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 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 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 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 those factors described herein including Item 1A "Risk Factors,"
and in the Risk Factors section of our Annual Report on Form 10-K for the fiscal
year ended December 31, 2021 filed with the US Securities and Exchange
Commission on March 29, 2022 (the "Annual Report"). 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.
The following analysis of our financial condition and results of operations
should be read in conjunction with our accompanying condensed financial
statements and the notes thereto contained elsewhere in this Quarterly Report
and in our Annual Report. Historical financial condition and results of
operations and percentage relationships among any amounts in the condensed
financial statements are not necessarily indicative of financial condition or
results of operations for any future periods.
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 March 31, 2022, we had a net loss of $388,604, which
was primarily related to operating costs and search for a target to complete an
initial Business Combination.
For the period from January 14, 2021 (inception) to March 31, 2021, we had a net
loss of $688, which was 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.
Liquidity and Capital Resources
On August 9, 2021, we consummated our IPO of 10,000,000 Units at $10.00 per
Unit, which is discussed in Note 6 to the condensed financial statements, and
the sale of 4,200,000 Private Warrants which is discussed in Note 6 to the
condensed 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 condensed financial
statements). Simultaneously with the exercise of the underwriters'
over-allotment option, our Sponsor purchased an additional 98,496 Private
Warrants, generating aggregate gross proceeds of $98,496 (see Note 3 to the
condensed financial statements). As payment for services including the exercise
of the over-allotment option, the underwriters received 209,850 Representatives'
Class A Shares for nominal consideration.
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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 Representatives' Class
A 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 December 31, 2021, the Company
had $769,484 of cash in its operating bank account and working capital of
$931,264.
As of March 31, 2022, the Company had $310,074 of cash in its operating bank
account and working capital of $579,131. The Company will continue to expend
working capital for operating costs, which includes costs to identify a
potential target and acquire the business, in addition to accounting, audit,
legal, board, franchise tax and other expenses associated with operating the
business during the period through the mandatory date to consummate a Business
Combination or liquidate the business. Such costs are likely to exceed the
amount of cash currently available. To finance working capital needs, 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 4). As of March 31, 2022, there were no amounts outstanding under any
Working Capital Loans. If the Company is unsuccessful in obtaining additional
working capital, it raises substantial doubt as to the Company's ability to
continue as a going concern, as further discussed below.
We have until November 9, 2022 to consummate an Initial Business Combination (or
February 9, 2023 if we exercise our option to extend the date). It is uncertain
that we will be able consummate an Initial Business Combination by either date.
If an Initial Business Combination is not consummated by the required dates,
there will be a mandatory liquidation and subsequent dissolution. In connection
with the Company's assessment of going concern considerations in accordance with
the authoritative guidance in ASC Topic 205-40, "Presentation of Financial
Statements - Going Concern," management has determined that as a result of the
liquidity discussion above and the mandatory liquidation, and subsequent
dissolution, should the Company be unable to complete a business combination,
there is substantial doubt about the Company's ability to continue as a going
concern. No adjustments have been made to the carrying amounts of assets and
liabilities should the Company be required to liquidate after November 9, 2022
(or February 9, 2023, if extended)
Off-Balance Sheet Arrangements
We have 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, 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.
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 condensed financial statements, and income and
expenses during the periods reported. Actual results could materially differ
from those estimates. We have determined that there have been no material
changes to our critical accounting policies during the three months ended March
31, 2022 from those described in our Annual Report.
Recent Accounting Standards
In August 2020, the FASB issued Accounting Standards Update ("ASU") 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) ("ASU 2020-06")
to simplify accounting for certain financial instruments. ASU 2020-06 eliminates
the current models that require separation of beneficial conversion and cash
conversion features from convertible instruments and simplifies the derivative
scope exception guidance pertaining to equity classification of contracts in an
entity's own equity. The new standard also introduces additional disclosures for
convertible debt and freestanding instruments that are indexed to and settled in
an entity's own equity. ASU 2020-06 amends the diluted earnings per share
guidance, including the requirement to use the if-converted method for all
convertible instruments. The
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Company adopted ASU 2020-06 effective as of January 1, 2022 on a full
retrospective basis. The adoption of ASU 2020-06 did not have an impact on the
Company's condensed financial statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our condensed financial statements.
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