References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Global SPAC Partners Co. References to our "management" refer
to our officers and directors, and references to the "Sponsor" refer to Global
SPAC Sponsors LLC. The following discussion and analysis of our financial
condition and results of operations should be read in conjunction with our
unaudited condensed financial statements and related notes included herein.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q 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 were incorporated on August 6, 2020 as a Cayman Islands exempted company and
formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with
one or more businesses or entities, which we refer to throughout this Report as
our "Business Combination" or "initial business combination".
On April 13, 2021, we consummated the initial public offering ("IPO") of
16,000,000 public units ("Public Units") at a price of $10.00 per public unit,
generating gross proceeds of $160,000,000. Simultaneously with the closing of
the IPO, we consummated the sale of 675,000 placement units ("Private Units"),
at a price of $10.00 per Private Unit, in a private placement to the Sponsor and
I-Bankers Securities, Inc. ("I-Bankers"), generating gross proceeds of
$6,750,000.
On April 14, 2021, I-Bankers partially exercised the over-allotment option to
purchase an additional 750,000 Public Units, at a purchase price of $10.00 per
public unit, generating gross proceeds to us of $7,500,000. Simultaneously with
the exercise of the over-allotment option, we consummated the sale of an
additional 22,500 Private Units, at a price of $10.00 per Private Unit, in a
private placement to the Sponsor and I-Bankers, generating gross proceeds to us
of $225,000.
Of the net proceeds from the IPO, partial exercise of the over-allotment option,
and associated private placements, $169,175,000 of cash was placed in the trust
account ("Trust Account").
On December 21, 2021, we entered into a business combination agreement
("Business Combination Agreement") with Gorilla Technology Group Inc., a Cayman
Islands exempted company ("Gorilla"), and Gorilla Merger Sub, Inc., a Cayman
Islands exempted company and a wholly-owned subsidiary of Gorilla ("Merger
Sub"). Gorilla is a leading market provider of video intelligence, Internet of
Things security, edge AI data analytics and operational technology security
solutions and services in Asia Pacific with operations and established
distribution and sales channels in the United States, Europe, the Middle East
and Latin America.
Pursuant to the Business Combination Agreement, at the Closing, and following
the recapitalization, (i) Merger Sub will merge with and into the Company, with
the Company continuing as the surviving entity and a wholly owned subsidiary of
Gorilla; (ii) the ordinary shares of the Company (including Class A ordinary
shares and Class B ordinary shares) will be converted into Gorilla ordinary
shares on a one-for-one basis; (iii) warrants to purchase the ordinary shares of
the Company will be converted into warrants to purchase the same number of
Gorilla ordinary shares at the same exercise price and for the same exercise
period; and (iv) the Company will have a restated certificate of incorporation.
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Additionally, to raise additional proceeds in connection with the transactions
contemplated by the Business Combination Agreement ("Transactions"), the
Company, Gorilla and certain PIPE Investors (as defined below) entered into a
series of subscription agreements (the "PIPE Subscription Agreements"),
providing for the purchase by certain investors (the "PIPE Investors") at the
effective time of the Gorilla Business Combination an aggregate of 5,000,000
PIPE Subunits at a price of $10.10 per subunit, for gross proceeds to the
Company of $50.5 million; provided, however, that if a PIPE Investor acquires
ownership of subunits of Gorilla in the open market or in privately negotiated
transactions with third parties (along with any related rights to redeem or
convert such subunits in connection with any redemption conducted by the Company
in accordance with the Company's organizational documents and the prospectus for
the Company's IPO in conjunction with the Closing or in conjunction with an
amendment to the Company's organizational documents to extend the Company's
deadline to consummate its Initial Business Combination) at least prior to the
Company's meeting of shareholders to approve the Transactions and the PIPE
Investor does not redeem or convert such PIPE Subunits in connection with any
redemption, the number of subunits for which the PIPE Investor is obligated to
purchase under the PIPE Subscription Agreement shall be reduced by the number of
non-redeemed subunits.
For a more detailed description of the Business Combination Agreement and the
Transactions, see the Company's Annual Report on Form 10-K filed with the SEC on
March 31, 2022 (the "Form 10-K") and Gorilla's Registration Statement on Form
F-4 filed with the SEC, as amended (the "Gorilla Form F-4").
