NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
(UNAUDITED)
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Globis
Acquisition Corp. (the “Company”) was incorporated in Delaware on August 21, 2020. The Company is a blank check company formed
for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses or entities (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.
The
Company has one wholly owned subsidiary, Globis NV Merger Corp., which was incorporated in the State of Nevada on January 5, 2022.
As
of March 31, 2022, the Company had not commenced any operations. All activity for the period from August 21, 2020 (inception) through
March 31, 2022 relates to the Company’s formation, initial public offering (“Initial Public Offering”), which is described
below, search for a Business Combination and activities in connection with the proposed acquisition of Forafric Agro Holdings Limited,
a Gibraltar private company limited by shares (“FAHL”) (see Note 6). The Company will not generate any operating revenues
until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest
income from the proceeds held in the Trust Account.
The
registration statement for the Company’s Initial Public Offering was declared effective on December 10, 2020. On December 15, 2020,
the Company consummated the Initial Public Offering of 11,500,000 units (the “Units” and, with respect to the shares of common
stock included in the Units sold, the “Public Shares,” which included the full exercise by the underwriter of its over-allotment
option in the amount of 1,500,000 Units, at $10.00 per Unit), generating gross proceeds of $115,000,000, which is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 4,188,889 warrants (the “Private Warrants”)
at a price of $0.75 per Private Warrant and 100,833 units (the “Placement Units” and, together with the Private Warrants,
the “Private Securities”) at a price of $10.00 per Placement Unit in a private placement to Globis SPAC LLC and Up and Up
Capital, LLC, an affiliate of Chardan Capital Markets, LLC, the representative of the underwriters (“Up and Up” and, collectively
with Globis SPAC LLC, the “Sponsors”), which is described in Note 4.
Transaction
costs amounted to $6,541,841 consisting of $2,300,000 of underwriting fees, $4,025,000 representing 402,500 shares of common stock issued,
which the underwriters are entitled to receive upon the consummation of a Business Combination (the “equity participation shares”),
and $216,841 of other offering costs.
Following
the closing of the Initial Public Offering on December 15, 2020, an amount of $116,150,000 ($10.10 per Unit) from the net proceeds of
the sale of the Units in the Initial Public Offering and the sale of the Private Securities was placed in a trust account (the “Trust
Account”), located in the United States and held as cash or invested only in U.S. government securities, within the meaning set
forth in Section 2(a)(16) of 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 selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act
of 1940, as amended (the “Investment Company Act”), as determined by the Company, until the earlier of: (i) the completion
of a Business Combination and (ii) the distribution of the funds in the Trust Account, 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 the sale of the Private Securities, although substantially all of the net proceeds are intended to be applied generally toward completing
a Business Combination. The Company must complete a Business Combination having an aggregate fair market value of at least 80% of the
assets held in the Trust Account (excluding taxes payable on income earned on the Trust Account) at the time of the agreement to enter
into an initial Business Combination. The Company intends to 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 complete a Business Combination successfully.
The
Company will provide its stockholders 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 stockholder meeting called to approve the Business Combination or (ii) by means
of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender
offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for
a pro rata portion of the amount then in the Trust Account (initially $10.10 per Public 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 or dissolution obligations). There will be
no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
GLOBIS
ACQUISITION CORP.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
(UNAUDITED)
The
Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 immediately prior to or
upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted
in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder
vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended
and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange
Commission (“SEC”) and file tender offer documents with the SEC containing substantially the same information as would be
included in a proxy statement prior to completing a Business Combination. If, however, stockholder approval of the transaction is required
by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares
in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks
stockholder approval in connection with a Business Combination, the Sponsors have agreed to vote their Founder Shares (as defined in
Note 5), Placement Shares (as defined in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor
of approving a Business Combination. The underwriters have also agreed to vote their equity participation shares and any public shares
they own in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares,
without voting, and if they do vote, irrespective of whether they vote for or against the proposed Business Combination.
Notwithstanding
the above, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender
offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of
such stockholder or any other person with whom such stockholder 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 redeeming its shares
with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.
