Gorilla Technology Group Inc. — Regulatory Filings 2023

Apr 4, 2023

424B3 1 ea176484-424b3_gorillatech.htm PROSPECTUS SUPPLEMENT

Filed pursuant to Rule 424(b)(3)

Registration No. 333- 267838

PROSPECTUS SUPPLEMENT NO. 1

(to Prospectus dated March 30, 2023)

GORILLA TECHNOLOGY GROUP INC.

PRIMARY OFFERING OF

1,273,125 ORDINARY SHARES UNDERLYING WARRANTS

14,000,000 ORDINARY SHARES UNDERLYING THE CONTINGENT VALUE RIGHTS

SECONDARY OFFERING OF

71,210,599 ORDINARY SHARES, 1,273,125 WARRANTS TO PURCHASE ORDINARY SHARES 3,000,000 CLASS A CONTINGENT VALUE RIGHTS OF GORILLA TECHNOLOGY GROUP INC

This prospectus supplement updates and supplements the prospectus dated March 30, 2023 (the “ Prospectus ”), which forms a part of our registration statement on Form F-1 (No. 333-267838) and declared effective by the Securities and Exchange Commission on March 30, 2023. This prospectus supplement is being filed to update and supplement the information in the Prospectus with information pertaining to the 2022 earnings of Gorilla Technology Group Inc., a Cayman Islands exempted company (“ Gorilla ”).

The Prospectus and this prospectus supplement relate relates to (A) issuance from time to time by Gorilla, of up to (i) 1,273,125 ordinary shares, par value $0.0001 per share (the “ ordinary shares ”), issuable upon exercise of warrants (the “ warrants ”) to purchase our ordinary shares at an exercise price of $11.50 per share and (ii) 14,000,000 ordinary shares underlying the CVRs (as defined in the Prospectus) and (B) the resale, from time to time, by the selling securityholders named in the Prospectus (the “ Selling Securityholders ”), or their pledgees, donees, transferees, or other successors in interest of up to an aggregate of (i) 63,225,599 ordinary shares that were issued to Company shareholders, (ii) 4,985,000 ordinary shares issued to Sponsor (as defined in the Prospectus), certain affiliates of Global, and I-Banker Securities (as defined in the Prospectus) at the closing of the Business Combination (as defined in the Prospectus), (iii) 3,000,000 ordinary shares issued to the PIPE Investor (as defined in the Prospectus), (iv) 1,273,125 warrants to purchase ordinary shares at an exercise price of $11.50 per share and (v) 3,000,000 Class A CVRs (as defined in the Prospectus). Our registration of the Ordinary Shares covered by this prospectus does not mean that either we or the Selling Securityholders will offer or sell, as applicable, any of the Ordinary Shares. The Selling Securityholders may offer and sell the Ordinary Shares covered by this prospectus in a number of different ways and at varying prices. We provide more information about how the Selling Securityholders may sell the Ordinary Shares in the section entitled “ Plan of Distribution ” in the Prospectus.

You should read this prospectus and any prospectus supplement or amendment carefully before you invest in our securities. Our Ordinary Shares and warrants are listed on the Nasdaq Capital Market (“ Nasdaq ”) under the symbols “GRRR” and “GRRRW,” respectively. On April 3, 2023, the last reported sale price of our Ordinary Shares on Nasdaq was $3.99 per share and the last reported sale price of our warrants on Nasdaq was $0.23.

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any subsequent amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus, and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement. The information in this prospectus supplement modifies and supersedes, in part, the information in the Prospectus. Any information in the Prospectus that is modified or superseded shall not be deemed to constitute a part of the Prospectus except as modified or superseded by this prospectus supplement. You should not assume that the information provided in this prospectus supplement or the Prospectus is accurate as of any date other than their respective dates. Neither the delivery of this prospectus supplement, the Prospectus nor any sale made hereunder, shall under any circumstances create any implication that there has been no change in our affairs since the date of this prospectus supplement, or that the information contained in this prospectus supplement, the Prospectus is correct as of any time after the date of that information.

We are an “emerging growth company” under applicable federal securities laws and will be subject to reduced public company reporting requirements.

