The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our unaudited financial
statements and the notes related thereto which are included in "Item 1.
Financial Statements" of this Quarterly Report on Form 10Q.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this
Quarterly Report on Form 10Q including, without limitation, statements under
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. When used in this Quarterly Report on Form 10Q,
words such as "anticipate," "believe," "estimate," "expect," "intend" and
similar expressions, as they relate to us or the Company's management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, the Company's management. Actual results could differ materially
from those contemplated by the forward-looking statements as a result of certain
factors detailed in our filings with the SEC. All subsequent written or oral
forward-looking statements attributable to us or persons acting on the Company's
behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company incorporated on December 16, 2020 as a Delaware
corporation and formed for the purpose of effecting a Business Combination with
one or more target businesses. We completed our Public Offering on March 16,
2021. As of September 30, 2022, we had not identified any Business Combination
target nor initiated any substantive discussions directly or indirectly, with
respect to identifying any Business Combination target.
We presently have no revenue, have had losses since inception from incurring
formation costs and have had no operations other than the active solicitation of
a target business with which to complete a business combination.
Recent Developments
Special Meeting to allow early redemption and liquidation
On November 3, 2022, the Company filed a preliminary proxy statement relating to
a special meeting of shareholders to approve (i) an amendment to the Company's
amended and restated certificate of incorporation (the "Charter Amendment
Proposal") and (ii), an amendment to the Investment Management Trust Agreement,
dated March 16, 2021, by and between the Company and Computershare Trust
Company, N.A, as trustee (the "Trust Amendment Proposal" and together with the
Charter Amendment Proposal, the "Proposals"), which would, if implemented, allow
the Company to redeem all of its outstanding Public Shares in advance of the
Company's contractual expiration date of March 16, 2023 by changing the date by
which the Company must cease all operations except for the purpose of winding up
if it fails to complete a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination (a "Business
Combination") from March 16, 2023 to the later of the date of the special
meeting of the stockholders (the "Special Meeting") or the date of effectiveness
of the Charter Amendment (the "Amended Termination Date").
If the Proposals are approved, and because the Company will not be able to
complete an initial Business Combination by the Amended Termination Date, the
Company will immediately after the Special Meeting, cease all operations, except
for the purpose of winding up and as promptly as reasonably possible, but not
more than ten business days thereafter, redeem all Public Shares (the "Mandatory
Redemption"). As promptly as reasonably possible following such Mandatory
Redemption, and subject to the approval of the Company's then remaining
stockholders and the Board, in accordance with applicable law, dissolve and
liquidate, subject in each case to the Company's obligations under the General
Corporation Law of the State of Delaware to provide for claims of creditors and
the requirements of other applicable law.
Pursuant to the amended and restated certificate, a Public Stockholder shall be
provided with the opportunity to redeem their Public Shares for cash if the
Charter Amendment Proposal is approved. Notwithstanding
22
--------------------------------------------------------------------------------
the foregoing, if the Charter Amendment Proposal is approved, and because the
Company will not be able to complete an initial Business Combination by the
Amended Termination Date, the Company will be obligated to redeem all Public
Shares as promptly as reasonably possible after the Amended Termination Date.
Therefore, no action is required by our Public Stockholders to redeem their
Public Shares. If the Proposals are approved, the Public Shares will be
automatically redeemed as part of the Mandatory Redemption.
Deferred Underwriting Commission
In accordance with the terms of the underwriting agreement entered into in
connection with the initial public offering, because we will not consummate an
initial Business Combination, the Deferred Discount will be included in the
distribution of the proceeds held in the Trust Account made to the Public
Shareholders upon liquidation. In connection with such liquidation, the
underwriters forfeit any rights or claims to the deferred underwriting
commission.
23
--------------------------------------------------------------------------------
Going Concern Consideration
If the Company does not complete its Business Combination by March 16, 2023, the
Company will (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible but not more than ten business days
thereafter, redeem 100% of the common stock sold as part of the units in the
Public Offering, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the Trust Account, including interest (which interest
shall be net of franchise and income taxes payable and less up to $100,000 of
such net interest which may be distributed to the Company to pay dissolution
expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders' rights as
stockholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the Company's remaining
stockholders and the Company's Board of Directors, dissolve and liquidate,
subject in each case to the Company's obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law.