The
Sponsors and the Company’s officers and directors will agree (a) to waive redemption rights with respect to the Founder Shares,
Placement Shares and Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose an
amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation
to allow redemption in connection with the Company’s initial Business Combination and certain amendments to the Amended and Restated
Certificate of Incorporation or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (ii) with
respect to any other provision relating to stockholders’ rights or pre-initial business combination activity, unless the Company
provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
The
Company initially had until December 15, 2021 to complete a Business Combination. The Company may, by resolution of the board of directors
if requested by Globis SPAC LLC, extend the period of time to consummate a Business Combination up to two times, each by an additional
three months (up until June 15, 2022), subject to the deposit of additional funds into the Trust Account by one or both of the Sponsors
or their affiliates or designees (the “Combination Period”). The Company’s stockholders will not be entitled to vote
or redeem their shares in connection with any such extension. Pursuant to the terms of the Amended and Restated Certificate of Incorporation,
in order for the time available for the Company to consummate a Business Combination to be extended, one or both of the Sponsors or their
affiliates or designees, upon five days’ advance notice prior to the applicable deadline, deposited $1,150,000 for each three month
extension into the trust account ($0.10 per Unit, an aggregate of $2,300,000), on or prior to the date of the applicable deadline. Any
such payments would be made in the form of a non-interest bearing loan and would be repaid, if at all, from funds released to the Company
upon completion of a Business Combination.
On
December 10, 2021, the Company drew down $1,150,000 under an unsecured Note (as defined below) that was previously issued to Globis SPAC
LLC. The proceeds from the draw down were deposited into the Company’s Trust Account in order to extend the period of time the
Company has to complete its Business Combination from December 15, 2021 to March 15, 2022. On March 7, 2022, the Company drew down an
additional $1,150,000 under the unsecured Note. The proceeds from the draw down were deposited into the Company’s Trust Account
in order to extend the period of time the Company has to complete its Business Combination from March 15, 2022 to June 15, 2022. The
Company’s stockholders were not entitled to vote on or redeem their shares in connection with such extensions. The Note does not
bear interest and matures upon closing of a Business Combination by the Company.
If
the Company is unable to complete a Business Combination within the Combination Period and the stockholders do not approve an amendment
to the Amended and Restated Certificate of Incorporation to extend this date, the Company will (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not 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 (which interest
shall be net of taxes payable and 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 liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve
and liquidate, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect
to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination
Period.
The
holders of the Founder Shares and Placement Shares have agreed to waive liquidation rights with respect to such shares if the Company
fails to complete a Business Combination within the Combination Period. However, if the Sponsors acquire Public Shares in or after the
Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails
to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their liquidation rights with
respect to the equity participation shares (see Note 6) 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 other 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 per share value deposited into the Trust Account ($10.30).
GLOBIS
ACQUISITION CORP.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
(UNAUDITED)
In
order to protect the amounts held in the Trust Account, the Sponsors will agree to be liable to the Company if and to the extent any
claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has
discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.30 per Public Share
or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions
in the value of trust assets, in each case net of the interest which may be withdrawn to pay the Company’s tax obligation and up
to $100,000 for liquidation expenses, except as to any claims by a third party who executed a waiver of any and all rights to seek access
to the Trust Account (even if such waiver is deemed to be unenforceable) and except as to any claims under the Company’s indemnity
of the underwriters of Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as
amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third
party, the Sponsors will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce
the possibility that the Sponsors will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors,
service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the
Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity
The
Company has principally financed its operations from inception using proceeds from the sale of its equity securities to its stockholders
prior to the Initial Public Offering and such amount of proceeds from the Initial Public Offering that were placed in an account outside
of the Trust Account for working capital purposes. As of March 31, 2022, the Company had cash of $210 held outside of the Trust Account
and an adjusted working capital deficit of $5,607,074, which excludes $17,492 of interest earned on the Trust Account to pay franchise
taxes.
The
Company may raise additional capital through loans or additional investments from the Sponsors, officers, directors, or their affiliates.
Other than as described above and in Note 5, the Company’s officers, directors and the Sponsors and their affiliates may, but are
not obligated to, loan the Company funds, from time to time, in whatever amount they deem reasonable in their sole discretion, to meet
the Company’s working capital needs.