Investing in our securities involves a high degree of risk. See the section entitled “ Risk Factors ” beginning on page 7 of the Prospectus.

Neither the Securities and Exchange Commission nor any other state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this Prospectus Supplement No. 1. Any representation to the contrary is a criminal offense.

The date of this Prospectus Supplement is April 4, 2023.

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2022 Results Overview

Unless noted otherwise, all figures are for the year ended December 31, 2022, and all comparisons are with the corresponding period of 2021.

The following table summarizes financial results:

	Year Ended
	December 31
Items	2022		2021
	(in thousands)
Revenue	$ 22,409		$ 42,243
Cost of revenue	(14,072	)	(26,469	)
Gross Profit	8,337		15,774
Gross Margin	37.2	%	37.3	%
Operating expense	94,844		23,932
Operating loss	(86,507	)	(8,158	)
Net loss	$ (87,537	)	$ (8,548	)

The following table shows our EBIT, EBITDA and adjusted EBITDA, together reconciled to the loss for the year ended December 31, 2022 and 2021.

	Year Ended December 31 — 2022		2021
	(in thousands)
Loss for the year	$ (87,537	)	$ (8,548	)
Income tax expense (benefit)	430		(238	)
Financial expense, net	599		628
EBIT	$ (86,508	)	(8,158	)
Depreciation expense	5,938		6,386
Amortization expense	1,688		2,361
EBITDA	$ (78,882	)	$ 589
Transaction costs	2,814		-
Share Listing Expense (1)	70,105		-
Adjusted EBITDA	$ (5,963	)	$ 589

(1) Non-cash de-SPAC reverse merger cost.

The revenue decline reflects the shift in emphasis to security convergence and a substantial paring of unprofitable or marginally profitable customer accounts. The table below highlights the building traction in convergence while video analytics is rationalized.

	Year Ended December 31
	2022		2021
	Dollars in Thousands	Percentage
of Net Revenue	Dollars in Thousands	Percentage
of Net Revenue	Change $	Change %
Security Convergence	$ 12,711	56.7 %	$ 12,055	28.5 %	$ 656		5.4 %
Video IoT	$ 9,698	43.3 %	$ 30,188	71.5 %	$ (20,490	)	-67.9 %
Total	$ 22,409	100.0 %	$ 42,243	100.0 %	$ (19,834	)	-47.0 %

The gross profit decline tracked the decline in revenue. Gross margin percentage was unchanged versus the previous year.

Operating expense growth reflected investment in transforming Gorilla into a global cybersecurity leader, increased cost of being a public company, one-time expenses related to the SPAC merger, and one-time transaction expenses mainly related to the public listing and the SeeQuestor asset acquisition. One-time listing expenses in 2022 were $70 million, reflecting non-cash charges related to accounting for the reverse merger transaction as a capital reorganization. Other transaction-related expenses totaled $2.8 million.

Excluding transaction cost and share listing expense, adjusted net loss, a non-GAAP financial measure, was $14.6 million, higher than prior year mainly due to the increase in public company expenses. However, adjusted EBITDA was a loss of $6.0 million and operating cash flow was an outflow of $8.8 million. Capital expenditures were $2.9 million for the year. The company ended the year with $23 million of cash and cash equivalents.

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About Gorilla Technologies Group Inc.

Gorilla, headquartered in London U.K., is a global solution provider in security intelligence, network intelligence, business intelligence and IoT technology. Gorilla develops a wide range of solutions including Smart Cities, Smart Retail, Enterprise Security, and Smart Media. In addition, Gorilla provides a complete Security Convergence Platform to government institutions, telecom companies and private enterprises with network surveillance and cyber security.

Gorilla places an emphasis on offering leading technology, expert service, and precise delivery, and ensuring top-of-the-line, intelligent and strong edge AI solutions that enable clients to improve operational performance and efficiency. With continuous core technology development, Gorilla will deliver edge AI solutions to managed service providers, distributors, system integrators, and hardware manufacturers. For more information go to Gorilla-Technology.com .

