The statements in the discussion and analysis regarding industry outlook, our
expectations regarding the performance of our business and the forward-looking
statements are subject to numerous risks and uncertainties, including, but not
limited to, the risks and uncertainties described in "Risk Factors" and
"Cautionary Note Regarding Forward-Looking Statements." Our actual results may
differ materially from those contained in or implied by any forward-looking
statements. You should read the following discussion together with the sections
entitled "Risk Factors"," "Business" and the audited consolidated financial
statements, including the related notes, appearing elsewhere in this Form 10-K.
All references to year, unless otherwise noted, refers to our fiscal year, which
ends on December 31. As used in this Form 10-K, unless the context suggests
otherwise, "we," "us," "our," "the Company" or "Globalink" refer to Globalink
Investment Inc.
Overview
We were formed on March 24, 2021 for the purpose of entering into a merger,
share exchange, asset acquisition, stock purchase, recapitalization,
reorganization or other similar business combination with one or more target
businesses. Our efforts to identify a prospective target business will not be
limited to any particular industry or geographic region, although we intend to
focus our search on target businesses in in North America, Europe, South East
Asia, and Asia (excluding China, Hong Kong and Macau), in the medical technology
and green energy industry. We shall not undertake our initial business
combination with any entity with its principal business operations in China
(including Hong Kong and Macau). We intend to complete the business acquisition
in a combination of cash (whether cash from the trust account or cash from a
debt or equity financing transaction that closes concurrently with the business
combination) or our equity securities.
The issuance of additional shares of common stock in connection with an initial
business combination:
? may significantly dilute the equity interest of our investors who would not
have pre-emption rights in respect of any such issuance;
? may subordinate the rights of holders of shares of common stock if we issue
shares of preferred stock with rights senior to those afforded to our shares
of common stock;
? could cause a change in control if a substantial number of shares of our
common stock is issued, which may affect, among other things, our ability to
use our net operating loss carry forwards, if any, and could result in the
resignation or removal of our present officers and directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the stock ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our common stock, rights
and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant debt, it
could result in:
? default and foreclosure on our assets if our operating revenues after an
initial Business Combination are insufficient to repay our debt obligations;
? acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt security is payable on demand;
? our inability to obtain necessary additional financing if the debt security
contains covenants restricting our ability to obtain such financing while the
debt security is outstanding;
? using a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our shares of
common stock if declared, our ability to pay expenses, make capital
expenditures and acquisitions, and fund other general corporate purposes;
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? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation;
? limitations on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, and execution of our
strategy; and
? other purposes and other disadvantages compared to our competitors who have
less debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a business
combination will be successful.
Recent Developments
On March 6, 2023, the stockholders of the Company approved an amendment to the
Company's amended and restated certificate of incorporation, allowing the
Company to extend the Termination Date by up to two (2) three-months extensions,
followed by three (3) one-month extensions, to December 9, 2023. To obtain each
extension, the Company, its sponsor or any of their affiliates or designees must
deposit into the Company's trust account with Continental by the deadline
applicable prior to the extension, $390,000 for each three-month extension and
$130,000 for each one-month extension. In connection with the approval of the
Extension Amendment Proposal and the Trust Amendment Proposal at the special
meeting held on March 6, 2023, holders of 6,756,695 shares of the Company's
common stock exercised their right to redeem those shares for cash at an
approximate price of $10.35 per share, for an aggregate of approximately $69.92
million.
On March 6, 2023, Globalink entered into an amendment to the Trust Agreement,
originally entered into by and between the Company and Continental on December
6, 2021 to conform the procedures in the Trust Agreement by which the Company
may extend the date on which Continental must liquidate its trust account if the
Company has not completed its initial business combination to the procedures in
the amendment to the Company's Amended and Restated Certificate of
Incorporation.
On March 6, 2023, Globalink elected to extend the Termination Date by three
months until June 9, 2023, and deposited an aggregate of $390,000 into the trust
account for its public stockholders. The Extension is first of up to five
extensions permitted under the Second Amended and Restated Certificate of
Incorporation of the Company.
Business Combination
On August 3, 2022, Globalink entered into the Merger Agreement by and among
Tomorrow, Merger Sub, the Parent Representative, and the Seller Representative.
Pursuant to the terms of the Merger Agreement, a business combination between
Globalink and Tomorrow through the merger of Merger Sub with and into Tomorrow,
with Tomorrow surviving the Merger as a wholly-owned subsidiary of Globalink.
