MicroCloud Hologram (HOLO) - 2021 Q4 - Annual Report

Part I Business Golden Path Acquisition Corporation is a SPAC targeting Asian-market businesses, having raised $58.1 million and entered a $450 million merger agreement with MC Hologram Inc - The company is a blank check company focused on acquiring businesses with a connection to the Asian market, aiming to provide them with access to U.S. capital markets[17][31] Initial Public Offering (IPO) and Trust Account Details | Metric | Value / Detail | | :--- | :--- | | IPO Date | June 24, 2021 | | Units Sold | 5,750,000 (including over-allotment) | | Price Per Unit | $10.00 | | Gross Proceeds from IPO | $57,500,000 | | Private Placement Proceeds | $2,705,000 | | Amount in Trust Account | $58,075,000 | | Trust Account Per Share | $10.10 | - On September 10, 2021, the company entered into a merger agreement with MC Hologram Inc. ("MC"), valuing MC at $450 million, with MC's stockholders set to receive approximately 44.55 million shares of the combined company[25][26][27] - The company has 12 months from its IPO, with a potential extension of up to nine additional months (total 21 months), to complete its initial business combination, with the sponsor funding extensions by depositing $191,667 per month into the trust account[40][41] - The company's acquisition criteria targets middle-market growth businesses with an enterprise value between $150 million and $300 million, particularly in sectors strategically significant to Asian markets like FinTech, clean energy, and healthcare[32][35] Risk Factors The company faces significant risks as a SPAC, including failure to complete a business combination, high redemptions, and regulatory uncertainties related to PRC operations and potential delisting - The company is a blank-check entity with no operating history, and its ability to complete a business combination is uncertain; failure to do so within the prescribed timeframe (12-21 months) will result in liquidation, with public shareholders receiving approximately $10.10 per share and warrants/rights expiring worthless[72][85] - The ability of public shareholders to redeem shares may make the company's financial condition unattractive to targets or prevent the completion of a desirable business combination if redemptions are high[80][81] - A business combination with a company in the PRC, like the proposed merger with MC, is subject to significant risks including regulatory uncertainty regarding VIE structures, data security (Cybersecurity Law, Data Security Law), and anti-monopoly reviews, which could materially change operations or block the transaction[218][221][252] - The Holding Foreign Companies Accountable Act (HFCAA) poses a risk of delisting from U.S. exchanges if the PCAOB is unable to inspect the company's auditor for three consecutive years, despite the current auditor being PCAOB-inspected[222][240][282] - The sponsor and its affiliates have conflicts of interest, as they will lose their entire investment in founder shares and private placement units if a business combination is not completed, potentially influencing their decision-making regarding a target[148][151] Unresolved Staff Comments The company reports no unresolved staff comments - Not applicable[283] Properties The company does not own real estate, paying its Sponsor $10,000 monthly for office and administrative services - The company pays its Sponsor $10,000 per month for office space, utilities, and administrative services, starting from June 24, 2021[284] Rent Expense | Year | Rent Expense | | :--- | :--- | | 2021 | $11,936 | | 2020 | $14,405 | Legal Proceedings The company is not currently a party to any material litigation or other legal proceedings - The company is not currently involved in any material legal proceedings[285] Mine Safety Disclosures This item is not applicable to the company - Not applicable[286] Part II Market for Registrant's Common Equity, and Related Stockholder Matters and Issuer Purchases of Equity Securities The company's securities trade on Nasdaq, has not paid dividends, and details the unregistered sale of founder shares and private placement units Trading Information | Security | Trading Symbol | | :--- | :--- | | Units | GPCOU | | Ordinary Shares | GPCO | | Rights | GPCOR | | Warrants | GPCOW | - The company has not paid any cash dividends and does not plan to before completing its initial business combination[293] - The sponsor purchased 1,437,500 founder shares for $25,000 and 270,500 private placement units for $2,705,000, with these sales being unregistered and exempt under Section 4(a)(2) of the Securities Act[294][295] Use of IPO Proceeds (June 24, 2021) | Item | Amount | | :--- | :--- | | Gross Proceeds from Units | $57,500,000 | | Gross Proceeds from Private Placement | $2,705,000 | | Total Deposited in Trust Account | $58,075,000 | | Total Transaction Costs | $2,887,500 | | - Upfront Underwriting Fees | $1,150,000 | | - Deferred Underwriting Fees | $1,437,500 | | - Other Offering Costs | $300,000 | Reserved This item is reserved Management's Discussion and Analysis of Financial Condition and Results of Operations As a blank check company, it has no operating revenue, reported a $740,299 net loss in 2021, and faces going concern doubts without a business combination - The company is a blank check company with no operations, focused on consummating a business combination, and has entered into a merger agreement with MC Hologram Inc. valued at $450 million[310][314] Results of Operations | Metric | 2021 | 2020 | | :--- | :--- | :--- | | Net Loss | $(740,299) | $(32,267) | | Cause of Loss | Change in fair value of warrant liabilities, dividend income, and general/administrative expenses | Formation and operating costs | - As of December 31, 2021, the company had $48,955 in cash available for working capital outside the Trust Account and may require loans from its sponsor to fund transaction costs[321][323] - The company's financial condition raises substantial doubt about its ability to continue as a going concern if a Business Combination is not consummated within the required timeframe[326] - Critical accounting policies include classifying private warrants as liabilities measured at fair value and classifying public shares subject to redemption as temporary equity[333][335] Quantitative and Qualitative Disclosures About Market Risk The company has minimal market