Forward-Looking Statements

This Prospectus Supplement contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Gorilla’s actual results may differ from its expectations, estimates and projections and consequently, you should not rely on these forward-looking statements as predictions of future events. Words such as “expect,” “estimate,” “project,” “budget,” “forecast,” “anticipate,” “intend,” “plan,” “may,” “will,” “could,” “should,” “believes,” “predicts,” “potential,” “might” and “continues,” and similar expressions are intended to identify such forward-looking statements. These forward-looking statements include, without limitation, statements regarding our Nasdaq listing improving our ability to attract the attention of customers and investors alike, our ability to fund operations as we execute a strategic shift to pursue the larger and higher margin opportunities in Security Convergence, our expectations to swing to profit in the quarters ahead, our immediate priorities, Gorilla’s strategic shift to enable it to pursue larger projects with better revenue visibility, along with those other risks described under the heading “Risk Factors” in the Prospectus, and those that are included in any of Gorilla’s future filings with the SEC. These forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from expected results. Most of these factors are outside of the control of Gorilla and are difficult to predict. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Readers are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made. Gorilla undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date they were made except as required by law or applicable regulation.

Non-GAAP Measures

Certain of the measures included in this Prospectus Supplement are non-GAAP financial measures, including adjusted EBITDA and adjusted net loss. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by Gorilla are not reported by all of their competitors and may not be comparable to similarly titled amounts used by other companies.

We believe that the non-GAAP measures such as adjusted EBITDA provide useful information about our core operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. We present adjusted EBITDA in order to provide more information and greater transparency to investors about our operating results.

Adjusted EBITDA represents EBITDA excluding transaction costs and share listing expenses which are one-off expenses for professional services related to the Business Combination, asset acquisition and SOX 404 implementation project which are considered as non-recurring corporate development events, which are added back for calculation of adjusted EBITDA.

The final table which shows our EBIT, EBITDA and adjusted EBITDA, together reconciled to the loss for the year ended December 31, 2022 and 2021 in this results announcement has more details on the non-GAAP financial measures and the related reconciliations between these financial measures.

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Gorilla Technology Group Inc. and Subsidiaries
Consolidated Statements of Comprehensive Loss
(Unaudited)
(Expressed in United States dollars)

Items — Revenue	For the year ended December 31, 2022 — $ 22,408,808		For the year ended December 31, 2021 — $ 42,242,863		For the year ended December 31, 2020 — $ 45,412,589
Cost of revenue	(14,071,902	)	(26,468,662	)	(26,857,201	)
Gross profit	8,336,906		15,774,201		18,555,388
Operating expenses
Selling and marketing expenses	(3,644,316	)	(4,961,639	)	(5,331,150	)
General and administrative expenses	(9,191,505	)	(3,430,230	)	(2,932,144	)
Share listing expenses	(70,104,989	)	-		-
Research and development expenses	(14,110,408	)	(15,053,175	)	(14,342,826	)
Expected credit losses	-		(404,210	)	-
Other income	983,932		43,819		59,198
Other gains (losses) – net	1,222,885		(127,025	)	(1,702,379	)
Total operating expenses	(94,844,401	)	(23,932,460	)	(24,249,301	)
Operating loss	(86,507,495	)	(8,158,259	)	(5,693,913	)
Non-operating income and expenses
Interest income	235,912		37,869		159,275
Finance costs	(835,273	)	(666,349	)	(461,118	)
Total non-operating income and expenses	(599,361	)	(628,480	)	(301,843	)
Loss before income tax	(87,106,856	)	(8,786,739	)	(5,995,756	)
Income tax (expense) benefit	(430,368	)	238,445		74,903
Loss for the year	$ (87,537,224	)	$ (8,548,294	)	$ (5,920,853	)
Other comprehensive (loss) income
Components of other comprehensive income that may not be reclassified to profit or loss
Remeasurement of defined benefit plans	$ 7,409		$ 13,087		$ (7,589	)
Components of other comprehensive (loss) income that may be reclassified to profit or loss
Exchange differences on translation of foreign operations	$ (1,672,040	)	$ 453,007		$ 778,758
Other comprehensive (loss) income for the year, net of tax	$ (1,664,631	)	$ 466,094		$ 771,169
Total comprehensive loss for the year	$ (89,201,855	)	$ (8,082,200	)	$ (5,149,684	)
Loss per share
Basic loss per share	$ (1.78	)	$ (0.29	)	$ (0.20	)
Diluted loss per share	$ (1.78	)	$ (0.29	)	$ (0.20	)

