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Item 7. Management’s Discussion and Analysis

2024-03-08 compared with 2023-02-27 · 118 added, 59 removed, 64 unchanged (73% of the section changed)

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The statements in the discussion and analysis regarding industry outlook, our expectations regarding the performance of our business and the forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described in “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements.

You should read the following discussion together with the sections entitled “Risk Factors”,” “Business” and the audited financial statements, including the related notes, appearing elsewhere in this Form 10-K.

You should read the following discussion together with the sections entitled “Risk Factors”,” “Business” and the audited consolidated financial statements, including the related notes, appearing elsewhere in this Form 10-K.

All references to year, unless otherwise noted, refer to our fiscal year, which ends on December 31.

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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

Results of Operations and Known Trends or Future Events

The First Extension

In April 2023, the Company and the Sponsor entered into Non-Redemption Agreements with a number of the Company’s stockholders in exchange for them agreeing not to redeem shares of the Company’s Class A common stock sold in the IPO in connection with the special meeting of stockholders called by the Company and held on May 4, 2023.

In exchange for the foregoing commitments not to redeem such shares, the Sponsor has agreed to transfer to such stockholders an aggregate of 999,665 shares of the Company’s Class B common stock, par value $0.0001 per share, held by the Sponsor immediately following consummation of an initial business combination.

On May 4, 2023, the Company’s stockholders approved at the special meeting of stockholders a proposal to amend the Company’s charter to extend the date by which the Company has to consummate a business combination from May 8, 2023 to November 8, 2023, or such earlier date as may be determined by the board of directors of the Company.

In connection with the votes to approve the Charter Amendment, the holders of 30,460,066 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.42 per share, for an aggregate redemption amount of approximately $317,400,000, leaving approximately $42,000,000 in the Trust Account.

The Second Extension

In November 2023, the Company and the Sponsor entered into Non-Redemption Agreements with a number of the Company’s stockholders in exchange for them agreeing not to redeem shares of the Company’s Class A common stock sold in the IPO in connection with the special meeting of stockholders called by the Company and held on November 7, 2023.

In exchange for the foregoing commitments not to redeem such shares, the Company has agreed to allocate to such investors an aggregate of 781,961 shares of Class A common stock and the Sponsor has agreed to surrender and forfeit to the Company for no consideration a number of shares of Class B common stock equal to the number of Promote Shares upon closing of an initial business combination.

On November 7, 2023, the Company’s stockholders approved at the special meeting of stockholders a proposal to amend the Company’s charter to further extend the date by which the Company has to consummate a Business Combination from the Extended Date to August 8, 2024, or such earlier date as may be determined by the board of directors of the Company.

In connection with the votes to approve such a proposal, the holders of an additional 98,573 shares of Class A common stock of the Company properly exercised their right to redeem their shares for cash at a redemption price of approximately $10.70 per share, for an aggregate redemption amount of approximately $1,100,000, leaving approximately $42,200,000 in the Trust Account and 3,941,361 shares of Class A common stock subject to possible redemption outstanding immediately following these redemptions.

In connection with the implementation of the Charter Amendment, the Sponsor converted 7,957,726 shares of Class B common stock into Class A common stock, and the other holders of shares of Class B common stock converted all of their shares of Class B common stock into Class A common stock.

The Business Combination Agreement;

Certain Agreements Related to the Business Combination

On November 2, 2023, the Company entered into the Business Combination Agreement GCT and Merger Sub.

Pursuant to the Business Combination Agreement, the parties will, subject to the satisfaction or waiver of the conditions contained in the Business Combination Agreement, consummate a business combination transaction pursuant to which Merger Sub will merge with and into GCT, with GCT surviving the merger as a wholly-owned subsidiary of the Company.

The aggregate equity consideration to be paid to GCT’s stockholders and other equity holders in the Transactions will be equal to the quotient of (i) the Company Value divided by (ii) $10.00.

Immediately prior to the Closing, all of the outstanding principal and accrued interest under the outstanding promissory notes issued by GCT that can be converted into shares of GCT common stock will be so converted in accordance with their terms.

