NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
GX
Acquisition Corp. (the “Company”) is a blank check company incorporated in Delaware on August 24, 2018. The Company
was formed for the purpose of effectuating a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or other similar business combination with one or more businesses (the “Business Combination”).The Company is an early
stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging
growth companies.
As
of March 31, 2020, the Company had not yet commenced any operations. All activity through March 31, 2020 relates to the Company’s
formation, the initial public offering (the “Initial Public Offering”), which is described below, and identifying
a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of
its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from
the proceeds derived from the Initial Public Offering.
The
registration statement for the Company’s Initial Public Offering was declared effective on May 20, 2019. On May 23, 2019,
the Company consummated the Initial Public Offering of 28,750,000 units (the “Units” and, with respect to the shares
of Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by the
underwriter of the over-allotment option to purchase an additional 3,750,000 Units, at $10.00 per Unit, generating gross proceeds
of $287,500,000, which is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 7,000,000 warrants (the “Private Placement
Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Company’s sponsor, GX Sponsor
LLC (the “Sponsor”), generating gross proceeds of $7,000,000, which is described in Note 4.
Transaction
costs amounted to $16,473,117, consisting of $5,000,000 of underwriting fees, $10,812,500 of deferred underwriting fees and $660,617
of other offering costs. In addition, as of March 31, 2020, cash of $504,930 was held outside of the Trust Account (as defined
below) and is available for working capital purposes.
Following
the closing of the Initial Public Offering on May 23, 2019, an amount of $287,500,000 ($10.00 per Unit) from the net proceeds
of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account
(the “Trust Account”), which have been 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 meeting the conditions of Rule
2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination
or (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering and sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied
generally toward consummating a Business Combination. NASDAQ rules provide that the Business Combination must be with one or more
target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred
underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the signing a definitive agreement
to enter a Business Combination. The Company will only complete a Business Combination if the post-Business Combination company
owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in
the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is
no assurance that the Company will be able to successfully effect a Business Combination.
The
Company will provide its holders of the outstanding Public Shares (the “public shareholders”) with the opportunity
to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with
a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed
Business Combination, the Company may seek shareholder approval of a Business Combination at a meeting called for such purpose
at which shareholders may seek to redeem their shares, regardless of whether they vote for or against a Business Combination.
The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 either
immediately prior to or upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority
of the outstanding shares voted are voted in favor of the Business Combination.
If
the Company seeks shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer
rules, the Company’s Amended and Restated Certificate of Incorporation provides that, a public shareholder, together with
any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted
from seeking redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
The
public shareholders will be entitled to redeem their shares for a pro rata portion of the amount then in the Trust Account ($10.00
per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company
to pay its tax obligations). The per-share amount to be distributed to shareholders who redeem their shares will not be reduced
by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 6). There will be no redemption
rights upon the completion of a Business Combination with respect to the Company’s warrants.
If
a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons,
the Company will, pursuant to its Amended and Restated Certificate of Incorporation, offer such redemption pursuant to the tender
offer rules of the Securities and Exchange Commission (the “SEC”), and file tender offer documents containing substantially
the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.
The
Company’s Sponsor has agreed (a) to vote its Founder Shares (as defined in Note 5), the common stock included in the Private
Units (the “Private Shares”) and any Public Shares purchased during or after the Initial Public Offering in favor
of a Business Combination, (b) not to propose an amendment to the Company’s Amended and Restated Certificate of Incorporation
with respect to the Company’s pre-Business Combination activities prior to the consummation of a Business Combination unless
the Company provides dissenting public shareholders with the opportunity to redeem their Public Shares in conjunction with any
such amendment; (c) not to redeem any shares (including the Founder Shares) and Private Placement Warrants (including underlying
securities) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a Business
Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company does not seek shareholder
approval in connection therewith) or a vote to amend the provisions of the Company’s Amended and Restated Certificate of
Incorporation relating to shareholders’ rights of pre-Business Combination activity and (d) that the Founder Shares and
Private Placement Warrants (including underlying securities) shall not participate in any liquidating distributions upon winding
up if a Business Combination is not consummated. However, the Sponsor will be entitled to liquidating distributions from the Trust
Account with respect to any Public Shares purchased during or after the Initial Public Offering if the Company fails to complete
its Business Combination.