On April 11, 2022, we held a shareholder meeting (the "Meeting"), where our
shareholders approved an amendment to the Company's amended and restated
memorandum and articles of association ("Charter Amendment"). The Charter
Amendment extends the date by which we must consummate our Initial Business
Combination from April 13, 2022 to July 13, 2022. The terms of the Charter
Amendment are set forth in our definitive proxy statement filed with the
Securities and Exchange Commission on March 28, 2022.
At the Meeting, shareholders holding 3,801,787 Public Subunits exercised their
right to redeem their Public Subunits for a pro rata portion of the funds in the
Trust Account. As a result, approximately $38,411,748.01 (approximately $10.10
per Public Subunit) was removed from the Trust Account to pay such holders.
Furthermore, as a result of the redemption, the one fourth of one warrant
contained in each Public Subunit (resulting in an aggregate of approximately
950,446 warrants) were also forfeited by such holders and automatically
extinguished by us.
Following the redemption, our remaining Public Subunits outstanding were
12,948,213. We have submitted a drawdown request under the promissory note dated
April 13, 2022 to fund into the Trust Account the required $0.03 per remaining
Public Subunit into the Trust Account for the first month past April 13, 2022
that we need to complete the Initial Business Combination. After such funding,
the Trust Account will contain approximately $10.13 per remaining Public Subunit
outstanding.
On April 13, 2022, the Company issued an unsecured promissory note to Gorilla,
pursuant to which the Company may borrow up to an aggregate principal amount of
$1,165,339 to be used for deposit into the Company's Trust Account to extend the
Company's time to complete a Business Combination (See Note 9). This loan is
non-interest bearing, unsecured and due at the earlier of the date that the
Company consummates the Business Combination or the liquidation of the Company.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an Initial Business
Combination may be adversely affected by various factors that could cause
economic uncertainty and volatility in the financial markets, many of which are
beyond our control. Our business could be impacted by, among other things,
downturns in the financial markets or in economic conditions, increases in oil
prices, inflation, increases in interest rates, supply chain disruptions,
declines in consumer confidence and spending, the ongoing effects of the
COVID-19 pandemic, including resurgences and the emergence of new variants, and
geopolitical instability, such as the military conflict in the Ukraine. We
cannot at this time fully predict the likelihood of one or more of the above
events, their duration or magnitude or the extent to which they may negatively
impact our business and our ability to complete an Initial Business Combination.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
The only activities through March 31, 2022 were activities related to our
formation, the IPO and search for prospective targets for an Initial Business
Combination, such as Gorilla. We do not expect to generate any operating
revenues until after the completion of our Initial Business Combination. We
generate non-operating income in the form of interest income on marketable
securities held in the Trust Account. We incur expenses as a result of being a
public company (for legal, financial reporting, accounting and auditing
compliance), as well as expenses for due diligence on prospective targets.
For the three months ended March 31, 2022, we had net income of $915,225, which
consisted of $15,703 in interest earned on marketable securities held in the
Trust Account, $5 in interest earned in our operating bank account, and
$1,736,138 in change in fair value of warrants, offset by $836,621 in formation
and operating costs.
For the three months ended March 31, 2021, we had net loss of $13,165, which
consisted of $13,166 in operating costs, offset by $1 in interest earned in our
operating bank account.
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Liquidity and Capital Resources
As of March 31, 2022, we had cash of $18,034. Until the consummation of the IPO,
our only source of liquidity was an initial purchase of ordinary shares by our
Sponsor and loans from our Sponsor.
Subsequent to the consummation of the IPO, partial exercise of the
over-allotment option, and associated private placements, $169,175,000 of cash
was placed in the Trust Account, and our liquidity needs have been satisfied
through the proceeds from the consummation of the private placement not held in
the Trust Account.
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
deferred underwriting commissions and income taxes payable) to complete our
Initial Business Combination, such as the Gorilla Business Combination. To the
extent that our capital stock 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.
We intend to use the funds held outside the Trust Account primarily to 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 an Initial Business Combination.
