UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For
the quarter ended
For the transition period from to
Commission
file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one ordinary share, one redeemable warrant, and one right | ALACU | The Nasdaq Stock Market LLC | ||
Redeemable warrants, each warrant exercisable for one-half (1/2) of one ordinary share | ALACW | The Nasdaq Stock Market LLC | ||
Rights, each to receive one-tenth (1/10) of one ordinary share | ALACR | The Nasdaq Stock Market LLC |
Indicate
by check mark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | |
Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
Emerging Growth Company | ☒ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As
of August 10, 2020, there were
ALBERTON ACQUISITION CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2020
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
ALBERTON ACQUISITION CORPORATION
CONDENSED BALANCE SHEETS
June 30, | December 31, | |||||||
2020 | 2019 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Cash | $ | $ | ||||||
Prepaid assets | ||||||||
Total Current Assets | ||||||||
Cash and investments held in Trust Account | ||||||||
Total assets | $ | $ | ||||||
Liabilities and Shareholders’ Equity | ||||||||
Accounts payable and accrued expenses | $ | $ | ||||||
Due to related party | — | |||||||
Promissory note | ||||||||
Promissory note - related party | ||||||||
Total current liabilities | ||||||||
Deferred underwriting compensation | ||||||||
Total Liabilities | ||||||||
Commitments and Contingencies | ||||||||
Ordinary shares subject to possible redemption, | ||||||||
Shareholders’ Equity: | ||||||||
Preferred shares, par value; | ||||||||
Ordinary shares, par value; | ||||||||
Retained earnings | ||||||||
Total shareholders’ equity | ||||||||
Total Liabilities and Shareholders’ Equity | $ | $ |
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
ALBERTON ACQUISITION CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Operating costs | $ | $ | $ | $ | ||||||||||||
Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other income | ||||||||||||||||
Interest income – bank | ||||||||||||||||
Interest income | ||||||||||||||||
Total other income | ||||||||||||||||
Net (loss) income | $ | ( | ) | $ | $ | $ | ||||||||||
Less: income attributable to ordinary shares subject to possible redemption | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Adjusted net (loss) income | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
Basic and diluted adjusted net (loss) income per ordinary share | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
(1) | Excludes an aggregate of up to 276,676 and 10,585,569 ordinary shares subject to possible redemption at June 30, 2020 and 2019, respectively. |
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
ALBERTON ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
THREE AND SIX MONTHS ENDED JUNE 30, 2020
Ordinary Shares | Retained | Shareholders’ | ||||||||||||||
Shares | Capital | Earnings | Equity | |||||||||||||
Balance – January 1, 2020 | $ | $ | $ | |||||||||||||
Change in ordinary shares subject to possible redemption | ( | ) | ( | ) | ||||||||||||
Net income | — | |||||||||||||||
Balance – March 31, 2020 | ||||||||||||||||
Change in ordinary shares subject to possible redemption | — | |||||||||||||||
Net loss | — | — | ( | ) | ( | ) | ||||||||||
Balance – June 30, 2020 | $ | $ | $ |
THREE AND SIX MONTHS ENDED JUNE 30, 2019
Ordinary Shares | Retained | Shareholders’ | ||||||||||||||
Shares | Capital | Earnings | Equity | |||||||||||||
Balance – January 1, 2019 | $ | $ | $ | |||||||||||||
Change in ordinary shares subject to possible redemption | ( | ) | ( | ) | ||||||||||||
Net income | — | |||||||||||||||
Balance – March 31, 2019 | ||||||||||||||||
Change in ordinary shares subject to possible redemption | ( | ) | — | ( | ) | |||||||||||
Net income | — | — | ||||||||||||||
Balance – June 30, 2019 | $ | $ | $ |
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
ALBERTON ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30, | ||||||||
2020 | 2019 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income | $ | $ | ||||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Interest earned on investments held in Trust Account | ( | ) | ( | ) | ||||
Changes in current assets and current liabilities: | ||||||||
Prepaid assets | ( | ) | ||||||
Accounts payable and accrued expenses | ( | ) | ||||||
Due to related party | ( | ) | ||||||
Net cash used in operating activities | ( | ) | ( | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Purchase of investments held in Trust Account | ( | ) | ||||||
Cash withdrawn from Trust Account to pay redeeming stockholders | — | |||||||
Net cash provided by investing activities | ||||||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from promissory note – related party | ||||||||
Proceeds from promissory note | — | |||||||
Redemption of ordinary shares | ( | ) | — | |||||
Net cash used in financing activities | ( | ) | ||||||
Net Decrease in Cash | ( | ) | ( | ) | ||||
Cash – Beginning of the period | ||||||||
Cash – Ending of period | ||||||||
Supplemental Disclosure of Non-Cash Financing Activities: | ||||||||
Change in value of ordinary shares subject to possible redemption | $ | $ |
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Note 1 — Organization and Business Operations
Organization and General
Alberton Acquisition Corporation (the “Company”) is a blank check company incorporated on February 16, 2018, under the laws of British Virgin Islands for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”). The Company’s efforts to identify a prospective target business will not be limited to an industry or geographic location.