The
Company will have until May 23, 2021 to complete a Business Combination (the “Combination Period”). If the Company
is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for
the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem the Public
Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest
earned on the funds held in the Trust Account and not previously released to the Company to pay taxes (less up to $100,000 of
interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval
of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby
a formal dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements
of applicable law. The underwriter has agreed to waive its rights to the deferred underwriting commission held in the Trust Account
in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts
will be included with the funds held in the Trust Account that will be available to fund the redemption of the Public Shares.
In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution
will be less than the Initial Public Offering price per Unit ($10.00).
Our
Sponsor has agreed that it will be liable to the Company if and to the extent any claims by a third party for services rendered
or products sold to us, or a prospective target business with which we have entering into a written letter of intent, confidentiality
or similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of
(i) $10.00 per public share and (ii) the actual amount per public share held in the Trust Account as of the day of liquidation
of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided
that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any
and all rights to monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims
under our indemnity of the underwriter of this offering against certain liabilities, including liabilities under the Securities
Act of 1933, as amended (the “Securities Act”). However, we have not asked our Sponsor to reserve for such indemnification
obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations
and believe that our Sponsor’s only assets are securities of our company. Therefore, we cannot assure you that our Sponsor
would be able to satisfy those obligations. None of our officers or directors will indemnify the Company for claims by third parties
including, without limitation, claims by vendors and prospective target businesses.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted
in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions
to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial
statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for
interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation
of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed
financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation
of the financial position, operating results and cash flows for the periods presented.
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on
Form 10-K for the year ended December 31, 2019 as filed with the SEC on March 24, 2020, which contains the audited financial statements
and notes thereto. The financial information as of December 31, 2019 is derived from the audited financial statements presented
in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The interim results for the three months
ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for
any future interim periods.
Emerging
growth company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to,
not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval
of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The
Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and
it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the
new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
financial statements with another public company, which is neither an emerging growth company nor an emerging growth company and
which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use
of estimates
The
preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed
financial statements and the reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect
of a condition, situation or set of circumstances that existed at the date of the condensed financial statements, which management
considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly,
the actual results could differ significantly from those estimates.
Cash
and cash equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of March 31, 2020 and December 31, 2019.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
Marketable
securities held in Trust Account
At
March 31 ,2020 and December 31, 2019, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills.
Through March 31, 2020, the Company withdraw $788,500 of interest earned on the Trust Account to pay its income taxes, of which
$137,500 was withdrawn during the three months ended March 31, 2020.
Common
stock subject to possible redemption
The
Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification
(“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption
is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common
stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence
of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common
stock is classified as stockholders’ equity. The Company’s Class A common stock features certain redemption rights
that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly,
common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’
equity section of the Company’s condensed balance sheets.
Income
taxes
The
Company complies with the accounting and reporting requirements of ASC Topic 740 “Income Taxes,” which requires an
asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities
are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future
taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected
to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
ASC
Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not
to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties
as of March 31, 2020 and December 31, 2019. The Company is currently not aware of any issues under review that could result in
significant payments, accruals or material deviation from its position.
The
Company may be subject to potential examination by federal, state and city taxing authorities in the areas of income taxes. These
potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions
and compliance with federal, state and city tax laws. The Company’s management does not expect that the total amount of
unrecognized tax benefits will materially change over the next twelve months.
Net
loss per common share
Net
loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period.
At March 31, 2019, weighted average shares were reduced for the effect of an aggregate of 1,125,000 Founder Shares that were subject
to forfeiture if the over-allotment option was not exercised by the underwriters. The Company applies the two-class method in
calculating earnings per share. Shares of common stock subject to possible redemption at March 31,2020, which are not currently
redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per share since such
shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered the
effect of warrants sold in the Initial Public Offering and private placement to purchase 21,375,000 shares of common stock in
the calculation of diluted net loss per share, since the exercise of the warrants is contingent upon the occurrence of future
events. As a result, diluted net loss per common share is the same as basic net loss per common share for the periods presented.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
Reconciliation
of net loss per common share
The
Company’s net income (loss) is adjusted for the portion of income that is attributable to common stock subject to possible
redemption, as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company.
