GIGINTERNATIONAL1, INC. References in this report (the "Quarterly Report") to "we," "us," "our" or the "Company" refer toGigInternational1, Inc. References to our "management" or our "management team" refer to our officers and directors. References to the "Sponsor" or "Founder" refer toGigInternational1 Sponsor, LLC . References to the "Insiders" refer toMr. Weightman , our Chief Financial Officer, andInterest Solutions, LLC , aConnecticut limited liability company and an affiliate ofICR, LLC , an investor relations firm providing services to the Company. References to "Initial Stockholders" refer to the Founder together with the Insiders. References to "Founder Shares" refer to the initial shares of common stock purchased by the Founder. References to "Insider Shares" refer to shares of common stock granted to the Insiders. References to "Private Placement Units" refer to the units sold to the Founder and the Underwriters in a private placement. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties
Special 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 (the "Securities Act"), and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek," "may," "might," "plan," "possible," "potential," "should, "would" and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company's Annual Report on Form 10-K filed with theU.S. Securities and Exchange Commission (the "SEC") onMarch 31, 2022 . The Company's securities filings can be accessed on the EDGAR section of theSEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Overview We are a Private-to-Public Equity (PPE) company, also known as a blank check company or special purpose acquisition vehicle, incorporated in theState of Delaware and formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, or engaging in any other similar Business Combination with one or more businesses or entities. We do not intend to effectuate our initial Business Combination as discussed above and will instead be dissolving and liquidating our assets. The Public Units sold in our initial public offering (the "Offering" or "IPO") each consisted of one share of common stock, and one-half (1/2) of one redeemable warrant to purchase our common stock (no fractional shares will be issued upon exercise of the warrants). The Private Placement Units were substantially similar to the Public Units sold in the Offering, but for certain differences in the warrants included in each of them. For clarity, the warrants included in the Public Units are referred to herein as the "public warrants", and the warrants included in the Private Placement Units are referred to herein as the "private warrants."
Results of Operations and Known Trends or Future Events
We have neither engaged in any operations nor generated any revenues to date. For the period fromFebruary 23, 2021 (date of inception) throughSeptember 30, 2022 , our only activities have been organizational activities, those necessary to prepare for the Offering and to search for a target business for the Business Combination. We generate non-operating income in the form of interest income on cash and marketable securities held in the Trust Account at 19 --------------------------------------------------------------------------------Oppenheimer & Co., Inc. inNew York, New York withContinental Stock Transfer & Trust Company acting as trustee, which was funded after the Offering to hold an amount of cash and marketable securities equal to that raised in the Offering. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements as of and for the period endedDecember 31, 2021 as filed with theSEC onMarch 31, 2022 . We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses. For the three months endedSeptember 30, 2022 , we had a net loss of$656,221 , which consisted of operating expenses of$1,009,703 , a provision for income taxes of$155,731 , interest expense of$3,077 and other expense from the change in fair value of the warrant liability of$9,590 , that were partially offset by interest income on marketable securities held in the Trust Account of$521,880 . For the three months endedSeptember 30, 2021 , we had a net loss of$1,114,865 , which consisted of operating expenses of$1,049,266 , a provision for income taxes of$1,587 , and other expense from the change in fair value of the warrant liability of$69,333 , that were partially offset by the interest income on marketable securities held in the Trust Account of$5,321 . For the nine months endedSeptember 30, 2022 , we had a net loss of$1,521,978 , which consisted of operating expenses of$2,327,536 , a provision for income taxes of$241,653 and interest expense of$3,077 , that were partially offset by other income from the change in fair value of the warrant liability of$239,750 and interest income on marketable securities held in the Trust Account of$810,538 . For the period fromFebruary 23, 2021 (date of inception) throughSeptember 30, 2021 , we had a net loss of$1,533,123 , which consisted of operating expenses of$1,389,818 , a provision for income taxes of$1,827 , and other expense from the change in fair value of the warrant liability of$147,603 , that were partially offset by the interest income on marketable securities held in the Trust Account of$6,125 .
