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 10,000,000 units at $10.00 per unit (“Units”
or “Public Units” and, with respect to the ordinary shares included in the Public Units offered, the “Public
Shares”), generating gross proceeds of $100,000,000, which is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 300,000 units (the “Private Units”)
at a price of $10.00 per Unit in a private placement to the Company’s sponsor, Hong Ye Hong Kong Shareholding Co., Limited
(the “Sponsor”), generating gross proceeds of $3,000,000, which is described in Note 4.
On
November 20, 2018, the underwriters exercised the over-allotment option in part and purchased 1,487,992 Public Units, which were
sold at an offering price of $10.00 per Unit, generating gross proceeds of $14,879,920. Simultaneously with the sale of the over-allotment
Public Units, the Company consummated the private placement of an additional 29,760 Private Units at a price of $10.00 per Unit,
generating total additional gross proceeds of $297,600.
Trust
Account
Following
the closing of the Initial Public Offering on October 26, 2018, an amount of $100,000,000 ($10.00 per Unit) from the net proceeds
of the sale of the Public Units in the Initial Public Offering and the Private Units was placed in a trust account (“Trust
Account”). Following the closing of underwriters’ exercise of over-allotment option on November 20, 2018, an additional
$14,879,920 of net proceeds ($10.00 per Unit) was placed in the Trust Account, bringing the aggregate proceeds held in the Trust
Account to $114,879,920.
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”). In connection with the Extension, shareholders
holding 10,073,512 public shares exercised their right to redeem such shares for a pro rata portion of the Trust Account. As a
result, an aggregate of $105,879,118 (or $10.51 per share) was removed from the Trust Account to pay such shareholders.
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.
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 80% test, at the time of
the signing of an agreement to enter into a Business Combination. However, the Company will only complete a Business Combination
if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise
acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under
the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
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 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 ($10.00 per share, plus any pro rata interest
earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The
Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation
of a Business Combination and a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.
If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other
legal reasons, the Company will, pursuant to Amended and Restated Memorandum and Articles of Association, conduct the redemptions
pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents
with the SEC prior to completing a Business Combination. If, however, a shareholder approval of the transaction is required by
law, or the Company decides to obtain shareholder approval for business or other legal reasons, the Company will offer to redeem
shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the
Company seeks shareholder approval in connection with a Business Combination, the Initial Shareholders (defined in Note 5 - Related
Party Transactions) have agreed to vote their initial shares and private shares, as well as any Public Shares acquired in or after
the Initial Public Offering, in favor of any proposed Business Combination. Additionally, each public shareholder may elect to
redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
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 100% of its Public Shares if the Company does not complete a Business Combination, unless
the Company provides the public shareholders with the opportunity to redeem their shares in conjunction with any such amendment.
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 $1,148,799 on or prior to the date of such applicable deadline.
On
October 18, 2019, the Company deposited $1,148,799 into its Trust Account (the “Extension Funds”) to extend the period
to consummate a Business Combination until January 24, 2020. The Extension Funds were proceeds of a note in the principal amount
of $1,148,800 (the “GN Note 1”) the Company issued to Global Nature Investment Holdings Limited (“Global Nature”),
a company incorporated under the laws of the Cayman Islands, its registered assignees or successor in interest (the “Payee”).
The GN Note 1 was issued in connection with a non-binding letter of intent entered into by and between Alberton and Global Nature
on September 13, 2019, to consummate a potential Business Combination with Global Nature (the “GN LOI”) (see Note
6).
On
January 23, 2020, the Company deposited an additional $1,148,800 into the Trust Account to further extend the time available for
the Company to complete a Business Combination from January 24, 2020 to April 27, 2020 (the “Extension”). The Extension
was partially funded from a $780,000 loan provided by the Sponsor and $368,800 from the Company’s working capital. In connection
with the loan provided by the Sponsor, the Company issued a promissory note (the “Sponsor Note”) to the Sponsor in
the aggregate principal amount of $780,000 (see Note 5).
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”). In connection with the approval of the extension, shareholders
elected to redeem an aggregate of 10,073,512 of the Company’s ordinary shares. As a result, an aggregate of $105,879,118
(or $10.51 per share) was released from the Company’s Trust Account to pay such shareholders.
The Company agreed to contribute, or cause
to be contributed on its 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 the 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, the Company 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 the Company’s Initial Public Offering (the “Dividend”, collectively with the Cash Contribution, the “Contribution”).
On May 5, 2020, the Company 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 (defined below).
As of today, the Company deposited an additional $60,000 into the Trust Account to fund the next extension payment. On April 23,
2020, the Company entered into an amendment to the trust agreement with the trust agent to extend the final liquidation date of
the Trust Account to the 24-month anniversary of the closing of its Initial Public Offering, which is October 26, 2020.
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.
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.
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 $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.
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 10,000,000 Units at a purchase price of $10.00 per Unit.
On November 20, 2018, in connection with the underwriters’ exercise of their over-allotment option, the Company consummated
the sale of an additional 1,487,992 Public Units at $10.00 per Unit. Each Unit consists of one ordinary share, one redeemable
warrant (“Public Warrant”), and one right (“Public Right”). Each whole redeemable warrant entitles the
holder to purchase one half of one ordinary share at an exercise price of $11.50 (see Note 8). Every 10 Public Rights will convert
automatically into one ordinary share upon consummation of a Business Combination (see Note 8).
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 $2,000,000
and $297,598, 2.0% of the per unit offering price to the underwriter, respectively, with an additional fee of $3,500,000 and $520,797
(the “Deferred Discount”), 3.5% of the gross offering proceeds payable upon the 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 $3,060,924, which consisted of $2,297,598 of underwriter’s commissions
and $763,325 of other offering costs.
Purchase
Option
On
October 26, 2018, the Company sold the underwriter (and its designees), for $100, an option to purchase up to 500,000 Units exercisable
at $11.50 per Unit (or an aggregate exercise price of $5,750,000) commencing on the consummation of a Business Combination. The
purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from the
effective date of the registration statement related to the Initial Public Offering. The Units issuable upon exercise of this
option are identical to those offered in the Initial Public Offering, with 500,000 ordinary shares, warrants to purchase 250,000
shares and rights to receive 50,000 ordinary shares that may be issued upon exercise of the option.
The
Company accounted for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Initial Public
Offering resulting in a charge directly to shareholders’ equity. The Company estimated the fair value of this unit purchase
option to be approximately $1,603,060 (or $3.206 per Unit) using the Black-Scholes option-pricing model. The fair value of the
unit purchase option granted to the underwriters was estimated as of the date of grant using the following assumptions: (1) expected
volatility of 38%, (2) risk-free interest rate of 2.29% (the interest rate on a three-month US Treasury Bill on October 26, 2018)
and (3) expected life of five years.
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 300,000 Private Units at $10.00 per Unit
(for a total purchase price of $3,000,000). On November 20, 2018, in connection with the underwriters’ partial exercise
of their over-allotment option, the Company consummated the sale of additional 29,760 Private Units, generating gross proceeds
of $297,600. The proceeds from the Private Units were added to the proceeds from the Initial Public Offering held in the Trust
Account.
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 1,725,000 Class B ordinary shares to its initial shareholders as founder shares, of which an aggregate
of 1,650,000 Class B ordinary shares were issued for an aggregate purchase price of $17,250 or $0.010454545 per share, and an
aggregate of 75,000 Class B ordinary shares were issued for services rendered. On September 10, 2018, the Company issued an additional
1,150,000 Class B ordinary shares to its initial shareholders as founder shares, of which an aggregate of 1,135,000 Class B ordinary
shares were issued for an aggregate purchase price of $2,300 or approximately $0.00202643 per share, and an aggregate of 15,000
Class B ordinary shares were issued for services rendered. On September 14, 2018, the Company’s initial shareholders converted
all of their Class B ordinary shares, constituting all of the outstanding Class B ordinary shares of the Company, into Class A
ordinary shares and, immediately thereafter, the Company amended and restated its Memorandum and Articles of Association to eliminate
the Class B ordinary shares and re-designate the Class A ordinary shares as “ordinary shares.” As a result, prior
to the Initial Public Offering, the Company’s initial shareholders held 2,875,000 founder shares. The 2,875,000 founder
shares included an aggregate of up to 375,000 ordinary shares subject to forfeiture to the extent that the over-allotment option
was not exercised by the underwriters in full or in part. On November 20, 2018, as a result of the underwriters’ partial
exercise of their over-allotment option, 3,002 founder shares were forfeited.
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.
Additionally,
subject to certain limited exceptions, the Initial Shareholders have agreed not to transfer, assign or sell any of the founder
shares (except to certain permitted transferees) until, with respect to 50% of the founder shares, the earlier of (i) six months
after the date of the consummation of a Business Combination, or (ii) the date on which the closing price of the Company’s
ordinary shares equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations)
for any 20 trading days within any 30-trading day period commencing after a Business Combination, and with respect to the remaining
50% of the founder shares, upon six months after the date of the consummation of a Business Combination, or earlier, in each case,
if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar
transaction which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash,
securities or other property.