The
Company does not believe it will need to raise additional funds in order to meet expenditures required for operating its business following
its issuance of an unsecured promissory note on January 11, 2021, as amended (the “Note”) to Globis SPAC LLC (the “Lender”),
providing for borrowings from time to time of up to an aggregate of $1,000,000. Through March 31, 2022, the Note was amended to increase
the principal amount to $7,000,000. None of the Sponsors, nor any of the stockholders, officers or directors, or third parties are under
any obligation to advance funds to, or invest in, the Company, except as discussed above. 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, suspending the pursuit of a potential Business Combination.
The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all. Even
if the Company can obtain sufficient financing or raise additional capital, it only has until June 15, 2022 to consummate a Business
Combination. There is no assurance that the Company will be able to do so prior to June 15, 2022.
Risks
and Uncertainties
Management
continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could
have a negative effect on the Company’s financial position and/or search for a target company, the specific impact is not readily
determinable as of the date of the financial statements. The financial statements do not include any adjustments that may result from
the outcome of this uncertainty.
Various
social and political circumstances in the U.S. and around the world (including wars and other forms of conflict, including trade tensions
between the United States and China, and other uncertainties regarding actual and potential shifts in U.S. and foreign, trade, economic
and other policies with other countries, terrorist acts, security operations and catastrophic events such as fires, floods, earthquakes,
tornadoes, hurricanes and global health epidemics), may also contribute to increased market volatility and economic uncertainties or
deterioration in the U.S. and worldwide. Specifically, the rising conflict between Russia and Ukraine, and resulting market volatility
could adversely affect the Company’s ability to complete a Business Combination. In response to the conflict between Russia and
Ukraine, the U.S. and other countries have imposed sanctions or other restrictive actions against Russia. Any of the above factors, including
sanctions, export controls, tariffs, trade wars and other governmental actions, could have a material adverse effect on the Company’s
ability to complete a Business Combination and the value of the Company’s securities.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited condensed consolidated 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 consolidated 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 consolidated financial statements should be read in conjunction with the Company’s Annual Report
on Form 10-K, as filed with the SEC on February 11, 2022. The interim results for the three months ended March 31, 2022 are not necessarily
indicative of the results to be expected for the year ending December 31, 2022 or for any future periods.
GLOBIS
ACQUISITION CORP.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
(UNAUDITED)
Principles
of Consolidation
The
accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All significant
intercompany balances and transactions have been eliminated in consolidation.
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 of
2002, 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 stockholder 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 which has opted out of using the extended transition period difficult
or impossible because of the potential differences in accounting standards used.
Use
of Estimates
The
preparation of the condensed consolidated 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
consolidated 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 financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future events.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of March 31, 2022 or December 31, 2021.
Marketable
Securities Held in Trust Account
At
March 31, 2022 and December 31, 2021, substantially all of the assets held in the Trust Account were held in money market funds which
invest in U.S. Treasury securities. All of the Company’s investments held in the Trust Account are classified as trading securities.
Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting
from the change in fair value of investments held in Trust Account are included in interest earned on marketable securities held in the
Trust Account in the accompanying condensed statements of operations. The estimated fair values of investments held in the Trust Account
are determined using available market information.
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 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 consolidated
balance sheets.
The
Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to
equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company
recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable common stock
resulted in charges against additional paid-in capital and accumulated deficit.
At
March 31, 2022 and December 31, 2021, the common stock subject to possible redemption reflected in the condensed consolidated balance
sheets is reconciled in the following table:
SCHEDULE OF CONDENSED BALANCE SHEET
Common stock subject to possible redemption, January 1, 2021 | |
$ | 116,150,000 | |
Plus: | |
| | |
Remeasurement of Class A common stock subject to redemption | |
| 1,150,000 | |
Common stock subject to possible redemption, December 31, 2021 | |
| 117,300,000 | |
Plus: | |
| | |
Remeasurement of Class A common stock subject to redemption | |
| 1,150,000 | |
Common stock subject to possible redemption, March 31, 2022 | |
$ | 118,450,000 | |
Income
Taxes
The
Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition
of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets
and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally
requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not
be realized.
GLOBIS
ACQUISITION CORP.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
(UNAUDITED)
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an company’s financial statements and prescribes
a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2022 and December 31, 2021.
