Global Systems Dynamics(GSD) - 2022 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION This section presents the company's unaudited financial statements, management's analysis, market risk, and internal controls Item 1. Financial Statements This section presents Gladstone Acquisition Corporation's unaudited condensed financial statements and notes for Q1 2022 Condensed Balance Sheets This table presents the company's financial position, including assets, liabilities, and equity, as of March 31, 2022 | | March 31, 2022 (Unaudited) | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $310,074 | $769,484 | | Prepaid expenses | $409,753 | $426,357 | | Total Current Assets | $719,827 | $1,195,841 | | Prepaid expenses – non-current portion | — | $39,110 | | Cash held in trust account | $107,031,377 | $107,028,738 | | Total Assets | $107,751,204 | $108,263,689 | | Liabilities and Stockholders' Deficit | | | | Accounts payable and accrued expenses | $140,681 | $252,894 | | Due to related party | $15 | $11,683 | | Total Current Liabilities | $140,696 | $264,577 | | Deferred underwriting discount | $3,672,368 | $3,672,368 | | Total Liabilities | $3,813,064 | $3,936,945 | | Class A Common Stock subject to possible redemption | $107,023,296 | $107,023,296 | | Total Stockholders' Deficit | $(3,085,156) | $(2,696,552) | | Total Liabilities and Stockholders' Deficit | $107,751,204 | $108,263,689 | Condensed Statements of Operations This table details the company's revenues, expenses, and net loss for the three months ended March 31, 2022 | | For the Three Months ended March 31, 2022 | For the period from January 14, 2021 (inception) to March 31, 2021 | | :--- | :--- | :--- | | Formation and operating costs | $391,244 | $688 | | Loss from operations | $391,244 | $688 | | Interest earned from Trust Account | $2,640 | — | | Total other income | $2,640 | — | | Net loss | $(388,604) | $(688) | | Basic and diluted net loss per share, Class A redeemable shares | $(0.03) | — | | Basic and diluted net loss per non-redeemable share | $(0.03) | $(0.00) | Condensed Statements of Changes in Stockholders' Equity (Deficit) This table outlines changes in the company's stockholders' equity (deficit) for the three months ended March 31, 2022 | | Class A Common Stock | | Class B Common Stock | | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders' Equity (Deficit) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Balance as of December 31, 2021 | 209,850 shares, $21 | 2,623,120 shares, $263 | $— | $(2,696,836) | $(2,696,552) | | Net loss | — | — | — | $(388,604) | $(388,604) | | Balance as of March 31, 2022 (Unaudited) | 209,850 shares, $21 | 2,623,120 shares, $263 | $— | $(3,085,440) | $(3,085,156) | | For the period from January 14, 2021 (inception) to March 31, 2021 | | | | | | | | | Balance as of January 14, 2021 (inception) | — | — | $— | $— | $— | | Issuance of Class B Common Stock to Sponsor | — | 2,875,000 shares, $288 | $24,712 | — | $25,000 | | Net loss | — | — | — | $(688) | $(688) | | Balance as of March 31, 2021 (Unaudited) | — | 2,875,000 shares, $288 | $24,712 | $(688) | $24,312 | Condensed Statements of Cash Flows This table presents the company's cash flows from operating, investing, and financing activities for Q1 2022 | | For the Three Months ended March 31, 2022 | For the period from January 14, 2021 (inception) to March 31, 2021 | | :--- | :--- | :--- | | Cash flows from operating activities: | | | | Net loss | $(388,604) | $(688) | | Interest earned on cash and Treasury securities held in Trust Account | $(2,640) | — | | Decrease in prepaid expenses | $55,714 | — | | (Decrease) in due to related party | $(11,668) | — | | (Decrease) in accounts payable and accrued expenses | $(112,212) | $(233,767) | | Net cash used in operating activities | $(459,410) | $(234,455) | | Cash flows from financing activities: | | | | Proceeds from sale of Common Stock to Sponsor | — | $25,000 | | Proceeds from issuance of promissory note to related party | — | $250,000 | | Net cash provided by financing activities | — | $275,000 | | Net change in cash | $(459,410) | $40,545 | | Cash, beginning of period | $769,484 | — | | Cash, end of period | $310,074 | $40,545 | | Supplemental Disclosure of Non-Cash Activities: | | | | Accrued deferred offering cost | — | $208,411 | Notes to Condensed Financial Statements This section provides detailed explanations and disclosures for the condensed financial statements, covering policies and equity Note 1 — Organization and Business Operations This note describes Gladstone Acquisition Corporation's formation as a SPAC, IPO, and going concern status - Gladstone Acquisition Corporation is a blank check company (SPAC) incorporated on January 14, 2021, formed to pursue a Business Combination, with an intent to focus on the farming and agricultural sectors[18] - The company consummated its IPO on August 9, 2021, selling 10,000,000 units at $10.00 per unit, and an additional 492,480 units through a partial over-allotment exercise on August 18, 2021[22] - A total of $107,023,296 from the IPO and private warrants was deposited into a Trust Account, to be invested in U.S. government securities or money market funds[27] - Management has determined there is substantial doubt about the company's ability to continue as a going concern due to liquidity challenges and the mandatory liquidation deadline if a Business Combination is not completed by November 9, 2022 (or February 9, 2023, if extended)[37] Note 2 — Significant Accounting Policies This note outlines the significant accounting policies applied in preparing the condensed financial statements - The financial statements are prepared in accordance with US GAAP for interim financial information and Article 10 of Regulation S-X, with certain disclosures condensed or omitted[38] - The company is an "emerging growth company" and has elected to use the extended transition period for complying with new or revised financial accounting standards[40][42] - Class A Common Stock subject to possible redemption