As of June 30, 2020, the Company had not yet commenced any operations. The Company has selected December 31 as its fiscal year end.
Financing
The
registration statement for the Company’s initial public offering (the “Initial Public Offering” as described
in Note 3) was declared effective by the United States Securities and Exchange Commission (“SEC”) on October 23, 2018.
On October 26, 2018, the Company consummated the Initial Public Offering of
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of
On
November 20, 2018, the underwriters exercised the over-allotment option in part and purchased
Trust Account
Following
the closing of the Initial Public Offering on October 26, 2018, an amount of $
On
April 23, 2020, the Company filed an amendment to its Articles of Association with the Registrar of the British Virgin Islands
to extend the time that it needs to complete an initial Business Combination from April 27, 2020 to October 26, 2020 or such an
earlier date as determined by its board of directors (the “Extension”).
The funds in the Trust Account are invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the Company’s failure to consummate a Business Combination by April 27, 2020 (the “Combination Period”). Placing funds in the Trust Account may not protect those funds from third party claims against the Company. Although the Company will seek all vendors, service providers, prospective target businesses or other entities it engages, to execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust Account, there is no guarantee that such persons will execute such agreements. The remaining net proceeds (not held in the Trust Account) may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative expenses. Additionally, the interest earned on the Trust Account balance may be released to the Company to pay the Company’s tax obligations.
5
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering and the Private Units, although substantially all the net proceeds are intended to be generally applied toward consummating
a Business Combination. The Company’s Business Combination must be with one or more target businesses that together have
a fair market value equal to at least 80% of the balance in the Trust Account (excluding any deferred underwriter’s fees
and taxes payable on the income earned on the Trust Account), which the Company refers to as the
The
Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion
of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii)
by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or
conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their
shares for a pro rata portion of the amount then on deposit in the Trust Account ($
The
Company will proceed with a Business Combination if the Company has net tangible assets of at least $
The amount in the Trust Account (less the aggregate nominal par value of the shares of the Company’s public shareholders) under the Companies Law will be treated as share premium which is distributable under the Companies Law provided that immediately following the date on which the proposed distribution is proposed to be made, the Company is able to pay the debts as they fall due in the ordinary course of business. If the Company is forced to liquidate the Trust Account, the public shareholders would be distributed the amount in the Trust Account calculated as of the date that is two days prior to the distribution date (including any accrued interest).
The
Initial Shareholders have agreed to (i) vote their insider shares (as well as any Public Shares acquired in or after the Initial
Public Offering) in favor of any proposed Business Combination, (ii) waive their conversion rights with respect to their initial
share (as well as any other shares acquired in or after the Initial Public Offering) in connection with the consummation of a
Business Combination, (iii) waive their rights to liquidating distributions from the Trust Account with respect to their initial
shares if the Company fails to consummate a Business Combination within the Combination Period, and (iv) not propose an amendment
to the Company’s Amended and Restated Memorandum and Articles of Association that would affect the substance or timing of
the Company’s obligation to redeem
6
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Liquidation
The
Company initially had until October 26, 2019 to consummate a Business Combination, however, if the Company anticipated that it
would not be able to consummate a Business Combination by such deadline, it could extend the period to consummate a Business Combination
by an additional six months (for a total of up to 18 months to complete a Business Combination). Pursuant to the terms of
the Company’s Amended and Restated Memorandum and Articles of Association and the trust agreement entered into between the
Company and Continental Stock Transfer & Trust Company, in order to extend the time available for the Company to consummate
the Business Combination, the Company’s insiders or their affiliates or designees, upon five days advance notice prior to
each applicable deadline, must deposit into the Trust Account $
On
October 18, 2019, the Company deposited $
On
January 23, 2020, the Company deposited an additional $
On
April 23, 2020, the Company held a special meeting pursuant to which the Company’s shareholders approved extending the Extension
from April 27, 2020 to October 26, 2020 (the “Extended Date”).