Following the Closing, the Company will issue up to an aggregate of 20,000,000 additional shares of its common stock to the stockholders of GCT as of immediately prior to the Closing and certain other persons, including the PIPE Investors, if the VWAP of the shares of the Company’s common stock equals or exceeds certain minimum share prices at any time during the Earnout Period, as follows:

(i) 6,666,667 shares if the VWAP of the shares of the common stock equals or exceeds $12.50 for any 20 trading days within

a period of 30 consecutive trading days during the Earnout Period;

(ii) 6,666,666 shares if the VWAP of the shares of the common stock equals or exceeds $15.00 for any 20 trading days within a period of 30 consecutive trading days during the Earnout Period;

and (iii) 6,666,667 shares if the VWAP of the shares of the common stock equals or exceeds $17.50 for any 20 trading days within a period of 30 consecutive trading days during the Earnout Period.

Such shares will also become issuable under certain circumstances if a “change of control” of the Company occurs following the Closing but prior to the applicable earnout expiration date and the price per share in the change of control equals or exceeds the applicable price target.

Concurrently with the execution of the Business Combination Agreement, the PIPE Investors entered into the PIPE Subscription Agreements pursuant to which the PIPE Investors have committed to purchase in a private placement an aggregate of 4,484,854 shares of the Company’s Class A common stock at a purchase price of $6.67 per share and an aggregate purchase price of approximately $29,900,000.

The purchase of the PIPE Shares is conditioned upon, among other things, the consummation of the Transactions and will be consummated immediately prior to or substantially concurrently with the Closing.

The Public Warrants and Private Placement Warrants include certain down-round provisions under which their exercise price may be adjusted, if (a) the Company issues additional shares of the Company’s Class A common stock or securities convertible into or exercisable or exchangeable for shares of the Company’s Class A common stock for capital raising purposes in connection with the closing of its initial business combination at an issue price or effective issue price of less than $9.20 per share of the Company’s Class A common stock, (b) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of an initial business combination on the date of the consummation of such initial business combination (net of redemptions), and (c) the volume weighted average trading price of the Company’s Class A common stock during the twenty (20) trading day period starting on the trading day prior to the day on which the Company consummates an initial business combination is below $9.20 per share, the price per share (including in cash or by payment of warrants pursuant to a “cashless exercise,” to the extent permitted) at which shares of the Company’s Class A common stock may be purchased at the time a warrant is exercised will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger prices will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.

Concurrently with the execution and delivery of the Business Combination Agreement, the Company entered into the Sponsor Support Agreement with GCT, the Sponsor and CA2.

Pursuant to the Sponsor Support Agreement, the Sponsor and CA2 have, among other things, agreed to vote all of their shares of the Company’s common stock in favor of the approval of the Transactions, including the Merger, not to redeem any of their shares of the Company’s common stock and to waive their anti-dilution protections with respect to their shares of the Company’s Class B common stock.

In addition, the Sponsor and CA2 agreed that a portion of up to an aggregate of 1,920,375 shares of common stock to be issued to them at Closing (collectively, the Sponsor Earnout Shares”) will be unvested and subject to forfeiture as of the Closing, and will only vest if certain share price trading thresholds are satisfied during a specified period of time following the Closing.

The Sponsor and CA2 further agreed that (i) 1,399,107 shares of common stock to be held by them at Closing, (ii) any portion of the Sponsor Earnout Shares not unvested and made subject to forfetiture as of the Closing and (iii) up to an aggregate of 2,820,000 Private Placement Warrants to be held by them at Closing may be allocated by GCT to the GCT Recipients, and transferred to the GCT Recipients at Closing (without any vesting conditions).

The Sponsor and CA2 also agreed (i) to forfeit up to an additional 2,820,000 Private Placement Warrants held by them at Closing, to the extent not allocated prior to the Closing to certain third parties, including prospective PIPE Investors and holders of shares of the Company’s Class A common stock who agree not to redeem their shares in connection with any extension of the Company’s deadline to consummate an initial business combination, and (ii) to forgive all amounts outstanding under the Sponsor Loans.

In connection with the execution of the Business Combination Agreement, the Company entered into the Stockholder Support Agreement with certain stockholders of GCT pursuant to which such stockholders have, among other things, agreed to vote to adopt and approve the Business Combination Agreement and all other documents and transactions contemplated thereby and to subject their shares to certain transfer restrictions.

The foregoing descriptions of the Business Combination Agreement, PIPE Subscription Agreements, Sponsor Support Agreement, Stockholder Support Agreement, and other agreements and transactions contemplated thereunder are not complete.

