References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Gladstone Acquisition Corporation. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Gladstone Sponsor, LLC. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the 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 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 Form
10-Q
including, without limitation, statements in this "Management's Discussion and
Analysis of Financial Condition and Results of Operations" regarding the
completion of the Proposed Business Combination (as defined below), 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" and variations
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, including that the conditions of
the Proposed Business Combination are not satisfied. 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 final prospectus for its IPO filed with the
SEC. The Company's securities filings can be accessed on the EDGAR section of
the SEC'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 blank check company formed under the laws of the State of Delaware on
January 14, 2021 for the purpose of effecting a Business Combination. We intend
to effectuate our Business Combination using cash from the proceeds of the IPO
and the sale of the Private Warrants, our capital stock, debt or a combination
of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
For the three months ended September 30, 2021, we had a net loss of $354,965,
which was primarily related to formation and operating costs.
For the period from January 14, 2021 (inception) to September 30, 2021, we had a
net loss of $355,653 which was primarily related to formation and operating
costs.
The Company will not generate any operating revenues until after the completion
of its initial Business Combination, at the earliest. The Company generated
non-operating
income in the form of interest income on cash and cash equivalents from the
proceeds derived from the IPO of $633. The Company has selected December 31 as
its fiscal year end.

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Liquidity and Capital Resources
The Company's liquidity needs up to August 9, 2021 had been satisfied through a
payment from the Sponsor of $25,000 (see Note 6 to the financial statements) for
the Class B Common Stock to cover certain offering costs and the loan under an
unsecured promissory note from the Sponsor of $390,000 (see Note 6 to the
financial statements). In addition, to finance transaction costs in connection
with a Business Combination, Sponsor or an affiliate of the Sponsor or certain
of the Company's officers and directors may, but are not obligated to, provide
the Company with Working Capital Loans (see Note 6 to the financial statements).
As of September 30, 2021, there were no amounts outstanding under any Working
Capital Loans.
On August 9, 2021, the Company consummated its IPO of 10,000,000 Units at $10.00
per Unit, which is discussed in Note 4 to the financial statements, and the sale
of 4,200,000 Private Warrants which is discussed in Note 5 to the financial
statements, at a price of $1.00 per Private Warrant in a private placement to
the Sponsor that closed simultaneously with the IPO. On August 18, 2021, the
underwriter of the IPO partially exercised their over-allotment option and
purchased an additional 492,480 Units, generating an aggregate of gross proceeds
of $4,924,800 (see Note 4 to the financial statements). Simultaneously with the
exercise of the underwriters' over-allotment option, the Sponsor of the Company
purchased an additional 98,496 Private Warrants, generating aggregate gross
proceeds of $98,496 (see Note 5 to the financial statements). As payment for
services including the exercise of the over-allotment option, the underwriters
received 209,850 Representative Shares for nominal consideration.
Transaction costs related to the IPO and partial over-allotment exercise and the
over-allotment amounted to $6,265,859 consisting of $3,672,368 of deferred
underwriting commissions, $2,098,500 of fair value of the Representative Shares
and $494,991 of other cash offering costs.
After consummation of the IPO on August 9, 2021, and the partial over-allotment
exercise on August 18, 2021, the Company had $2,023,122 in its operating bank
account, and working capital of $1,475,504. As of September 30, 2021, the
Company had $1,089,377 of cash in its operating bank account and working capital
of $1,232,438.
Based on the foregoing, management believes that the Company will have
sufficient working capital and borrowing capacity to meet its needs through the
earlier of the consummation of an initial Business Combination or one year from
this filing. Over this time period, the Company will be using these funds for
paying existing accounts payable, identifying and evaluating prospective initial
Business Combination candidates, performing due diligence on prospective target
businesses, paying for travel expenditures in connection with travel to and from
the offices, farms or similar locations of prospective target businesses or
their representatives or owners, selecting the target business to merge with or
acquire, and structuring, negotiating and consummating the Business Combination.
Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of September 30, 2021. 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
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
a monthly fee of $10,000 for general and administrative services, including
office space, utilities and administrative support. We began incurring these
fees on August 4, 2021 and will continue to incur these fees monthly until the
earlier of the completion of the initial Business Combination or our
liquidation.