The Company agreed to contribute, or cause
to be contributed on its behalf (the “Cash Contribution”), $
Any additional loans that may be made to the Company to fund the Contribution, will not bear interest and will be repayable by the Company upon consummation of a Business Combination. The Company’s officers, directors or affiliates will have the sole discretion whether to continue extending additional loans for additional calendar months until the Extended Date and if the officers, directors or affiliates determine not to continue extending additional loans for additional calendar months, their obligation to extend additional loans following such determination will terminate.
7
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Going Concern
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the mandatory liquidation and subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after October 26, 2020.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, (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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised, and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements of the Company are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the accounting and disclosure rules and regulations of the SEC. The accompanying unaudited condensed financial statements have been prepared in accordance with US GAAP for interim financial statements and Article 8 of Regulation S-X. They do not include all of the information and notes required by US GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made that are necessary to present fairly the financial position, and the results of its operations and its cash flows. Operating results as presented are not necessarily indicative of the results to be expected for a full year. The unaudited condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2019.
Use of Estimates
The preparation of condensed financial statements in conformity with US 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 financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of June 30, 2020 and December 31, 2019.
8
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Investments Held in Trust Account
At June 30, 2020, the assets held in the Trust Account were held in money market funds, which are invested in U.S. Treasury securities. At December 31, 2019, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills.
Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s condensed balance sheets.
Income Taxes
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determined that the British Virgin Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no unrecognized tax benefits as of June 30, 2020 and December 31, 2019 and no amounts accrued for interest and penalties. 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 is subject to income tax examinations by major taxing authorities since inception.
The Company is considered an exempted British Virgin Islands Company and is presently not subject to income taxes or income tax filing requirements in the British Virgin Islands or the United States. As such, the Company’s tax provision is zero for the period presented.
Adjusted Net (Loss) Income per Ordinary Share
The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Adjusted net (loss) income per ordinary share is computed by dividing net (loss) income by the weighted average number of ordinary shares issued and outstanding for the period. Ordinary shares subject to possible redemption at June 30, 2020 and 2019, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic and diluted adjusted net (loss) income per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. At June 30, 2020 and 2019, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the income (loss) of the Company. As a result, diluted adjusted net (loss) income per ordinary share is the same as basic adjusted net (loss) income per ordinary share for the periods presented.
Concentration of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which at times, may exceed the Federal depository insurance coverage of $
9
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed financial statements.
Note 3 — Initial Public Offering
Public Units
Pursuant
to the Initial Public Offering on October 26, 2018, the Company sold
If the Company does not complete its Business Combination within the necessary time period described in Note 1, the Public Warrants and Public Rights will expire and be worthless. Since the Company is not required to net cash settle the Public Warrants and Public Rights, and the Public Warrants and Public Rights are convertible upon the consummation of the Business Combination, management determined that the Public Warrants and Public Rights are classified within shareholders’ equity as “Additional paid-in capital” upon their issuance in accordance with ASC 815-40. The proceeds from the sale are allocated to Public Shares and Public Warrants and Public Rights based on the relative fair value of the securities in accordance with ASC 470-20-30. The value of the Public Shares, Public Warrants and Public Rights was based on the closing price paid by investors.
At
the closing of the Initial Public Offering and over-allotment option, the Company paid an upfront underwriting discount of $
Purchase Option
On
October 26, 2018, the Company sold the underwriter (and its designees), for $
The
Company accounted for the unit purchase option, inclusive of the receipt of $
10
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Note 4 — Private Placements
Simultaneously
with the Initial Public Offering, the Company’s Sponsor purchased an aggregate of
The Private Units are identical to the units sold in the Initial Public Offering except the Private Units are non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the Sponsor or its permitted transferees. The purchasers of the Private Units have agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to the same permitted transferees as the founder shares) until the completion of the Business Combination.
If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law).
Note 5 — Related Party Transactions
Founder Shares
In
August 2018, the Company issued
The founder shares are identical to the ordinary shares included in the units sold in the Initial Public Offering. However, the Initial Shareholders have agreed to (A) to vote any shares owned by them in favor of any proposed Business Combination, (B) not to convert any shares in connection with a shareholder vote to approve a proposed initial Business Combination or any amendment to the Company’s charter documents prior to consummation of an initial Business Combination, or sell any shares to the Company in a tender offer in connection with a proposed initial Business Combination and (C) that the founder shares shall not participate in any liquidating distribution from the Trust Account upon winding up if a Business Combination is not consummated.
