The accompanying notes are an integral part
of these condensed financial statements.
The accompanying notes are an integral part
of these condensed financial statements.
The accompanying notes are an integral part
of these condensed financial statements.
The accompanying notes are an integral part
of these condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 September 30, 2020, the Company had
not yet commenced any operations. All activity through September 30, 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 September 30, 2020, cash of $454,497 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
SEPTEMBER 30, 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).
The Company’s 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 the Company, or a prospective target business with which the Company has entered 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 the Company’s indemnity of the underwriter of this
offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the
“Securities Act”). However, the Company has not asked the Company’s Sponsor to reserve for such
indemnification obligations, nor has the Company independently verified whether the Company’s Sponsor has sufficient
funds to satisfy its indemnity obligations and believe that the Company’s Sponsor’s only assets are securities of
the Company. Therefore, we cannot assure you that the Company’s Sponsor would be able to satisfy those obligations.
None of the Company’s officers or directors will indemnify the Company for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
Liquidity and Going Concern
As of September 30, 2020, the Company had
$454,497 in its operating bank accounts, $291,844,594 in securities held in the Trust Account to be used for a Business Combination
or to repurchase or redeem its common stock in connection therewith and working capital of $490,819, which excludes franchise and
income taxes payable as such amounts can be paid from the interest earned in the Trust Account. As of September 30, 2020, approximately
$4,345,000 of the amount on deposit in the Trust Account represented interest income, which is available to pay the Company’s
tax obligations.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Until the consummation of a Business Combination,
the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates,
performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire,
and structuring, negotiating and consummating the Business Combination.
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. These conditions raise substantial doubt about the Company’s
ability to continue as a going concern through May 23, 2021, the date that the Company will be required to cease all operations,
except for the purpose of winding up, if a Business Combination is not consummated. These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should
the Company be unable to continue as a going concern.
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 and nine months ended September 30, 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.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
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 September 30, 2020 and December 31, 2019.
Marketable Securities Held in Trust Account
At September 30, 2020 and December 31,
2019, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills. Through September 30, 2020,
the Company withdrew $1,264,703 of interest earned on the Trust Account to pay its franchise and income taxes, of which $613,703
was withdrawn during the nine months ended September 30, 2020 and $137,500 was returned due to a reduction in the estimated tax
liability of the Company for the nine months ended September 30, 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 September 30,
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.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
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. The Company applies the two-class
method in calculating earnings per share. Shares of common stock subject to possible redemption at September 30, 2020 and 2019,
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.
Reconciliation of Net Loss Per Common
Share
The Company’s net (loss) income 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
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net (loss) income
|
|
$
|
(37,524
|
)
|
|
$
|
1,121,167
|
|
|
$
|
843,575
|
|
|
$
|
1,755,706
|
|
Less: Income attributable to common stock subject to possible redemption
|
|
|
(114,440
|
)
|
|
|
(1,209,003
|
)
|
|
|
(1,280,785
|
)
|
|
|
(1,873,638
|
)
|
Adjusted net loss
|
|
$
|
(151,964
|
)
|
|
$
|
(87,836
|
)
|
|
$
|
(437,210
|
)
|
|
$
|
(117,932
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic and diluted
|
|
|
8,668,801
|
|
|
|
8,640,339
|
|
|
|
8,672,285
|
|
|
|
7,803,850
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.02
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.05
|
)
|
|
$
|
(0.02
|
)
|
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 standards, 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 included 3,750,000 units sold at $10.00 per Unit upon the full exercise by the underwriter of its over-allotment option. 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
SEPTEMBER 30, 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 option 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 and nine months ended September 30, 2020, the Company incurred
and paid $30,000 and $90,000 in fees for these services, respectively. For the three and nine months ended September 30, 2019,
the Company incurred and paid $30,000 and $50,000 in fees for these services, respectively.
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.
GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
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
and nine months ended September 30, 2020, the Company incurred and paid $37,500 and $112,500 in such fees, respectively. For the
three and nine months ended September 30, 2019, the Company incurred and paid $37,500 and $53,000 in such fees, respectively.
NOTE 7. STOCKHOLDERS’ EQUITY
Preferred Stock —
The Company is authorized to issue up to 1,000,000 shares of $0.0001 par value preferred stock. At September 30, 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 Class A common stock are entitled to one vote for each share. At September 30, 2020 and December 31,
2019, there were 1,510,320 and 1,466,517 shares of Class A common stock issued and outstanding, excluding 27,239,680 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 Class B 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 September 30, 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.
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:
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●
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at any time while the Public Warrants are exercisable,
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●
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upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder,
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●
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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
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GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
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.
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:
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Level 1:
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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.
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Level 2:
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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.
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Level 3:
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Unobservable
inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or
liability.
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GX ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
The following table presents information
about the Company’s assets that are measured at fair value on a recurring basis at September 30, 2020 and December 31, 2019,
and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
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Level
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September 30,
2020
|
|
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December 31,
2019
|
|
Assets:
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
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1
|
|
$
|
291,844,594
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|
|
$
|
290,594,540
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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.