Business Context and Reporting Period
This Form 8-K, filed on August 1, 2022, reports on events occurring on July 29, 2022. Galata Acquisition Corp. (the "SPAC"), a Cayman Islands exempted company, entered into a Business Combination Agreement with Marti Technologies, Inc. (the "Company"), a Delaware corporation. The transaction involves a merger where Marti Technologies will become a wholly-owned subsidiary of the SPAC, followed by the SPAC's domestication as a U.S. corporation for tax purposes.
Key Financial Metrics and Transaction Structure
The filing details the financial mechanics of the proposed business combination rather than historical operating results for Marti Technologies.
- Valuation Consideration: The transaction values the Company based on an exchange ratio calculated to result in 45,000,000 SPAC Class A Ordinary Shares issued to Company shareholders.
- Earnout Provision: Up to 9,000,000 additional SPAC Class A Ordinary Shares may be issued over a five-year period if the share price reaches $20.00 per share.
- PIPE Investment: The SPAC entered into subscription agreements to sell convertible notes with an aggregate principal amount of $47,500,000. These notes bear interest at 12.00% per annum (8% cash, 4% payment-in-kind) and are convertible into SPAC Class A Ordinary Shares at approximately 87 shares per $1,000 of principal.
- Pre-Funding: A pre-fund subscription agreement was executed for a minimum of $10,000,000 in convertible notes, which will convert into the PIPE notes at closing.
- Liquidity Condition: Closing is conditioned on the SPAC having at least $50,000,000 in cash on hand after redemptions and subscription proceeds, and a minimum cash condition of $150,000,000 (including trust account balance and convertible note proceeds).
Note: The filing text does not provide specific historical revenue, profit, cash flow, or margin data for Marti Technologies, Inc.
Material Changes and Transaction Mechanics
The primary material change is the entry into a definitive merger agreement. Key structural changes include:
- Security Conversion: Prior to closing, all outstanding Company warrants and preferred stock will convert into Company Common Stock. Upon the merger, Company Common Stock, options, and restricted stock will convert into SPAC Class A Ordinary Shares based on the Exchange Ratio.
- Founder Shares: SPAC Founder Shares will convert on a one-for-one basis into SPAC Class A Ordinary Shares.
- Lock-Up Period: Post-closing, pre-closing shareholders and founders are subject to a lock-up period of 13 months or until a specific price threshold is met, whichever is earlier.
Guidance, Outlook, Risks, and Contingencies
Conditions to Closing: The transaction is subject to several material conditions, including:
- Approval by SPAC shareholders and written consent from requisite Company stockholders.
- Effectiveness of the Registration Statement (Form F-4) and no stop orders by the SEC.
- Delivery of audited financial statements for Marti Technologies as of December 31, 2020, and December 31, 2021.
- Expiration of HSR Act waiting periods and absence of governmental orders prohibiting the transaction.
Risks and Contingencies: The filing highlights significant risks, including the potential failure to obtain shareholder approval, inability to meet listing standards, disruption of operations, and the possibility that the transaction may not be consummated. The agreement includes termination rights if the deal is not closed within nine months (the "Outside Date") or if specific breaches occur.
Management Commentary: Management intends to file a proxy statement/prospectus containing detailed information. The filing includes a cautionary statement regarding forward-looking information, noting that actual results may differ materially from expectations due to various risks.
Investor Verification Checklist
- Verify the final audited financial statements for Marti Technologies for the years ended December 31, 2020, and 2021, which are a condition to closing.
- Confirm the final number of shares outstanding for Marti Technologies to calculate the precise Exchange Ratio and implied valuation.
- Monitor the status of the SPAC shareholder vote and the effectiveness of the Form F-4 Registration Statement.
- Assess the level of redemptions by SPAC public shareholders to ensure the $50,000,000 minimum cash condition is met.
- Review the definitive terms of the Convertible Notes, including conversion adjustments and interest payment schedules.