11
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Related Party Advances
To
participate in the private placement in connection with the Initial Public Offering, the Company’s Sponsor made a
deposit of $
During
the quarter ended June 30, 2020, the Company received an aggregate of $
Related Party Loans
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the
Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may
be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the
Working Capital Loans out of the proceeds of the Trust Account released to the Company. The Working Capital Loans would either
be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $
On
July 6, 2018, the Sponsor loaned the Company $
On
January 24, 2020, the Sponsor loaned the Company $
Administrative Service Fee
The
Company has agreed, commencing on August 1, 2018, to pay the Sponsor, a monthly fee of an aggregate of $
Other
than the $
12
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Note 6 — Promissory Note
On
September 18, 2019, the Company issued an unsecured promissory note in the aggregate principal amount of $
The
GN Note 1 is non-interest bearing and is payable on the date on which the Company consummates its initial Business Combination with
Global Nature or another qualified target company (a “Qualified Business Combination” and such date, the “Maturity
Date”), subject to certain mandatory repayment arrangement set forth in the GN Note 1. The principal balance may be prepaid
at any time without penalty. As of June 30, 2020 and December 31, 2019, there was $
Pursuant
to the GN Note 1, in the event that Global Nature notifies the Company that it does not wish to proceed with the Qualified Business
Combination (the “Withdrawal Request”), the Company shall only be obligated to repay the GN Note 1 as follows:
All amounts owed by the Company under the GN Note 1 become immediately due and payable upon an event of default, which includes the Company’s failure to pay the principal amount due within 5 business days of the Maturity Date and the Company’s voluntary or involuntary bankruptcy.
On
December 3, 2019, the Company issued an unsecured promissory note in the aggregate principal amount of $
On
April 17, 2020, the Company issued an unsecured promissory note in the aggregate principal amount of $
Notwithstanding the issuance of the GN Note 1, GN Note 2, AMC Note and the non-binding GN LOI and AMC LOI which have expired or been terminated under their respective terms, the Company has not entered into any definitive agreements, for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar Business Combination with one or more businesses or entities.
13
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Note 7 — Cash and Investments Held in Trust Account
As
of June 30, 2020, assets held in the Trust Account were comprised of $
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | Level | June 30, 2020 | ||||||
Assets: | ||||||||
Trust Account – U.S. Treasury Securities Money Market Fund | 1 | $ |
The Company classifies its United States Treasury and equivalent securities as held-to-maturity in accordance with FASB ASC 320 “Investments — Debt and Equity Securities.” Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheets and adjusted for the amortization or accretion of premiums or discounts.
The gross holding gains and fair value of held-to-maturity securities at December 31, 2019 are as follows:
Amortized Cost | Gross Holding Gain | Fair Value | ||||||||||
December 31, 2019 | ||||||||||||
U.S. Money Market | $ | $ | $ | |||||||||
U.S. Treasury Securities | ||||||||||||
$ | $ | $ |
Note 8 — Commitments and Contingencies
Risks and Uncertainties
Management is currently evaluating the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration Rights
Pursuant to a registration rights agreement entered into on October 23, 2018, the holders of the founder shares, Private Units (and underlying securities) and units that may be issued in payment of Working Capital Loans (and all underlying securities) are entitled to registration rights. The holders of a majority-in-interest of these securities are entitled to make up to two demands that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Note 9 — Deferred Underwriter Compensation
The
Company is obligated to pay the underwriters a deferred underwriting discounts and commissions equal to
14
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Note 10 — Shareholders’ Equity
Preferred
Shares - The Company is authorized to issue
Ordinary
Shares - The Company is authorized to issue
Warrants
- Each warrant entitles the registered holder to purchase one-half (1/2) of one ordinary share at a price of $
The warrants issued in the Private Units (“Private Warrants”) are identical to the Public Warrants sold in the Initial Public Offering except the Private Warrants will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees.
The
Company may call the warrants for redemption (excluding the private warrants and any warrants issued to its initial shareholders,
officers or directors in payment of working capital loans made to the Company, but including outstanding warrants issued upon
exercise of the unit purchase option issued to Chardan Capital Markets LLC), in whole and not in part, at a price of $
● | at any time after the warrants become 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 ordinary shares equals or exceeds $16.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day 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 ordinary shares underlying such warrants. |
The right to exercise will be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such warrant.
