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Globalink Investment(GLLI) - 2023 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION This section presents the unaudited interim financial statements and management's discussion and analysis for the company's financial performance and condition Item 1. Interim Financial Statements (Unaudited) This section presents Globalink Investment Inc.'s unaudited condensed consolidated financial statements and detailed notes for the three months ended March 31, 2023 and 2022 Condensed Consolidated Balance Sheets (Unaudited) This statement presents the company's financial position, detailing assets, liabilities, and stockholders' deficit as of March 31, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets (Unaudited) | Metric | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | Total Assets | $120,207,536 | $118,698,177 | | Cash in escrow account | $21,509 | $81,763 | | Investments held in Trust Account | $120,037,081 | $118,408,969 | | Total Liabilities | $76,333,458 | $4,886,950 | | Redeemed stock payable to public stockholders | $69,920,879 | — | | Promissory note | $390,000 | — | | Excise tax liability | $699,209 | — | | Total Stockholders' Deficit | $(5,413,388) | $(4,053,192) | Condensed Consolidated Statements of Operations (Unaudited) This statement details the company's financial performance for the three months ended March 31, 2023 and 2022, showing a shift to net income Condensed Consolidated Statements of Operations (Unaudited) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | General and administrative expenses | $271,537 | $153,517 | | Franchise tax expense | $50,000 | $50,000 | | Total operating expenses | $(321,537) | $(203,517) | | Income on investments held in Trust Account | $1,257,477 | $1,257 | | Change in fair value of warrant liabilities | $570 | $47,367 | | Total other income | $1,258,047 | $48,624 | | Income (Loss) before taxes | $936,510 | $(154,893) | | Provision for income taxes | $(253,571) | — | | NET INCOME (LOSS) | $682,939 | $(154,893) | | Basic and diluted net income (loss) per share, Common stock-redeemable | $0.09 | $(0.01) | | Basic and diluted net loss per share, Common stock-non-redeemable | $(0.05) | $(0.01) | Condensed Consolidated Statements of Changes in Stockholder's Deficit (Unaudited) This statement outlines changes in stockholders' deficit for the three months ended March 31, 2023 and 2022, reflecting net income/loss and share remeasurements Changes in Stockholders' Deficit (Three Months Ended March 31, 2023) | Metric | Amount | | :---------------------------------------- | :------------- | | Balance, December 31, 2022 | $(4,053,192) | | Remeasurement of shares subject to possible redemption | $(1,343,926) | | Excise tax imposed on common stock redemptions | $(699,209) | | Net income | $682,939 | | Balance, March 31, 2023 | $(5,413,388) | Changes in Stockholders' Deficit (Three Months Ended March 31, 2022) | Metric | Amount | | :---------------------------------------- | :------------- | | Balance, December 31, 2021 | $(3,138,015) | | Net loss | $(154,893) | | Balance, March 31, 2022 | $(3,292,908) | Condensed Consolidated Statements of Cash Flows (Unaudited) This statement presents cash flows from operating, investing, and financing activities for the three months ended March 31, 2023 and 2022, showing a net cash decrease Condensed Consolidated Statements of Cash Flows (Unaudited) | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(79,619) | $(176,016) | | Net cash used in investing activities | $(370,635) | — | | Net cash provided by financing activities | $390,000 | — | | NET CHANGE IN CASH | $(60,254) | $(176,016) | | Cash, Beginning of Period | $81,763 | $812,232 | | Cash, End of Period | $21,509 | $636,216 | | Excise tax accrued for common stock redemptions (Non-Cash) | $699,209 | — | | Remeasurement of common stock subject to redemption (Non-Cash) | $1,343,926 | — | | Reclassification of redeemable Common stock to redeemed stock payable (Non-Cash) | $69,920,879 | — | Notes to Condensed Consolidated Financial Statements (Unaudited) These notes provide detailed explanations and disclosures on business operations, accounting policies, IPO, related party transactions, and fair value measurements Note 1 – Description of Organization and Business Operations and Liquidity Globalink Investment Inc., a blank check company, extended its business combination deadline to June 9, 2023, facing going concern doubts without a completed deal * Globalink Investment Inc. was incorporated on March 24, 2021, as a blank check company to pursue a business combination18 * The company has not commenced operations and generates non-operating income from interest on investments in its Trust Account20 * The company extended its deadline to complete a Business Combination to June 9, 2023, with options for further extensions until December 9, 2023, by depositing $390,000 into the Trust Account33 * Holders of 6,756,695 shares redeemed their shares for approximately $69.92 million in connection with the extension approval34 * The Merger Agreement with Tomorrow Crypto Group Inc. was terminated on March 8, 202338 * The company had $21,509 cash in escrow and a working capital deficit of approximately $1,382,688 as of March 31, 202344 * Management has determined that the mandatory liquidation risk and liquidity condition raise substantial doubt about the company's ability to continue as a going concern if a Business Combination is not consummated or extended by June 9, 202347 Note 2 – Summary of Significant Accounting Policies This note details significant accounting policies, including U.S. GAAP basis, emerging growth company status, and treatments for investments, taxes, and warrants * The company's financial statements are prepared in conformity with U.S. GAAP and SEC rules, with certain interim disclosures condensed or omitted49 * The company is an emerging growth company and has elected to use the extended transition period for complying with new or revised financial accounting standards51 * Investments held in the Trust Account are classified as trading securities and presented at fair value, primarily in U.S. Treasury securities55 * The effective tax rate was 27.08% for the three months ended March 31, 2023, differing from the statutory rate due to changes in warrant fair value and valuation allowance on deferred tax assets60 * A 1% excise tax liability of $699,209 was recorded for common stock redemptions totaling approximately $69.92 million62 * Common stock subject to possible redemption is classified as temporary equity, with 4,743,305 shares at March 31, 2023, and 11,500,000 shares at December 31, 202263 * Private Placement Warrants are classified as liability-classified instruments and re-measured at fair value each reporting period using a binomial lattice model70 Note 3 – Initial Public Offering and Over-allotment This note details the IPO and over-allotment, where the company sold 11,500,000 units, each comprising common stock, a redeemable warrant, and a right * The company sold 11,500,000 Units at $10.00 per Unit in its IPO and over-allotment72 * Each Unit consists of one share of common stock, one redeemable warrant (exercisable for one-half share at $11.50), and one right (entitling to one-tenth share upon business combination)72 Note 4 – Private Placement This note describes the private placement of 570,000 units, generating $5.7 million, sold concurrently with the IPO to Public Gold Marketing Sdn Bhd * The company issued and sold 570,000 Private Placement Units at $10.00 per unit, generating $5,700,00073 * Each Private Placement Unit includes one share, one warrant, and one right, with proceeds added to the Trust Account73 Note 5 – Related Party Transactions This note outlines related party transactions, including sponsor's Founder Shares, potential Working Capital Loans, and administrative service fees * The company's sponsor purchased 2,875,000 Founder Shares for $25,000, subject to transfer restrictions7475 * The sponsor or affiliates may provide Working Capital Loans, repayable upon business combination or convertible into units76 * The company pays its sponsor $10,000 per month for administrative services, with $157,000 accrued as of March 31, 202377 Note 6 – Commitments and Contingencies This note details commitments and contingencies, including registration rights for security holders and deferred underwriting discounts * Holders of Founder Shares, Private Placement Units, and Working Capital Loan warrants are entitled to registration rights78 * Deferred underwriting discounts of $4,025,000 are payable to underwriters only upon completion of a Business Combination79 Note 7 – Promissory Notes This note describes two promissory notes with Public Gold Marketing Sdn Bhd for extension fees, totaling up to $640,000, bearing 6% interest * On March 3, 2023, the company borrowed $390,000 via a promissory note from Public Gold Marketing Sdn Bhd for extension fees80 * On March 23, 2023, the company entered into another promissory note for up to $250,000 for extension fees, with no borrowings against it as of March 31, 202381 * Both promissory notes bear 6% interest per annum and are repayable upon consummation of an initial Business Combination8081 Note 8 – Stockholders' Deficit This note details stockholders' deficit components, including common stock, warrants, and rights, and their respective terms and conditions * As of March 31, 2023, there were 3,445,000 shares of common stock issued and outstanding (excluding redeemable shares)82 * 6,756,695 shares of common stock were redeemed for approximately $69.92 million on March 6, 202383 * The company had 11,500,000 Public Warrants and 570,000 Private Placement Warrants outstanding as of March 31, 202384 * Public Warrants are equity instruments, exercisable after a business combination, and may be redeemed by the company if the common stock price exceeds $16.508587 * Private Warrants are liability-classified, exercisable for cash or cashless at the holder's option, and not redeemable by the company while held by initial purchasers89 * Each Public Right automatically converts into one-tenth of one share of common stock upon consummation of a Business Combination92 Note 9 – Fair Value Measurements This note explains the fair value hierarchy for financial instruments, focusing on Private Placement Warrants valuation using a binomial lattice model * The company uses a three-level fair value hierarchy (Level 1, 