The warrants would be identical to the
Private Placement Warrants. The conversion feature was analyzed under ASC
470-20, "Debt with Conversion or Other Options", the note did not include any
premium or discounts. The conversion option did not include elements that would
require bifurcation under ASC 815-40, "Derivatives and Hedging."
53
On June 6, 2022, the Company entered into a promissory note agreement with the
Sponsor in the amount of $250,000. The promissory note would either be repaid
upon consummation of a Business Combination, without interest, or, at the
lender's discretion, convertible into warrants of the post-Business Combination
entity at a price of $1.00 per warrant. The warrants would be identical to the
Private Placement Warrants. The conversion feature was analyzed under ASC
470-20, "Debt with Conversion or Other Options", the note did not include any
premium or discounts. The conversion option did not include elements that would
require bifurcation under ASC 815-40, "Derivatives and Hedging."
On August 29, 2022, the Company entered into a promissory note agreement with
the Sponsor in the amount of $250,000. The promissory note would either be
repaid upon consummation of a Business Combination, without interest, or, at the
lender's discretion, convertible into warrants of the post-Business Combination
entity at a price of $1.00 per warrant. The warrants would be identical to the
Private Placement Warrants. The conversion feature was analyzed under ASC
470-20, "Debt with Conversion or Other Options", the note did not include any
premium or discounts. The conversion option did not include elements that would
require bifurcation under ASC 815-40, "Derivatives and Hedging."
As of September 30, 2022 and 2021, the Company had $1,264,945 and $175,827
borrowings under the Working Capital Loans, respectively.
For the year ended September 30, 2022, net cash used in operating activities was
$2,113,042. Net loss of $2,995,719 was affected by interest earned on marketable
securities of $673,042 and a change in fair value of over-allotment units of
$44,550. Changes in operating assets and liabilities provided $1,600,269 of cash
from operating activities.
For the period from February 23, 2021 (inception) through September 30, 2021,
net cash used in operating activities was nil. Net loss of $14,946 was offset by
formation and operating costs paid by Sponsor of $14,946.
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standards Board's Accounting Standards
Codification Topic 205-40, "Presentation of Financial Statements - Going
Concern," the Company has until April 14, 2023, to consummate an initial
business combination. It is uncertain that the Company will be able to
consummate an initial business combination by this time. If an initial business
combination is not consummated by this date, there will be a mandatory
liquidation and subsequent dissolution of the Company. Management has determined
that the liquidity condition and the mandatory liquidation, should an initial
business combination not occur, and potential subsequent dissolution raises
substantial doubt about the Company's ability to continue as a going concern. No
adjustments have been made to the carrying amounts of assets or liabilities
should the Company be required to liquidate after April 14, 2023.
Off-Balance Sheet Financing Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2022.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities
and administrative support. We began incurring these fees on October 14, 2021
and will continue to incur these fees monthly until the earlier of the
completion of the business combination and our liquidation.
The underwriters are entitled to a deferred fee of $4,025,000. The deferred fee
will become payable to the underwriters from the amounts held in the trust
account solely in the event that we complete a business combination, subject to
the terms of the underwriting agreement.
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Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
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. We have identified the following critical accounting policies:
Net Loss Per Ordinary Share
We have two categories of shares, which are referred to as redeemable ordinary
shares and non-redeemable ordinary shares. Earnings and losses are shared pro
rata between the two categories of shares.
Ordinary Shares Subject to Possible Redemption
All of the 11,500,000 ordinary shares sold as part of the units contain a
redemption feature which allows for the redemption of such public shares in
connection with our liquidation, if there is a shareholder vote or tender offer
in connection with the business combination and in connection with certain
amendments to the our amended and restated memorandum and articles of
association. In accordance with ASC 480-10-S99, redemption provisions not solely
within the control of us require ordinary shares subject to redemption to be
classified outside of permanent equity. Therefore, all 11,500,000 ordinary
shares were classified outside of permanent equity as of September 30, 2022.
We recognized changes in redemption value immediately as they occur upon the IPO
and will adjust the carrying value of redeemable ordinary shares to equal the
redemption value at the end of each reporting period. Increases or decreases in
the carrying amount of redeemable ordinary shares are affected by charges
against additional paid in capital and accumulated deficit.
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