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| Gorilla
Technology Group Inc. and Subsidiaries |
| --- |
| Consolidated
Balance Sheets |
| (Unaudited) |
| (Expressed
in United States dollars) |

Items	December 31, 2022	December 31, 2021
Assets
Current assets
Cash and cash equivalents	$ 22,996,377	$ 9,944,748
Financial assets at fair value through profit or loss - current	1,073,229	-
Financial assets at amortized cost - current	6,871,187	9,008,499
Contract assets	725,441	1,639,893
Accounts receivable	14,041,611	34,821,818
Inventories	68,629	152,227
Prepayments - current	1,266,442	231,531
Other receivables	648,617	19,930
Other current assets	61,803	5,971
Total current assets	47,753,336	55,824,617
Non-current assets
Financial assets at amortized cost - non-current	-	50,578
Property, plant and equipment	16,132,567	34,395,070
Right-of-use assets	16,675	123,375
Intangible assets	56,342	3,419,469
Deferred income tax assets	29,905	410,203
Prepayments - non-current	612,982	-
Other non-current assets	659,071	707,391
Total non-current assets	17,507,542	39,106,086
Total assets	$ 65,260,878	$ 94,930,703

Items	December 31, 2022
Liabilities and Equity
Liabilities
Current liabilities
Short-term borrowings	$ 13,492,935	$	22,968,092
Contract liabilities	58,475		20,194
Notes payable	602		668
Accounts payable	6,674,528		8,060,501
Other payables	3,620,998		4,532,628
Provisions - current	88,469		152,778
Lease liabilities - current	16,981		54,588
Warrant liabilities	2,042,410		-
Long-term borrowings, current portion	2,108,896		2,077,634
Other current liabilities, others	152,373		129,356
Total current liabilities	28,256,667		37,996,439
Non-current liabilities
Long-term borrowings	8,251,788		10,751,630
Provisions - non-current	61,057		105,542
Deferred income tax liabilities	148,183		78,402
Lease liabilities - non-current	-		69,587
Total non-current liabilities	8,461,028		11,005,161
Total liabilities	36,717,695		49,001,600
Equity
Equity attributable to owners of parent
Share capital
Ordinary share	7,136		6,191,100
Preference share	-		5,844,892
Advance receipts for share capital	-		33,720
Capital surplus
Capital surplus	154,730,389		41,301,738
Retained earnings
Accumulated deficit	(96,984,380	)	(9,454,565	)
Other equity interest
Financial statements translation differences of foreign operations	370,178		2,042,218
Treasury shares	(29,580,140	)	(30,000	)
Equity attributable to owners
of the parent	28,543,183		45,929,103
Total equity	28,543,183		45,929,103
Significant contingent liabilities and unrecognized contract commitments
Total liabilities and equity	$ 65,260,878	$	94,930,703

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Gorilla Technology Group Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
(Expressed in United States dollars)