is classified as temporary equity at redemption value, in accordance with ASC Topic 480, "Distinguishing Liabilities from Equity"[48] - The company adopted ASU 2020-06, which simplifies accounting for certain financial instruments, effective January 1, 2022, on a full retrospective basis, with no material impact on the condensed financial statements[57] Note 3 — Initial Public Offering This note details the consummation of the company's IPO, including units sold and proceeds generated - The IPO was consummated on August 9, 2021, with the sale of 10,000,000 Units at $10.00 per Unit, generating gross proceeds of $100,000,000[59] - An additional 492,480 over-allotment Units were purchased on August 18, 2021, generating $4,924,800, bringing total gross IPO proceeds to $107,023,296[60] - The underwriters received 209,850 Representatives' Class A Shares as payment for services, valued at approximately $10.00 per share[60] Note 4 — Related Party Transactions This note describes transactions with related parties, including stock purchases, loans, and administrative fees - The Sponsor purchased 2,875,000 shares of Class B Common Stock for $25,000 on January 25, 2021; 251,880 shares were forfeited, resulting in 2,623,120 shares outstanding as of March 31, 2022[61][62] - The Sponsor loaned the Company up to $300,000 for IPO expenses, which was non-interest bearing and repaid on September 2, 2021[65] - The Sponsor or affiliates may provide Working Capital Loans to finance Business Combination transaction costs, convertible into Private Warrants at $1.00 per warrant upon consummation of a Business Combination[66][67] - The Company pays the Sponsor $10,000 per month for administrative services, with $15 due as of March 31, 2022[68] Note 5 — Commitments and Contingencies This note outlines the company's commitments and contingencies, including registration rights and deferred underwriting discount - Holders of Class B Common Stock, Representatives' Class A Shares, and Private Warrants are entitled to registration rights for resale of their securities[69] - Underwriters are entitled to a deferred underwriting discount of $3,672,368, payable from the Trust Account only upon completion of a Business Combination[72] - Representatives' Class A Shares (209,850 shares) were issued as underwriters' compensation, subject to transfer restrictions and waiver of redemption/liquidation rights[73][74] Note 6 — Stockholders' Equity This note details the authorized and outstanding shares of common stock, voting rights, and warrant terms | Stock Class | Authorized Shares | Issued and Outstanding (March 31, 2022) | | :--- | :--- | :--- | | Preferred Stock | 1,000,000 | None | | Class A Common Stock | 200,000,000 | 209,850 (excluding redeemable shares) | | Class B Common Stock | 20,000,000 | 2,623,120 | - Class A and Class B Common Stock vote together as a single class, except Class B holders have exclusive voting rights for director elections prior to the initial Business Combination[78] - Class B Common Stock will automatically convert into Class A Common Stock upon consummation of the initial Business Combination, at a ratio ensuring it represents 20% of the total outstanding Class A shares post-conversion, with a minimum one-to-one conversion[79][80] - Public Warrants (5,246,240 outstanding) become exercisable on the later of Business Combination completion or 12 months from IPO, expiring five years after Business Combination, and may be redeemed by the company under certain conditions[81][83] - Private Placement Warrants (4,298,496 outstanding) have identical terms to Public Warrants but are not transferable until after the Business Combination, with limited exceptions[51][86] Note 7 — Subsequent Events This note confirms management's evaluation of subsequent events with no material adjustments or disclosures required - Management evaluated subsequent events up to the issuance date of the financial statements and concluded that no material subsequent events occurred requiring additional adjustment or disclosure[88] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial condition, operations, liquidity, and controls Special Note Regarding Forward-Looking Statements This section highlights forward-looking statements and directs readers to risk factors for potential material differences - This Quarterly Report includes forward-looking statements that involve risks and uncertainties, which could cause actual results to differ materially from those expected[91] - Readers are directed to Item 1A "Risk Factors" in this report and the Annual Report on Form 10-K for important factors that could cause actual results to differ[91] Overview This section provides an overview of Gladstone Acquisition Corporation as a blank check company and its Business Combination goal - Gladstone Acquisition Corporation is a blank check company formed on January 14, 2021, to effect a Business Combination using proceeds from its IPO, capital stock, debt, or a combination[93] - The company expects to incur significant costs in pursuing acquisitions and cannot assure the successful completion of a Business Combination[94] Results of Operations This section details the company's net loss for the three months ended March 31, 2022, and prior period - The company reported a net loss of $388,604 for the three months ended March 31, 2022, primarily due to operating costs and the search for a target[95] - For the period from inception (January 14, 2021) to March 31, 2021, the net loss was $688, related to formation and operating costs[95] - The company will not generate operating revenues until after the completion of its initial Business Combination[95] Liquidity and Capital Resources This section discusses the company's liquidity, capital resources, IPO proceeds, and going concern challenges - The company consummated its IPO on August 9, 2021, raising $100,000,000 from 10,000,000 Units, plus an additional $4,924,800 from over-allotment units and $98,496 from private warrants[96] - Transaction costs related to the IPO and