2, 3) to classify assets and liabilities based on observable and unobservable inputs9697 Fair Value Measurements as of March 31, 2023 | Asset/Liability | Level | Fair Value | | :-------------------------- | :---- | :----------- | | U.S. Treasury Securities | 1 | $120,037,081 | | Warrant Liabilities- Private Warrants | 3 | $5,700 | Fair Value Measurements as of December 31, 2022 | Asset/Liability | Level | Fair Value | | :-------------------------- | :---- | :----------- | | U.S. Treasury Securities | 1 | $118,408,969 | | Warrant Liabilities- Private Warrants | 3 | $6,270 | * Private Placement Warrants are valued using a binomial lattice model (Level 3), with implied volatility as a significant input100 Private Placement Warrants Valuation Inputs | Input | March 31, 2023 | December 31, 2022 | | :------------------ | :------------- | :---------------- | | Exercise price | $5.75 | $5.75 | | Market price of public stock | $5.20 | $5.10 | | Term (years) | 0.5 | 0.8 | | Volatility | 7.6% | 6.9% | | Risk-free rate | 4.88% | 4.69% | | Dividend yield | 0.0% | 0.0% | Note 10 – Subsequent Events No subsequent events requiring adjustment or disclosure were identified after the balance sheet date up to the financial statement issuance * No subsequent events requiring adjustment or disclosure were identified after the balance sheet date up to the issuance date of the financial statements101 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, liquidity, and critical accounting policies, including recent developments and going concern considerations Special Note Regarding Forward-Looking Statements This section notes the report contains forward-looking statements subject to risks and uncertainties, with no obligation to update them * The report includes forward-looking statements that involve risks and uncertainties, which could cause actual results to differ materially103 * The company disclaims any intention or obligation to update or revise forward-looking statements103 Overview Globalink Investment Inc. is a blank check company formed to pursue business combinations in medical technology and green energy, excluding certain regions * Globalink Investment Inc. was formed on March 24, 2021, as a blank check company for a business combination104 * The company intends to focus its search on target businesses in North America, Europe, Southeast Asia, and Asia (excluding China, Hong Kong, and Macau), specifically in the medical technology and green energy industries104 Recent Developments Recent developments include extending the business combination deadline to June 9, 2023, and the redemption of approximately $69.92 million in shares * Stockholders approved an amendment to extend the Business Combination deadline to June 9, 2023, with options for up to five extensions until December 9, 2023107 * In connection with the extension, holders of 6,756,695 shares redeemed their shares for approximately $69.92 million107 * Globalink deposited $390,000 into the trust account for the first three-month extension109 Results of Operations The company reported a net income of $682,939 for the three months ended March 31, 2023, driven by increased interest income * For the three months ended March 31, 2023, the company had a net income of $682,939112 * This net income was primarily driven by $1,257,477 in interest income on investments held in the Trust Account and a $570 change in fair value of warrant liabilities112 * For the three months ended March 31, 2022, the company had a net loss of $154,893113 Liquidity, Capital Resources and Going Concern The company's liquidity relies on its Trust Account, facing a working capital deficit and substantial doubt about its ability to continue as a going concern * As of March 31, 2023, the company had $120,037,081 in investments held in the Trust Account121 * Cash used in operating activities was $79,619 for the three months ended March 31, 2023119 * The company had $21,509 of cash held outside the Trust Account as of March 31, 2023123 * The company has a working capital deficit and may need to raise additional capital through loans from its sponsor or other parties128 * Management has determined that the mandatory liquidation and liquidity condition raise substantial doubt about the company's ability to continue as a going concern if a Business Combination is not consummated or extended by June 9, 2023129 Off-Balance Sheet Arrangements The company reported no off-balance sheet arrangements as of March 31, 2023, or December 31, 2022 * The company has no obligations, assets, or liabilities considered off-balance sheet arrangements as of March 31, 2023, and December 31, 2022130 Contractual obligations The company's contractual obligations include registration rights, deferred underwriting discounts, a right of first refusal, and promissory notes for extension fees * Holders of insider shares, private units, and certain loan conversion units are entitled to registration rights132 * Deferred underwriting discounts of $4,025,000 are payable only upon completion of an initial Business Combination133 * The company granted Chardan Capital Markets, LLC a right of first refusal for future equity and debt offerings for 18 months post-business combination134 * Two promissory