Celularity (CELU) - 2019 Q4 - Annual Report

PART I Item 1. Business. GX Acquisition Corp. is a blank check company focused on identifying and acquiring businesses with strong growth potential and attractive returns, leveraging its management's expertise to enhance shareholder value - The company is an early stage blank check company formed to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses[22] - The company focuses its search on companies with favorable growth prospects and attractive returns on invested capital, which can benefit from becoming a publicly-listed company[22][23] - The company's strategy involves utilizing its management team's network, conducting rigorous research and due diligence, arranging appropriate financing, and implementing operational and financial business plans to accelerate growth and enhance shareholder value[25] Overview and Business Strategy The company is a Delaware-incorporated blank check company established to pursue a business combination, focusing on targets with strong growth potential and high returns on invested capital - GX Acquisition Corp. is a Delaware-incorporated blank check company established to pursue a business combination, focusing on targets with strong growth potential and high returns on invested capital[22] - The business strategy aims to identify targets that can benefit from public listing, improved capital access, and management team expertise to materially grow revenue and earnings through capital injection, technology investment, or business restructuring[23] Acquisition Criteria Key acquisition criteria include potential for favorable revenue and earnings growth, high returns on invested capital, and presence in sectors with positive secular trends - Key acquisition criteria include potential for favorable revenue and earnings growth, high returns on invested capital, established customer relationships, sustainable margins, and presence in sectors with positive secular trends and significant barriers to entry[27][28] - The company also seeks targets that are less susceptible to new regulations, have potential for growth through add-on acquisitions, appear undervalued by investors, and require strategic/managerial guidance for value creation[29] Acquisition, Investment and Post-Closing Process The acquisition process involves thorough due diligence, followed by a "100 Day Plan" post-closing to define objectives and accelerate growth - The acquisition process involves thorough due diligence, including analysis of industry conditions, management meetings, third-party expert interaction, document reviews, facility inspections, and financial/operational data review[31] - Post-closing, the company intends to implement a '100 Day Plan' with the target's management to define near-term objectives, develop key performance indicators, accelerate revenue growth, identify high-return investments, optimize expenses, and establish an investor relations strategy[33][34] Business Combination Process and Management Team The company conducts extensive due diligence for business combinations, while managing potential conflicts of interest due to management's other affiliations - The company conducts extensive due diligence, including financial and operating data review, management meetings, and legal reviews, leveraging its team's expertise in analyzing target companies and evaluating projections[38] - Potential conflicts of interest exist due to management's ownership of founder shares and private placement warrants, and their affiliations with Trimaran, which may present other business opportunities[40][42] - Management team members are not obligated to devote full-time to the company's affairs but commit necessary time until a business combination is completed, utilizing their broad network and experience[44] Status as a Public Company The company's public status offers target businesses an alternative to traditional IPOs, providing capital access and an enhanced profile, while benefiting from 'emerging growth company' exemptions - The company's public status offers target businesses an alternative to traditional IPOs, providing greater access to capital, improved management incentives, enhanced public profile, and ability to attract talent[47][49] - As an 'emerging growth company' under the JOBS Act, the company benefits from exemptions from certain reporting requirements, including auditor attestation for internal controls and reduced executive compensation disclosures[51][52] Financial Position and Business Combination Funding The company has $279,782,040 available for its initial business combination, with flexibility to use various financing methods and seek additional funding if needed Funds Available for Initial Business Combination (as of December 31, 2019) | Item | Amount ($) | | :------------------------------------ | :------------ | | Funds available for initial business combination | 279,782,040 | | Deferred underwriting fees (up to) | 10,812,500 | - The company has flexibility to use cash, debt, equity securities, or a combination for its initial business combination, allowing tailored consideration for target businesses[53] - Additional financing may be