For a more detailed discussion of the Business Combination Agreement and the Transactions, see the Company’s Current Report on Form 8-K filed with the SEC on November 8, 2023, and the Registration Statement on Form S-4 initially filed with the SEC on November 13, 2023, as amended, and the Company’s prospectus filed with the SEC on February 14, 2024.

Other Recent Developments

In December 2023, one of the underwriters waived any right to receive the deferred underwriters’ commission of $6,991,425 and will therefore receive no additional underwriting commissions in connection with the closing of a Business Combination.

After one of our underwriters waived their right to the deferred underwriters’ commission, our remaining underwriters are entitled to a deferred underwriters’ commission of $5,083,575 of the gross proceeds of the IPO held in the Trust Account upon the completion of the Company’s initial Business Combination subject to the terms of the underwriting agreement.

On January 19, 2024, the Company received a notification from the NYSE informing the Company that, because the number of public stockholders is less than 300, the Company is not in compliance with Section 802.01B of the Listing Rule.

The Listing Rule requires the Company to maintain a minimum of 300 public stockholders on a continuous basis.

The NYSE notification letter specifies that the Company has 45 days to submit a plan that demonstrates how the Company expects to return to compliance with the Listing Rule within 18 months of receipt of the notice.

The business plan will be reviewed by Committee of the NYSE.

The Committee will either accept the plan, at which time the Company will be subject to quarterly monitoring for compliance with this business plan, or the Committee will not accept the business plan and the Company will be subject to suspension and delisting procedures.

The Company submitted its Compliance Plan on February 28, 2024.

On February 27, 2024, the Company held a special meeting in lieu of the 2024 annual meeting of stockholders in connection with the proposed Business Combination.

At the Special Meeting, the Company’s stockholders approved the Business Combination Proposal, the Charter Amendment Proposal, each of the Governance Proposals (on a non-binding advisory basis), the election of each director nominee pursuant to the Election of Directors Proposal, the Incentive Award Plan Proposal, the Employee Stock Purchase Plan Proposal, and the NYSE Proposal, in each case as defined and described in greater detail in the Final Prospectus.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date.

Our only activities since inception have been organizational activities and those necessary for our initial public offering (“IPO”) and activities related to seeking and consummating an acquisition target.

Our only activities since inception relate to our formation, the IPO and, subsequent to the IPO, identifying a target company for a Business Combination and completion of the proposed Business Combination.

We do not expect to generate any operating revenues until after completion of our initial business combination.

Until such time that a business combination occurs, we will generate non-operating income in the form of interest income on cash and cash equivalents in the form of specified U.S.

government treasury bills or specified money market funds after the IPO and non-operating income or expense from the changes in the fair value of the warrant liability and the Sponsor loans.

There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements.

Until such time that a business combination occurs, we will generate non-operating income in the form of investment income on cash and cash equivalents in the form of specified U.S.

government treasury bills or specified money market funds after the IPO and non-operating income or expense from the changes in the fair value of warrant liabilities and Sponsor Loans.

There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited consolidated financial statements.

Until the completion of our initial business combination, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

For the year ended December 31, 2022, we had net income of $24,256,284, which consisted of formation and operating costs of $1,172,506, income tax expense of $995,207 offset by the change in the fair value of the warrant liability and sponsor loans of $21,332,800 and income from investments held in Trust Account of $5,091,197.

For the period from February 18, 2021 (inception) through December 31, 2021, we had net income of $9,169,605, which consisted of formation and operating costs of $361,567, fair value of Private Placement Warrants in excess of purchase price of $886,420, and offering costs attributable to the warrant liability of $1,035,747 offset by the change in the fair value of the warrant liability and sponsor loans of $11,431,645 and interest earned on investment held in the Trust Account of $21,694.

For the year ended December 31, 2023, we had a net loss of $1,995,754 which consisted of operating costs, net, of $4,867,708, a change in the fair value of the warrant liability and Sponsor Loans of $2,913,800 and income taxes of $1,385,741, partially offset by income from cash and investments held in Trust Account of $6,795,482, income from operating bank account of $3,335, and recovery of offering costs attributable to warrant liability of $372,678.

For the year ended December 31, 2022, we had net income of $24,256,284, which consisted of the change in the fair value of the warrant liability and Sponsor Loans of $21,332,800 and income from investments held in Trust Account of $5,091,197, partially offset by formation and operating costs of $1,172,506 and income tax expense of $995,207.