In the event of such distribution, it is possible that the per share value of
the residual assets remaining available for distribution (including Trust
Account assets) will be less than the initial public offering price per unit in
the Public Offering. In addition, if the Company fails to complete its Business
Combination by March 16, 2023, there will be no redemption rights or liquidating
distributions with respect to the warrants, which will expire worthless.
In addition, at September 30, 2022 and December 31, 2021, the Company had
current liabilities of $4,975,138 and $14,191,953, respectively, and a working
capital deficit of ($3,656,100) and ($12,898,348), the balances of which are
primarily related to warrants we have recorded as liabilities as described in
Notes 2 and 3. Other amounts are related to accrued expenses owed to
professionals, consultants, advisors and others who are working on seeking a
Business Combination as described in Note 1. Additionally, the warrant liability
will not impact the Company's liquidity until a Business Combination has been
consummated, as they do not require cash settlement until such event has
occurred.
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's Accounting Standards
Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," the Company has until March 16, 2023 to
consummate a Business Combination. It is uncertain whether 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 liquidity condition and mandatory liquidation, should a Business
Combination not occur, and potential subsequent dissolution raises substantial
doubt about the Company's ability to continue as a going concern. The
accompanying financial statements have been prepared on a going concern basis
and do not include any adjustments that might arise as a result of uncertainties
about the Company's ability to continue as a going concern.
Results of Operations
For the nine months ended September 30, 2022 and September 30, 2021, we had net
income/(loss) of $9,306,416 and ($1,962,464), of which $9,435,000 and ($647,500)
is a non-cash gain/(loss) related to the change in fair value of the warrant
liability, respectively. Our business activities during the quarter mainly
consisted of identifying and evaluating prospective acquisition candidates for a
Business Combination. We believe that we have sufficient funds available to
complete our efforts to effect a Business Combination with an operating business
by March 16, 2023. However, if our estimates 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.
As indicated in the accompanying unaudited financial statements, at September
30, 2022, we had $907,588 in cash and deferred underwriting compensation of
$9,625,000. Further, we expect to continue to incur significant costs in the
pursuit of our acquisition plans. We cannot assure you that our plans to
complete our Business Combination will be successful.
Liquidity and Capital Resources
24
--------------------------------------------------------------------------------
On January 19, 2021, the Sponsor purchased 6,900,000 shares of Class F Common
Stock, par value $0.0001 per share, of the Company (the "Founder Shares") for
$25,000, or approximately $0.004 per share. On March 11, 2021, the Sponsor
transferred 25,000 Founder Shares to each of the independent directors at their
original purchase price. On April 30, 2021, the Sponsor forfeited 25,000 Founder
Shares following the expiration of the unexercised portion of underwriters'
over-allotment option, so that the Founder Shares held by the Initial
Stockholders would represent 20% of the outstanding shares of common stock.
On March 16, 2021, we consummated our Public Offering of 27,500,000 Units at a
price of $10.00 per Unit, including 3,500,000 Units as a result of the
underwriters' partial exercise of its over-allotment option, generating gross
proceeds of $275,000,000. On the IPO Closing Date, we completed the private sale
of an aggregate of 3,750,000 Private Placement Warrants, each exercisable to
purchase one share of Common Stock at $11.50 per share, to our Sponsor, at a
price of $2.00 per Private Placement Warrant, generating gross proceeds, before
expenses, of $7,500,000. After deducting the underwriting discounts and
commissions (excluding the Deferred Discount, which amount will be payable upon
consummation of the Business Combination, if consummated), the total net
proceeds from our Public Offering and the sale of the Private Placement Warrants
were $277,000,000, of which $275,000,000 (or $10.00 per share sold in the Public
Offering) was placed in the Trust Account. The amount of proceeds not deposited
in the Trust Account was $2,000,000 at the closing of our Public Offering.
Interest earned on the funds held in the Trust Account may be released to us to
fund our Regulatory Withdrawals, subject to an annual limit of $900,000, for a
maximum of 24 months and/or additional amounts necessary to pay our franchise
and income taxes.
Prior to the completion of the Public Offering, the Sponsor loaned the Company
$300,000 by the issuance of an unsecured promissory note (the "Note") issued by
the Company in favor of the Sponsor to cover expenses related to the Public
Offering. The Note was non-interest bearing and payable on the earlier of
January 31, 2022 or the completion of the Public Offering. The Note was repaid
upon completion of the Public Offering.
On April 9, 2021, the Sponsor made available to the Company a loan of up to
$4,000,000 pursuant to a promissory note issued by the Company to the Sponsor.