sought through private offerings of debt or equity, especially for larger target businesses, with such financing expected to close simultaneously with the business combination[57] Sources and Selection of Target Businesses Target businesses are identified through various sources, with a requirement for the business combination's fair market value to be at least 80% of the trust account assets - Target businesses are identified through various unaffiliated sources like investment bankers and professionals, as well as through the business contacts and relationships of the company's officers, directors, and sponsor[58] - The company must complete a business combination with an aggregate fair market value of at least 80% of the trust account assets, as determined by the board of directors using generally accepted financial community standards[62] - The company aims to acquire 100% of a target's equity or assets, or at least a controlling interest (50% or more of voting securities) to avoid registration as an investment company[63] Risks of Lack of Diversification and Management Evaluation Post-combination success may depend entirely on a single business, leading to a lack of diversification and increased exposure to negative developments, alongside potential limitations in evaluating target management - Post-combination success may depend entirely on a single business, leading to a lack of diversification and increased exposure to negative economic, competitive, and regulatory developments[68] - The company's ability to evaluate a target's management team may be limited, and future management may lack the necessary skills for a public company, potentially impacting the combined entity's performance[69] Stockholder Approval and Redemption Rights Stockholder approval for business combinations varies by transaction type, with public stockholders retaining redemption rights, but facing liquidation if a combination is not completed by May 23, 2021 Stockholder Approval Requirements for Business Combinations | Type of Transaction | Stockholder Approval is Required | | :------------------------------------------------------ | :------------------------------- | | Purchase of assets | No | | Purchase of stock of target not involving a merger with the company | No | | Merger of target into a subsidiary of the company | No | | Merger of the company with a target | Yes | - Public stockholders have redemption rights upon completion of an initial business combination, allowing them to redeem shares for cash at a per-share price based on the trust account balance[79] - If a business combination is not completed by May 23, 2021, the company will liquidate, redeeming public shares at a per-share price from the trust account, and warrants will expire worthless[99] Competition and Employees The company faces significant competition for acquisition targets from entities with greater resources and operates with a small team of 4 officers and no full-time employees - The company faces competition from other blank check companies, private equity groups, and operating businesses for acquisition targets, with many competitors possessing greater financial and human resources[116] - The company currently has 4 officers and no full-time employees, with officers dedicating time as needed until a business combination is completed[117] Periodic Reporting and Financial Information As a public company, GX Acquisition Corp. has SEC reporting obligations and, as an 'emerging growth company', will evaluate internal control procedures for the fiscal year ending December 31, 2020 - As a public company, GX Acquisition Corp. has reporting obligations to the SEC, including filing annual, quarterly, and current reports with audited financial statements[118] - The company is an 'emerging growth company' and will evaluate its internal control procedures for the fiscal year ending December 31, 2020, as required by the Sarbanes-Oxley Act[120][121] Item 1A. Risk Factors. Investing in GX Acquisition Corp. involves significant risks, including the inability to complete a business combination, potential loss of investment upon liquidation, and conflicts of interest among management and the sponsor - The company is a blank check company with no operating history or revenues, meaning investors have no basis to evaluate its ability to achieve its business objective of completing an initial business combination[124][125] - Public stockholders may not have the opportunity to vote on a proposed business combination, and even if a vote occurs, the sponsor's agreement to vote in favor increases the likelihood of approval regardless of public stockholder sentiment[126][129] - The requirement to complete a business combination by May 23, 2021, creates leverage for potential targets and may limit due diligence, potentially leading to less favorable terms or the company's liquidation if no combination is achieved[141][142][144][145] Risks Related to Business Combination and Liquidation The company's lack of operating history poses a risk to completing a business combination, potentially leading to liquidation and loss for public stockholders if a deal is not finalized by May 23, 2021 - The company's lack of operating history means investors have no basis to evaluate its ability to complete a business combination, and failure to do so will result in no operating revenues[125] - Public stockholders may not have a vote on the business combination, and their only recourse may be to redeem shares for cash, which could make the company unattractive to targets if too many redemptions occur[127][133][134] - If the company fails to complete a business combination by May 23, 2021, it will liquidate, and public stockholders may receive less than $10.00 per share, while warrants will expire worthless[144][145] Risks Related to Securities and Market Nasdaq may delist the company's securities if listing requirements are not met, and investors may lose redemption ability if they hold 15% or more of Class A common stock - Nasdaq may delist the company's securities if it fails to meet listing requirements, limiting investor transactions and potentially subjecting the company to additional trading restrictions[155][156][157] - The company is exempt from certain SEC rules for 'blank check' companies due to having over $5,000,000 in net tangible assets, meaning investors do not receive the protections afforded by those rules[159][160] - If stockholders hold 15% or more of Class A common stock, they may lose the ability to redeem shares in excess of this threshold, reducing their influence and potentially leading to losses if they sell in the open market[162][163] Risks Related to Financial Condition and Operations Limited resources and intense competition may hinder the company's ability to complete a business combination, potentially leading to liquidation or post-combination write-downs - Limited resources and significant competition for business combination opportunities may hinder the company's ability to complete an initial business combination, potentially leading to liquidation at a loss for public stockholders[164][165] - Insufficient funds outside the trust account could limit the search for a target, requiring dependence on loans from the sponsor or management, which if unavailable, could lead to liquidation[166][167] - Post-combination, the company may face write-downs, restructuring, or impairment charges due to undetected issues during due diligence, negatively impacting financial condition and stock price[169][170] Risks Related to Governance and Conflicts of Interest Third-party claims could reduce trust account funds, and officers' and directors' other business affiliations create potential conflicts of interest, impacting the company's ability to complete a combination - Third-party claims against the company could reduce funds in the trust account, potentially leading to a per-share redemption amount less than $10.00, despite sponsor indemnification agreements[171][172][173] - If deemed an investment company under the Investment Company Act, the company would face burdensome compliance requirements and restricted activities, making a business combination difficult[183][185][187] - Officers and directors allocate time to other businesses, creating potential conflicts of interest in identifying and pursuing business opportunities, which could negatively impact the company's ability to complete a combination[234][235][236][239] Item 1B. Unresolved Staff Comments. There are no unresolved staff comments from the SEC regarding the company's filings - The company has no unresolved staff comments[313] Item 2. Properties. The company does not own any material real estate or physical properties; its principal executive offices are located in New York, NY, with costs covered by a monthly fee to an affiliate of the sponsor - The company does not own any real estate or other physical properties materially important to its operation[314] - Principal executive offices are at 1325 Avenue of the Americas, 25th Floor, New York, NY 10019, with costs included in a $10,000 monthly fee paid to the sponsor's affiliate[314] Item 3. Legal Proceedings. As of the report date, there is no pending litigation against the company, its officers, or directors - To the knowledge of management, there is no litigation currently pending against the company, its officers or directors in their capacity as such or against any of its property[315] Item 4. Mine Safety Disclosures. This item is not applicable to the company - This item is not applicable[317] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities. The company's units, Class A common stock, and warrants are traded on the Nasdaq Capital Market, with specific holders of record as of March 20, 2020, and no equity compensation plans or recent issuer purchases - The company's units, Class A common stock, and warrants are traded on the Nasdaq Capital Market under the symbols GXGXU, GXGX, and GXGXW, respectively[321] Holders of Record (as of March 20, 2020) | Security | Holders of Record | | :------------------ | :---------------- | | Units | 1 | | Class A Common Stock | 1 | | Warrants | 2 | - There are no securities authorized for issuance under equity compensation plans, and no recent sales of unregistered securities or issuer purchases of equity securities[323][324][325] Item 6. Selected