Liquidity and Capital Resources

Our liquidity needs have been satisfied prior to the completion of our initial public offering through receipt of a $25,000 capital contribution from our sponsors in exchange for the issuance of the founder shares and up to $200,000 in loans from our sponsors under unsecured promissory notes.

For the year ended December 31, 2022, net cash used in operating activities was $1,516,064, net cash provided by investing activities was $822,658, and no net cash provided by financing activities.

We intend to use substantially all of the funds held in our Trust Account, including any amounts representing interest earned on the Trust Account (which interest shall be net of taxes payable) to complete our initial business combination.

We may withdraw interest to pay our taxes.

Delaware franchise tax is based on our authorized shares or on our assumed par and non-par capital, whichever yields a lower result.

Under the authorized shares method, each share is taxed at a graduated rate based on the number of authorized shares with a maximum aggregate tax of $200,000 per year.

Under the assumed par value capital method, Delaware taxes each $1,000,000 of assumed par value capital at the rate of $350;

where assumed par value would be (1) our total gross assets following the IPO, divided by (2) our total issued shares of common stock following the IPO, multiplied by (3) the number of our authorized shares following the IPO.

Based on the number of shares of our common stock authorized and outstanding and our total gross proceeds after the completion of the IPO, our annual franchise tax obligation is expected to be capped at the maximum amount of annual franchise taxes payable by us as a Delaware corporation of $200,000.

Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account.

We expect the only taxes payable by us out of the funds in the Trust Account will be for taxes.

We expect the interest earned on the amount in the Trust Account will be sufficient to pay our taxes.

To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our 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 our growth strategies.

As of December 31, 2022, we had available to us $521,149 of proceeds held outside the Trust Account.

We will use these funds primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes.

Until the consummation of the IPO, as described below, our only source of liquidity was an initial purchase of common stock by the sponsors and loans from our Sponsor.

The Company executed promissory notes with the Sponsors (the “Sponsors Loans”), evidencing loans to the Company in the aggregate amount of $6,900,000.

The Sponsor Loans were to be repaid or converted into warrants (“Sponsor Loan Warrants”) at a conversion price of $1.00 per warrant, at the Sponsors’ discretion.

The Sponsor Loan Warrants would be identical to the Private Placement Warrants.

In accordance with the Business Combination Agreement with GCT, with the consummation of the Business Combination, the Sponsor would forgive the outstanding balance of the Sponsor Loans of $6,900,000.

As of December 31, 2023, we had available to us $16,371 of cash held outside the Trust Account.

We will use these funds primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination, pay our administrative fees, and to pay taxes to the extent the interest earned on the Trust Account is not sufficient to pay our taxes.

For the year ended December 31, 2023, net cash used in operating activities was $2,677,129.

Net loss of $1,995,754 was primarily driven by income from cash and investments held in Trust Account of $6,795,482 and recovery of offering costs attributable to warrants of $372,678, partially offset by a change in the fair value of the warrant liability of $2,913,800.

Changes in working capital generated $3,572,985.

For the year ended December 31, 2023, net cash provided by investing activities was $320,579,121 as a result of withdrawals of $318,441,770 from the Trust Account in connection with redemptions and $2,137,351 from the Trust Account to pay taxes.

For the year ended December 31, 2023, net cash used in financing activities was $318,406,770 due to redemptions of Class A common stock of $318,441,770 offset by proceeds from a promissory note of $35,000.

For the year ended December 31, 2022, net cash used in operating activities was $1,516,064.

Net income of $24,256,284 was primarily driven by income from investments held in Trust Account of $5,091,197 and a change in the fair value of the warrant liability of $21,332,800.

Changes in working capital generated $651,649.

For the year ended December 31, 2022, net cash provided by investing activities was $822,658 due to our withdrawal of funds from the Trust Account to pay taxes.

In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsors, an affiliate of our sponsors or our officers and directors may, but are not obligated to, loan us funds as may be required.

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Prior to the completion of our business combination, we do not expect to seek loans from parties other than our sponsors, an affiliate of our sponsors or our officers and directors, if any, as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.

As of December 31, 2022, no such loans had been arranged.

As of December 31, 2023, no such convertible loans had been arranged.

On May 3, 2022, the sponsor agreed to loan us up to $350,000 to be used to pay operating expenses.

This loan is non-interest bearing, unsecured, not convertible into warrants or any other securities, and due at the closing of a business combination.

There was $35,000 and no balance outstanding as of December 31, 2023 and December 31, 2022, respectively.

