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
June 30, 2018, the Company had not yet commenced any operations. All activities through June 30, 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 the Company entered into a merger agreement (the
“Merger Agreement”) with HF Group Merger Sub Inc., a wholly-owned subsidiary of the Company (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.
In connection with the transaction between us and HF Group, we filed a definitive proxy statement on Schedule 14A with the Securities
and Exchange Commission (the “SEC”) on July 18, 2018. Please refer to the definitive proxy statement for a more detailed
description of the proposed Business Combination. The Company plans to close the business combination in August 2018 and reclassified
cash and investments held in trust account as current asset, and deferred underwriting compensation as current liability in Balance
Sheet as of June 30, 2018.
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 June 30, 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 June 30, 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 June 30, 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 June 30, 2018, investment securities in the Company’s Trust Account consisted of $203,979 in cash and $45,389,735 in
United States Treasury Bills maturity on July 5, 2018 with a cost basis of $45,213,184. 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 June 30, 2018 is as follows:
|
|
Carrying Value as of June 30, 2018
|
|
|
Gross Unrealized / Unrecognized Holding Gain
|
|
|
Fair Value as of June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
Held-to-maturity:
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Treasury Securities
|
|
$
|
45,389,735
|
|
|
$
|
3,872
|
|
|
$
|
45,393,608
|
|
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 June 30, 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 June 30, 2018, there were 2,003,357 shares of common stock issued and outstanding, excluding 3,869,140
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:
EPS Calculation
|
|
For The Three Months Ended
|
|
|
For The Six Months Ended
|
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
47,482
|
|
|
|
(57
|
)
|
|
|
28,311
|
|
|
|
(82
|
)
|
Less: income attributable to common stock subject to redemption
(1)
|
|
|
(122,653
|
)
|
|
|
—
|
|
|
|
(221,543
|
)
|
|
|
—
|
|
Adjusted loss
|
|
|
(75,171
|
)
|
|
|
(57
|
)
|
|
|
(193,232
|
)
|
|
|
(82
|
)
|
Basic and diluted weighted average shares outstanding
(2)
|
|
|
2,003,058
|
|
|
|
1,000,000
|
|
|
|
2,003,058
|
|
|
|
1,000,000
|
|
Basic and diluted net loss per share
|
|
|
(0.04
|
)
|
|
|
(0.00
|
)
|
|
|
(0.10
|
)
|
|
|
(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 3,869,439 common shares subject to redemption at June 30, 2018 and 150,000 shares of common stock that were
subject to forfeiture assuming the over-allotment option was not exercised by the underwriter at June 30, 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.