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 $3,299,979 (net of a bank service charge) into the Company’s escrow account on October 21, 2018. Because
the Company’s underwriter did not exercise its over-allotment option in full and cancelled the remaining portion on November
20, 2018, the Company’s Sponsor subscribed to a total of 329,760 Private Units for $3,297,600, and the remaining $2,379
was repaid by the Company to the Sponsor as of March 31, 2019.
During
the quarter ended June 30, 2020, the Company received an aggregate of $100,005 in advances from the Company’s Chief Executive
Officer for working capital purposes, of which $20,000 was used to partially fund the Extension. The advances are non-interest
bearing and due on demand. At June 30, 2020, advances of $100,005 were outstanding.
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 $1,500,000
of such Working Capital Loans may be converted into units of the post Business Combination entity at a price of $10.00
per unit. The units would be identical to the Private Units. In the event that a Business Combination does not close, the
Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in
the Trust Account would be used to repay the Working Capital Loans.
On
July 6, 2018, the Sponsor loaned the Company $300,000 under a promissory note, a portion of which was used to pay for costs associated
with the Initial Public Offering. The loan is non-interest bearing, unsecured and due at the closing of a Business Combination.
As of June 30, 2020 and December 31, 2019, there was $300,000 outstanding under the promissory note.
On
January 24, 2020, the Sponsor loaned the Company $780,000 under a promissory note (the “Sponsor Note”) in order to
partially fund the amount required to be deposited into the Trust Account to extend the period of time required by the Company
to complete a Business Combination. The loan is non-interest bearing, unsecured and due at the closing of a Business Combination.
The Sponsor Note may also be converted, at the Sponsor’s discretion, into units of the post Business Combination entity
at a purchase price of $10.00 per unit. The units would be identical to the Private Units. As of June 30, 2020, there was $780,000
outstanding under the Sponsor Note.
Administrative
Service Fee
The
Company has agreed, commencing on August 1, 2018, to pay the Sponsor, a monthly fee of an aggregate of $1,000 for general and
administrative services including office space, utilities and secretarial support, due before the first day of each month. This
arrangement will terminate upon the completion of a Business Combination or a distribution of the Trust Account to the public
shareholders. For each of the three months ended June 30, 2020 and 2019, the Company incurred $3,000 of administrative fees. For
each of the six months ended June 30, 2020 and 2019, the Company incurred $6,000 of administrative fees. At June 30, 2020, $6,000
of such fees are included in accounts payable and accrued expenses in the accompanying condensed balance sheets.
Other
than the $1,000 per month administrative fee, the $290,000 payment to White and Williams LLP (an affiliate of our director)
for its legal services to the Company in connection with the IPO and other payments to such firm for legal services
(including with respect to periodic filings) prior to the initial Business Combination and the $300,000 of non-interest
bearing loans described above, no compensation or fees of any kind, including finder’s fee, consulting fees and other
similar fees, will be paid to our initial shareholders, members of our management team or their respective affiliates, for
services rendered prior to, or in order to effectuate the consummation of, our initial Business Combination (regardless of
the type of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket expenses
incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing
business due diligence on suitable target businesses and Business Combination as well as traveling to and from the offices,
plants or similar locations of prospective target businesses to examine their operations. There is no limit on the amount of
out-of-pocket expenses reimbursable by us.
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 $1,148,800 to Global
Nature (the “GN Note 1”). The GN Note 1 was issued in connection with the GN LOI entered into by and between Global
Nature and the Company on September 13, 2019, to consummate a potential Business Combination with Global Nature.
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 $1,148,800 outstanding under the GN Note 1.
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: (i)
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 a Business
Combination with another target if the Withdrawal Request is given from after October 18, 2019; or (ii) the full principal amount
of the GN Note 1 as soon as possible with best efforts but no later than 5 business days after a Business Combination or the date
of expiry of the term of the Company (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, the Company 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 the Company’s
Business Combination or the date of the expiry of the term of the Company (whichever is earlier).