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 has been subject to income tax examinations by major taxing authorities since inception.
The
Company’s currently taxable income primarily consists of interest income on the Trust Account. The Company’s operational
costs are generally considered start-up costs and are not currently deductible. During the three months ended March 31, 2022 and 2021,
the Company recorded no income tax expense. The Company’s effective tax rate for the three months ended March 31, 2022 and 2021
was 0%, which differs from the expected income tax rate mainly due to the start-up costs (discussed above) which are not currently deductible
and permanent differences associated with Business Combination expenses and the valuation allowance on net operating losses.
Net
Loss per Common Share
The
Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net loss per common
share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Accretion associated
with the redeemable shares of common stock is excluded from earnings per share as the redemption value approximates fair value.
The
calculation of diluted loss per share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering
and (ii) the private placement, as described in Note 5, since the exercise of the warrants is contingent upon the occurrence of future
events. The warrants are exercisable to purchase 15,789,722 shares of common stock in the aggregate. As of March 31, 2022 and 2021, the
Company did not have any other dilutive securities or other contracts that could, potentially, be exercised or converted into shares
of common stock and then share in the earnings of the Company. As a result, diluted net loss per share of common stock is the same as
basic net loss per share of common stock for the periods presented.
The
following table reflects the calculation of basic and diluted net loss per share of common stock (in dollars, except per share amounts):
SCHEDULE OF CALCULATION OF BASIC AND DILUTED NET LOSS PER COMMON SHARE
| |
Redeemable common stock | | |
Non- redeemable common stock | | |
Redeemable common stock | | |
Non- redeemable common stock | |
| |
Three Months Ended | | |
Three Months Ended | |
| |
March 31, 2022 | | |
March 31, 2021 | |
| |
Redeemable common stock | | |
Non- redeemable common stock | | |
Redeemable common stock | | |
Non- redeemable common stock | |
Basic and diluted net loss per common share | |
| | | |
| | | |
| | | |
| | |
Numerator: | |
| | | |
| | | |
| | | |
| | |
Allocation of net loss, as adjusted | |
$ | (806,996 | ) | |
$ | (249,175 | ) | |
$ | (278,093 | ) | |
$ | (85,866 | ) |
Denominator: | |
| | | |
| | | |
| | | |
| | |
Basic and diluted weighted average shares outstanding | |
| 11,500,000 | | |
| 3,550,833 | | |
| 11,500,000 | | |
| 3,550,833 | |
| |
| | | |
| | | |
| | | |
| | |
Basic and diluted net loss per share of common stock | |
$ | (0.07 | ) | |
$ | (0.07 | ) | |
$ | (0.02 | ) | |
$ | (0.02 | ) |
GLOBIS
ACQUISITION CORP.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
(UNAUDITED)
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal Depository Insurance Corporation coverage limit 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 consolidated balance sheets, primarily
due to their short-term nature.
Recent
Accounting Standards
Management
does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material
effect on the accompanying condensed consolidated financial statements.
NOTE
3. INITIAL PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 11,500,000 Units, which included a full exercise by the underwriters of their over-allotment
option in the amount of 1,500,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of common stock and one redeemable
warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase one share of common stock at a price of $11.50
per share, subject to adjustment (see Note 7).
GLOBIS
ACQUISITION CORP.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2022
(UNAUDITED)
NOTE
4. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, Globis SPAC LLC purchased 3,688,889 Private Warrants at a purchase price of $0.75 per
Private Warrant, for an aggregate purchase price of $2,766,667 and Up and Up purchased 500,000 Private Warrants at a purchase price of
$0.75 per Private Warrant, for an aggregate purchase price of $375,000. Each Private Warrant entitles the holder to purchase one share
of common stock at a price of $11.50 per share, subject to adjustment (see Note 8). In addition, Up and Up purchased an aggregate of
100,833 Placement Units at a purchase price of $10.00 per Placement Unit, or $1,008,333 in the aggregate. Each Placement Unit consists
of one share of common stock (“Placement Share”) and one redeemable warrant (“Placement Warrant”). Each Placement
Warrant entitles the holder to purchase one share of common stock at a price of $11.50 per share, subject to adjustment (see Note 7).