If the Company calls the warrants for redemption as described above, management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.”
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ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2020
(UNAUDITED)
Rights - Each holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even if a holder of such right converted all ordinary shares held by it in connection with a Business Combination. No fractional shares will be issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights to receive its additional shares upon consummation of a Business Combination as the consideration related thereto has been included in the Unit purchase price paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in the transaction on an as-converted into ordinary shares basis and each holder of rights will be required to affirmatively covert its rights in order to receive 1/10 of a share underlying each right (without paying additional consideration). The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company).
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 rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
The rights included in the Private Units sold in the private placement are identical to the rights included in the Units sold in the Initial Public Offering, except that, among others, the rights including the shares issuable upon exchange of such rights, are being purchased pursuant to an exemption from the registration requirements of the Securities Act and will become tradable only after certain conditions are met or the resale of such rights (including underlying securities) is registered under the Securities Act. Please refer to Note 4 Private Placement for more details.
Note 11 — Reconciliation of Adjusted Net (Loss) Income per Ordinary Share
The Company’s net (loss) income is adjusted for the portion of income that is attributable to ordinary shares subject to possible redemption, as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly, basic and diluted adjusted net (loss) income per ordinary share is as follows:
Three Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Net (loss) income | $ | ( | ) | $ | $ | $ | ||||||||||
Less: income attributable to ordinary shares subject to redemption (1) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Adjusted net (loss) income | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||
Basic and diluted weighted average shares outstanding (2) | ||||||||||||||||
Basic and diluted adjusted net (loss) income per ordinary share | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
(1) | |
(2) |
Note 12 — Subsequent Events
The Company’s management reviewed all material events that have occurred after the balance sheet date through the date which these unaudited condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to “we”, “us”, “our” or the “Company” are to Alberton Acquisition Corporation, except where the context requires otherwise. The following discussion should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this report.
Overview
We were incorporated on February 16, 2018 under the laws of British Virgin Islands for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar Business Combination with one or more businesses or entities. The Company’s efforts to identify a prospective target business are not limited to a particular industry or geographic location. We have not selected any target business for our initial Business Combination.
We presently have no revenue, have had losses since inception from incurring formation and operating costs and have had no operations other than identifying and evaluating suitable acquisition transaction candidates. We have relied upon the sale of our securities and loans from Hong Ye Hong Kong Shareholding Co., Limited (our “Sponsor”) to fund our operations.
On October 26, 2018, we consummated our Initial Public Offering of 10,000,000 Units. Each Unit consists of one ordinary share, one redeemable warrant to purchase one-half of one ordinary share and one right to receive 1/10 of an ordinary share upon the consummation of our initial Business Combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $100,000,000. On October 26, 2018, simultaneously with the consummation of the Initial Public Offering, we consummated a private placement with our Sponsor of 300,000 Private Units at a price of $10.00 per Private Unit, generating total proceeds of $3,000,000. On November 20, 2018, the underwriters exercised the over-allotment option in part and purchased 1,487,992 over-allotment option Units at an offering price of $10.00 per Unit, generating gross proceeds of $14,879,920. On November 20, 2018, simultaneously with the sale of the over-allotment units, the Company consummated the private sale of an additional 29,760 Private Units to our Sponsor, generating gross proceeds of $297,600. On November 20, 2018, the underwriters waived their right to exercise the reminder of the over-allotment option. In connection with such waiver, an aggregate of 3,002 founder shares held by our initial shareholders were forfeited.
A total of $114,879,920 of the net proceeds from the Initial Public Offering (including the partial exercise of the over-allotment option) and the private placements were deposited in a Trust Account established for the benefit of the Company’s public shareholders.
Our management has broad discretion with respect to the specific application of the net proceeds of Initial Public Offering and the private placements, although substantially all of the net proceeds are intended to be applied generally towards consummating a Business Combination.
Recent Developments
We initially had until October 25, 2019 to consummate a Business Combination. However, as we anticipated that we may not be able to consummate a Business Combination by October 25, 2019, we extended the period of time to consummate a Business Combination until October 26, 2020 or such an earlier date as determined by our board.
