Business context and reporting period
This is Galata Acquisition Corp.’s unaudited Form 10-Q for the quarter ended September 30, 2022, filed November 10, 2022. Although the request identifies Marti Technologies, Inc., the filing is for Galata, a special purpose acquisition company (SPAC), and does not report Marti’s standalone operating results. Galata had not begun operations and reported no operating revenue.
On July 29, 2022, Galata agreed to combine with Marti Technologies. The proposed transaction remained subject to shareholder approval and other closing conditions.
Financial results and position
- Revenue: None. The company’s activities related to formation, its IPO, and seeking a business combination.
- Results: Third-quarter general and administrative expense was $1.03 million and interest income was $394,189, resulting in a net loss of $630,938, or $0.04 per ordinary share. For the nine months, expenses were $2.37 million, interest income was $602,390, and net loss was $1.77 million, or $0.10 per share.
- Cash and liquidity: Cash outside the trust was $310,808 at September 30, 2022; the working capital deficit was $2.25 million. Cash used in operations was $300,118 for the nine months.
- Trust assets: Investments held in trust totaled $147.23 million, up from $146.63 million at December 31, 2021. Class A shares subject to possible redemption were recorded as temporary equity at $144.36 million.
- Liabilities and debt: Total liabilities were $7.69 million, including $2.66 million of accounts payable and accrued expenses and a $5.03 million deferred underwriting commission payable only if a business combination closes. The company reported no long-term debt or other long-term obligations.
- Margins: Not meaningful, as the company had no operating revenue.
Changes versus prior comparable period
Third-quarter net loss increased to $630,938 from $144,650 in the prior-year quarter, while general and administrative expense rose to $1.03 million from $146,245. Interest income increased to $394,189 from $1,595. Nine-month 2022 results are compared in the filing with the period from inception (February 26, 2021) through September 30, 2021, so that comparison is not a like-for-like nine-month period.
Transaction, outlook, and risks
- Galata expected the Marti transaction to close in the fourth quarter of 2022, subject to approvals and conditions. Its stated business-combination deadline was July 13, 2023; the filing cautioned that completion was not assured.
- Related subscription agreements contemplated $47.5 million of convertible notes bearing 12% annual interest (8% cash and 4% payment-in-kind), subject to closing conditions. A $150 million minimum-cash condition included the post-redemption trust balance and note proceeds.
- Management disclosed substantial doubt about Galata’s ability to continue as a going concern, citing limited cash outside the trust and uncertainty about completing a transaction within the available period. The financial statements included no adjustments for the uncertainty.
- Disclosure controls and procedures were deemed ineffective because of material weaknesses in accounting for complex financial instruments and timely period-end account reconciliations. Management said it performed additional analysis to support the financial statements.
- The filing cited possible effects from COVID-19 and the Russia-Ukraine conflict but said specific impacts were not determinable. No material changes to previously disclosed risk factors were reported.
- If no business combination is completed by the deadline, public shares are subject to redemption under the stated terms; warrants may expire worthless. The deferred underwriting fee is waived if no combination closes.
Important facts for investors to verify
- Whether the Galata-Martı transaction closed, and the final terms, approvals, and timing.
- Redemptions and available cash at closing, including whether the $150 million minimum-cash condition was satisfied.
- Whether the $47.5 million convertible-note financing funded, and its final interest, conversion, and dilution terms.
- Galata’s cash runway, accrued expenses, and progress addressing the disclosed internal-control material weaknesses.
- Marti’s standalone financial performance and liquidity, which are not provided in this filing.