Financial Data. Selected financial data is not required for smaller reporting companies, a category the registrant falls under - Selected financial data is not required for smaller reporting companies[327] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. This section reviews the company's financial condition and operations as a blank check company, detailing 2019 net income, liquidity from IPO proceeds, and strategies for funding a business combination - The company is a blank check company formed on August 24, 2018, with no operating history or revenues to date, focusing on identifying a target for a business combination[331][337] Financial Performance (Year Ended December 31, 2019) | Metric | Amount ($) | | :---------------------------------------------- | :------------ | | Net Income | 2,512,971 | | Interest Income on Marketable Securities | 3,753,411 | | Unrealized Loss on Marketable Securities | (7,871) | | Operating Costs | (564,339) | | Provision for Income Taxes | (668,230) | Liquidity and Capital Resources (as of December 31, 2019) | Item | Amount ($) | | :-------------------------------------------- | :------------ | | Marketable Securities in Trust Account | 290,594,540 | | Cash held outside Trust Account | 917,007 | | Transaction Costs (Underwriting & Other Fees) | 16,473,117 | Overview The company is a blank check entity formed in August 2018 to effect a business combination, with potential for equity dilution or debt subordination from future financing - The company is a blank check company formed in August 2018 to effect a business combination, intending to use cash, securities, debt, or a combination thereof[331] - Issuance of additional shares or incurrence of significant debt for a business combination could dilute equity, subordinate common stock rights, cause a change in control, or adversely affect market prices[332][333] Results of Operations The company has not generated operating revenues, with net income of $2,512,971 for 2019 primarily from interest income on trust account securities - The company has not generated operating revenues to date, with activities focused on organization, IPO preparation, and identifying a business combination target[337] Net Income (Loss) Summary | Period | Net Income (Loss) ($) | | :-------------------------------------- | :---------------- | | Year Ended December 31, 2019 | 2,512,971 | | Period from August 24, 2018 - Dec 31, 2018 | (1,098) | - Net income for 2019 was primarily driven by interest income on marketable securities in the Trust Account, offset by operating costs and income taxes[338] Liquidity and Capital Resources The company raised $287.5 million from its IPO and $7 million from private placement warrants, with $917,007 held outside the Trust Account for pre-combination expenses IPO and Private Placement Proceeds | Item | Amount ($) | | :------------------------------------ | :------------ | | Gross Proceeds from IPO (28,750,000 Units) | 287,500,000 | | Gross Proceeds from Private Placement Warrants (7,000,000 Warrants) | 7,000,000 | | Total Transaction Costs | 16,473,117 | Cash Flow from Operating Activities (Year Ended December 31, 2019) | Item | Amount ($) | | :-------------------------------------------- | :------------ | | Net Income | 2,512,971 | | Interest Earned on Marketable Securities (non-cash) | (3,753,411) | | Unrealized Loss on Marketable Securities | 7,871 | | Deferred Income Tax Provision | (1,653) | | Changes in Operating Assets and Liabilities | 136,389 | | Net Cash Used in Operating Activities | (1,097,833) | - Funds held outside the Trust Account ($917,007 as of Dec 31, 2019) are intended for identifying acquisition candidates, due diligence, and other pre-combination expenses[343] Off-Balance Sheet Arrangements The company had no off-balance sheet arrangements as of December 31, 2019 - The company had no off-balance sheet arrangements as of December 31, 2019[348] Contractual Obligations The company has no long-term debt or capital lease obligations, but incurs monthly fees for office space and administrative support, and a consulting arrangement - The company has no long-term debt or capital lease obligations, but pays a monthly fee of $10,000 to an affiliate of the Sponsor for office space and administrative support[349] - A consulting arrangement for identifying potential targets and assisting with negotiations incurs a monthly fee of $12,500[350] Critical Accounting Policies The company classifies common stock subject to possible redemption as temporary equity, calculates net loss per share using the two-class method, and anticipates no material effect from recently issued accounting pronouncements - The company classifies common stock subject to possible redemption as temporary equity, measured at redemption value, due to redemption rights outside its control[351][490] - Net loss per common share is calculated using the two-class method, excluding redeemable shares from basic EPS as they only participate in Trust Account earnings[352][494] - Management believes recently issued, but not yet effective, accounting pronouncements would not materially affect the financial statements if currently adopted[353][500] Item 