notes with Public Gold Marketing Sdn Bhd for $390,000 (borrowed) and up to $250,000 (available) for extension fees, bearing 6% interest, are repayable upon a business combination135136 JOBS Act As an emerging growth company, Globalink elected to delay new accounting standards adoption, potentially affecting comparability with other public companies * The company qualifies as an "emerging growth company" under the JOBS Act137 * The company has elected to delay the adoption of new or revised accounting standards, aligning with private company effective dates137 * This election may make the company's financial statements not comparable to non-emerging growth companies137 Critical Accounting Policies Critical accounting policies involve significant estimates for net income per share and warrant classification as equity or liability instruments * The preparation of financial statements requires management to make estimates and assumptions, which could materially differ from actual results140 * Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common stock outstanding, including remeasurement of redeemable shares141 * Warrants are classified as either equity or liability instruments based on specific terms and ASC 480 and ASC 815 guidance; private warrants are recorded as liabilities at fair value142 Recent Accounting Pronouncements Management believes recently issued, but not yet effective, accounting standards will not materially affect the company's financial statements * Management does not believe that any recently issued, but not yet effective, accounting standards would have a material effect on the company's consolidated financial statements as of March 31, 2023143 Item 3. Quantitative and Qualitative Disclosures about Market Risk As of March 31, 2023, the company faced no material market or interest rate risk, with Trust Account investments in short-term U.S. government securities * As of March 31, 2023, the company was not subject to any market or interest rate risk144 * Funds in the Trust Account are invested in short-term U.S. government securities or money market funds, minimizing interest rate risk144 Item 4. Controls and Procedures Disclosure controls and procedures were ineffective as of March 31, 2023, due to issues with complex financial instrument classification and tax filings Evaluation of Disclosure Controls and Procedures The company's disclosure controls and procedures were evaluated as ineffective due to issues in classifying private warrants and timely tax return filings * The company's disclosure controls and procedures were not effective as of March 31, 2023145 * Ineffectiveness was due to issues in reclassifying private warrants (complex financial instruments) and internal control over financial reporting related to timely tax return filings145 Changes in Internal Control Over Financial Reporting No material changes occurred in internal control over financial reporting, but the company plans to enhance processes to address identified deficiencies * No material changes in internal control over financial reporting occurred during the most recent fiscal quarter147 * The company plans to enhance processes by providing better access to accounting literature, research materials, and increasing communication among personnel and third-party professionals147 PART II – OTHER INFORMATION This section provides additional information not covered in the financial statements, including legal proceedings, risk factors, and other disclosures Item 1. Legal Proceedings The company reported no legal proceedings * There are no legal proceedings149 Item 1A. Risk Factors As a smaller reporting company, disclosures under this item are not required, with risk factors referenced in the annual Form 10-K * As a smaller reporting company, the company is not required to make disclosures under this item150 * A comprehensive list of risk factors is provided in the company's annual report on Form 10-K for the fiscal year ended December 31, 2022150 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or use of proceeds for the period * There were no unregistered sales of equity securities and use of proceeds151 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities * There were no defaults upon senior securities152 Item 4. Mine Safety Disclosures This item is not applicable to the company * This item is not applicable153 Item 5. Other Information The company reported no other information for this period * There is no other information to report154 Item 6. Exhibits This section lists exhibits filed or incorporated by reference into this Quarterly Report on Form 10-Q, including certificates and agreements * The section lists exhibits filed or incorporated by reference, including the Second Amended and Restated Certificate of Incorporation and certifications of principal executive and financial officers155156 SIGNATURES This section contains the official signatures for the report SIGNATURES The report is signed by Say Leong Lim, Chief Executive Officer and Director, and Kelvin Chin, Chief Financial Officer and Director, on May 18, 2023 * The report was signed on May 18, 2023, by Say Leong Lim, Chief Executive Officer and Director, and Kelvin Chin, Chief Financial Officer and Director160