On September 18, 2019, we issued an unsecured promissory note in the amount of $1,148,800 (the “GN Note 1”) to Global Nature Investment Holdings Limited (“Global Nature”) to fund a three-month extension payment and, accordingly, $1,148,799 was deposited into the Trust Account. GN Note 1 was issued in connection with a non-binding letter of intent entered into by and between Global Nature and us on September 13, 2019, to consummate a potential Business Combination with Global Nature (the “GN LOI”).
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The GN Note 1 is non-interest bearing and is payable on the date on which we consummate our initial Business Combination with Global Nature or another qualified target company (a “Qualified Business Combination” and such date, the “Maturity Date”), subject to certain mandatory repayment arrangement set forth in the GN Note 1. The principal balance may be prepaid at any time without penalty. Pursuant to the GN Note 1, in the event that the Global Nature notifies us in written that it does not wish to proceed with the Qualified Business Combination (the “Withdrawal Request”), we shall only be obligated to repay the Note, as follows: (i) the full principal amount of the GN Note 1 within 5 business days of such Withdrawal Request if such Withdrawal Request is given on or before September 24, 2019; (ii) 50% of the principal amount of the GN Note 1 within 5 business days of such Withdrawal Request if the Withdrawal Request is given from after September 24, 2019 and on or before October 15, 2019 or the date the subscription amount of this GN Note 1 is transferred into the Trust Account (whichever is later); (iii) 50% of the principal amount of the GN Note 1 as soon as possible with best efforts but no later than 5 business days after Alberton’s Business Combination if the Withdrawal Request is given from after October 15, 2019 or the date the subscription amount of this Note is transferred into the Trust Account (whichever is later); or (iv) the full principal amount of the Note as soon as possible with best efforts but no later than 5 business days after Alberton’s Business Combination or the date of expiry of the term of Alberton (whichever is earlier), if the parties have not entered into a definitive agreement with regard to the Qualified Business Combination within 45 days from the date of the GN Note 1 as a result of the disagreement on the valuation of the Qualified Business Combination. On March 12, 2020, we received the Withdrawal Request from Global Nature that it did not wish to proceed with the Qualified Business Combination. The parties are in discussion of the repayment of the GN Note 1 which shall be repaid as soon as possible with best efforts but no later than 5 business days after our Business Combination or the date of expiry of the term of us (whichever is earlier).
On December 3, 2019, we, upon receipt of the principal, issued an unsecured promissory note in the aggregate principal amount of $500,000 (the “GN Note 2”, together with GN Note 1, the “GN Notes”) to Global Nature, its registered assignees or successor in interest as working capital.
The GN Note 2 is non-interest bearing and is payable on the earlier date of (i) that we consummate a Qualified Business Combination, and (ii) expiry of the term of us. The principal balance may be prepaid prior to the Maturity Date without penalty. Pursuant to the GN Note 2, in the event that (i) the parties do not agree with the valuation of the Qualified Business Combination; (ii) a definitive agreement with regard to the Qualified Business Combination with the Payee is not entered into within 45 days from the date of this GN Note 2; or (iii) the Qualified Business Combination is not consummated for any reason prior to the date of expiry of the term of us, we shall repay the principal amount of the GN Note 2 no later than 5 business days after our initial Business Combination or the date of expiry of the term of Alberton, whichever is earlier. As a result that the parties did not enter into a definitive agreement within 45 days from the GN Note 2, such note becomes payable no later than 5 business days after our initial Business Combination or the date of expiry of the term of us.
On January 23, 2020, we deposited $1,148,800 into the Trust Account to extend the time available for us to complete a Business Combination from January 24, 2020 to April 27, 2020. The extension deposit was partially funded from a $780,000 loan provided by the Sponsor and partially from a $368,800 from our working capital. In connection with the loan provided by the Sponsor, we issued a promissory note (the “Sponsor Note”) to the Sponsor in the aggregate principal amount of $780,000. The Sponsor Note is non-interest bearing and is payable on the date on which we consummate our initial Business Combination. The Sponsor, however, has the right to convert the Sponsor Note, in whole or in part, into our Private Units, as described in the public offering prospectus we filed with the Securities and Exchange Commission on October 24, 2018, file No. 333-227652.
On March 30, 2020, Mr. Ben (Bin) Wang, resigned from his positions as Chairman and member of the board and the Chief Executive Officer of the Company. On the same day, the board accepted Mr. Wang’s resignation, effective immediately. Upon Mr. Wang’s resignation, on March 30, 2020, the Board appointed Ms. Guan Wang, the treasurer and one of the directors of the Company, as the Chairwoman of the Board and the Chief Executive Officer of the Company to fill the vacancy, effective immediately.