or interest rate risk due to trust account investments in short-term U.S. government securities - The company has minimal market or interest rate risk as its trust account funds are invested in short-term U.S. government treasury securities or money market funds[340] Financial Statements and Supplemental Data This section presents the company's audited financial statements for 2021, showing $58.2 million in assets and a $740,299 net loss Consolidated Balance Sheet Highlights (As of Dec 31, 2021) | Account | Amount (USD) | | :--- | :--- | | Total Assets | $58,221,185 | | Cash and investments held in trust account | $58,077,063 | | Total Liabilities | $2,283,230 | | Ordinary shares, subject to redemption | $58,077,063 | | Total Shareholders' Deficit | $(2,139,108) | Consolidated Statement of Operations (Year ended Dec 31, 2021) | Account | Amount (USD) | | :--- | :--- | | Total operating expenses | $(726,949) | | Net Loss | $(740,299) | | Comprehensive Loss | $(739,878) | - The independent auditor, Friedman LLP, issued an opinion that the financial statements present fairly, in all material respects, the financial position of the company in conformity with U.S. GAAP[422] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no disagreements with its accountants on accounting and financial disclosure - None reported[342] Controls and Procedures Management concluded disclosure controls were ineffective due to material weaknesses in accounting for warrants and redeemable shares, leading to a restatement - Management concluded that disclosure controls and procedures were not effective as of December 31, 2021[343] - The ineffectiveness was due to material weaknesses identified in the accounting for public warrants (which should have been classified as equity) and the classification of all ordinary shares subject to redemption as temporary equity[345][346] - These issues led to a restatement of financial statements for affected periods in 2021, as disclosed in a Form 8-K filed on January 20, 2022[347] - A remediation plan is underway, which includes enhancing access to accounting literature and increasing communication with third-party professionals on complex accounting matters[348] Other Information The company reports no other information - None[351] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[351] Part III Directors, Executive Officers and Corporate Governance This section provides biographical information for directors and officers, details board committees, and discloses potential conflicts of interest Executive Officers and Directors | Name | Position | | :--- | :--- | | Shaosen Cheng | Chairman and Chief Executive Officer | | Teddy Zheng | Chief Financial Officer | | Jun Liu | Director | | Hai Lin | Director | | Xu Zhang | Director | - The Board of Directors has a majority of independent directors (Messrs. Jun Liu, Hai Lin, and Xu Zhang) as required by Nasdaq standards[360] - The Board has three standing committees: Audit, Compensation, and Nominating, each composed of independent directors[361] - Potential conflicts of interest exist as officers and directors have obligations to other businesses, but the company has renounced interest in corporate opportunities not expressly offered to them in their capacity as company officers/directors[374][377] - During 2021, all directors and officers filed their Form 3s late due to administrative delays[387] Executive Compensation No cash compensation has been paid to officers or directors, with an affiliate receiving $10,000 monthly for administrative services - No compensation of any kind has been paid to the company's founders, officers, or directors for services rendered[389] - An affiliate of the sponsor receives $10,000 per month for providing office space, administrative, and support services[389] - Post-business combination compensation for any remaining officers or directors will be determined by a compensation committee of the combined company[390] Security Ownership of Certain Beneficial Owners and Management This section details beneficial ownership of ordinary shares, with the sponsor holding 22.90% as of March 8, 2022 Beneficial Ownership (as of March 8, 2022) | Beneficial Owner | Approximate Percentage | | :--- | :--- | | Greenland Asset Management Corporation (Sponsor) | 22.90% | | Shaosen Cheng (CEO) | 12.31% | | WEISS ASSET MANAGEMENT LP | 9.49% | | Zhiguo Zhang | 8.57% | | Space Summit Capital LLC | 7.8% | | Karpus Investment Management | 7.70% | | Lighthouse Investment Partners, LLC | 5.82% | | ATW SPAC MANAGEMENT LLC | 5.36% | | Boothbay Fund Management, LLC | 5.36% | | All directors and officers as a group | 22.90% | Certain Relationships, and Related Transactions and Director Independence This section outlines related party transactions, including sponsor purchases of shares and units, and administrative service fees - The sponsor purchased 1,437,500 founder shares for $25,000 and 270,500 private placement units for $2,705,000[398][399] - The company pays an affiliate of the sponsor $10,000 per month for office space and administrative services[400] - The sponsor provided an initial loan of $453,364, which was fully repaid from the private placement proceeds after the IPO[402] - The sponsor or its affiliates may provide up to $1,500,000 in additional working capital loans, which can be converted into units at $10.00 per unit at the lender's option[403] Principal Accountant Fees and Services The company paid Friedman LLP $65,000 in audit fees for FY 2021, with all services pre-approved by the audit committee Fees Paid to Friedman LLP (FY 2021) | Service Category | Fees Paid | | :--- | :--- | | Audit Fees | $65,000 | | Audit-Related Fees | $0 | | Tax Fees | $0 | | All Other Fees | $0 | - The audit committee has a policy to pre-approve all auditing and permitted non-audit services provided by the auditor[413] Part IV Exhibits, Financial Statement Schedules This section lists the documents filed as part of the Form 10-K, including financial statements and key agreements - The report includes the consolidated financial statements and the report of the independent registered public accounting firm, Friedman LLP[416] - Key exhibits filed include the Merger Agreement with MC Hologram Inc., the Underwriting Agreement, and agreements related to warrants, rights, and registration rights[418] Form 10-K Summary The company reports no Form 10-K summary - None[513]