Gorilla Technology Group Inc. — FY 2022 Form 20-F
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone Q4 filing. Financial statements are audited and prepared under IFRS as issued by the IASB, in U.S. dollars. The business provides video intelligence, IoT, edge AI and IT/OT security products and services, primarily through its Video IoT and Security Convergence segments. The SPAC business combination closed in July 2022.
Financial results and liquidity
| Metric | FY 2022 | FY 2021 |
|---|---|---|
| Revenue | $22.41 million | $42.24 million |
| Gross profit / margin | $8.34 million / 37.2% | $15.77 million / 37.3% |
| Operating expenses | $94.84 million | $23.93 million |
| Operating loss | $86.51 million | $8.16 million |
| Net loss | $87.54 million | $8.55 million |
| Basic and diluted loss per share | $1.78 | $0.29 |
| Cash from operating activities | $(8.77) million | $1.62 million |
| Cash from investing activities | $(1.93) million | $(9.91) million |
| Cash from financing activities | $23.61 million | $5.99 million |
| Cash and cash equivalents at year-end | $23.00 million | $9.94 million |
| Total borrowings | $23.85 million | $35.80 million |
| Net debt | $0.86 million | $25.85 million |
| Working capital | $19.50 million | $17.83 million |
Cash flows include the effects of foreign exchange changes where indicated in the filing. The company reported $6.87 million of current time deposits classified as financial assets at amortized cost, some of which were pledged as collateral. It also reported $7.50 million of availability under its revolving loan facility in the liquidity discussion. Management said it expected available cash, deposits, credit lines and shareholder loans to meet obligations for the 12 months following authorization of the statements, while noting that operating cash generation depends on business execution and working-capital management.
Material changes versus FY 2021
- Revenue fell 47.0%. Video IoT revenue declined 67.9% to $9.70 million, while Security Convergence revenue increased 5.4% to $12.71 million. Management attributed the decline largely to prior-year project completions, lower hardware, software and services sales, and pandemic-related delays or lack of new material services.
- Gross margin was nearly flat overall, but shifted materially by segment: Security Convergence margin declined to 29.2% from 54.1%, which the company attributed mainly to higher hardware costs and supply shortages. Video IoT margin improved to 47.7% from 30.7%, reflecting a greater software and lower hardware-and-services mix.
- Operating expenses included a $70.10 million non-cash share-listing expense from the SPAC merger, recorded under IFRS 2. General and administrative expenses rose to $9.19 million, partly due to merger-related professional fees and new public-company costs. R&D was $14.11 million and sales and marketing was $3.64 million.
- Excluding specified adjustments, management reported adjusted EBITDA of $(5.96) million for 2022 versus positive $0.59 million for 2021. This non-IFRS measure adds back $70.11 million of share-listing expense and $2.81 million of transaction costs; it is not a substitute for IFRS results or operating cash flow.
- Operating cash flow turned negative. Financing cash inflows, including capital reorganization proceeds, PIPE proceeds and borrowings, supported the increase in year-end cash. Total borrowings declined, and management reported compliance with credit-facility covenants at year-end.
Outlook, risks and unusual items
- Outlook: The filing provides no formal revenue or earnings guidance. Gorilla said a MENA-region government customer was expected to be its largest customer in 2023 and possibly beyond; execution, funding needs and regional legal, political and macroeconomic conditions could materially affect results.
- Customer concentration: The filing reports 97 customers in 2022. A privately owned Asian networking-equipment supplier represented approximately 24% of revenue; two Taiwanese government entities represented approximately 10% and 16%, respectively. The company warns that losing a major customer could materially reduce revenue. It also described reliance on government tenders and procurement requirements.
- Earnouts and CVRs: Share-price tests triggered forfeiture of 1,137,577 and a further 1,384,951 Price Protection Shares in 2022, entitling Class A CVR holders to additional shares. The filing states that 5,877,472 remaining 2022 Earnout Shares were subject to forfeiture because the annual report was not filed by March 31, 2023. For 2023, remaining earnouts are subject to share-price, gross-margin and reporting tests; revenue protection depends in part on whether 2023 revenue reaches $90 million.
- Related-party share exchange: In December 2022, the company acquired 2,814,895 shares from former CEO Sih-Ping Koh’s affiliate, holding them as treasury shares, in exchange for specified receivables and assets with reported book value of approximately $30.8 million. The transaction also involved 1,566,788 Earnout Shares forfeited by Dr. Koh, some still subject to vesting conditions. Review the agreement and valuation assumptions.
- Subsequent events: In January 2023, Gorilla agreed to acquire SeeQuestor intellectual property for $6 million fixed consideration plus up to $3 million in contingent share consideration. In March 2023, it drew a $3 million Asteria Corporation shareholder loan bearing 10.375% interest, due March 2024.
- Unusual income items: 2022 included a $0.96 million gain from reversing supplier payables after suppliers ceased operations and became uncontactable, and $1.08 million of net foreign-exchange gains. The filing also reports gains on financial assets and liabilities measured at fair value.
- Controls: Management identified material weaknesses involving insufficient accounting and regulatory expertise and inadequate policies for complex transactions and certain general-ledger accounts. Disclosure controls were deemed ineffective as of December 31, 2022. Management described remediation efforts, but said the weaknesses were not confirmed fully remedied. The auditor gave an unmodified opinion on the IFRS financial statements; no auditor attestation on internal controls was included.
- Key risks: Other disclosed risks include seasonality and uneven project timing, continued operating cash needs and potential financing or dilution, competition and technology adoption, cybersecurity and privacy regulation, foreign-exchange exposure, and geopolitical or regulatory developments affecting Taiwan and other markets. The company also notes that a significant portion of revenue is generated in Taiwan.
Important facts for investors to verify
- Reconcile the 2022 customer concentration disclosures with audited major-customer revenue, and assess the expected MENA customer’s contract terms, delivery obligations and payment timing.
- Review the cash-flow and liquidity outlook, including the distinction between cash, pledged time deposits, available credit lines, short-term borrowings and shareholder loans.
- Assess the drivers and sustainability of segment gross margins, especially the 2022 decline in Security Convergence margin and the planned shift in business mix.
- Confirm the status and accounting consequences of the 2022 Earnout forfeitures, CVR share issuances, and 2023 revenue, margin and reporting tests.
- Examine the related-party share exchange and subsequent Asteria loan, as well as the SeeQuestor acquisition payments and contingent consideration.
- Track remediation of the reported internal-control weaknesses and whether subsequent filings demonstrate improved controls and timely reporting.