over-allotment amounted to $6,265,859, including deferred underwriting commissions, fair value of Representatives' Class A Shares, and other cash offering costs[97] | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash in operating bank account | $310,074 | $769,484 | | Working capital | $579,131 | $931,264 | - The company faces substantial doubt about its ability to continue as a going concern due to insufficient cash for operating costs and the mandatory liquidation deadline if a Business Combination is not completed by November 9, 2022 (or February 9, 2023, if extended)[99][100] Off-Balance Sheet Arrangements This section confirms the absence of off-balance sheet arrangements as of March 31, 2022 - As of March 31, 2022, the company had no off-balance sheet arrangements, such as obligations, assets, or liabilities, nor did it participate in transactions with unconsolidated entities or special purpose entities[101] Contractual Obligations This section outlines the company's contractual obligations, primarily administrative fees to the Sponsor - The company has no long-term debt, capital lease obligations, operating lease obligations, or long-term liabilities, other than a monthly fee of $10,000 per month payable to the Sponsor for administrative services[102] - These monthly fees commenced on August 4, 2021, and will continue until the earlier of the completion of the initial Business Combination or the company's liquidation[102] Critical Accounting Policies This section states no material changes to critical accounting policies occurred during the quarter - Management determined there have been no material changes to the company's critical accounting policies during the three months ended March 31, 2022, from those described in its Annual Report[103] Recent Accounting Standards This section discusses the adoption of ASU 2020-06 and the impact of other recent accounting pronouncements - The company adopted ASU 2020-06, which simplifies accounting for certain financial instruments, effective January 1, 2022, on a full retrospective basis, with no impact on its condensed financial statements[104][105] - Management does not believe any other recently issued, but not yet effective, accounting pronouncements would materially affect the condensed financial statements if currently adopted[105] Item 3. Quantitative and Qualitative Disclosures About Market Risk This item is not required for smaller reporting companies, thus no disclosures are provided - This disclosure is not required for smaller reporting companies[106] Item 4. Controls and Procedures This section addresses disclosure controls and internal control effectiveness, noting a material weakness and remediation Evaluation of Disclosure Controls and Procedures This section evaluates the effectiveness of disclosure controls and procedures, noting a material weakness - As of March 31, 2022, the company's disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting[108] Changes in Internal Control over Financial Reporting This section details changes in internal control, including a material weakness and subsequent restatement - No change in internal control over financial reporting occurred during the quarter ended March 31, 2022, that materially affected or is reasonably likely to materially affect internal control[109] - A material weakness was previously identified in accounting for complex financial instruments, leading to a material misstatement of additional paid-in capital, accumulated deficit, and related disclosures[110] - This material weakness resulted in the restatement of the August Balance Sheet to classify all redeemable Public Shares as temporary equity, following re-evaluation of ASC 480-10-S99-3A[111][112] - Despite the identified material weaknesses, management believes the condensed financial statements fairly present the company's financial position and results[113] Remediation Plan The remediation plan addresses the material weakness in internal control over financial reporting - The principal executive and financial officers are implementing additional accounting and financial analyses, including consulting subject matter experts, to address the material weakness in classifying Public Shares[114] - The company is evaluating whether further remediation measures are needed and cannot assure that current or future measures will fully remediate the identified weaknesses[115][116] PART II OTHER INFORMATION This section covers risk factors, equity sales, defaults, mine safety, other information, and exhibits Item 1A. Risk Factors This section updates risk factors, emphasizing regulatory changes and the SEC's 2022 Proposed Rules' impacts - Factors that could materially affect results are described in the Annual Report on Form 10-K for the period ended December 31, 2021[117] - Changes in laws or regulations, or a failure to comply, may adversely affect the business, including the ability to negotiate and complete the Initial Business Combination[118] - The SEC's 2022 Proposed Rules, if adopted, could materially adversely affect the company's ability to negotiate and complete its Business Combination and increase related costs and time[119] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no unregistered sales of equity securities or use of proceeds for the period - No unregistered sales of equity securities or use of proceeds to report[120] Item 3. Default Upon Senior Securities This section states that there were no defaults upon senior securities - No defaults upon senior securities[120] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[120] Item 5. Other Information This section states that there is no other information to report - No other information to report[120] Item 6. Exhibits This section lists exhibits filed as part of or incorporated by reference into the Quarterly Report on Form 10-Q - Exhibits include Amended and Restated Certificate of Incorporation, Bylaws, Certifications of Principal Executive and Financial Officers, and Inline XBRL documents for financial statements[122]