	Year ended December 31 2022		Year ended December 31 2021		Year ended December 31 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Loss before tax	$ (87,106,856	)	$ (8,786,739	)	$ (5,995,756	)
Adjustments
Adjustments to reconcile profit (loss)
Expected credit losses	-		404,210		-
Depreciation expenses	5,938,167		6,385,999		5,307,581
Amortization expenses	1,687,618		2,361,009		2,897,975
Loss (gain) on disposal of property, plant and equipment	70,698		(459	)	856
Impairment loss	-		-		1,238,548
Loss on lease modification	48,488		-		-
Share listing expenses	70,104,989		-		-
Share option expenses	346,122		375,941		142,416
Interest expense	835,273		666,349		461,118
Interest income	(235,912	)	(37,869	)	(159,275	)
Gains on reversal of accounts and other payables	(960,564	)	-		(25,523	)
Loss on disposal of subsidiaries	69,335		-		124,441
Gains on financial assets and liabilities at fair value through profit or loss	(405,008	)	-		-
Changes in operating assets and liabilities
Changes in operating assets
Contract assets	914,452		(158,970	)	(972,189	)
Notes receivable	-		0		3,074,266
Accounts receivable	3,580,932		(1,579,304	)	(5,060,026	)
Inventories	83,598		(62,449	)	68,568
Prepayments	(1,245,559	)	344,354		(108,164	)
Other receivables	(628,687	)	(187,708	)	79,218
Other current assets	(55,832	)	-		(21,840	)
Other non-current assets	55,361		(30,235	)	(18,657	)
Changes in operating liabilities
Contract liabilities	38,281		20,194		-
Notes payable	(66	)	(35,835	)	(5,850,712	)
Accounts payable	(1,378,916	)	1,371,017		3,102,523
Other payables	9,129		1,163,036		31,344
Provisions	(108,794	)	837		103,850
Other current liabilities	23,017		28,566		(64,222	)
Cash (outflow) inflow generated from operations	(8,320,734	)	2,241,944		(1,643,660	)
Interest received	235,912		37,869		159,275
Interest paid	(686,841	)	(655,673	)	(461,118	)
Tax paid	(2,174	)	(1,167	)	-
Net cash flows (used in) from operating activities	(8,773,837	)	1,622,973		(1,945,503	)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of financial assets at fair value through profit or loss	(1,105,540	)	-		-
Acquisition of property, plant and equipment	(2,935,249	)	(7,496,271	)	(4,121,887	)
Proceeds from disposal of property, plant and equipment	-		459		6,180
Acquisition of intangible assets	(73,093	)	(899,005	)	(1,404,192	)
Disposal in financial assets at amortized cost	2,187,890		135,937		26,483
Investment in financial assets at amortized cost	-		(1,579,329	)	(2,245,333	)
Decrease (increase) in guarantee deposits	368		(72,142	)	5,087
Net cash flows used in investing activities	(1,925,624	)	(9,910,351	)	(7,733,662	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings	12,492,935		5,000,000		3,508,961
Repayments of short-term borrowings	(20,089,523	)	(327,098	)	-
Proceeds from long-term borrowings	3,447,526		6,146,341		1,184,469
Repayments of long-term borrowings	(4,899,022	)	(4,933,134	)	(900,682	)
Principal repayment of lease liabilities	(90,549	)	(33,864	)	(29,716	)
Exercise of share options	-		135,520		112,004
Payment of transaction cost	(292,416	)	-		-
Proceeds from capital reorganization	32,324,004		-		-
Exercise of warrants	714,230		-		-
Net cash flows from financing activities	23,607,185		5,987,765		3,875,036
Effect of foreign exchange rate changes	143,905		91,105		324,900
Net increase (decrease) in cash and cash equivalents	13,051,629		(2,208,508	)	(5,479,229	)
Cash and cash equivalents at beginning of year	9,944,748		12,153,256		17,632,485
Cash and cash equivalents at end of year	$ 22,996,377		$ 9,944,748		$ 12,153,256

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The following table shows our EBIT, EBITDA and adjusted EBITDA, together reconciled to the loss for the year ended December 31, 2022 and 2021 (net of operating expenses and non-operating income and expenses and excluding other comprehensive income).

	Year Ended December 31 — 2022		2021
	(in thousands)
Loss for the year	$ (87,537	)	$ (8,548	)
Income tax expense (benefit)	430		(238	)
Financial expense, net	599		628
EBIT	$ (86,508	)	(8,158	)
Depreciation expense	5,938		6,386
Amortization expense	1,688		2,361
EBITDA	$ (78,882	)	$ 589
Transaction costs (1)	2,814		-
Share Listing Expense (2)	70,105		-
Adjusted EBITDA	$ (5,963	)	$ 589

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(1) Transaction costs are one-off expenses for professional services related to the Business Combination, asset acquisition and SOX 404 implementation project which are considered as one-off corporate development events and added back for calculation of adjusted EBITDA.

(2) Share listing expense represents non-cash IFRS 2 charges recorded in connection with the consummation of the SPAC merger.

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