Additionally, GCT has agreed to reimburse us for certain Business Combination related expenses.

As of December 31, 2023, $296,441 is due from GCT.

If the 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, the Company may have insufficient funds available to operate our business prior to a Business Combination.

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In addition, following a Business Combination, if cash on hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations.

The Company has until May 8, 2023 (or until August 8, 2023, or November 8, 2023, if extended) to consummate a Business Combination.

If a Business Combination is not consummated by this date and extension(s) are not obtained, there will be a mandatory liquidation and subsequent dissolution of the Company.

Although the Company intends to consummate a Business Combination on or before May 8, 2023, it is uncertain whether the Company will be able to consummate a Business Combination by this time.

In connection with the Company’s assessment of going concern considerations in accordance with ASC Subtopic 205-40, “Presentation of Financial Statements – Going Concern”, Management has determined that the mandatory liquidation, should a Business Combination not occur, and an extension is not obtained, and potential subsequent dissolution, as well as the potential for the Company to have insufficient funds available to operate its business prior to a Business Combination, raise substantial doubt about the Company’s ability to continue as a going concern.

No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after May 8, 2023 (or until August 8, 2023 or November 8, 2023, as applicable, if we extend the period of time to consummate a business combination).

The Company has until the Current Extended Date to consummate a Business Combination.

If a Business Combination is not consummated by this date and any additional extension(s) are not obtained, there will be a mandatory liquidation and subsequent

dissolution of the Company.

Although the Company intends to consummate a Business Combination on or before the Current Extended Date, it is uncertain whether the Company will be able to consummate a Business Combination by this time.

In connection with the Company’s assessment of going concern considerations in accordance with ASC Subtopic 205-40, “Presentation of Financial Statements – Going Concern”, Management has determined that the mandatory liquidation, should a Business Combination not occur, and an additional extension is not obtained, and potential subsequent dissolution, as well as the potential for the Company to have insufficient funds available to operate its business prior to a Business Combination, raise substantial doubt about the Company’s ability to continue as a going concern.

No adjustments have been made to the carrying amounts and classification of assets or liabilities should the Company be required to liquidate after the Current Extended Date.

Off-Balance Sheet Financing Arrangements

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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 the Sponsor a monthly fee of $20,000 for office space, administrative and support services.

We began incurring these fees on November 3, 2021 and will continue to incur these fees monthly until the earlier of the completion of our initial Business Combination and our liquidation.

Additionally, our underwriters are entitled to a deferred underwriting discount of $12,075,000 of the gross proceeds of the IPO held in the Trust Account upon the completion of the Company’s initial Business Combination subject to the terms of the underwriting agreement.

Critical Accounting Policies and Significant Judgments and Estimates

We prepare our financial statements in accordance with accounting principles generally accepted in the United States of America.

The preparation of financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and related disclosures.

Other than an agreement to pay an affiliate of the Sponsor a monthly fee of $20,000 for office space, administrative and support services and $6,900,000 in Sponsor Loans, we do not have any contractual obligations, long-term debt, capital lease obligations, operating lease obligations or long-term contractual obligations to be paid from our operating bank account.

In association with the Business Combination agreement, GCT has agreed to reimburse the Company for that portion of the Administrative Service Fee that relates to the proposed Business Combination.

Further, on May 3, 2022, the Sponsor agreed to loan the Company up to $350,000 to be used to pay operating expenses.

This loan is non-interest bearing, unsecured, is not convertible into warrants or any other securities, and due at the closing of a business combination.

The Company has borrowed $35,000 under the promissory note.

There was $35,000 and no balance outstanding as of December 31, 2023 and December 31, 2022, respectively.

On March 29, 2023, the Company engaged a capital markets advisor in connection with seeking an extension for completing a business combination, a possible acquisition of a third party by merger, consolidation, acquisition of stock or assets or other business combination, and as a placement agent in connection with a private placement of debt, equity, equity-linked or convertible securities.

The Company agreed to pay the capital markets advisor a transaction fee in connection with the services provided, payable upon and subject to the Company’s consummation of an initial business combination.

The fee consists of a fixed and determinable portion and a variable portion contingent upon certain future events expected to take place upon completion of a business combination.

As of December 31, 2023, $2,500,000 was accrued for the fee as the amount was earned and fixed and determinable.

These costs may be paid for using the proceeds of the cash available once a business combination is complete.

Critical Accounting Estimates

We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America.