On April 17, 2020, we issued an unsecured promissory note in the aggregate principal amount of $500,000 (the “AMC Note”) to AMC Sino, a PRC company based in Qingdao, China, its registered assignees or successor in interest (the “AMC Payee”). The AMC Note was issued in connection with a non-binding letter of intent (“AMC LOI”) entered into by and between the Company and Zhongxin AmcAsset Limited (“AmcAsset”), a holding company incorporated in the British Virgin Islands, to consummate a potential business combination with AmcAsset. AmcAsset is a transnational distressed asset management company with foothold in the U.S. and China, and undergoing global expansion. AmcAsset holds 100% equity interest of Quest Mark Capital Inc., a California corporation located in Los Angeles, and Qingdao Zhongbiao Distressed Asset Management Co., Ltd (“Zhongbiao”), to which AMC Sino is related. The principal of the AMC Note of $500,000 will be paid in installments according to the our needs. The AMC Note is non-interest bearing and is payable on the date on which we consummate our initial business combination with AMC Payee or another qualified target company, subject to certain mandatory repayment arrangement set forth in the AMC Note. The principal balance may be prepaid at any time without penalty. On May 5, 2020, we received first installment of $100,000 under the AMC Note. On June 30, 2020, the exclusivity period under the AMC LOI expired.
On April 23, 2020, we held a special meeting pursuant to which our shareholders approved extending the Extension from April 27, 2020 to October 26, 2020 (the “Extended Date”). In connection with the approval of the extension, shareholders elected to redeem an aggregate of 10,073,512 of our ordinary shares. As a result, an aggregate of $105,879,118 (or $10.51 per share) was released from our Trust Account to pay such shareholders.
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We agreed to contribute, or cause to be contributed on our behalf (the “Cash Contribution”), $60,000 for the aggregate number of Public Shares that did not convert in connection with the extension (the “Remaining Public Shares”) for each monthly period or portion thereof that is needed to complete a Business Combination (commencing on April 27, 2020 until the earlier of the consummation of a Business Combination and the expiry of the Extension). The Cash Contribution will be deposited as additional interest on the proceeds in the Trust Account and will be distributed pro rata as a part of redemption amount to each Remaining Public Share in connection with a future redemption. In addition, at the earlier date (the “Issuance Date”) of the consummation of its initial Business Combination and the expiry of the Extension, we will issue a dividend of one warrant to purchase one-half of one ordinary share for each Remaining Public Share. Each such warrant will be identical to the warrants included in the Units sold in our Initial Public Offering (the “Dividend”, collectively with the Cash Contribution, the “Contribution”).
The Cash Contribution is subject to the following deposit schedule (the “Deposit Schedule”): the aggregate amount of the Cash Contribution of first two months of $120,000 will be deposited into the Trust Account within 7 business days of April 27, 2020 and the Cash Contribution of each subsequent month of $60,000 will be deposited into the Trust Account with 7 business days of 27th day of such month. We deposited the proceeds of AMC Note into the Trust Account as the Cash Contribution pursuant to the Deposit Schedule. On May 5, 2020, we deposited an aggregate of $120,000 into the Trust account to fund the first two months’ extension. The Extension was partially funded from a $20,000 advance provided by the Sponsor and $100,000 from the AMC Note. On the same day, we entered into an amendment to the trust agreement to extend the final liquidation date of the trust account to the 24-month anniversary of the closing of its Initial Public Offering.
Any additional loans that may be made to us to fund the Contribution, will not bear interest and will be repayable by us upon consummation of a Business Combination. Our officers, directors or affiliates will have the sole discretion whether to continue extending additional loans for additional calendar months until the Extended Date and if the officers, directors or affiliates determine not to continue extending additional loans for additional calendar months, their obligation to extend additional loans following such determination will terminate.
As of the date of this report, we have not entered into any definitive agreements, for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar Business Combination with one or more businesses or entities. Our board has decided to seek shareholders’ approval to amend our current charter to extend the time we need to consummate an initial Business Combination after October 26, 2020 and provide public shareholder the opportunity to redeem their Public Shares in connection with such amendment and extension.
On October 11, 2019, Mr. Keqing (Kevin) Liu, our Chief Financial Officer, resigned from his position as a director of the Company in order to satisfy Nasdaq listing standards that the majority of the board of the Company be independent. On July 29, 2020, the board re-elected Mr. Liu as a member of the board, effective immediately. As a result, the board of the Company currently have two executive directors and three independent directors.
