References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Globis Acquisition Corp. References to our "management" or
our "management team" refer to our officers and directors, and references to the
"Sponsors" refer to Up and Up Capital, LLC and Globis SPAC LLC. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this Quarterly Report. Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), that are not historical facts, and involve risks and
uncertainties that could cause actual results to differ materially from those
expected and projected. All statements, other than statements of historical fact
included in this Form 10-Q including, without limitation, statements in this
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding the Company's financial position, business strategy and
the plans and objectives of management for future operations, are
forward-looking statements. Words such as "expect," "believe," "anticipate,"
"intend," "estimate," "seek" and variations and similar words and expressions
are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect
management's current beliefs, based on information currently available. A number
of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's final prospectus for its Initial Public Offering filed with the U.S.
Securities and Exchange Commission (the "SEC"). The Company's securities filings
can be accessed on the EDGAR section of the SEC's website at www.sec.gov. Except
as expressly required by applicable securities law, the Company disclaims any
intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
We are a blank check company formed under the laws of the State of Delaware on
August 21, 2020, for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar business
combination with one or more businesses (a "Business Combination"). We intend to
effectuate our Business Combination using cash from the proceeds of our initial
public offering (the "Initial Public Offering") of 11,500,000 units (the
"Units," which included the full exercise by the underwriter of its
over-allotment option in the amount of 1,500,000 Units, at $10.00 per Unit) and
the sale of 4,188,889 warrants (the "Private Warrants") at a price of $0.75 per
Private Warrant and 100,833 units (the "Placement Units" and, together with the
Private Warrants, the "Private Securities"), our capital stock, debt or a
combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to raise capital or to
complete our initial Business Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. Our only activities from inception through September 30, 2020 were
organizational activities and those necessary to prepare for the Initial Public
Offering, described below. We do not expect to generate any operating revenues
until after the completion of our initial Business Combination. We expect to
generate non-operating income in the form of interest income on marketable
securities held after the Initial Public Offering. We expect that we will incur
increased expenses as a result of being a public company (for legal, financial
reporting, accounting and auditing compliance), as well as for due diligence
expenses in connection with searching for, and completing, a Business
Combination.
For the period from August 21, 2020 (inception) through September 30, 2020, we
had a net loss of $1,040, which consisted of formation and operating costs.
Liquidity and Capital Resources
As of September 30, 2020, we had cash of $14,965. Until the consummation of the
Initial Public Offering, our only source of liquidity was an initial purchase of
common stock by the Sponsors and loans from one of our Sponsors, Globis SPAC
LLC.
Subsequent to the end of the quarterly period covered by this Quarterly Report,
on December 15, 2020, we consummated the Initial Public Offering of 11,500,000
Units, which included the full exercise by the underwriters of their
over-allotment option in the amount of 1,500,000 Units, at a price of $10.00 per
Unit, generating gross proceeds of $115,000,000. Simultaneously with the closing
of the Initial Public Offering, we consummated the sale of 4,188,889 Private
Warrants to the Sponsors at a price of $0.75 per Private Warrant and 100,833
Placement Units to the Sponsors at a price of $10.00 per Placement Units,
generating gross proceeds of $4,150,000.
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Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Securities, a total of $116,150,000 was
placed in a trust account (the "Trust Account"), and we had $209,439 of cash
held outside of the Trust Account, after payment of costs related to the Initial
Public Offering, and available for working capital purposes. We incurred
$6,541,841 in transaction costs, including $2,300,000 of underwriting fees,
$4,025,000 representing 402,500 shares of common stock issued, which the
underwriters are entitled to receive upon the consummation of a Business
Combination (the "equity participation shares") and $216,841 of other offering
costs.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account, which
interest shall be net of taxes payable, to complete our Business Combination. We
may withdraw interest from the Trust Account to pay taxes and up to $100,000 of
dissolution expenses, if any. To the extent that our share capital or debt is
used, in whole or in part, as consideration to complete a 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 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,
structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our Sponsors or an affiliate of our
Sponsors or certain of our officers and directors may, but are not obligated to,
loan us funds as may be required ("Working Capital Loans"). Such Working Capital
Loans would be evidenced by promissory notes. If we complete a Business
Combination, we may repay the notes out of the proceeds of the Trust Account
released to us. In the event that a Business Combination does not close, we may
use a portion of the working capital held outside the Trust Account to repay the
notes, but no proceeds from our Trust Account would be used for such repayment.
The notes may be convertible into warrants, at a price of $0.75 per warrant, at
the option of the lender. The warrants would be identical to the Private
Warrants.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business following our issuance of an
unsecured convertible promissory note to Globis SPAC LLC, or its assigns or
successors in interest, providing for borrowings from time to time of up to an
aggregate of $1,000,000. However, if our estimate of the costs of identifying a
target business, undertaking in-depth due diligence and negotiating a Business
Combination are less than the actual amount necessary to do so, we may have
insufficient funds available to operate our business prior to our initial
Business Combination. Moreover, we may need to obtain additional financing
either to complete our Business Combination or because we become obligated to
redeem a significant number of our public shares upon completion of our Business
Combination, in which case we may issue additional securities or incur debt in
connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2020. We do not participate
in transactions that create relationships with unconsolidated 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 an agreement to pay an
affiliate of Globis SPAC LLC a monthly fee of $10,000 for office space,
secretarial, and administrative support services provided to the Company. We
began incurring these fees on December 15, 2020 and will continue to incur these
fees monthly until the earlier of the completion of a Business Combination and
the Company's liquidation.
The underwriters are entitled to receive 402,500 equity participation shares
upon the consummation of a Business Combination. The equity participation shares
have been placed in escrow until the consummation of a Business Combination. If
a Business Combination is not consummated, the equity participation shares will
be forfeited by the underwriters. The fair value of the equity participation
shares is estimated to be $4,025,000, based upon the offering price of the Units
of $10.00 per Unit.
Critical Accounting Policies
The preparation of condensed 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 condensed financial statements, and income and
expenses during the periods reported. Actual results could materially differ
from those estimates. We have not identified any critical accounting policies.
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Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on our
condensed financial statements.
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