In accordance with the termination provisions under Section 10.1 of the Merger
Agreement, the Merger Agreement was terminated on March 8, 2023 (the "Merger
Agreement Termination Date"). In conjunction with the termination of the Merger
Agreement, the Additional Agreements (as defined in the Merger Agreement)
(including the Support Agreements) were also terminated in accordance with their
respective terms as of March 8, 2023, the Merger Agreement Termination Date.
Results of Operations
As of December 31, 2022, the Company had not commenced any operations. All
activity through December 31, 2022 relates to the Company's formation and the
IPO and search for a prospective initial business combination target. The
Company will not generate any operating revenues until after the completion of
an initial business combination, at the earliest. The Company will generate
non-operating income in the form of interest income from the proceeds derived
from the IPO placed in the trust account established for the benefit of the
Company's public stockholders.
For the year ended December 31, 2022, we had a net income of $224,242, all of
which consisted of interest income on investments held in trust account of
$1,683,870 and change in fair value of the warrant liabilities of $108,300,
partially offset by operating expenses incurred driven by general and
administrative expenses of $1,107,632, provision for income tax of $308,185 and
accrual of Delaware franchise taxes of $152,111.
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For the period from March 24, 2021 (inception) through December 31, 2021, we had
net loss of $119,631, which consists general and administrative expenses of
$135,649 and transaction costs allocated to warrant issuance of $611, partially
offset by change in fair value of warrant liabilities of $16,530 and interest
income on investments held in the trust account of $99.
Liquidity, Capital Resources and Going Concern
The registration statement on Form S-1 for the Company's IPO was declared
effective on December 6, 2021. On December 9, 2021, we consummated our IPO of
10,000,000 units. Each unit consists of one share of common stock, $0.001 par
value, one right to receive one-tenth (1/10) of a share of common stock upon the
consummation of an initial business combination and one redeemable warrant
entitling the holder thereof to purchase one-half (1/2) of a share of common
stock at a price of $11.50 per whole share. The units were sold at an offering
price of $10.00 per unit, generating gross proceeds of $100,000,000.
Simultaneously with the closing of the IPO, we consummated the private placement
of 517,500 private units at a price of $10.00 per unit, generating total
proceeds of $5,175,000.
On December 9, 2021, the underwriters exercised the over-allotment option in
full, and the closing of the Over-Allotment Units occurred on December 13, 2021.
The total aggregate issuance by the Company of 1,500,000 units at a price of
$10.00 per unit resulted in total gross proceeds of $15,000,000. On December 13,
2021, simultaneously with the sale of the Over-Allotment Units, we consummated
the private sale of an additional 52,500 private units, generating gross
proceeds of $525,000. Since the underwriter's over-allotment was exercised in
full, the Sponsor did not forfeit any insider shares.
Offering costs for the IPO and the exercise of the underwriters' Over-allotment
Option amounted to $6,887,896, consisting of $2,300,000 of underwriting fees,
$4,025,000 of deferred underwriting fees payable (which are held in the trust
account) and $562,896 of other costs. The $4,025,000 of deferred underwriting
fee payable is contingent upon the consummation of an initial business
combination by June 9, 2023 (or up until December 9, 2023 if our time to
complete a business combination is extended), subject to the terms of the
underwriting agreement.
Following the closing of the IPO (including the Over-Allotment Units),
$116,725,000 ($10.15 per unit) from the net proceeds of the sale of the units in
the IPO, Over-Allotment Units, and the private units was placed in a trust
account established for the benefit of the Company's public stockholders at
JPMorgan Chase Bank, N.A. maintained by Continental Stock Transfer & Trust
Company, acting as trustee and is invested in U.S. government securities, within
the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940,
as amended (the "Investment Company Act"), with a maturity of 180 days or less
or in any open-ended investment company that holds itself out as a money market
fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3)
and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the
Company, until the earlier of: (i) the completion of an initial business
combination and (ii) the distribution of the trust account.
For the year ended December 31, 2022, cash used in operating activities was
$730,469. Net income of $224,242 was impacted by interest earned on investments
held in the trust account of $1,683,870, change in fair value of warrant
liabilities of $108,300. Changes in operating assets and liabilities provided
$837,459 of cash from operating activities.
For the period from March 24, 2021 (inception) through December 31, 2021, cash
used in operating activities was $324,872. Net loss was $119,631 consisting of
general and administration expenses. Transaction costs allocated to warrant
issuance of $611, offset partially by change in fair value of warrant
liabilities of $16,530 and interest earned on investments held in the trust
account of $99. Changes in operating assets and liabilities used $189,223 of
cash from operating activities.
