Genesis Growth Tech Acquisition Corp. (Ticker: GGAAW), a Special Purpose Acquisition Company (SPAC), in its latest financial report disclosed a net loss of approximately $109,000 for the period from March 17, 2021 (its inception) to December 31, 2021. The loss comprised general and administrative expenses of around $100,000, approximately $10,000 in general and administrative expenses for a related party, offset by income from investments held in the Trust Account of about $1,000.
The key financial indicators and insights from the report are detailed below.
Liquidity and Capital Resources:
The report shows that as of December 31, 2022, the company had net proceeds of $258,645,000 from its initial public offering (IPO) and the sale of private placement warrants. Of this amount, $257,148,600 was held in the Trust Account. After an Extension EGM and the redemption of public shares by shareholders, about $1.2 million remained in the Trust Account, in which the funds were invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act
Use of Funds:
Genesis Growth Tech Acquisition Corp. intends to use substantially all of the funds held in the Trust Account to complete its initial Business Combination. They may withdraw interest income (if any) to pay income taxes, and they expect the interest income earned on the amount in the Trust Account (if any) to be sufficient to pay their income taxes. To the extent that their equity or debt is used, in whole or in part, as consideration to complete their initial 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 their growth strategies.
The company expects the following liquidity requirements during the period until its initial Business Combination: approximately $300,000 for legal, accounting, due diligence, travel, and other expenses associated with structuring, negotiating and documenting successful business combinations; $100,000 for legal and accounting fees related to regulatory reporting obligations; $800,000 for directors and officers insurance premiums; $120,000 for office space, administrative and support services; $100,000 for Nasdaq and other regulatory fees; and $430,000 for general working capital that will be used for miscellaneous expenses and reserves. These amounts are estimates and may differ materially from the actual expenses.
Based on the company’s financial statements, they believe they will have sufficient working capital and borrowing capacity from their sponsor or an affiliate of the sponsor, or certain of their officers and directors, to meet the company’s needs through the consummation of a business combination. If the initial Business Combination is not completed by September 13, 2023, due to insufficient funds, the company will be forced to cease operations and liquidate the trust account.
The company will continue to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices and similar locations of prospective target businesses, review corporate documents and material agreements, and structure, negotiate and complete a Business Combination. They will rely on the $1,200,595 of proceeds held outside the Trust Account, as well as certain funds from loans from their sponsor, its affiliates, or members of their management team for these purposes.
Note that we may hold securities mentioned in this article. All data is based on recent SEC filings. Even though we have implemented various manual and automatic fact-checking and data acquisition processes, some incorrect information may have slipped through (false positive). Let us know if you find any inconsistencies!