The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses and related disclosures.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

Actual results could differ significantly from the estimates made by our management.

We have identified the following critical accounting policies:

We have identified the following critical accounting estimates:

Warrant Liability

The Company accounts for the 26,650,000 warrants issued in connection with the Initial Public Offering (the 17,250,000 Public Warrants and the 9,400,000 Private Placement Warrants) in accordance with the guidance contained in ASC 815-40.

Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability.

Accordingly, the Company classifies each warrant as a liability at its fair value.

We classify each warrant as a liability at its fair value.

This liability is subject to re-measurement at each balance sheet date.

With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations.

With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in our statement of operations.

The fair value of our Private Placement Warrants requires significate estimates by management.

Deviations from these estimates could result in a significate difference to our financial results.

Sponsor Loans

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The Company has elected to apply the fair value option to the Sponsor Loans to simplify the accounting model applied to that class of financial instruments.

Common Stock Subject to Possible Redemption

The Company accounts for its shares of Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as a liability instrument and is measured at fair value.

Conditionally redeemable shares of Class A common stock (including shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity.

At all other times, shares of Class A common stock are classified as stockholders’ equity.

The Company’s shares of Class A common stock feature certain redemption rights that are considered to be outside of the Company’s control and subject to the occurrence of uncertain future events.

Accordingly, all shares of Class A common stock subject to possible redemption are presented at redemption value as temporary equity, outside of the stockholders’ deficit section of the Company’s balance sheet.

On November 2, 2023, the Company, GCT and the Sponsor entered into a Sponsor Support Agreement.

Pursuant to the Sponsor Support Agreement, the Sponsor agreed to forgive all amounts outstanding under the Sponsor Loan upon the closing of the proposed Business Combination which was determined to be a modification of the Sponsor Loan.

The Company follows the guidance of ASC Topic 470-50 “Debt—Modifications and Extinguishments,” for loan modifications.

The Company’s Sponsor continues to maintain an equity interest in the Company.

The Company determined that after accounting for the modification of the Sponsor Loan, the terms of the Sponsor Loan were substantially different and as such should be accounted for as an extinguishment of the original debt and the recognition of new debt.

As such, the Company recognized a gain on extinguishment of the Sponsor Loans in the Company’s consolidated statements of changes in stockholders’ deficit calculated as the difference between the fair value of the Sponsor Loan under the original Sponsor Loan Agreement and the fair value of the Sponsor Loan under the updated terms of the Sponsor Support Agreement on the date of the extinguishment.

The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”).

ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.

ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

Net Income per Common Share

We comply with the accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of shares, which are referred to as Class A common stock and Class B common stock.

Earnings and losses are shared pro rata between the two classes of stock.

For purposes of computing diluted earnings per share, the weighted-average shares outstanding of common stock reflects the dilutive effect that could occur if convertible securities or other contracts to issue common stock were converted into or exercised for common stock as of the beginning of the period in which the conditions were satisfied (or as of the date of the contingent stock agreement, if later).

The calculation of diluted net income per share does not consider the effect of the warrants issued in connection with the (i) IPO, (ii) exercise of over-allotment (iii) Private Placement and (iv) sponsor loans since the exercise of the warrants and sponsor loans would be anti-dilutive.

The warrants (including warrants issuable in conjunction with the Sponsor Loans) are exercisable to purchase 33,550,000 shares of Class A common stock in the aggregate.

Remeasurement associated with the

redeemable shares of Class A common stock to redemption value is excluded from earnings per share as the redemption value approximates fair value.

ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the consolidated financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards.

The Company assesses the likelihood that deferred tax assets will be recovered from the existing deferred tax liabilities or future taxable income.

To the extent the Company believes that recovery will not meet the more likely than not threshold, it establishes a valuation allowance.

Non-Redemption Agreements

We comply with the requirements of SEC Staff Accounting Bulletin (“SAB”) Topic 5(A) – “Expenses of Offering” and SAB Topic 5(T):

Miscellaneous Accounting – Accounting for Expenses or Liabilities Paid by Principal Stockholder(s).

As such, management used significant estimates to determine the fair value of the Promote Shares assigned to the Investors.

On April 5, 2012, the JOBS Act was signed into law.

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We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies.

As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.

Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act.

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(1) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act;

(2) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act;

(3) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis);

(2) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection

(3) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the consolidated financial statements (auditor discussion and analysis);

and (4) disclose certain executive compensation-related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis