The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
Notes to Unaudited Condensed Financial
Statements
Note 1 — Organization and Plan of Business Operations
Organization
Atlantic Acquisition Corp. (the “Company”) was incorporated
in Delaware on May 19, 2016 as a blank check company whose objective is to acquire, through a merger, share exchange, asset acquisition,
stock purchase, recapitalization, reorganization or other similar Business Combination, one or more businesses or entities (a “Business
Combination”). The Company’s efforts to identify a prospective target business will not be limited to any particular
industry or geographic region, although the Company initially intends to focus on target businesses being operated by and/or serving
ethnic minorities in the United States, especially within Asian-American communities.
At March 31, 2018, the Company had not yet commenced any operations.
All activities through March 31, 2018 relate to the Company’s formation, the public offering described below and seeking
a target business.
Plan of Business Operations
Financing
The registration statement for the Company’s initial public
offering (the “Public Offering” as described in Note 3) was declared effective by the United States Securities and
Exchange Commission (“SEC”) on August 8, 2017. On August 14, 2017, the Company consummated the Public Offering of 4,000,000
units at $10.00 per unit (the “Public Units”) and sold to initial shareholders and Chardan Capital Markets, LLC 320,000
units at $10.00 per unit (the “Private Units”) in a private placement (Note 4). The Company received net proceeds of
approximately $41,476,000 from the sale of the Public Units, the Private Units and the proceeds from the promissory note (See note
5).
On August 16, 2017, the underwriters exercised the over-allotment
option in part. The closing of the sale of 425,000 over-allotment option Units generating gross proceeds of $4,250,000 took place
on August 21, 2017. Simultaneously with the sale of the over-allotment units, the Company consummated the private sale of an additional
21,250 Private Units, generating gross proceeds of $212,500.
Trust Account
Upon the closing of the Public Offering and the private placement
(including the shares sold upon exercise of the over-allotment option), an aggregate of $45,135,000 was placed in a trust account
(the “Trust Account”) with American Stock Transfer & Trust LLC acting as trustee. The funds held in the Trust Account
can be invested in United States government treasury bills, bonds or notes, having a maturity of 180 days or less or in money market
funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act until the earlier of (i) the consummation
of the Company’s initial Business Combination and (ii) the Company’s failure to consummate a Business Combination within
18 months from the closing of the Public Offering. Placing funds in the Trust Account may not protect those funds from third party
claims against the Company. Although the Company will seek to have all vendors, service providers, prospective target businesses
or other entities it engages, 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.
Business Combination
Pursuant to Nasdaq listing rules, the Company’s initial
Business Combination must occur with one or more target businesses having an aggregate fair market value equal to at least 80%
of the value of the funds 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 80% test, at the time of the execution of a definitive agreement
for our initial Business Combination, although the Company may structure a Business Combination with one or more target businesses
whose fair market value significantly exceeds 80% of the trust account balance. If the Company is no longer listed on Nasdaq, it
will not be required to satisfy the 80% test.
The Company currently anticipates structuring a Business Combination
to acquire 100% of the equity interests or assets of the target business or businesses. The Company may, however, structure a Business
Combination where the Company merges directly with the target business or where the Company acquires less than 100% of such interests
or assets of the target business in order to meet certain objectives of the target management team or stockholders or for other
reasons, but the Company will only complete such Business Combination if the post-transaction company owns 50% or more of the outstanding
voting securities of the target or otherwise owns a controlling interest in the target sufficient for it not to be required to
register as an investment company under the Investment Company Act. If less than 100% of the equity interests or assets of a target
business or businesses are owned or acquired by the post-transaction company, the portion of such business or businesses that is
owned or acquired is what will be valued for purposes of the 80% test.
The Company will either seek stockholder approval of any Business
Combination at a meeting called for such purpose at which stockholders may seek to convert their shares into their pro rata share
of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid, or provide stockholders
with the opportunity to sell their shares to the Company by means of a tender offer for an amount equal to their pro rata share
of the aggregate amount then on deposit in the Trust Account, less any taxes then due but not yet paid. These shares have been
recorded at redemption value and are classified as temporary equity, in accordance with Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company
will proceed with a Business Combination only if it will have net tangible assets of at least $5,000,001 upon consummation of the
Business Combination and, solely if stockholder approval is sought, a majority of the outstanding common shares of the Company
voted are voted in favor of the Business Combination.
Notwithstanding the foregoing, a public stockholder, together
with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section
13(d)(3) of the Exchange Act) will be restricted from seeking conversion rights with respect to 25% or more of the common shares
sold in the Public Offering. Accordingly, all shares purchased by a holder in excess of 25% of the shares sold in the Public Offering
will not be converted to cash. In connection with any stockholder vote required to approve any Business Combination, the Initial
Stockholders will agree (i) to vote any of their respective shares, including the common shares sold to the Initial Stockholders
in connection with the organization of the Company (the “Initial Shares”), common shares included in the Private Units
to be sold in the Private Placement, and any common shares which were initially issued in connection with the Public Offering,
whether acquired in or after the effective date of the Public Offering, in favor of the initial Business Combination and (ii) not
to convert such respective shares into a pro rata portion of the Trust Account or seek to sell their shares in connection with
any tender offer the Company engages in.
On March 28, 2018, Atlantic Acquisition Corp. (“Atlantic”)
entered into a merger agreement (the “Merger Agreement”) with HF Group Merger Sub Inc., a wholly-owned subsidiary of
Atlantic (the “Merger Sub”), and HF Group Holding Corporation (“HF”), a leading foodservice distributor
operated by Chinese Americans serving Chinese/Asian restaurants, primarily Chinese takeout restaurants located in the southeastern
United States. Upon the closing of the transactions contemplated in the Merger Agreement, Merger Sub will merge with and into HF,
resulting in HF becoming a wholly owned subsidiary of Atlantic. The former shareholders of HF will receive 19,969,833 shares of
Atlantic common stock as consideration for the merger.
Liquidation
Pursuant to the Company’s Certificate of Incorporation,
if the Company is unable to complete its initial Business Combination within 18 months from the date of the Public Offering, 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 100% of the outstanding public shares and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the remaining holders of common stock and the Company’s board of directors, dissolve
and liquidate. However, if the Company anticipates that it may not be able to consummate its initial Business Combination within
18 months, the Company may, but is not obligated to, extend the period of time to consummate a Business Combination up to two times,
each by an additional three months (for a total of up to 24 months to complete a Business Combination). Pursuant to the terms of
the Company’s amended and restated articles of incorporation and the trust agreement to be entered into between the Company
and American Stock Transfer & Trust Company, LLC, in order to extend the time available for the Company to consummate its initial
Business Combination, the Company’s insiders or their affiliates or designees, upon five days advance notice prior to the
applicable deadline, must deposit into the Trust Account $800,000, or $920,000 if the underwriters’ over-allotment option
is exercised in full ($0.20 per share in either case), on or prior to the date of the applicable deadline, up to an aggregate of
$1,600,000 (or $1,840,000 if the underwriters’ over-allotment option is exercised in full), or $0.40 per share. The insiders
will receive a non-interest bearing, unsecured promissory note equal to the amount of any such deposit that will not be repaid
in the event that the Company is unable to close a Business Combination unless there are funds available outside the Trust Account
to do so. Such notes would either be paid upon consummation of our initial Business Combination, or, at the lender’s discretion,
converted upon consummation of our Business Combination into additional private units at a price of $10.00 per unit. The Company’s
stockholders have approved the issuance of the private units upon conversion of such notes, to the extent the holder wishes to
so convert such notes at the time of the consummation of our initial Business Combination. In the event that the Company receives
notice from its insiders five days prior to the applicable deadline of their intent to effect an extension, the Company intends
to issue a press release announcing such intention at least three days prior to the applicable deadline. In addition, the Company
intends to issue a press release the day after the applicable deadline announcing whether or not the funds had been timely deposited.
The Company’s insiders and their affiliates or designees are not obligated to fund the Trust Account to extend the time for
the Company to complete its initial Business Combination. To the extent that some, but not all, of the Company’s insiders,
decide to extend the period of time to consummate its initial Business Combination, such insiders (or their affiliates or designees)
may deposit the entire amount required. If the Company is unable to consummate an initial Business Combination and is forced to
redeem 100% of the outstanding public shares for a pro rata portion of the funds held in the Trust Account, each holder will receive
a pro rata portion of the amount then in the Trust Account. Holders of rights will receive no proceeds in connection with the liquidation.