The
proceeds from the sale of the Private Securities 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 Securities
held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and
the Private Securities and all underlying securities will expire worthless.
NOTE
5. RELATED PARTY TRANSACTIONS
Founder
Shares
On
September 1, 2020, Globis SPAC LLC purchased 2,875,000 shares of the Company’s common stock for an aggregate price of $25,000.
On December 7, 2020, the Company sold an additional 172,500 shares of the Company’s common stocks to Up and Up for an aggregate
price of $1,500, resulting in a total of shares of common stock being sold to the Sponsors (the “Founder Shares”)
and being issued and outstanding, of which an aggregate of up to 397,500 shares were subject to forfeiture to the extent that the underwriters’
over-allotment option was not exercised in full or in part, so that the Sponsors would own approximately 21% of the Company’s issued
and outstanding shares after the Initial Public Offering. As a result of the underwriters’ election to fully exercise their over-allotment
option on December 15, 2020, no Founder Shares are currently subject to forfeiture.
In
February 2021, the Sponsor transferred an aggregate of 45,000 Founder Shares to three of the Company’s directors. In December 2021,
the Sponsor transferred an aggregate 60,000 common stock purchase warrants to three of the Company’s directors.
The
transfer of the Founders Shares and common stock purchase warrants to the Company’s directors, as described above, is within the
scope of FASB ASC Topic 718, “Compensation-Stock Compensation” (“ASC 718”). Under ASC 718, stock-based compensation
associated with equity-classified awards is measured at fair value upon the grant date. The fair value of the 45,000 Founder Shares transferred
to the Company’s directors in February 2021 was $345,455 or $7.68 per share. The fair value of the 60,000 common stock purchase
warrants transferred to the Company’s directors in December 2021 was $39,510 or $0.6585 per share. The Founders Shares and common
stock purchase warrants were effectively transferred subject to a performance condition (i.e., the occurrence of a Business Combination).
Compensation expense related to the Founders Shares and common stock purchase warrants is recognized only when the performance condition
is probable of occurrence under the applicable accounting literature in this circumstance. Stock-based compensation would be recognized
at the date a Business Combination is considered probable in an amount equal to the number of Founders Shares times the grant date fair
value per share (unless subsequently modified) less the amount initially received for the purchase of the Founders Shares. As of March
31, 2022, the Company determined that a Business Combination is not considered probable, and, therefore, no stock-based compensation
expense has been recognized.
The
Sponsors agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the date of the consummation
of a Business Combination or the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or
other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common
stock for cash, securities or other property.
Administrative
Support Agreement
The
Company entered into an agreement, commencing on December 15, 2020, the effective date of the Initial Public Offering, to pay an affiliate
of Globis SPAC LLC a total of $10,000 per month for office space, secretarial and administrative support. Upon completion of the Business
Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the three months ended March 31,
2022 and 2021, the Company incurred $30,000 in fees for these services. At March 31, 2022 and December 31, 2021, $5,000 is reflected
in accrued expenses related to this agreement.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsors or an affiliate of the Sponsors, or the Company’s
officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital
Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business
Combination, without interest.
On
January 11, 2021, the Company issued the Note to the Lender, which provides for borrowings from time to time of up to an aggregate of
$1,000,000. The Note bears no interest and is due and payable upon the date on which the Company consummates its initial Business Combination.
On
April 28, 2021, the Note was amended to terminate the option for the Lender to convert the amount outstanding under the Note into Private
Warrants.
During
the year ended December 31, 2021, the Note was amended to increase the principal amount to $5,000,000.
On
January 27, 2022, the Note was amended to increase the principal amount to $7,000,000.
On
various dates during the year ended December 31, 2021, the Company drew down a total of $1,450,000 under the Note for working capital
purposes, in accordance with the terms of the Note.
On
December 10, 2021, the Company drew down $1,150,000 under the Note in order to extend the period of time the Company had to complete
its Business Combination from December 15, 2021 to March 15, 2022. The proceeds from the draw down were deposited into the Company’s
Trust Account.
On
various dates during the three months ended March 31, 2022, the Company drew down a total of $577,300 under the Note for working capital
purposes, in accordance with the terms of the Note.