We had investments held in the trust account of $118,408,969 and $116,725,099 as
of December 31, 2022 and 2021 respectively. Interest income on the balance in
the trust account of $1,683,870 for the year ended December 31, 2022 may be used
by us to pay taxes. Through December 31, 2022, no amount was withdrawn from the
trust account to pay for taxes.
We intend to use substantially all of the funds held in the trust account,
including any amounts representing interest earned on the trust account (less
income taxes payable), to complete our business combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our business combination, the remaining proceeds held in the trust
account will be used as working capital to finance the operations of the target
business or businesses, make other acquisitions and pursue our growth
strategies.
We had $81,763 and $812,232 of cash held outside of the trust account as of
December 31, 2022 and 2021, respectively. We intend to use the funds held
outside the trust account primarily to identify and evaluate target businesses,
perform business due diligence on prospective target businesses, travel to and
from the offices, plants or similar locations of prospective target businesses
or their representatives or owners, review corporate documents and material
agreements of prospective target businesses, and structure, negotiate and
complete initial business combination.
Ding Jie Lin, a member of the Sponsor, agreed to loan the Company an aggregate
of up to $300,000 to cover expenses related to the IPO pursuant to a promissory
note (the "Note"). The Company borrowed $70,000 under the Note, which was repaid
at IPO. As of December 31, 2022 and 2021, the Company had no borrowings under
this Note.
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In order to finance transaction costs in connection with an initial business
combination, the Sponsor or an affiliate of the Sponsor, or certain of the
Company's officers and directors may, but are not obligated to, loan the Company
funds as may be required. If the Company completes an initial business
combination, the Company will repay the working capital loans out of the
proceeds of the trust account released to the Company. Otherwise, the working
capital loans would be repaid only out of funds held outside the trust account.
In the event that our initial business combination does not close, the Company
may use a portion of proceeds held outside the trust account to repay the
working capital loans, but no proceeds held in the trust account would be used
to repay the working capital loans. Except for the foregoing, the terms of such
working capital loans, if any, have not been determined and no written
agreements exist with respect to such loans. The working capital loans would
either be repaid upon consummation of an initial business combination, without
interest, or, at the lender's discretion, up to $1,500,000 of such working
capital loans may be convertible into units of the post initial business
combination entity at a price of $10.00 per unit. The units would be identical
to the private units. As of December 31, 2022, there were no working capital
loans outstanding.
If our initial business combination is not consummated, the Company will need to
raise additional capital through loans or additional investments from its
Sponsor, stockholders, officers, directors, or third parties. The Company's
officers, directors and Sponsor may, but are not obligated to, loan the Company
funds, from time to time or at any time, in whatever amount they deem reasonable
in their sole discretion, to meet the Company's working capital needs.
Accordingly, the Company may not be able to obtain additional financing. If the
Company is unable to raise additional capital, it may be required to take
additional measures to conserve liquidity, which could include, but not
necessarily be limited to, curtailing operations, suspending the pursuit of a
potential transaction, and reducing overhead expenses. The Company cannot
provide any assurance that new financing will be available to it on commercially
acceptable terms, if at all.
In connection with the Company's assessment of going concern considerations in
accordance with FASB ASU 2014-15, "Disclosures of Uncertainties about an
Entity's Ability to Continue as a Going Concern," the Company has until June 9,
2023 to consummate a business combination. It is uncertain that the Company will
be able to consummate a business combination by this time. If a business
combination is not consummated by this date and an extension is not requested by
the Sponsor, there will be a mandatory liquidation and subsequent dissolution of
the Company. Management has determined that the mandatory liquidation, should a
business combination not occur, and an extension is not requested by the
Sponsor, and potential subsequent dissolution as well as liquidity condition
noted above raises substantial doubt about the Company's ability to continue as
a going concern. No adjustments have been made to the carrying amounts of assets
or liabilities should the Company be required to liquidate after June 9, 2023.
The Company intends to complete a business combination before the mandatory
liquidation date.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2022 and 2021. We do not
participate in transactions that create relationships with entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities other than the below.
Registration Rights
The holders of the insider shares, the private units and any units that may be
issued upon conversion of working capital loans or extension loans (and any
securities underlying the private units or units issued upon conversion of the
working capital loans or extension loans) will be entitled to registration
rights pursuant to a registration rights agreement requiring us to register such
securities for resale. The holders of these securities are entitled to make up
to two demands, excluding short form demands, that we register such securities.