Liquidity and Capital Resources
During the period fromFebruary 23, 2021 (date of inception) toDecember 31, 2021 , the Founder purchased 5,210,000 Founder Shares, after giving effect to the forfeiture onMay 28, 2021 of 525,000 Founder Shares due to the Underwriters partially exercising their over-allotment option onMay 28, 2021 , for an aggregate purchase price of$25,000 , or$0.0047985 per share. The Company also issued 5,000 Insider Shares toMr. Weightman , its Chief Financial Officer, pursuant to the Insider Shares Grant Agreement datedMay 18, 2021 , between the Company andMr. Weightman . The 5,000 shares granted toMr. Weightman are subject to forfeiture and cancellation if he resigns or the services are terminated for cause prior to the completion of the Business Combination. OnMay 28, 2021 , the Underwriters partially exercised their over-allotment option resulting in the forfeiture of 525,000 Founder Shares. OnMay 18, 2021 , the Company consummated the IPO of 20,000,000 units (the "Public Units"). OnMay 28, 2021 , the Company completed the issuance of 900,000 additional Public Units as a result of the Underwriters' partial exercise of their over-allotment option. The Public Units were sold at a price of$10.00 per unit, generating gross proceeds to the Company of$209,000,000 . As ofSeptember 30, 2022 , we held cash and marketable securities in the amount of$43,202,859 in the Trust Account. In addition, there was interest receivable to the Trust Account of$80,536 . The marketable securities consisted of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940 which invest only in directU.S. government obligations. Interest income earned from the funds held in the Trust Account may be used by us to pay taxes. For the nine months endedSeptember 30, 2022 , tax relating to interest earned on the Trust Account totaled$241,653 . For the nine months endedSeptember 30, 2022 , cash used in operating activities was$1,032,581 , consisting of a net loss of$1,521,978 , a decrease in the fair value of the warrant liability of$239,750 and interest earned on marketable securities held in the Trust Account of$810,538 , plus an increase in receivables from related party of$6,286 , that were partially offset by increases in payable to related parties of$522,053 , accounts payable of$117,286 , other current liabilities of$237,253 , accrued liabilities of$87,039 and decreases in prepaid expenses of$479,249 and other long-term assets of$103,091 . For the period fromFebruary 23, 2021 (date of inception) toSeptember 30, 2021 , cash used in operating activities was$1,886,035 , consisting of a net loss of$1,533,123 , increases in prepaid expenses of$838,373 and other 20 -------------------------------------------------------------------------------- long-term assets of$304,885 , plus interest earned on marketable securities held in the Trust Account of$6,125 , that were partially offset by increases in the fair value of the warrant liability of$147,603 , stock-based compensation of$94,700 , payable to related parties of$13,177 , accounts payable of$13,925 , accrued liabilities of$525,239 and other current liabilities of$1,827 .
For the nine months ended
For the period fromFebruary 23, 2021 (date of inception) toSeptember 30, 2021 , cash used in investing activities was$211,090,000 , consisting of an investment of cash in Trust Account of$211,090,000 . For the nine months endedSeptember 30, 2022 , cash used in financing activities was$168,421,923 , consisting of cash paid for the redemption of public units of$168,751,923 and the payment of deferred offering costs of$70,000 , that were partially offset by cash proceeds from a related party borrowing of$400,000 . For the period fromFebruary 23, 2021 (date of inception) throughSeptember 30, 2021 , financing activities provided cash of$214,138,945 due to the proceeds from the sale of common stock to the Founder of$25,000 , from the sale of Public Units, net of underwriting discounts paid, of$205,000,000 , from the sale of Private Placement Units to the Founder of$6,500,000 , from the sale of Private Placement Units to the Underwriters of$3,090,000 , and from the borrowing from a related party of$125,000 , that were partially offset by the payment of offering costs of$476,055 and the repayment of borrowing from a related party of$125,000 . We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable by us). We may withdraw interest to pay taxes and to withdraw up to$100,000 to cover liquidation expenses. All other amounts in the Trust Account will be used to redeem shares issued as constituent parts of the units sold in the Offering. We estimate our annual franchise tax obligations for 2022 to be approximately$146,000 . Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. As ofSeptember 30, 2022 , we had cash of$49,516 held outside the Trust Account. We believe that the proceeds not held in the Trust Account may not be sufficient to allow us to operate up toFebruary 1, 2023 if all one-month extensions are exercised prior to the consummation of the Business Combination. Since the closing of the IPO, we have used the funds held outside the Trust Account primarily for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
Off-Balance Sheet Arrangements
As ofSeptember 30, 2022 , we have not entered into any off-balance sheet financing arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. 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.
Contractual Obligations
As ofSeptember 30, 2022 , we do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay our Founder a monthly fee of$30,000 for office space, administrative services and secretarial support. We began incurring these fees onMay 19, 2021 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination or our liquidation. OnJanuary 1, 2022 , the payment for such services was deferred until after the Business Combination is completed, which will now not occur as discussed above. OnMay 18, 2021 , the Company entered into a Strategic Services Agreement withMr. Weightman , its Chief Financial Officer, who holds 5,000 Insider Shares.Mr. Weightman is initially receiving$5,000 per month for his services and such amount could increase to up to$10,000 per month dependent upon the scope of services provided, 21 -------------------------------------------------------------------------------- as may be mutually agreed by the parties. The Company will payMr. Weightman for services rendered sinceMay 18, 2021 and on a monthly basis thereafter for all services rendered after the consummation of the Offering.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted inthe United States of America ("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. We have identified the following critical accounting policies:
Emerging Growth Company
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 election to opt out is irrevocable. We have 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, we, as an emerging growth company, will adopt the new or revised accounting standard at the time private companies adopt the new or revised standard.