In order to finance transactions costs in connection with an Initial Business
Combination, post the initial public offering, the Sponsor or an affiliate of
the Sponsor, or certain of our officers and directors may, but are not obligated
to, loan us funds as may be required ("Working Capital Loans"). If we complete
an Initial Business Combination, we would repay the Working Capital Loans. In
the event that an Initial Business Combination does not close, we may use a
portion of proceeds held outside the Trust Account to repay the Working Capital
Loans but no proceeds held in the Trust Account would be used to repay the
Working Capital Loans. Up to $1,500,000 of such loans may be convertible into
units at a price of $10.00 per unit at the option of the lender at the time of
the Business Combination. The units would be identical to the Private Units sold
in the private placements.
On April 13, 2022, we issued an unsecured promissory note to Gorilla, pursuant
to which we may borrow up to an aggregate principal amount of $1,165,339 to be
used for deposit into our Trust Account to extend our Combination Period from
April 13, 2022 to July 13, 2022. This loan is non-interest bearing, unsecured
and due at the earlier of the date that we consummate the Business Combination
or the liquidation.
We anticipate that the $18,034 outside of the Trust Account as of March 31, 2022
will not be sufficient to allow us to operate for at least the next 12 months,
assuming that a Business Combination is not consummated during that time. We may
need to obtain additional financing to consummate our Initial Business
Combination but there is no assurance that new financing will be available to us
on commercially acceptable terms. Furthermore, if we are unable to complete an
Initial Business Combination by July 13, 2022, it will trigger our automatic
winding up, liquidation and dissolution. These conditions raise substantial
doubt about our ability to continue as a going concern.
Critical Accounting Policies and Estimates
The preparation of these unaudited condensed financial statements in conformity
with accounting principles generally accepted in the United States of America
("GAAP") requires 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 unaudited condensed financial statement.
Actual results could differ from those estimates.
One of the more significant accounting estimates included in these financial
statements is the determination of the fair value of our warrant liability. Such
estimates may be subject to change as more current information becomes available
and, accordingly, the actual results could differ significantly from those
estimates (See Note 5).
Class A Ordinary Shares (underlying the Public Subunits) Subject to Possible
Redemption
The Company accounts for its Class A ordinary shares (underlying the Public
Subunits) subject to possible redemption in accordance with the guidance in
Financial Accounting Standards Board ("FASB") Accounting Standards Codification
("ASC") Topic 480 "Distinguishing Liabilities from Equity." Ordinary shares
subject to mandatory redemption (if any) are classified as a liability
instrument and are measured at fair value. Conditionally redeemable ordinary
shares (including ordinary shares that feature redemption rights that are either
within the control of the holder or subject to redemption upon the occurrence of
uncertain events not solely within the Company's control) are classified as
temporary equity. At all other times, ordinary shares are classified as
shareholders' equity. The Company's Class A ordinary shares feature certain
redemption rights that are considered to be outside of the Company's control and
subject to the occurrence of uncertain future events. Accordingly, Class A
ordinary shares subject to possible redemption are presented at redemption value
of $10.10 per share (plus any interest earned on the Trust Account) as temporary
equity, outside of the shareholders' deficit section of the Company's balance
sheets.
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Offering Costs Associated with the IPO
Offering costs consist of underwriting, legal, accounting and other expenses
incurred through the balance sheet date that are directly related to the IPO.
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff
Accounting Bulletin ("SAB") Topic 5A - "Expenses of Offering". Offering costs
are allocated to the public warrants issued in the IPO based on the public
warrants' fair value at inception compared to the total IPO proceeds received.
Offering costs associated with warrant liabilities are expensed, and offering
costs associated with the Class A ordinary shares are allocated to temporary
equity.
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". Derivative
instruments are recorded at fair value at inception and re-valued at each
reporting date, with changes in the fair value reported in the statements of
operations. Derivative assets and 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.
FASB ASC Topic 470-20, "Debt with Conversion and Other Options" addresses the
allocation of proceeds from the issuance of convertible debt into its equity and
debt components. The Company applies this guidance to allocate IPO proceeds from
the units between Class A ordinary shares and warrants, using the residual
method by allocating IPO proceeds first to fair value of the warrants and then
the Class A ordinary shares.