In addition, the holders have certain "piggy-back" registration rights with
respect to registration statements filed subsequent to our completion of our
initial business combination and rights to require us to register for resale
such securities pursuant to Rule 415 under the Securities Act.
Underwriting Agreement
The Company granted the underwriters a 45-day option to purchase up to 1,500,000
units to cover over-allotment. On December 13, 2021, the underwriters fully
exercised the option and purchased 1,500,000 additional units, generating gross
proceeds of $11,500,000. The underwriters are entitled to a deferred
underwriting discounts of $0.35 per unit, or $4,025,000 from the closing of the
IPO and the Over-Allotment Units. The deferred discounts will become payable to
the underwriters from the amounts held in the trust account solely if the
Company completes an initial business combination, subject to the terms of the
underwriting agreement.
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Right of First Refusal
Subject to certain conditions, we granted Chardan Capital Markets, LLC, the
representative of the underwriters in the IPO, for a period of 18 months after
the date of the consummation of our initial business combination, a right of
first refusal to act as book-running manager, with at least 30% of the
economics, for any and all future public and private equity and debt offerings.
In accordance with FINRA Rule 5110(f)(2)(E)(i), such right of first refusal
shall not have a duration of more than three years from the effective date of
the registration statement for the IPO.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We will qualify as an "emerging growth company" and
under the JOBS Act will be allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As such, our consolidated financial
statements may not be comparable to companies that comply with public company
effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal control over financial reporting pursuant to Section 404 of the
Sarbanes-Oxley Act, (ii) provide all of the compensation disclosure that may be
required of non-emerging growth public companies under the Dodd-Frank Wall
Street Reform and Consumer Protection Act, (iii) comply with any requirement
that may be adopted by the PCAOB regarding mandatory audit firm rotation or a
supplement to the auditor's report providing additional information about the
audit and the consolidated financial statements (auditor discussion and
analysis) and (iv) disclose certain executive compensation related items such as
the correlation between executive compensation and performance and comparisons
of executive compensation to median employee compensation. These exemptions will
apply for a period of five years following the completion of our IPO or until we
are no longer an "emerging growth company," whichever is earlier.
Critical Accounting Policies
The preparation of consolidated financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the consolidated financial statements, and income and
expenses during the periods reported. Actual results could materially differ
from those estimates. We have identified the following critical accounting
policies:
Net (Loss) Income Per Share
The Company complies with the accounting and disclosure requirements of FASB ASC
Topic 260, "Earnings Per Share". Net (loss) income per common share is computed
by dividing net (loss) income by the weighted average number of shares of common
stock outstanding for the period. Remeasurement of carrying value to redemption
value associated with the redeemable shares of common stock is included in
(loss) income per share. As of December 31, 2022 and for the period from March
24, 2021 (Inception) through December 31, 2021, the Company did not have any
dilutive securities and other contracts that could, potentially, be exercised or
converted into common stock and then share in the earnings of the Company. As a
result, diluted (loss) income per share is the same as basic (loss) income per
share for the period presented.
Accounting for Warrants
The Company accounts for warrants as either equity-classified or
liability-classified instruments based on an assessment of the warrant's
specific terms and applicable authoritative guidance in FASB, ASC 480 and ASC
815. The assessment considers whether the warrants are freestanding financial
instruments pursuant to ASC 480, meet the definition of a liability pursuant to
ASC 480, and whether the warrants meet all of the requirements for equity
classification under ASC 815, including whether the warrants are indexed to the
Company's own common stock, among other conditions for equity classification.
This assessment, which requires the use of professional judgment, is conducted
at the time of warrant issuance and as of each subsequent quarterly period end
date while the warrants are outstanding. We account for the warrants issued in
connection with our IPO in accordance with the guidance contained in ASC 815
under which the public warrants meet the criteria for equity treatment and the
private warrants do not meet the criteria for equity treatment and must be
recorded as liabilities. Accordingly, we classify the private warrants as
liabilities at their fair value and adjust the private warrants to fair value at
each reporting period. This liability is subject to re-measurement at each
balance sheet date until exercised, and any change in fair value is recognized
in our consolidated statement of operations. The fair value of the warrants was
estimated using a binomial lattice model.
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Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in
Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company adopted ASU 2020-06 on March 24, 2021 (inception). The
adoption of ASU 2020-06 did not have an impact on the Company's financial
statements.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our consolidated financial statements as of December 31, 2022.
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