7A. Quantitative and Qualitative Disclosures about Market Risk As of December 31, 2019, the company was not exposed to significant market or interest rate risk, with trust account proceeds invested in short-term U.S. government treasury bills or money market funds - As of December 31, 2019, the company was not subject to any material market or interest rate risk[354] - Net proceeds in the Trust Account are invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds investing solely in U.S. treasuries, limiting interest rate exposure[354] Item 8. Financial Statements and Supplementary Data This item refers to the financial statements and supplementary data located after Item 15 of this Report - Financial statements and supplementary data are included following Item 15 of this Report[355] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure There have been no changes in or disagreements with accountants on accounting and financial disclosure - There are no changes in and disagreements with accountants on accounting and financial disclosure[356] Item 9A. Controls and Procedures. As of December 31, 2019, the company's disclosure controls and procedures were evaluated as effective, with no material changes in internal control over financial reporting during the most recent fiscal quarter - As of December 31, 2019, the company's disclosure controls and procedures were evaluated as effective[358] - The company, being newly public, is in a transition period and does not include a management's assessment or independent auditor's attestation report on internal control over financial reporting[360] - There were no material changes in internal control over financial reporting during the most recent fiscal quarter[361] Evaluation of Disclosure Controls and Procedures The company's disclosure controls and procedures were evaluated as effective as of December 31, 2019, providing reasonable assurance for timely and accurate reporting - The company's disclosure controls and procedures were evaluated as effective as of December 31, 2019, ensuring timely and accurate reporting[358] - Disclosure controls provide reasonable, not absolute, assurance, acknowledging inherent limitations and resource constraints[359] Management's Report on Internal Controls Over Financial Reporting This Annual Report on Form 10-K does not include a management's assessment or an independent auditor's attestation report on internal control over financial reporting due to a transition period for newly public companies - This Annual Report on Form 10-K does not include a report of management's assessment or an attestation report from the independent registered public accounting firm on internal control over financial reporting due to a transition period for newly public companies[360] Changes in Internal Control over Financial Reporting No material changes in internal control over financial reporting occurred during the most recent fiscal quarter - No material changes in internal control over financial reporting occurred during the most recent fiscal quarter[361] Item 9B. Other Information. There is no other information to report under this item - There is no other information to report[363] PART III Item 10. Directors, Executive Officers and Corporate Governance. This section outlines the company's directors and executive officers, board structure, committee functions, and adherence to a Code of Ethics and Section 16(a) compliance Directors and Executive Officers (as of Report Date) | Name | Age | Position | | :--------------- | :-- | :-------------------------------------- | | Jay R. Bloom | 64 | Co-Chairman and Chief Executive Officer | | Dean C. Kehler | 63 | Co-Chairman and Chief Executive Officer | | Michael G. Maselli | 60 | Vice President of Acquisitions | | Andrea J. Kellett | 63 | Chief Financial Officer | | Hillel Weinberger | 66 | Director | | Marc Mazur | 60 | Director | | Paul S. Levy | 72 | Director | - The board of directors is divided into three staggered classes, with each class serving a three-year term, and officers are appointed at the discretion of the board[375][376] - Messrs. Weinberger, Mazur, and Levy are designated as independent directors, forming the audit and compensation committees, with Mr. Mazur qualifying as an 'audit committee financial expert'[377][380][381][383] Directors and Executive Officers Jay R. Bloom and Dean C. Kehler serve as Co-Chairmen and Chief Executive Officers, supported by Michael G. Maselli as Vice President of Acquisitions and Andrea J. Kellett as Chief Financial Officer - Jay R. Bloom and Dean C. Kehler serve as Co-Chairmen and Chief Executive Officers, bringing extensive experience from Trimaran, CIBC, and other financial institutions[366][368] - Michael G. Maselli is Vice President of Acquisitions, and Andrea J. Kellett is Chief Financial Officer, both with significant financial and management experience[369][370] Number and Terms of Office of Officers and Directors The board has five directors, divided into three classes with staggered three-year terms, while officers are appointed by and serve at the discretion of the board - The board has five directors, divided into three classes with staggered three-year