Net Income (Loss) Per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC
260, "Earnings Per Share." The statements of operations include a presentation
of income per redeemable Class A ordinary share and income (loss) per
non-redeemable share following the two-class method of income (loss) per share.
In order to determine the net income (loss) attributable to both the redeemable
Class A ordinary shares and the non-redeemable shares, the Company first
considered the total income (loss) allocable to both sets of shares. This is
calculated using the total net income (loss) less any dividends paid. For
purposes of calculating net income (loss) per share, any remeasurement of the
accretion to redemption value of the Class A ordinary shares subject to possible
redemption was considered to be dividends paid to the public shareholders.
Subsequent to calculating the total income (loss) allocable to both sets of
shares, the Company split the amount to be allocated using a ratio of 77.1% for
the redeemable Class A ordinary shares and 22.9% for the non-redeemable shares
for the three months ended March 31, 2022.
For the three months ended March 31, 2021, net loss per share is computed by
dividing net loss by the weighted average number of ordinary shares outstanding
during the period, excluding ordinary shares subject to forfeiture by the
Sponsor. Weighted average shares were reduced for the effect of an aggregate of
750,000 ordinary shares that were subject to forfeiture if the underwriter's
over-allotment option was not exercised by the underwriter.
As of March 31, 2022 and December 31, 2021, the Company did not have any
dilutive securities and other contracts that could, potentially, be exercised or
converted into ordinary shares and then share in the Company's earnings. As a
result, diluted income (loss) per share is the same as basic income (loss) per
share for the periods presented.
Recent Accounting Standards
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments ("ASU
2016-13"). The ASU introduced a new credit loss methodology, the Current
Expected Credit Losses ("CECL") methodology, which requires earlier recognition
of credit losses, while also providing additional transparency about credit
risk. The CECL methodology utilizes a lifetime "expected credit loss"
measurement objective for the recognition of credit losses for loans, held-to
maturity debt securities, trade receivables and other receivables measured at
amortized cost at the time the financial asset is originated or acquired. After
the issuance of ASU 2016-13, the FASB issued several additional ASUs to clarify
implementation guidance, provide narrow-scope improvements and provide
additional disclosure guidance. In November 2019, the FASB issued an amendment
making this ASU effective for fiscal years beginning after December 15, 2022 for
smaller reporting companies. The Company plans to adopt this standard in the
first quarter of 2023 and does not expect the adoption will have a significant
impact on its financial statements and related disclosures.
Other than as noted above, management does not believe that any recently issued,
but not effective, accounting standards, if currently adopted, would have a
material effect on the Company's unaudited condensed financial statements.
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Off-Balance Sheet Arrangements
We had no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities. We have not
entered into any off-balance sheet financing arrangements, established any
special purpose entities, guaranteed any debt or commitments of other entities,
or purchased any non-financial assets.
Commitments and Contractual Obligations
Registration Rights Agreement
Pursuant to a registration rights agreement entered into on April 8, 2021, the
holders of the Founder Shares, the Representative Shares, the units and
underlying securities issuable upon conversion of the Working Capital Loans
and the Private Units and its underlying securities are entitled to certain
registration rights. See "Item 1. Business" and Notes 4 and 6 of the financial
statements included herein. The Company will bear the expenses incurred in
connection with the filing of any registration statements pursuant to such
registration rights.
Underwriting Agreement
Pursuant to the underwriting agreement, the underwriters received a cash
underwriting discount of $3,350,000 following the consummation of the IPO and
the partial exercise of the over-allotment option. In addition, the underwriters
also received 100,000 representative shares upon the consummation of the IPO.
Additionally, the underwriter will be entitled to a deferred underwriting
discount of 3.5% of the gross proceeds of the IPO and partial exercise of the
over-allotment option, or $5,862,500, upon the completion of the Company's
Initial Business Combination subject to the terms of the underwriting agreement.
The underwriter has agreed that the deferred underwriting discount will be
reduced pro rata for redemptions from the Trust Account prior to completion of
the Initial Business Combination, up to a maximum reduction of 20%. In addition,
the underwriter has agreed that the Company may allocate up to 30% of the net
deferred underwriting commissions, after any reductions due to redemptions, to a
firm or firms who assists the Company in connection with completing the Initial
Business Combination.
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