Marti Technologies, Inc. annual report, FY2022

Business context and reporting period

This is Galata Acquisition Corp.’s Form 10-K for the year ended December 31, 2022, filed March 31, 2023—not Marti Technologies, Inc.’s operating-company 10-K. Galata is a special purpose acquisition company (SPAC) formed to complete a business combination; it had no operating revenue or business operations. Its proposed combination with Marti Technologies was pending at year-end.

Financial results and position

Trust investments were $148.745 million at December 31, 2022, compared with $146.630 million a year earlier; $145.870 million was classified as redeemable Class A shares in temporary equity. Operating cash outflow was $359,061. Total liabilities were $8.185 million, including $3.154 million of accounts payable and accrued expenses and a $5.031 million deferred underwriting commission. The filing reports no long-term debt or lease obligations. It does not provide meaningful operating margins because the SPAC had no operating revenue.

Material changes and proposed transaction

• General and administrative expense increased to $2.952 million from $846,086 in the 2021 inception period. Net loss was slightly lower than the prior inception-period loss, while trust investment income rose substantially; the periods are not directly comparable because 2021 covers only part of the year.
• Galata signed a business combination agreement with Marti on July 29, 2022. The transaction was expected to close in the second quarter of 2023, subject to shareholder approval and other conditions.
• Marti waived the agreement’s $50 million minimum-cash condition on December 23, 2022. Separately, the proposed $49.5 million convertible-note financing has a $150 million minimum-cash condition as amended, calculated using specified sources that include trust funds after redemptions, note and other financing commitments, and Marti cash.
• The notes carry 15% annual interest, split between 10% cash interest and 5% payment-in-kind interest, and are convertible at an initial rate of approximately 87 shares per $1,000 principal, subject to adjustment. They mature five years after issuance. The financing and transaction remained conditional.

Outlook, risks and unusual items

• Going concern: The auditor highlighted substantial doubt about Galata’s ability to continue as a going concern, citing its working-capital deficit, need for additional funds and uncertainty about completing a combination before the July 13, 2023 deadline. The financial statements include no adjustments for this uncertainty.
• Liquidity and redemption: If no combination is completed by the deadline, Galata must wind up and redeem public shares; the filing cautions shareholders may receive less than $10.20 per share in some circumstances, and warrants would expire worthless. Creditor claims could reduce trust proceeds.
• Financing and dilution: The combination depends on financing conditions, and redemptions, convertible-note conversion and other share issuances could affect available cash and dilute existing holders.
• Listing: NYSE American notified Galata in February 2023 that it had fewer than 300 public shareholders. It submitted a cure plan and stated it must meet the threshold by August 1, 2024 to avoid delisting; the securities continued trading during the cure period.
• Litigation: Galata received two January 2023 demand letters alleging inadequate disclosure about the transaction and reserving rights to sue. Further litigation could delay or prevent closing and create costs.
• Controls: Management concluded disclosure controls were ineffective at year-end due to material weaknesses involving evaluation of complex equity transactions and timely account-level reconciliations. Management said remediation efforts were continuing.
• Management cited uncertainty from COVID-19, inflation, market conditions and the Russia-Ukraine conflict, but said specific effects on the company could not be determined.

Important facts for investors to verify

• Confirm the actual status and final terms of the Marti transaction, including required approvals, closing conditions and any changes since this filing.
• Verify whether the $49.5 million note financing closed, whether its $150 million condition was satisfied or amended, and the resulting interest, conversion and dilution implications.
• Check current trust-account funds, redemption levels, cash available after transaction costs and the status of any deadline extension or liquidation requirements.
• Review the company’s progress on its NYSE American shareholder-count deficiency and the potential consequences of delisting.
• Assess the resolution of the disclosure demand letters and any subsequent litigation or transaction-related costs.
• Review remediation of the disclosed internal-control material weaknesses and any subsequent findings or restatements.