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 $500,000 to Global Nature
(the “GN Note 2”). The GN Note 2 was issued in order to fund the Company’s working capital needs. The GN Note
2 is non-interest bearing and is payable as soon as possible but in any event no later than 5 business days after the Company’s
initial Business Combination or the date of the expiry of the term of the Company, whichever is earlier. The principal balance
may be prepaid at any time without penalty. As of June 30, 2020 and December 31, 2019, there was $500,000 outstanding under the
GN Note 2.
On
April 17, 2020, the Company issued an unsecured promissory note in the aggregate principal amount of $500,000 (the “AMC
Note”) to Qingdao Zhongxin Huirong Distressed Asset Disposal Co., Ltd. (“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 entered (“AMC LOI”) 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 needs of the Company. The AMC Note is non-interest bearing
and is payable on the date on which the Company consummates its 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, the Company received first installment of $100,000 under the AMC Note.
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.
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 $14,993,648 in money market funds which are invested in U.S.
Treasury Securities. As of December 31, 2019, investments in the Company’s Trust Account consisted of $1,187,964 in United
States Money Market funds and $117,857,363 in U.S. Treasury Securities, respectively.
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
|
|
|
$
|
14,993,648
|
|
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
|
|
$
|
1,187,964
|
|
|
$
|
—
|
|
|
$
|
1,187,964
|
|
U.S. Treasury Securities
|
|
|
117,857,363
|
|
|
|
41,157
|
|
|
|
117,898,520
|
|
|
|
$
|
119,045,327
|
|
|
$
|
41,157
|
|
|
$
|
119,086,484
|
|
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 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.
ALBERTON
ACQUISITION CORPORATION
NOTES
TO CONDENSED FINANCIAL STATEMENTS
JUNE
30, 2020
(UNAUDITED)
Note
10 — Shareholders’ Equity
Preferred
Shares - The Company is authorized to issue 100,000,000 shares of no par value preferred shares, 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, 2020 and December
31, 2019, there are no preferred shares designated, issued or outstanding.
Ordinary
Shares - The Company is authorized to issue 300,000,000 ordinary shares, no par value. As of June 30, 2020 and December 31,
2019, the Company had issued an aggregate of 4,339,562 and 4,212,191 ordinary shares, excluding 276,676 and 10,477,559 shares
of ordinary shares subject to possible redemption, respectively.
Warrants
- Each warrant entitles the registered holder to purchase one-half (1/2) of one ordinary share at a price of $11.50 per whole
ordinary share, subject to adjustment as discussed below, at any time commencing on the later of the completion of the Business
Combination or 12 months from the date of the effective date of the registration statement. However, no warrants will be exercisable
for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise
of the warrants. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon exercise
of the public warrants is not effective within a specified period following the consummation of the Company’s Business Combination,
warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall
have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided
by Section 3(a)(9) of the Securities Act, provided that such exemption is available. In such event, each holder would pay the
exercise price by surrendering the warrants for that number of ordinary shares equal to the quotient obtained by dividing (x)
the product of the number of ordinary shares underlying the warrants, multiplied by the difference between the exercise price
of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value”
for this purpose will mean the average reported last sale price of the ordinary shares for the 20 trading days ending on the third
trading day immediately prior to the date of exercise. If that exemption, or another exemption, is not available, holders will
not be able to exercise their warrants on a cashless basis. The warrants will expire on the fifth anniversary of the closing of
the initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
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 $0.01 per
warrant,
|
●
|
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.”
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
|
|
$
|
(121,769
|
)
|
|
$
|
557,215
|
|
|
$
|
264,371
|
|
|
$
|
1,092,227
|
|
Less: income attributable to ordinary shares subject to redemption (1)
|
|
|
(4,747
|
)
|
|
|
(639,499
|
)
|
|
|
(109,270
|
)
|
|
|
(1,273,984
|
)
|
Adjusted net (loss) income
|
|
$
|
(126,516
|
)
|
|
$
|
(82,284
|
)
|
|
$
|
155,101
|
|
|
$
|
(181,757
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding (2)
|
|
|
4,324,988
|
|
|
|
4,104,181
|
|
|
|
4,268,590
|
|
|
|
4,091,485
|
|
Basic and diluted adjusted net (loss) income per ordinary share
|
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.04
|
)
|
(1)
|
Income attributable to ordinary shares subject to possible redemption was calculated in proportion of the interest income earned in the Trust Account, which would be distributed to shareholders in the event they choose to exercise their redemption rights at the closing of a Business Combination and at October 26, 2020.
|
(2)
|
Excludes an aggregate of up to 276,676 and 10,585,569 shares subject to possible redemption at June 30, 2020 and 2019, respectively.
|
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.