References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Global Blockchain Sponsor, LLC. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Global Blockchain Sponsor, LLC. The
following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the unaudited 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 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 Annual Report on Form 10-K filed with the U.S.
Securities and Exchange Commission (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
March 18, 2021 for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses. We intend to effectuate our Business
Combination using cash from the proceeds of the Initial Public Offering and the
sale of the Private Placement 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
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from March 18, 2021 (inception) through September 30, 2022
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until
after the completion of our 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 for due
diligence expenses.
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For the three months ended September 30, 2022, we had a net income of $367,422,
which consists of interest income on marketable securities held in the Trust
Account of $791,293, offset by the formation and operational costs of $268,104
and provision for income taxes of $155,767.
For the nine months ended September 30, 2022, we had a net income of $274,389,
which consists of interest income on marketable securities held in the Trust
Account of $966,017, offset by the formation and operational costs of $509,868
and provision for income taxes of $181,760.
For the three months ended September 30, 2021, we had net loss of $304, which
consists solely of formation and operational costs.
For the period from March 18, 2021 (inception) through September 30, 2021, we
had net loss of $304, which consists solely of formation and operational costs.
Liquidity and Capital Resources
On May 12, 2022, we completed the Initial Public Offering of $17,250,000 Units,
at $1.00 per Unit, generating gross proceeds of $172,500,000. Simultaneously
with the closing of the Initial Public Offering, we completed the sale of
8,537,500 Private Placement Warrants at a price of $1.00 per Private Placement
Warrant in a private placement to the Sponsor, generating gross proceeds of
$172,500,000.
On May 12, 2022, in connection with the underwriters' exercise of their
over-allotment option in full, we consummated the sale of an additional
2,250,000 Units at a price of $10.00 per Unit, generating total gross proceeds
of $172,500,000.
The registration statement for the Company's Initial Public Offering was
declared effective on May 9, 2022. On May 12, 2022, the Company consummated the
Initial Public Offering of 17,250,000 units (the "Units" and, with respect to
the shares included in the Units being offered, the "Public Shares"), which
includes the full exercise by the underwriter of its over-allotment option in
the amount of 2,250,000 Units, at $10.00 per Unit, generating gross proceeds of
$172,500,000.
For the nine months ended September 30, 2022, cash used in operating activities
was $1,108,412. Net income of $274,389 was affected by interest earned on
marketable securities held in the Trust Account of $966,017. Changes in
operating assets and liabilities used $416,784 of cash for operating
activities.
For the period from March 18, 2021 (inception) through September 30, 2021, we
had no cash used in operating activities.
As of September 30, 2022, we had marketable securities held in the Trust Account
of $176,053,517 (including approximately $966,000 of interest income) consisting
of U.S. Treasury Bills with a maturity of 185 days or less. Interest income on
the balance in the Trust Account may be used by us to pay taxes. Through
September 30, 2022, we have not withdrawn any interest earned from 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
income taxes payable), to complete our Business Combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our 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.
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As of September 30, 2022 we had cash of $827,818. 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 a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a Business Combination, we would repay such
loaned amounts. In the event that a Business Combination does not close, we may
use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from our Trust Account would be used for
such repayment. Up to $1,500,000 of such loans may be convertible, at the option
of the lender, into warrants at a price of $1.00 per warrant of the post
Business Combination entity.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our Public Shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination.
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's ("FASB") Accounting
Standards Update ("ASU") 2014-15, "Disclosures of Uncertainties about an
Entity's Ability to Continue as a Going Concern," the Company has until August
5, 2023, to consummate a Business Combination. It is uncertain that the Company
will be able to consummate a Business Combination by this time. If a 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 mandatory liquidation, should a Business Combination not occur, and
potential subsequent dissolution, raise substantial doubt about the Company's
ability to continue as a going concern. Management intends to complete a
Business Combination; however, the Company cannot guarantee that a Business
Combination will take place. No adjustments have been made to the carrying
amounts of assets or liabilities should the Company be required to liquidate
after August 5, 2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 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 an
affiliate of one of our executive officers a monthly fee of $5,000 for office
space, utilities, secretarial support and other administrative and consulting
services. We began incurring these fees on May 9, 2022 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 $0.20 per Unit, or $3,450,000
in the aggregate. 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.
Prior to the closing of this offering, we will engage I-Bankers and Dawson James
as advisors in connection with our business combination to (i) assist us in
preparing presentations for each potential business combination; (ii) assist us
in arranging meetings with our stockholders, including making calls directly to
stockholders, to discuss each potential business combination and each potential
target's attributes and providing regular market feedback, including written
status reports, from these meetings and participate in direct interaction with
stockholders, in all cases to the extent legally permissible; (iii) introduce us
to potential investors to purchase our securities in connection with each
potential business combination; and assist us with the preparation of any press
releases and filings related to each potential business combination or target.
Pursuant to the business combination marketing agreement, I-Bankers and Dawson
James are not obligated to assist us in identifying or evaluating possible
acquisition candidates. Pursuant to our agreement with I-Bankers and Dawson
James, the advisory fees payable to I-Bankers and Dawson James will collectively
be 3.5% of the gross proceeds of this offering, including the proceeds from the
full exercise of the underwriters' over-allotment option.
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Critical Accounting Policies
The preparation of unaudited 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 Common stock subject to possible redemption in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." Shares of Common stock subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable common stock (including common stock that
feature redemption rights that is 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, shares of Common stock
subject to possible redemption are presented as temporary equity, outside of the
stockholders' equity section of our balance sheets.
Net Income (Loss) Per Common Share
Net loss per common share is computed by dividing net loss by the weighted
average number of common stock outstanding during the period, excluding common
stock subject to forfeiture. Weighted average shares were reduced for the effect
of an aggregate of 562,500 shares of common stock that are subject to forfeiture
if the over-allotment option is not exercised by the underwriters (see Note 5).
At September 30, 2022 and December 31, 2021, the Company did not have any
dilutive securities and other contracts that could, potentially, be exercised or
converted into common stock and then share in the earnings of the Company. As a
result, diluted loss per common share is the same as basic loss per common share
for the period presented.
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
unaudited condensed financial statements.
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