The Initial Stockholders and the holders of Private Units will not participate in any redemption distribution with respect to their
initial shares and Private Units, including the common stock included in the Private Units.
To the extent the Company is unable to consummate a Business
Combination, it will pay the costs of liquidation from the remaining assets outside of the Trust Account. If such funds are insufficient,
Wai Fun Cheng, Ren Hua Zheng, Richard Xu and Tom W. Su have committed to pay the funds necessary to complete such liquidation and
have agreed not to seek repayment of such expenses.
Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our Business Startups Act
of 2012 (the “JOBS Act”) permits emerging growth companies to delay complying with new or revised financial accounting
standards that do not yet apply to 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). 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 an 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
are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”)
and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The interim accompanying
financial statements have been prepared in accordance with GAAP for interim financial statements and Article 8 of Regulation S-X.
They do not include all of the information and notes required by GAAP for complete financial statements. The unaudited interim
condensed financial information should be read in conjunction with the audited financial statements and the notes thereto for the
fiscal year ended December 31, 2017.
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.
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. There were no cash equivalents as of March 31, 2018 and
December 31, 2017.
Fair value of financial instruments
The fair value of the Company’s assets and liabilities,
which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the balance sheet, primarily due to their short-term nature.
Loss Per Common Share
Basic loss per common share is computed by dividing net loss
by the weighted-average number of common shares outstanding during the period, excluding ordinary shares subject to compulsory
repurchase by the Company. Diluted loss per common share is computed by dividing net loss by the weighted average number of common
shares outstanding, plus to the extent dilutive, the incremental number of common shares to settle rights and other ordinary share
equivalents (currently none outstanding), as calculated using the treasury stock method. Shares of common stock subject to possible
conversion at March 31, 2018, which are not currently redeemable and are not redeemable at fair value, have been excluded from
the calculation of basic and diluted loss per common share since such shares, if redeemed, only participate in their pro rata share
of the Trust Account earnings. The Company has not considered the effect of (1) rights sold in the Offering and private placement
that convert into 476,625 shares of Class A common stock, and (2) 250,000 of Class A common stock and rights that convert into
25,000 shares of Class A common stock in the unit purchase option sold to the underwriter, in the calculation of diluted loss per
share, since the conversion of the rights into shares of common stock is contingent upon the occurrence of future events. As a
result and the Company’s loss position attributable to common stock, diluted loss per common share is the same as basic loss
per common share for the three months ended March 31, 2018 and 2017.
Use of Estimates
The preparation of 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 financial statements and the reported amounts of expenses during the reporting
period. Actual results could differ from those estimates.
Concentration of credit risk
Financial instruments that potentially subject the Company to
concentration of credit risk consist of cash accounts in a financial institution which, at times may exceed the Federal depository
insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company is
not exposed to significant risks on such accounts.
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.
ASC 740 also clarifies the accounting for uncertainty in income
taxes recognized in an enterprise’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. ASC 740 also
provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.
The Company is required to file income tax returns in the United States (federal) and in various state and local jurisdictions.
Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring
recognition in the Company’s financial statements.
The Company was incorporated in the State of Delaware and is
required to pay franchise taxes to the State of Delaware on an annual basis.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not
yet effective accounting standards, if currently adopted, would have a material effect on the accompanying financial statements.
Note 3 — Public Offering
Public Unit
On August 14, 2017, the Company sold 4,000,000 Public Units
at a price of $10.00 per Public Unit in the Public Offering generating gross proceeds of $40,000,000. Each Public Unit consists
of one ordinary share of the Company, $0.0001 par value per share (the “Public Shares”), and one right (the “Public
Rights”). Each Public Right entitles the holder to receive one-tenth (1/10) of an ordinary share upon consummation of an
initial Business Combination.
On August 16, 2017, the underwriters exercised the over-allotment
option in part. The closing of the sale of 425,000 over-allotment option Units generating gross proceeds of $4,250,000 took place
on August 21, 2017.