On
March 7, 2022, the Company drew down $1,150,000 under the Note in order to extend the period of time the Company has to complete its
Business Combination from March 15, 2022 to June 15, 2022. The proceeds from the draw down were deposited into the Company’s Trust
Account.
As
of March 31, 2022, the total amount outstanding under the Note amounted to $4,327,300.
NOTE
6. COMMITMENTS
Registration
Rights
Pursuant
to a registration rights agreement entered into on December 10, 2020, the holders of the Founder Shares, Private Securities, equity participation
shares and any warrants that may be issued upon conversion of the Working Capital Loans (and any shares of common stock issuable upon
the exercise of the Private Securities or warrants issued upon conversion of Working Capital Loans) will be entitled to registration
rights. The holders of a majority of these securities are entitled to make up to three demands that the Company register such securities.
The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months
prior to the date on which these shares of common stock are to be released from escrow. 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 Company
will bear the expenses incurred in connection with the filing of any such registration statements.
GLOBIS
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2022
(UNAUDITED)
Underwriting
Agreement
The
underwriters are entitled to receive the 402,500 equity participation shares upon the consummation of a Business Combination. The equity
participation shares have been placed in escrow until the consummation of a Business Combination. If a Business Combination is not consummated,
the equity participation shares will be forfeited by the underwriters. The Company accounted for the equity participation shares as an
expense of the Initial Public Offering, resulting in a charge directly to stockholders’ equity. The fair value of the equity participation
shares is estimated to be $4,025,000, based upon the offering price of the Units of $10.00 per Unit.
Forafric
Agro Holdings Limited Business Combination Agreement
On
December 19, 2021, the Company, entered into a securities purchase agreement (the “Business Combination Agreement”),
by and among the Company, Forafric Agro Holdings Limited, a Gibraltar private company limited by shares (“FAHL”) and Lighthouse
Capital Limited, a Gibraltar private company limited by shares (the “Seller”). On April 20, 2022, the Company entered
into Amendment No. 1 to the Business Combination Agreement, with FAHL, the Seller and Globis NV Merger Corp., a Nevada corporation (“Globis
Nevada”), which provides for the consummation of the following series of separate transactions (collectively, the “Business
Combination”): (i) Globis Nevada will change its jurisdiction of incorporation by transferring by way of a redomiciliation and
domesticating as a Gibraltar private limited company known as “Forafric Global Limited” (the “Redomiciliation”)
and, following the Redomiciliation, altering its authorized and issued share capital and thereafter re-registering as a Gibraltar public
company limited by shares and changing its name to “Forafric Global PLC” (referred to herein as “New Forafric”);
(ii) New Forafric will form a new wholly-owned subsidiary, Globis NV Merger 2 Corp., a Nevada corporation (“Merger Sub”);
(iii) the Company will merge with and into Merger Sub, with Merger Sub surviving (the “Merger”); (iv) immediately following the
effectiveness of the Merger, all of the common stock of Merger Sub issued pursuant to the Merger shall be contributed to New Forafric;
and (v) as soon as practicable thereafter New Forafric will acquire 100% of the equity interests in FAHL from the Seller and FAHL will
become a direct subsidiary of New Forafric.
As
a result of the Merger prior to the consummation of the Business Combination (i) the issued and outstanding shares of common stock of
the Company, will be exchanged, on a one-for-one basis, into ordinary shares, nominal value $0.001 per share, of New Forafric (the “Ordinary
Shares”); (ii) the issued and outstanding redeemable warrants that were registered pursuant to the Company’s registration
statement on Form S-1 (SEC File No. 333-250939) of the Company will automatically become redeemable warrants to acquire Ordinary Shares
at an exercise price of $11.50 per share; (iii) each issued and outstanding warrant of the Company issued in a private placement will
automatically become warrants to acquire Ordinary Shares at an exercise price of $11.50 per share on the terms and subject to the conditions
set forth in the applicable warrant agreement (no other changes will be made to the terms of any issued and outstanding private placement
warrants as a result of the Merger); and (iv) each issued and outstanding unit of the Company that has not been previously separated
into the underlying common stock and underlying warrant upon the request of the holder thereof, will be cancelled and will entitle the
holder thereof to one Ordinary Share and one redeemable warrant to acquire one Ordinary Share at an exercise price of $11.50 per share.
