Global Star Acquisition, Inc. (GLST) 2024 10-K Review

Global Star Acquisition, Inc. (NASDAQ: GLSTU) is a special purpose acquisition company (SPAC) whose sole purpose is to merge with or acquire an operating business. GLST was incorporated in July 2019 and completed its initial public offering (IPO) in September 2022, raising $94.3 million into a trust account to fund a business combination. With multiple deadline extensions and a proposed merger with K Enter Holdings ("K Wave Media Ltd."), GLST’s fiscal 2024 report provides an update on its financial condition, governance, and merger progress.

Warren.AI 💰 2.5 / 10

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1. SPAC Structure and Merger Agreement

IPO and Trust Account

• GLST raised $94.3 million by selling 8 million units at $10.00 each. 1.2 million overallotment units and 498,225 “placement units” were sold to the sponsor.
• Proceeds, net of underwriting fees, were deposited in a trust account invested in U.S. Treasuries and money-market funds.
• Sponsor committed up to $1.6 million in working capital loans to cover operating expenses.

Share Structure

• Class A common stock (613,225 shares issued and outstanding; 380,875 shares subject to redemptions).
• Class B common stock (2.3 million founder shares held by sponsor, officers, and initial shareholders).
• Public warrants: 9.2 million outstanding, $11.50 exercise price, expire five years after a business combination.
• Rights: each public unit included a "right" convertible into one-tenth of a share of Class A stock upon the combination.

Proposed Business Combination with K Wave

• On June 15, 2023, GLST signed a merger agreement to combine with K Wave Media Ltd., a Cayman Islands company formed for the deal.
• The transaction is structured as a "Reincorporation Merger" and an "Acquisition Merger," creating a publicly listed operating company.
• Aggregate merger consideration reduced from $610 million to $590 million in March 2024 to reflect the termination of an ancillary acquisition.
• Deal extensions: shareholders approved three successive deadline extensions (to June 22, 2025), each supported by sponsor deposits totaling up to $1.875 million.

Key Closing Conditions

1. Stockholder approvals.
2. Net tangible assets of at least $5 million.
3. Effectiveness of a Form F-4 registration statement and Nasdaq listing approval.
4. Completion of K Wave’s acquisitions of six Korean entertainment firms.

2. Financial Highlights

Operating Results

• 2024 net loss: $(0.77) million, reflecting $2.09 million in operating expenses (legal, advisory, insurance) offset by $1.72 million of trust account interest.
• 2023 net income: $1.04 million, driven by $3.94 million of trust interest and similar expense levels.

Balance Sheet (12/31/2024)

• Cash (operating): $0.51 million (working capital deficit of $5.0 million).
• Marketable securities (trust): $4.37 million.
• Liabilities: $8.71 million (including $3.22 million deferred underwriting fees).
• Stockholders’ deficit: $(8.24) million.
• Class A common stock subject to possible redemption at $11.63 per share: $4.43 million.

Liquidity & Going Concern

• Negative working capital and repeated extension deposits highlight a strained runway.
• Mandatory liquidation if no deal by June 22, 2025—public shares to redeem at $10.25 (plus interest), warrants and rights expire worthless.
• Sponsor working capital loans outstanding: $2.58 million (no interest, convertible into equity).
• Audit committee identified material control weaknesses in tax and related-party accounting.

3. Corporate Governance and Risks

Nasdaq Delisting

• January 31, 2025: Nasdaq notified GLST that it failed to meet shareholder and public float requirements.
• Hearing requested; delisted from Nasdaq on March 14, 2025; now trades on OTCQX (symbols GLSTU, GLSTW, GLSTR).
• Sponsor and investors continue to pursue the pending merger and Nasdaq uplisting for the combined company.

Risk Factors

• SPAC status—possible Investment Company Act implications.
• M&A not completed by deadline triggers liquidation.
• Sponsor, officers, and directors have multiple conflicts of interest and no skin in the game share ownership.
• Audit and tax control deficiencies; Nasdaq listing uncertainties.

4. Investment Considerations

Pros

• SPAC with a signed merger agreement and timeline through mid-2025.
• Merger partner K Wave Media brings entertainment assets and topline revenue potential.
• Trust account retains cash and interest to fund the deal or redeem shares.

Cons

• Repeated deadline extensions signal difficulty closing a deal.
• Delisting from Nasdaq undermines liquidity and investor confidence.
• Negative working capital and ongoing cash burn require sponsor bailouts.
• No operating business—value entirely contingent on completing the business combination.

Net Result: GLST is a high-risk SPAC prospect, trading on the OTC market with limited assets and an uncertain path to combination. Public shareholders face nearly guaranteed dilution, and the warrants/rights look valueless absent a deal.

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Net (Loss) Income

2024: $(768,551)
2023: $1,044,077

Trust Account Balance (12/31/2024)

$4,374,657

Investment Score: 2.5 / 10

GLST’s delisting, weak liquidity, and pending SPAC deal make it a speculative target with limited upside and high downside risk.

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