Results of Operations
Our entire activity from inception up to October 26, 2018 was related to the Company’s formation, the Initial Public Offering and general and administrative activities. Since the Initial Public Offering, our activity has been limited to the evaluation of Business Combination candidates, and we will not be generating any operating revenues until the closing and completion of our initial Business Combination. We generate non-operating income in the form of interest income on investments. We are incurring expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended June 30, 2020, we had a net loss of $121,769, consisting of $146,045 of operating costs, consisting mostly of general and administrative expenses, offset by $24,271 of interest income from investments in our Trust Account and $5 of interest income from deposits in our corporate bank account.
For the six months ended June 30, 2020, we had net income of $264,371, consisting of $558,639 of interest income from investments in our Trust Account and $832 of interest income from deposits in our corporate bank account, offset by $295,100 of operating costs, consisting mostly of general and administrative expenses.
For the three months ended June 30, 2019, we had net income of $557,215, consisting of $694,051 of interest income from investments in our trust account and $309 of interest income from deposits in our corporate bank account, offset by $137,145 of operating costs, consisting mostly of general and administrative expenses.
For the six months ended June 30, 2019, we had net income of $1,092,227, consisting of $1,382,661 of interest income from investments in our trust account and $452 of interest income from deposits in our corporate bank account, offset by $290,886 of operating costs, consisting mostly of general and administrative expenses.
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Liquidity and Capital Resources
For the six months ended June 30, 2020, cash used in operating activities was $79,065. As of June 30, 2020, we had cash outside the Trust Account of $9,289 available for working capital needs. All remaining cash is held in the Trust Account and is generally unavailable for our use, prior to an initial Business Combination, and is restricted for use either in a Business Combination or to redeem ordinary shares. As of June 30, 2020, none of the amount on deposit in the Trust Account was available to be withdrawn as described above.
Until consummation of the Business Combination, we will be using the funds not held in the Trust Account, and any additional funding that may be loaned to us by our Sponsor, for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
If our estimates of the costs of undertaking in-depth due diligence and negotiating Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate its business prior to the Business Combination and will need to raise additional capital. In this event, our officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we consummate an initial Business Combination, we would repay such loaned amounts out of the proceeds of the Trust Account released to us upon consummation of the Business Combination, or, at the lender’s discretion, up to $1,500,000 of such loans may be convertible into units of the post Business Combination entity at a price of $10.00 per unit. In the event that the initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. The terms of such loans by our initial shareholders, officers and directors, if any, have not been determined and no written agreements exist with respect to such loans.
Moreover, we may need to obtain additional financing either to consummate our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial Business Combination. Following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Going Concern
In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the mandatory liquidation and subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after October 26, 2020.
Off-Balance Sheet Arrangements
As of June 30, 2020, we did not have any off-balance sheet arrangements. We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $1,000 for general and administrative services including office space, utilities and secretarial support. We began incurring these fees on August 1, 2018 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination or our liquidation.
The underwriters are entitled to a deferred underwriting discounts and commissions equal to 3.5% of the gross proceeds of the Initial Public Offering. Upon completion of the Business Combination, $4,020,797 (with consideration of the underwriters’ exercise of their over-allotment option on November 20, 2018) will be paid to the underwriters from the funds held in the Trust Account. No discounts or commissions will be paid with respect to the purchase of the Private Units.
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Critical Accounting Policies
The preparation of the condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on our condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The net proceeds of our Initial Public Offering and the sale of the Private Units held 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 meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2020, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were effective.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material legal proceedings and no material legal proceedings have been threatened by us or, to the best of our knowledge, against us.
Item 1A. Risk Factors
As a smaller reporting company, we are not required to make disclosures under this Item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits.
Exhibit No. | Description | |
10.1* | Amendment No.1 to the Investment Management Trust Agreement dated May 5, 2020 | |
31.1* | Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. | |
31.2* | Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended. | |
32** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema Document | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document |
* | Filed herewith. |
** | Furnished. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ALBERTON ACQUISITION CORPORATION | ||
Date: August 10, 2020 | By: | /s/ Guan Wang |
Guan Wang | ||
Chief Executive
Officer (Principal executive officer) | ||
Date: August 10, 2020 | By: | /s/ Keqing (Kevin) Liu |
Keqing (Kevin) Liu | ||
Chief Financial
Officer (Principal financial and accounting officer) |
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