The
total consideration to be paid to the Seller in the FAHL Business Combination will be (i) 15,100,000 Ordinary Shares, subject to reduction
to the extent that the Closing Payment (as defined below) is less than $0, provided that Seller may be issued up to 1,904,762 additional
Ordinary Shares determined based on the amount of Remaining Cash (as defined in the Business Combination Agreement) at the Closing; plus
(ii) an amount (the “Closing Payment”) equal to $20,000,000 minus the outstanding amount of all Funded Debt (as defined
in the Business Combination Agreement) as of the Closing (other than Permitted Debt); provided that Seller may receive up to an additional
$20,000,000 determined based on the amount of Remaining Cash at the Closing. The Closing Payment will be funded by remaining funds in
the Trust Account after giving effect to any Buyer Share Redemptions (as defined in the Business Combination Agreement) and the proceeds
of any potential private placement financing.
In
addition, the Seller is also entitled to receive, up to 2,000,000 Ordinary Shares (the “Earnout Shares”), subject to New
Forafric achieving certain performance and share price thresholds prior to certain future dates, in each case as described in the Business
Combination Agreement. The Seller will also be entitled to receive, as additional consideration, 20% of any cash proceeds received by
the New Forafric from the exercise of outstanding warrants.
PIPE
Subscription Agreement
In
connection with the FAHL Business Combination, on December 31, 2021, the Company entered into a subscription agreement (the “PIPE
Subscription Agreement”) with an accredited investor (the “PIPE Investor”) pursuant to the PIPE Investor will purchase
ordinary shares of New Forafric in a private placement following the Redomiciliation and the Merger and prior to the closing of the Business
Combination. Pursuant to the PIPE Subscription Agreement, the PIPE Investor will purchase, at a purchase price of $10.50 per share, a
number of ordinary shares (the “PIPE Shares”) that will be equal to the lesser of (i) 4.99% of all issued and outstanding
ordinary shares, after taking into account the completion of the FAHL Business Combination and all ordinary shares issued pursuant to
the FAHL Bonds (defined below) and other related subscription agreements, if any, and (ii) 1,904,761 ordinary shares (the “PIPE
Investment”); accordingly, the maximum aggregate amount to be paid by the PIPE Investor for the PIPE Shares is approximately $20
million. The purpose of the sale of the PIPE Shares is to raise additional capital for use in connection with the Business Combination.
The
closing of the sale of the PIPE Shares (the “PIPE Closing”) will be contingent upon, among other things, the substantially
concurrent with the consummation of the Business Combination.
Convertible
Bonds Offering
In
connection with the proposed Business Combination, between December 31, 2021 and January 19, 2022, investors (each, a “Bond Investor”)
subscribed for convertible bonds of FAHL in an aggregate principal amount of $12 million (the “FAHL Bonds”) in private placements,
and issued pursuant to a bond subscription deed among the FAHL, the Seller and the Bond Investors. The FAHL Bonds are unsecured obligations
of the Bonds Issuer and are not transferable without the consent of FAHL (such consent not to be unreasonably withheld).
Unless
earlier converted or redeemed in accordance with the terms of the FAHL Bonds, the FAHL Bonds will mature and be redeemed on June 15,
2026. Interest accrues on the FAHL Bonds at a rate of 6% per annum and the Bond Investors are entitled to certain customary information
rights.
GLOBIS
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2022
(UNAUDITED)
Pursuant
to the current terms of the FAHL Bonds, upon consummation of the FAHL Business Combination, the FAHL Bonds will automatically convert
into ordinary shares of New Forafric at a price per share that is a 10% discount to the PIPE Investment, subject to certain adjustments.
The number of ordinary shares will be equal to the quotient that results from dividing the aggregate principal amount of the respective
FAHL Bond by $9.45, subject to certain adjustments. The Bond Investors include affiliates Up and Up Capital, LLC and Globis SPAC LLC,
the Sponsors of the Company, who have subscribed for an aggregate principal amount of $9.5 million of the FAHL Bonds, convertible into
approximately one million ordinary shares of New Forafric.