terms, ensuring continuity[375] - Officers are appointed by and serve at the discretion of the board of directors, without specific terms of office[376] Director Independence Messrs. Weinberger, Mazur, and Levy are deemed independent directors under Nasdaq listing standards and SEC rules, holding regularly scheduled meetings without non-independent directors - Messrs. Weinberger, Mazur, and Levy are deemed independent directors under Nasdaq listing standards and SEC rules, and hold regularly scheduled meetings without non-independent directors[377] Committees of the Board of Directors The board has an audit committee and a compensation committee, both comprised solely of independent directors, overseeing financial reporting, compliance, and executive compensation - The board has an audit committee and a compensation committee, both comprised solely of independent directors as required by Nasdaq rules[378][380][383] - The audit committee oversees the independent registered public accounting firm, pre-approves services, and reviews financial reporting and compliance matters[382] - The compensation committee reviews and approves executive compensation, administers incentive plans, and recommends director remuneration[384][385] Director Nominations The company does not have a standing nominating committee, with independent directors recommending nominees based on educational background, professional experience, and integrity - The company does not have a standing nominating committee, with independent directors recommending nominees for board selection[389] - The board considers educational background, professional experience, business knowledge, integrity, reputation, independence, and ability to represent stockholder interests when evaluating director nominees[391] Compliance with Section 16(a) of the Exchange Act All applicable reports for executive officers, directors, and greater than 10% beneficial owners were filed in a timely manner pursuant to Section 16(a) of the Exchange Act - All reports applicable to executive officers, directors, and greater than 10% beneficial owners were filed in a timely manner pursuant to Section 16(a) of the Exchange Act[393] Code of Ethics The company has adopted a Code of Ethics applicable to its directors, officers, and employees, which is available on the SEC's website - The company has adopted a Code of Ethics applicable to its directors, officers, and employees, available on the SEC's website[394][395] Item 11. Executive Compensation. No cash compensation has been paid to officers for services rendered; the company pays monthly fees to an affiliate for administrative support and reimburses out-of-pocket expenses, with potential for post-combination consulting fees - No cash compensation has been paid to officers for services rendered to the company[398] - The company pays its sponsor's affiliate $10,000 per month for office space, utilities, and administrative support, and reimburses officers and directors for out-of-pocket expenses related to business combination activities[398] - Post-business combination, directors or management may receive consulting or management fees from the combined company, with full disclosure to stockholders[399] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. This section details beneficial ownership of common stock by directors, executive officers, and significant shareholders as of March 23, 2020, with GX Sponsor LLC holding 100% of Class B common stock Beneficial Ownership of Common Stock (as of March 23, 2020) | Name and Address of Beneficial Owner | Class A Stock Number of Shares Beneficially Owned | Common % of Class | Class B Stock Number of Shares Beneficially Owned | Common % of Class | | :----------------------------------- | :------------------------------------------------ | :---------------- | :------------------------------------------------ | :---------------- | | Jay R. Bloom | - | - | 7,187,500 | 100% | | Dean C. Kehler | - | - | 7,187,500 | 100% | | All executive officers and directors as a group (7 individuals) | - | - | 7,187,500 | 100% | | GX Sponsor LLC | - | - | 7,187,500 | 100% | | Linden Capital L.P. | 2,576,000 | 8.96% | - | - | | Polar Asset Management Partners Inc. | 2,200,000 | 7.65% | - | - | | Magnetar Financial LLC | 1,500,000 | 5.22% | - | - | | HGC Investment Management Inc. | 1,702,500 | 5.92% | | | | RP Investment Advisors LP | 1,653,259 | 5.75% | | | - GX Sponsor LLC, controlled by Jay R. Bloom and Dean C. Kehler, is the record holder of 7,187,500 founder shares (Class B common stock), representing 100% of Class B[404][405] - The table does not reflect beneficial ownership of private placement warrants as they are not exercisable within 60 days of the report date[403] Item 13. Certain Relationships and Related Transactions, and Director Independence. This section outlines related party transactions, including founder shares and private placement warrants issued to the sponsor, monthly payments to an affiliate, and the audit committee's role in reviewing such transactions, while reaffirming director independence - The sponsor purchased 7,187,500 founder shares for $25,000 and 7,000,000 private placement warrants for $7,000,000, which will be worthless if a business combination is not completed[409][410] - The company pays Trimaran Holdings, Inc., an affiliate of the sponsor, $10,000 per month for office space and administrative support[412] - The audit committee is responsible for reviewing and approving related party transactions, and the company has a code of ethics to avoid conflicts of interest[419][420] Related Party Policy The company's code of ethics requires avoiding conflicts of interest, with financial transactions involving the company subject to board or committee approval, and the audit committee reviewing related party transactions - The company's code of ethics requires avoiding conflicts of interest, with financial transactions involving the company subject to board or committee approval[419] - The audit committee reviews and approves related party transactions, requiring an affirmative vote of a majority of its members[420] - Payments to the sponsor, officers, or directors (or their affiliates) for services rendered prior to a business combination are generally prohibited from trust account proceeds, with specific exceptions for loan repayments and administrative support[423] Director Independence A majority of the board, specifically Messrs. Weinberger, Mazur, and Levy, are independent directors as defined by Nasdaq listing standards and SEC rules - A majority of the board, specifically Messrs. Weinberger, Mazur, and Levy, are independent directors as defined by Nasdaq listing standards and SEC rules[425] Item 14. Principal Accountant Fees and Services. Marcum LLP received $89,000 in audit fees for the year ended December 31, 2019, with no other fees paid, and the audit committee now pre-approves all auditing and permitted non-audit services Fees Paid to Marcum LLP | Fee Type | Year Ended Dec 31, 2019 ($) | Period from Aug 24, 2018 - Dec 31, 2018 ($) | | :---------------- | :---------------------- | :-------------------------------------- | | Audit Fees | 89,000 | 30,000 | | Audit-Related Fees | 0 | 0 | | Tax Fees | 0 | 0 | | All Other Fees | 0 | 0 | - The audit committee, formed after the IPO, now pre-approves all auditing and permitted non-audit services, including fees and terms[430][431] PART IV Item 15. Exhibits, Financial Statement Schedules This section lists the financial statements and exhibits filed as part of the Form 10-K, including the Report of Independent Registered Public Accounting Firm, primary financial statements, and various agreements - The report includes audited financial statements: Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, and Statements of Cash Flows[433] - A comprehensive list of exhibits, including underwriting agreements, certificates of incorporation, warrant agreements, and various certifications, is provided[438] Item 16. Form 10-K Summary. This item is not applicable to the company - This item is not applicable[435] INDEX TO FINANCIAL STATEMENTS This index provides a detailed listing of the financial statements included in the report, starting with the Report of Independent Registered Public Accounting Firm, followed by the primary financial statements and their accompanying notes - The index lists the Report of Independent Registered Public Accounting Firm, Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, Statements of Cash Flows, and Notes to Financial Statements[440] REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Marcum LLP issued an unqualified opinion on the company's financial statements for the years ended December 31, 2019 and 2018, following PCAOB standards - Marcum LLP issued an unqualified opinion, stating that the financial statements present fairly, in all material respects, the financial position as of December 31, 2019 and 2018, and results of operations and cash flows for the periods then ended, in conformity with GAAP[442] - The audit was conducted in accordance with PCAOB standards, including assessing risks of material misstatement and evaluating accounting principles and estimates[444][445] FINANCIAL STATEMENTS The financial statements present GX Acquisition Corp.'s financial position, operational results, equity changes, and cash flows for 2019 and 2018, with notes detailing accounting policies and equity structure - The financial statements include Balance Sheets, Statements of Operations, Statements of Changes in Stockholders' Equity, and Statements of Cash Flows[440] - The company reported net income of $2,512,971 for the year ended December 31, 2019, primarily from interest income on marketable securities in the Trust Account[452] Key Financial Data (as of December 31, 2019) | Metric | 2019 Amount ($) | | :-------------------------------------- | :------------ | | Total Assets | 291,605,350 | | Total Liabilities | 11,041,594 | | Total Stockholders' Equity | 5,000,001 | | Marketable Securities in Trust Account | 290,594,540 | | Cash | 917,007 | Balance Sheets The balance sheets provide a snapshot of the company's financial position as of December 31, 2019 and 2018, detailing assets, liabilities, and stockholders' equity Balance Sheet Summary (as of December 31) | Item | 2019 ($) | 2018 ($) | | :------------------------------------ | :------------ | :---------- | | Cash | 917,007 | 24,707 | | Total Current Assets | 1,009,157 | 24,707 | | Marketable securities held in Trust Account | 290,594,540 | — | | TOTAL ASSETS | 291,605,350 | 174,457 | | Total Current Liabilities | 229,094 | 150,555 | | Deferred underwriting fee payable | 10,812,500 | — | | Total Liabilities | 11,041,594 | 150,555 | | Common stock subject to possible redemption | 275,563,755 | — | | Total Stockholders' Equity | 5,000,001 | 23,902 | Statements of Operations The statements of operations detail the company's financial performance, showing a net income of $2,512,971 for the year ended December 31, 2019, primarily from interest income Statements of Operations Summary | Item | Year Ended Dec 31, 2019 ($) | Period from Aug 24, 2018 - Dec 31, 2018 ($) | | :-------------------------------------------- | :-------------------------- | :------------------------------------------ | | Operating and formation costs | 564,339 | 1,098 | | Loss from operations | (564,339) | (1,098) | | Interest income on marketable securities held in Trust Account | 3,753,411 | — | | Unrealized loss on marketable securities held in Trust Account | (7,871) | — | | Income (loss) before provision for income taxes | 3,181,201 | (1,098) | | Provision for income taxes | (668,230) | — | | Net income (loss) | 2,512,971 | (1,098) | | Basic and diluted net loss per common share | (0.03) | (0.00) | Statements of Changes in Stockholders' Equity This statement details the changes in stockholders' equity for the year ended December 31, 2019, reflecting the impact of the IPO, private placement, and net income Changes in Stockholders' Equity (Year Ended December 31, 2019) | Item | Class A Common Stock (Shares) | Class A Common Stock (Amount $) | Class B Common Stock (Shares) | Class B Common Stock (Amount $) | Additional Paid-in Capital ($) | Retained Earnings/(Accumulated Deficit) ($) | Total Stockholders' Equity ($) | | :-------------------------------------------- | :---------------------------- | :------------------------------ | :---------------------------- | :------------------------------ | :----------------------------- | :------------------------------------------ | :----------------------------- | | Balance – December 31, 2018 | — | — | 8,625,000 | 863 | 24,137 | (1,098) | 23,902 | | Sale of 28,750,000 Units, net of underwriting discounts and offering expenses | 28,750,000 | 2,875 | — | — | 271,024,008 | — | 271,026,883 | | Sale of 7,000,000 Private Placement Warrants | — | — | — | — | 7,000,000 | — | 7,000,000 | | Forfeiture of Founder Shares | — | — | (1,437,500) | (144) | 144 | — | — | | Common stock subject to possible redemption | (27,283,483) | (2,728) | — | — | (275,561,027) | — | (275,563,755) | | Net income | — | — | — | — | — | 2,512,971 | 2,512,971 | | Balance – December 31, 2019 | 1,466,517 | 147 | 7,187,500 | 719 | 2,487,262 | 2,511,873 | 5,000,001 | Statements of Cash Flows The statements of cash flows highlight significant cash movements in 2019, including $287.5 million invested in the Trust Account and $288.8 million from financing activities Statements of Cash Flows Summary | Item | Year Ended Dec 31, 2019 ($) | Period from Aug 24, 2018 - Dec 31, 2018 ($) | | :-------------------------------------------- | :-------------------------- | :------------------------------------------ | | Net cash used in operating activities | (1,097,833) | (543) | | Net cash used in investing activities | (286,849,000) | — | | Net cash provided by financing activities | 288,839,133 | 25,250 | | Net Change in Cash | 892,300 | 24,707 | | Cash – Ending | 917,007 | 24,707 | - Significant cash flows in 2019 include $287.5 million investment in the Trust Account and $288.8 million provided by financing activities, primarily from the IPO and private placement[459] Notes to Financial Statements The notes provide essential details on the company's formation, significant accounting policies, related party transactions, commitments, equity structure, and income tax provisions - Note 1 describes the company's formation as a blank check company, its Initial Public Offering, and the placement of proceeds into a trust account for a business combination[462][464][467] - Note 2 outlines significant accounting policies, including the company's status as an 'emerging growth company' and its election to use the extended transition period for new accounting standards[482][483] - Note 5 details related party transactions, including the issuance of founder shares and private placement warrants to the sponsor, and loans and administrative support agreements with affiliates[505][507][508][509] - Note 6 covers commitments and contingencies, including registration rights for certain securities, a deferred underwriting fee of $10,812,500, and a monthly consulting fee of $12,500[510][513][514] - Note 7 describes stockholders' equity, including authorized and outstanding shares of Class A and Class B common stock, and the terms and conditions of warrants[515][516][517][519] - Note 8 provides details on income tax provision and deferred tax assets, while Note 9 explains fair value measurements using a three-level hierarchy[526][527][530][532][533]