Net Loss Per Common Share
Our condensed statements of operations and comprehensive loss include a presentation of income per share for common stock subject to possible redemption in a manner similar to the two-class method of income (loss) per share. Net income per share, basic and diluted, for common stock subject to possible redemption is calculated by dividing the proportionate share of income or loss on marketable securities held by the Trust Account, net of tax, by the weighted-average number of common stock subject to possible redemption outstanding since original issuance. Net loss per share, basic and diluted, for non-redeemable common stock is calculated by dividing the net loss, adjusted for income or loss on marketable securities attributable to common stock subject to possible redemption, net of tax, by the weighted-average number of non-redeemable common stock outstanding for the period, basic and diluted. When calculating our diluted net loss per share, we have not considered the effect of (i) the incremental number of shares of common stock to settle warrants sold in the Offering and Private Placement, as calculated using the treasury stock method and (ii) the shares issued toMr. Weightman subject to forfeiture representing 5,000 shares of common stock underlying a restricted stock award for the periods it was outstanding. Since we were in a net loss position during the period after deducting net income attributable to common stock subject to redemption, diluted net loss per common share is the same as basic net loss per common share for the period presented as the inclusion of all potential common shares outstanding would have been anti-dilutive. In accordance with the two-class method, our net loss is adjusted for net income that is attributable to common stock subject to redemption, net of tax, as these shares only participate in the income of the Trust Account and not our losses. Accordingly, net loss per common share, basic and diluted, is calculated as follows: 22 --------------------------------------------------------------------------------
Period from
February 23,
2021
Nine Months (Date of
Three Months Ended Ended Inception)
September 30, September 30, through
2022 2021 2022 September 30,
2021
Common stock subject to possible
redemption
Numerator: Earnings allocable to
common stock subject to
redemption
Interest earned on marketable
securities held in Trust Account,
net of taxes $ 366,149 $ 3,734 $ 568,885 $ 4,298
Net income attributable to common
stock subject to possible
redemption $ 366,149 $ 3,734 $ 568,885 $ 4,298
Denominator: Weighted-average
common shares subject to
redemption
Basic and diluted
weighted-average shares
outstanding, common stock subject
to possible redemption 13,649,320 20,900,000 18,456,548 12,606,364
Basic and diluted net income per
share, common stock subject to
possible redemption $ 0.03 $ 0.00 $ 0.03 $ 0.00
Non-Redeemable common stock Numerator: Net loss minus net earnings - Basic and diluted Net loss$ (656,221 ) $ (1,114,865 ) $ (1,521,978 ) $ (1,533,123 ) Less: net income attributable to common stock subject to redemption (366,149 ) (3,734 ) (568,885 ) (4,298 ) Net loss attributable to non-redeemable common stock$ (1,022,370 ) $ (1,118,599 ) $ (2,090,863 ) $ (1,537,421 ) Denominator: Weighted-average non-redeemable common shares Weighted-average non-redeemable common shares outstanding, basic and diluted 6,179,000 6,179,000 6,179,000 5,676,723 Basic and diluted net loss per share, non-redeemable common stock$ (0.17 ) $ (0.18 ) $ (0.34 ) $ (0.27 )
Common Stock subject to possible redemption
Common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders' equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, as ofSeptember 30, 2022 andDecember 31, 2021 , common stock subject to possible redemption is presented as temporary equity, outside of the stockholders' deficit section of our condensed balance sheets. Warrant Liability The Company accounts for warrants for shares of the Company's common stock that are not indexed to its own stock as liabilities at fair value on the condensed balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized as a component of other income (expense) on the condensed statements of operations and comprehensive loss. The Company will continue to adjust the liability for 23 -------------------------------------------------------------------------------- changes in fair value until the earlier of the exercise or expiration of the common stock warrants. At that time, the portion of the warrant liability related to the common stock warrants will be reclassified to additional paid-in capital.
Recent Accounting Pronouncements
InAugust 2020 , theFinancial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 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): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning afterDecember 15, 2023 , including interim periods within those fiscal years, with early adoption permitted. The Company assessed the potential impact of ASU 2020-06 and determined it would not have a material impact on the condensed financial statements as presented.
The Company 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.
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