If the Company does not complete its Business Combination within
the necessary time period described in Note 1, the Public Rights will expire and be worthless. Since the Company is not required
to net cash settle the Rights and the Rights are convertible upon the consummation of an initial Business Combination, management
determined that the 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 Rights based on the relative
fair value of the securities in accordance with ASC 470-20-30. The value of the Public Shares and Rights will be based on the closing
price paid by investors.
At the closing of the Public Offering and over-allotment option,
the Company paid an upfront underwriting discount of $1,200,000 and $127,500, 3.0% of the per unit offering price to the underwriter,
respectively, with an additional fee of $1,000,000 and $106,250 (the “Deferred Discount”), 2.5% of the gross offering
proceeds payable upon the Company’s completion of the Business Combination, respectively. The Deferred Discount will become
payable to the underwriter from the amounts held in the Trust Account solely in the event the Company completes its Business Combination.
In the event that the Company does not close a Business Combination, the underwriter has waived its right to receive the Deferred
Discount. The underwriter is not entitled to any interest accrued on the Deferred Discount. Total offering costs were $1,851,217,
which consist of $1,327,500 of underwriter’s commissions and $523,717 of other offering costs.
Purchase Option
On August 14, 2017, the Company sold the underwriters, for $100,
a unit purchase option to purchase up to a total of 250,000 Units exercisable at $10.50 per Unit (or an aggregate exercise price
of $2,625,000) commencing on the later of the consummation of a Business Combination and six months from February 8, 2018. The
unit purchase option expires on August 8, 2022. The units issuable upon exercise of this option are identical to the Units being
offered in the Public Offering. The Company has agreed to grant to the holders of the unit purchase option, demand and “piggy
back” registration rights for periods of five and seven years, respectively, from the effective date of the Public Offering,
including securities directly and indirectly issuable upon exercise of the unit purchase option.
The Company has accounted for the fair value of the unit purchase
option, inclusive of the receipt of a $100 cash payment, as an expense of the Public Offering resulting in a charge directly to
stockholders’ equity. The Company estimates that the fair value of this unit purchase option is $610,265 using a Black-Scholes
option-pricing model adjusted for the likelihood of a completed Business Combination. The fair value of the unit purchase option
to be granted to the placement agent is estimated as of the date of grant using the following assumptions: (1) expected volatility
of 51.14%, (2) risk-free interest rate of 1.77%, (3) expected life of five years and (4) estimated possibility of 55% for consummation
of initial Business Combination.
Note 4 — Private Placement
On August 14, 2017 (see Note 7) certain of the Company’s
shareholders, and Chardan Capital Markets, LLC purchased an aggregate of 320,000 Private Units at $10.00 per Private Unit of which
17,500 units were issued for the conversion of the May 30, 2017 note payable by one of our directors (see Note5). They also purchased
an additional 21,250 Private Units from the Company at a price of $10.00 per Private Unit at the closing of the sale of 425,000
Units in connection with the exercise of the over-allotment option. Chardan Capital Markets, LLC purchased 20,000 of the 320,000
Private Units issued simultaneously with the close of the Public Offering, and 2,125 of the 21,250 Private Units issued simultaneously
with the exercise of over-allotment option.
The Private Units are identical to the Units sold in the Public
Offering. Additionally, the holders of the Private Units have agreed (A) to vote the shares underlying their Private Units in favor
of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the Company’s amended and
restated certificate of incorporation with respect to the Company’s pre-Business Combination activities prior to the consummation
of such a Business Combination unless the Company provides dissenting Public Stockholders with the opportunity to convert their
public shares in connection with any such vote, (C) not to convert any shares underlying the Private Units into the right to receive
cash from the Trust Account in connection with a stockholder vote to approve an initial Business Combination or a vote to amend
the provisions of the Company’s amended and restated certificate of incorporation relating to shareholders’ rights
or pre-Business Combination activity or sell their shares to the Company in connection with a tender offer the Company engages
in and (D) that the shares underlying the Private Units shall not participate in any liquidating distribution upon winding up if
a Business Combination is not consummated. The purchasers have also agreed not to transfer, assign or sell any of the Private Units
or underlying securities (except to transferees that agree to the same terms and restrictions) until the completion of an initial
Business Combination.