Accordingly, basic and diluted net loss per common share is calculated as follows:
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net income (loss)
|
|
$
|
1,024,687
|
|
|
$
|
(121
|
)
|
Less: Income attributable to common stock subject to possible redemption
|
|
|
(1,152,591
|
)
|
|
|
—
|
|
Adjusted net loss
|
|
$
|
(127,904
|
)
|
|
$
|
(121
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic and diluted
|
|
|
8,654,017
|
|
|
|
7,500,000
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
Concentration
of credit risk
Financial instruments that potentially subject
the Company to concentration of credit risk consist of cash accounts in a financial institution, which, at times may exceed the
Federal Depository Insurance Corporation coverage of $250,000. The Company has not experienced losses on this account and management
believes the Company is not exposed to significant risks on such account.
Fair
value of financial instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair
Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily
due to their short-term nature.
Recently
issued accounting standards
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have
a material effect on the Company’s condensed financial statements.
NOTE
3. INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 28,750,000 Units at a purchase price of $10.00 per Unit, which includes the full
exercise by the underwriter of its option to purchase an additional 3,750,000 Units at $10.00 per Unit. Each Unit consists of
one share of the Company’s Class A common stock, $0.0001 par value, and one-half of one redeemable warrant (“Public
Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A common stock at an exercise price of
$11.50 per whole share (see Note 7).
NOTE
4. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 7,000,000 Private Placement Warrants at
a price of $1.00 per Private Placement Warrant ($7,000,000 in the aggregate), each exercisable to purchase one share of Class
A common stock at a price of $11.50 per share. The proceeds from the sale of the Private Placement Warrants were added to the
net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination
within the Combination Period, the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption
of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE
5. RELATED PARTY TRANSACTIONS
Founder
Shares
In
September 2018, the Company issued an aggregate of 8,625,000 shares (the “Founder Shares”) to the Sponsor for an aggregate
purchase price of $25,000 in cash. In April 2019, the Sponsor contributed back to the Company, for no consideration, 1,437,500
Founder Shares, resulting in an aggregate of 7,187,500 Founder Shares outstanding. The 7,187,500 Founder Shares included an aggregate
of up to 937,500 shares subject to forfeiture by the Sponsor to the extent that the underwriter’s over-allotment was not
exercised in full or in part, so that the Sponsor would collectively own 20% of the Company’s issued and outstanding shares
after the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering and
excluding the Private Placement Warrants and underlying securities). As a result of the underwriter’s election to fully
exercise its over-allotment option, 937,500 Founder Shares are no longer subject to forfeiture.
The
Sponsor has agreed not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after
the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, capital stock exchange
or similar transaction that results in the shareholders having the right to exchange their shares of common stock for cash, securities
or other property. Notwithstanding the foregoing, if the last sale price of the Company’s Class A common stock equals or
exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for
any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination, the Founder
Shares will be released from the lock-up.
Promissory
Note – Related Party
On
September 24, 2018, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial
Public Offering pursuant to a promissory note (the “Note”). The Note was non-interest bearing and was payable on the
earlier of March 31, 2019 or the completion of the Initial Public Offering. On March 29, 2019, the Sponsor and the Company, for
no consideration, agreed to extend the maturity date of the Note from the earlier of March 31, 2019 or the completion of the Initial
Public Offering to the earlier of June 30, 2019 or the completion of the Initial Public Offering. The borrowings outstanding under
the Note of $280,000 were repaid upon the consummation of the Initial Public Offering on May 23, 2019.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Company’s Sponsor, an affiliate of the
Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required
(the “Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would
either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion. Up to $1,500,000
of notes may be converted upon consummation of a Business Combination into additional Private Units at a price of $10.00 per Unit.
In the event that a 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.
Administrative
Support Agreement
The Company entered into an agreement whereby,
commencing on May 20, 2019, the Company began paying an affiliate of the Sponsor a total of $10,000 per month for office space,
utilities and secretarial and administrative support. Upon completion of the Business Combination or the Company’s liquidation,
the Company will cease paying these monthly fees. For the three months ended March 31, 2020, the Company incurred and paid $30,000
in fees for these services.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE
6. COMMITMENTS AND CONTINGENCIES
Registration
Rights
Pursuant
to a registration rights agreement entered into on May 20, 2019, the holders of the Founder Shares, Private Placement Warrants
(and their underlying securities) and any Units that may be issued upon conversion of the Working Capital Loans (and underlying
securities) will be entitled to registration rights. The holders of 25% of these securities are entitled to make up to three demands,
excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. The
registration rights agreement will not contain liquidating damages or other cash settlement provisions resulting from delays in
registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such
registration statements.