NOTE
7. STOCKHOLDER’S DEFICIT
Preferred
Stock — On December 10, 2020, the Company amended its Certificate of Incorporation such that it is now authorized to issue
up to 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences
as may be determined from time to time by the Company’s board of directors. At March 31, 2022 and December 31, 2021, there were
no shares of preferred stock issued or outstanding.
Common
Stock — The Company is authorized to issue 100,000,000 shares of common stock with a par value of $0.0001 per share. At March
31, 2022 and December 31, 2021, there were 3,550,833 shares of common stock issued and outstanding, excluding 11,500,000 shares of common
stock subject to possible redemption which are presented as temporary equity.
Warrants
— At March 31, 2022 and December 31, 2021, there were 11,500,000 Public Warrants outstanding. At March 31, 2022 and
December 31, 2021, there were 4,289,722 Private Warrants outstanding.
The
Public Warrants will become exercisable on the later of (a) the completion of a Business Combination or (b) 12 months from the closing
of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier
upon redemption or liquidation.
Notwithstanding
the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the warrants is not effective
within 90 days from the consummation of the Company’s Business Combination, warrant 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 warrants on a cashless basis pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities Act provided
that such exemption is available.
Once
the warrants become exercisable, the Company may redeem the Public Warrants:
|
● |
in
whole and not in part; |
|
● |
at
a price of $0.01 per warrant; |
|
● |
at
any time while the warrants are exercisable; |
|
● |
upon
not less than 30 days’ prior written notice of redemption to each warrant holder; |
|
● |
if,
and only if, the reported last sale price of the shares of common stock equals or exceeds $16.50 per share (as adjusted for stock
splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30-day trading period ending on
the third business day prior to the notice of redemption to warrant holders; and |
|
● |
if,
and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants
at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the
date of redemption. |
If
and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register
or qualify the underlying securities for sale under all applicable state securities laws. 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 shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including
in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the
warrants will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company
be required to net cash settle the 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.
In
addition, if (x) the Company issues additional common stock or equity-linked securities for capital raising purposes in connection with
the closing of a Business Combination at an issue price or effective issue price of less than $9.50 per share of 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 Sponsors or their 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 a Business Combination on the date of
the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the common stock
during the 10 trading day period starting on the trading day prior the day on which the Company consummates a Business Combination (such
price, the “Market Value”) is below $9.50 per share, then 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 $16.50 per share redemption trigger price
will be adjusted (to the nearest cent) to be equal to 165% of the higher of the Market Value and the Newly Issued Price.
The
Private Warrants and Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering,
except that the Private Warrants and the Placement Warrants are exercisable on a cashless basis, non-redeemable and holders of the Private
Warrants and the Placement Warrants have the option to calculate the fair market value based upon the last reported sale price of the
shares of common stock for the trading day prior to the date of exercise in lieu of the average reported last sale price of the shares
of common stock for the 10 trading days ending on the third trading day prior to the date of exercise.
GLOBIS
ACQUISITION CORP.
NOTES
TO CONDENSED FINANCIAL STATEMENTS
MARCH
31, 2022
(UNAUDITED)
NOTE
8. FAIR VALUE MEASUREMENTS
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each
reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company
seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable
inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is
used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and
liabilities:
|
Level
1: |
Quoted
prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions
for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
|
|
|
|
Level
2: |
Observable
inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities
and quoted prices for identical assets or liabilities in markets that are not active. |
|
|
|
|
Level
3: |
Unobservable
inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at March 31,
2022 and December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair
value:
SCHEDULE OF FAIR VALUE ASSETS MEASURED ON RECURRING BASIS
Description | |
Level | | |
March 31. 2022 | | |
December 31, 2021 | |
Assets: | |
| | | |
| | | |
| | |
Marketable securities held in Trust Account | |
| 1 | | |
$ | 118,467,492 | | |
$ | 117,307,838 | |
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 consolidated
financial statements were issued. Based upon this review, other than the below, the Company did not identify any subsequent events that
would have required adjustment or disclosure in the condensed consolidated financial statements.
On
April 20, 2022, the Business Combination Agreement was amended, as described in Note 6.