Note 5 — Related Party Transactions
On June 9, 2016, the Company issued a $175,000 principal amount
unsecured promissory note to the Company’s former President and Director. On May 30, 2017, the Company issued a separate
$175,000 principal amount unsecured promissory note to one of the Company’s current directors. The proceed from the Company’s
current director was wired into an escrow account and used to repay the original outstanding $175,000 loan due to the Company’s
former President on June 1, 2017. The new note was non-interest bearing and was payable on the consummation of the Public Offering.
On August 14, 2017, a $175,000 loan from the director was converted into Private Units as part of the Private Placement at a price
of $10.00 per Private Unit and 17,500 units were issued to this director.
All expenses incurred by the Company prior to an initial Business
Combination may be paid only from the net proceeds of the Public Offering and related private placements not held in the Trust
Account. Thus, in order to meet the Company’s working capital needs following the consummation of the Public Offering, if
the funds not held in the Trust Account is not sufficient, Wai Fun Cheng, Ren Hua Zheng, Richard Xu, Tom W. Su may, but are not
obligated to, loan the Company funds, from time to time or at any time, in whatever amount they deem reasonable in their sole discretion.
Each loan would be evidenced by a promissory note. Up to $500,000 of the notes may, at the lender’s discretion, be converted
upon consummation of an initial Business Combination into additional private units at a price of $10.00 per unit (“Working
Capital Units”). If the Company does not complete an initial Business Combination, the loans will only be repaid with funds
not held in the Trust Account, to the extent available.
Note 6 – Cash and Investment held in Trust Account
As of March 31, 2018, investment securities in the Company’s
Trust Account consisted of $1,723 in cash and $45,416,532 in United States Treasury Bills maturity on April 5, 2018 with a cost
basis of $45,195,529. 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 sheet and adjusted for the amortization or accretion of premiums or discounts. The
carrying value, gross unrealized holding loss and fair value of held to maturity securities on March 31, 2018 is as follows:
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Carrying Value as of March 31, 2018
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|
|
Gross Unrealized / Unrecognized Holding Gain
|
|
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Fair Value as of March 31, 2018
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|
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|
|
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Held-to-maturity:
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|
|
|
|
|
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|
|
|
|
|
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U.S. Treasury Securities
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|
$
|
45,416,532
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|
|
$
|
1,268
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|
|
$
|
45,417,800
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|
Note 7 — Commitments
Deferred Underwriter Commission
The Company is obligated to pay the Deferred Discount of 2.5%
of the gross Public Offering proceeds, in the amount of $1,106,250, to the underwriter upon the Company’s consummation of
the Business Combination. The underwriter is not entitled to any interest accrued on the Deferred Discount, and has waived its
right to receive the Deferred Discount if the Company does not close a Business Combination.
Registration Rights
The Initial Stockholders are entitled to registration rights
with respect to their Initial Shares and the purchasers of the Private Units are entitled to registration rights with respect to
the Private Units (and underlying securities), pursuant to a registration rights agreement signed on the effective date of the
Public Offering. The holders of the majority of the initial shares are entitled to demand that the Company register these shares
at any time commencing three months prior to the first anniversary of the consummation of a Business Combination. The holders of
the Private Units (or underlying securities) are entitled to demand that the Company register these securities at any time after
the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration rights
on registration statements filed after the Company’s consummation of a Business Combination.
Engagement of B. Riley & Co. LLC
The Company plans to engage B. Riley & Co. LLC (“B.
Riley”) to provide certain advisory services to it. In consideration for such services, the Company’s management team
has agreed to transfer 20,000 insider shares to B. Riley upon the consummation of the initial Business Combination. Such shares
will be subject to the same restrictions and escrow arrangement as the other insider shares. The value of the service provided
by B. Riley will be accounted at the fair value at the date of transfer as operating expenses and a credit to additional paid-in
capital upon the transfer of the shares.
Note 8 — Stockholders’ Equity
Preferred Shares
The Company is authorized to issue 1,000,000 preferred shares
with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the
Company’s board of directors. As of March 31, 2018 and December 31, 2017, there are no preferred shares issued or outstanding.