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Critical Accounting Policies
The preparation of condensed 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:
Common Stock Subject to Possible Redemption
We account for our shares of Class A Common Stock subject to possible redemption
in accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities
from Equity." Shares of Class A Common Stock subject to mandatory redemption (if
any) are classified as a liability instrument and are measured at fair value.
Conditionally redeemable shares of common stock (including 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 our
control) are classified as temporary equity. At all other times, shares of
common stock are classified as stockholders' equity. Our shares of Class A
Common Stock sold in the IPO feature certain redemption rights that are
considered to be outside of our control and subject to the occurrence of
uncertain future events. Accordingly, as of September 30, 2021, 10,492,480
shares of Class A Common Stock subject to possible redemption are presented at
redemption value as temporary equity, outside of the stockholders' equity
section of our condensed balance sheet.
Warrant Instruments
The Company accounts for warrants issued in connection with the IPO and the
Private Placement in accordance with the guidance contained in ASC 815,
"Derivatives and Hedging". Under that provision, warrants that do not meet the
criteria for equity treatment would be classified as liabilities. The Public
Warrants and Private Warrants do meet the criteria for equity treatment, and
therefore are included as part of stockholder's equity on the balance sheet. As
of September 30, 2021, there were 5,246,240 Public Warrants and 4,298,496
Private Warrants outstanding.
Net Loss Per Common Share
The Company applies the two-class method in calculating earnings per share. Net
loss per share of common stock is computed by dividing the pro rata net loss
between the redeemable shares of Class A Common Stock and the non-redeemable
shares of Class A Common Stock and Class B Common Stock by the weighted average
number of shares of common stock outstanding for each of the periods. The
calculation of diluted loss per share does not consider the effect of the
warrants and rights issued in connection with the IPO since the exercise of the
warrants are contingent upon the occurrence of future events and the inclusion
of such warrants would be anti-dilutive. The warrants are exercisable for
9,544,736 shares of Class A Common Stock in the aggregate. Shares subject to
forfeiture are not included in weighted-average shares outstanding until the
forfeiture restriction lapses. Subsequent measurement of the Class A Common
Stock to redemption value is not considered in the calculation because
redemption value closely approximates fair value.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
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 by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal
financial officer or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial and accounting officer,
we conducted an evaluation of the effectiveness of our disclosure controls and
procedures as of the end of the fiscal quarter ended September 30, 2021, as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based
on this evaluation, our principal executive officer and principal financial and
accounting officer have concluded that during the period covered by this report,
our disclosure controls and procedures were not effective due solely to the
material weakness in our internal control over financial reporting described
below in "Changes in Internal Control over Financial Reporting."
Changes in Internal Control over Financial Reporting
Except as set forth below, there was no change in our internal control over
financial reporting that occurred during the quarter ended September 30, 2021
covered by this Quarterly Report on Form 10-Q that has materially affected, or
is reasonably likely to materially affect, our internal control over financial
reporting.
Our internal control over financial reporting did not result in the proper
classification of all redeemable public shares as temporary equity within our
previously issued audited balance sheet, as of August 9, 2021 (the "August
Balance Sheet"), filed with the SEC in Form 8-Ks on August 13, 2021 and August
19, 2021. Historically, a portion of our public shares was classified as
permanent equity to maintain stockholders' equity greater than $5,000,000 on the
basis that we will consummate our initial Business Combination only if we have
net tangible assets of at least $5,000,001. In light of recent comment letters
issued by the SEC to several SPACs, our management re-evaluated our application
of ASC 480-10-S99-3A to our accounting classification of public shares and
determined that our public shares include certain provisions that require
classification of the public shares as temporary equity regardless of the
minimum net tangible assets required to complete our initial Business
Combination.
Therefore, in consultation with the audit committee of our board of directors,
on November 15, 2021, we concluded that our previously issued August Balance
Sheet should be restated to report all public shares as temporary equity and
should no longer be relied upon. As such, we have restated the August Balance
Sheet in this Quarterly Report, as described in Note 2 of the notes to the
financial statements included herein.
Notwithstanding the identified material weaknesses, management believes that the
financial statements and related financial information included in this
Quarterly Report fairly present, in all material respects, our balance sheets,
statements of operations and cash flows as of and for the periods presented.

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Remediation Plan
Following the identification of the material weakness described above with
respect to the accounting treatment of our public shares, our principal
executive officer and principal financial and accounting officer begin working
to implement additional accounting and financial analyses related to the
classification of our Public Shares as temporary equity versus permanent equity,
including consulting with subject matter experts. We are in the process of
evaluating whether additional remediation measures should be implemented with
respect to such material weakness.
As we continue to evaluate and improve our financial reporting process, we may
take additional actions to modify certain of the remediation measures described
above. We cannot assure you that the measures we have taken to date, or any
measures we may take in the future, will be sufficient to remediate the material
weaknesses we have identified or avoid potential future material weaknesses.

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