Underwriter’s
Agreement
The
underwriter is entitled to a deferred fee of $10,812,500, which will become payable to the underwriter from the amounts held in
the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting
agreement.
Consulting
Agreement
In
June 2019, the Company entered into a consulting arrangement for services to help identify and introduce the Company to potential
targets and provide assistance with the negotiations in connection with a Business Combination. The agreement provides for a monthly
fee of $12,500. For the three months ended March 31, 2020, the Company incurred and paid $37,500 in such fees.
NOTE
7. STOCKHOLDERS’ EQUITY
Preferred
Stock — The Company is authorized to issue 1,000,000 shares of $0.0001 par value preferred stock. At March 31, 2020
and December 31, 2019, there were no preferred shares issued or outstanding.
Class
A Common Stock — The Company is authorized to issue up to 100,000,000 shares of Class A, $0.0001 par value common
stock. Holders of the Company’s common stock are entitled to one vote for each share. At March 31, 2020 and December 31,
2019, there were 1,506,575 and 1,466,517 shares of Class A common stock issued and outstanding, excluding 27,243,425 and 27,283,483
shares of Class A common stock subject to possible redemption, respectively.
Class
B Common Stock — The Company is authorized to issue up to 10,000,000 shares of Class B, $0.0001 par value common
stock. Holders of the Company’s common stock are entitled to one vote for each share. The shares of Class B common stock
will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject
to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like. As a result of the underwriter’s
election to fully exercise its over-allotment option, 937,500 Founder Shares are no longer subject to forfeiture. At March 31,
2020 and December 31, 2019, there were 7,187,500 shares of Class B common stock issued and outstanding.
The
Company may issue additional common stock or preferred stock to complete its Business Combination or under an employee incentive
plan after completion of its Business Combination.
Warrants
— The Public Warrants will become exercisable on the later of (a) 30 days after the consummation of a Business Combination
or (b) 12 months from the effective date of the registration statement relating to the Initial Public Offering. No Public Warrants
will be exercisable for cash unless the Company has an effective and current registration statement covering the common shares
issuable upon exercise of the Public Warrants and a current prospectus relating to such common shares. Notwithstanding the foregoing,
if a registration statement covering the common shares issuable upon the exercise of the Public Warrants is not effective within
90 days from the consummation of a Business Combination, the holders may, until such time as there is an effective registration
statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise the
Public Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. If an exemption
from registration is not available, holders will not be able to exercise their Public Warrants on a cashless basis. The Public
Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
The
Company may call the Public Warrants for redemption (excluding the Private Placement Warrants), in whole and not in part, at a
price of $0.01 per warrant:
|
●
|
at
any time while the Public Warrants are exercisable,
|
|
●
|
upon
not less than 30 days’ prior written notice of redemption to each Public Warrant holder,
|
|
●
|
if,
and only if, there is a current registration statement in effect with respect to the issuance of the common stock underlying
such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing
|
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except
that the Private Placement Warrants and the common shares issuable upon the exercise of the Private Placement Warrants will not
be transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
Additionally, the Private Placement Warrants will be exercisable on a cashless basis and will be non-redeemable so long as they
are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other
than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and
exercisable by such holders on the same basis as the Public Warrants.
The
exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain
circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. In addition,
if (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in
connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20
per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s
board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder
Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance) (the “Newly Issued Price”),
(y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon,
available for the funding of the Company’s initial Business Combination on the date of the consummation of such initial
Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Company’s common stock
during the 20 trading day period starting on the trading day prior to the day on which the Company consummates its initial Business
Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be
adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price and the $18.00
per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to 180% of the higher of
the Market Value and the Newly Issued Price.
Additionally,
in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business
Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants
will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless. If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and
number of common shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the
event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. If the Company
is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust
Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution
from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may
expire worthless.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE
8. FAIR VALUE MEASUREMENTS
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value
at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company
would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an
orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets
and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and
to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).
The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable
inputs used in order to value the assets and liabilities:
|
Level 1:
|
Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing
basis.
|
|
|
|
|
Level 2:
|
Observable
inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or
liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level 3:
|
Unobservable
inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at
March 31, 2020 and December 31, 2019, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine
such fair value:
Description
|
|
Level
|
|
|
March 31,
2020
|
|
|
December 31,
2019
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
|
1
|
|
|
$
|
291,996,005
|
|
|
$
|
290,594,540
|
|
NOTE
9. SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed
financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required
adjustment or disclosure in the condensed financial statements.