Common Stock
The Company is authorized to issue 30,000,000 shares of common
stock with a par value of $0.0001 per share.
On June 9, 2016, 1,150,000 shares of the Company’s common
stock were sold at a price of approximately $0.02 per share for an aggregate of $25,000. On May 25, 2017, the Company repurchased
and canceled the initial shareholder shares. On May 30, 2017, the Company issued an additional 1,150,000 shares for $25,000, or
approximately $0.02 per share, which amount was wired into an escrow account and was directly used to pay for the May 25, 2017
repurchase. All of these shares were placed in escrow on the date of the closing of the Public Offering until (1) with respect
to 50% of the shares, the earlier of six months after the date of the consummation of an initial Business Combination and the date
on which the closing price of the Company’s common stock equals or exceeds $12.50 per share (as adjusted for share splits,
share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after
the Company’s initial Business Combination and (2) with respect to the remaining 50% of the insider shares, six months after
the date of the consummation of an initial Business Combination, or earlier, in either case, if, subsequent to an initial Business
Combination, the Company consummates a liquidation, merger, share exchange or other similar transaction which results in all of
the Company’s stockholders having the right to exchange their shares for cash, securities or other property. The escrow share
arrangement does not require the continued employment of the stockholders who received the shares or the insiders. At the closing
of the Business Combination, the fair value of the escrow arrangement would be both charged and credited to additional paid-in
capital.
On August 14, 2017, the Company consummated the Public Offering
of 4,000,000 units at $10.00 per unit (the “Public Units’) and sold to initial shareholders and Chardan Capital Markets,
LLC 320,000 units at $10.00 per unit (the “Private Units”) in a private placement (Note 4). The Company received net
proceeds of approximately $41,476,000. On August 16, 2017, the underwriters exercised the over-allotment option in part. The closing
of the sale of 425,000 over-allotment option Units generating gross proceeds of $4,250,000 took place on August 21, 2017. Simultaneously
with the sale of the over-allotment units, the Company consummated the private sale of an additional 21,250 Private Units, generating
gross proceeds of $212,500. On August 22, 2017, the underwriters canceled the remainder of the over-allotment option. In connection
with the cancellation of the remainder of the over-allotment option, the Company canceled an aggregate of 43,753 shares of common
stock issued to the Company’s initial stockholders.
At March 31, 2018, there were 1,996,450 shares of common stock
issued and outstanding, excluding 3,876,047 shares subject to possible redemption. At December 31, 2017, there were 1,987,837 shares
of common stock issued and outstanding, excluding 3,884,660 shares subject to possible redemption.
Note 9 — Reconciliation of Net Loss per Common Share
The Company’s net income (loss) is adjusted for the portion
of income that is attributable to common stock subject to redemption, as these shares only participate in the income of the Trust
Account and not the losses of the Company. Accordingly, basic and diluted loss per common share is:
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For The Three Months Ended
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March 31, 2018
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March 31, 2017
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Net loss
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(19,171
|
)
|
|
|
(25
|
)
|
Less: income attributable to common stock subject to redemption
(1)
|
|
|
(99,059
|
)
|
|
|
—
|
|
Adjusted loss
|
|
|
(118,230
|
)
|
|
|
(25
|
)
|
Basic and diluted weighted average shares outstanding
(2)
|
|
|
1,996,450
|
|
|
|
1,000,000
|
|
Basic and diluted loss per common share
|
|
|
(0.06
|
)
|
|
|
(0.00
|
)
|
|
(1)
|
Income attributable to common stock subject to redemption
was calculated in portion of the interest income earned in trust account, which would be distributed to common stockholders at
the event they choose to exercise their redemption right at the closing of Initial Business Combination.
|
|
(2)
|
Excludes an aggregate of up to 3,876,047 common shares subject to redemption at March 31,
2018 and 150,000 shares of common stock that were subject to forfeiture if the over-allotment option was not exercised by the
underwriter at March 31, 2017. An aggregate of 43,753 shares of common stock were cancelled after partial exercise of the
over-allotment option by the underwriters.
|
Note 10 — Subsequent Events
The Company’s management reviewed
all material events that have occurred after the balance sheet date through the date which these 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 financial statements.