The proceeds from the note will be used for ongoing operational expenses and
certain other expenses in connection with the Business Combination. The note is
unsecured, non-interest bearing and matures on the earlier of: (i) March 2, 2023
or (ii) the date on which the Company consummates the Business Combination. As
of September 30, 2022, the amount advanced by Sponsor to the Company was
$1,300,000.
As of September 30, 2022 and December 31, 2021, we had cash held outside of the
Trust Account of $907,588 and $222,492, respectively, which is available to fund
our working capital requirements. Additionally, interest earned on the funds
held in the Trust Account may be released to us to fund our Regulatory
Withdrawals, for a maximum of 24 months and/or additional amounts necessary to
pay our franchise and income taxes.
At September 30, 2022 and December 31, 2021, the Company had current liabilities
of $4,975,138 and $14,191,953 and a working capital deficit of ($3,656,100) and
($12,898,348), respectively, the balances of which are primarily related to
warrants we have recorded as liabilities as described in Notes 2 and 3. Other
amounts are related to accrued expenses owed to professionals, consultants,
advisors and others who are working on seeking a Business Combination as
described in Note 1. Additionally, the warrant liability will not impact the
Company's liquidity until a Business Combination has been consummated, as they
do not require cash settlement until such event has occurred.
25
--------------------------------------------------------------------------------
We intend to use substantially all of the funds held in the Trust Account,
including interest (which interest shall be net of Regulatory Withdrawals and
taxes payable) to consummate our Business Combination. Moreover, we may need to
obtain additional financing either to complete a Business Combination or because
we become obligated to redeem a significant number of shares of our Class A
Common Stock upon completion of a Business Combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our Business Combination. If we are unable
to complete our Business Combination because we do not have sufficient funds
available to us, we will be forced to cease operations and liquidate the Trust
Account. In addition, following our Business Combination, if cash on hand is
insufficient, we may need to obtain additional financing in order to meet our
obligations. To the extent that our capital stock or debt is used, in whole or
in part, as consideration to consummate our Business Combination, the remaining
proceeds held in our Trust Account, if any, will be used as working capital to
finance the operations of the target business or businesses, make other
acquisitions and pursue our growth strategy. Following the closing of a Business
Combination, we do not expect there to be remaining proceeds in our Trust
Account.
With regard to the SEC's investment company proposals included in the 2022
Proposed Rules (as defined below), to mitigate the risk of being viewed as
operating as an unregistered investment company (including pursuant to the
subjective test of Section 3(a)(1)(A) of the Investment Company Act of 1940, as
amended), we intend to, on or prior to the 18-month anniversary of the effective
date of our registration statement relating to the Public Offering, instruct
Computershare, Inc., the trustee with respect to the Trust Account, to liquidate
the U.S. government securities or money market funds held in the Trust Account
and thereafter to hold all funds in the Trust Account in cash until the earlier
of consummation of our Business Combination or liquidation. As a result,
following such liquidation, we will likely receive minimal interest, if any, on
the funds held in the Trust Account, which would reduce the dollar amount our
public stockholders would receive upon any redemption or liquidation of the
Company.
As of September 30, 2022 and December 31, 2021, we did not have any long-term
debt obligations, capital lease obligations, operating lease obligations,
purchase obligations or long-term liabilities. In connection with the Public
Offering, we entered into an administrative services agreement to pay monthly
recurring expenses of $20,000 to an affiliate of the Sponsor for office space,
utilities and secretarial support. The administrative services agreement
terminates upon the earlier of the completion of a Business Combination or the
liquidation of the Company.
The underwriters are entitled to underwriting discounts and commissions of 5.5%,
of which 2.0% ($5,500,000) was paid at the IPO Closing Date, and 3.5%
($9,625,000) was deferred. The Deferred Discount will become payable to the
underwriters from the amounts held in the Trust Account solely in the event that
the Company completes a Business Combination, subject to the terms of the
underwriting agreement. The underwriters are not entitled to any interest
accrued on the Deferred Discount.
Recently Issued Accounting Pronouncements Not Yet Adopted
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
the Company's financial statements based on current operations of the
Company. The impact of any recently issued accounting standards will be
re-evaluated on a regular basis or if a Business Combination is completed where
the impact could be material.
© Edgar Online, source Glimpses
GORES TECHNOLOGY PARTNERS, INC. 
