Special Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this annual
report on Form 10-K including, without limitation, statements under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding Alberton's financial position, business strategy, and the
plans and objectives of management for future operations, are forward-looking
statements. When used in this annual report on Form 10-K, words such as
"anticipate," "believe," "estimate," "expect," "intend," and similar
expressions, as they relate to us or Alberton's management, identify
forward-looking statements. Such forward-looking statements are based on the
beliefs of management, as well as assumptions made by, and information currently
available to, Alberton's management. Actual results could differ materially from
those contemplated by the forward-looking statements as a result of certain
factors detailed in our filings with the SEC.
16
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with the financial statements and the
notes thereto contained elsewhere in this report. Certain information contained
in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Overview
Alberton Acquisition Corporation (the "Company," "we," "our," "us," or
"Alberton") was incorporated on February 16, 2018 under the laws of British
Virgin Islands for the purpose of entering into a merger, share exchange, asset
acquisition, stock purchase, recapitalization, reorganization or other similar
business combination with one or more businesses or entities. The Company's
efforts to identify a prospective target business are not limited to a
particular industry or geographic location. We have not selected any target
business for our initial business combination.
We presently have no revenue, have had losses since inception from incurring
formation and operating costs and have had no operations other than identifying
and evaluating suitable acquisition transaction candidates. We have relied upon
the sale of our securities and loans from Hong Ye Hong Kong Shareholding Co.,
Limited (our "Sponsor") to fund our operations.
On October 26, 2018, we consummated our initial public offering (the "IPO") of
10,000,000 units. Each unit consists of one ordinary share, one redeemable
warrant to purchase one-half of one ordinary share and one right to receive 1/10
of an ordinary share upon the consummation of our initial business combination.
The units were sold at an offering price of $10.00 per unit, generating gross
proceeds of $100,000,000. On October 26, 2018, simultaneously with the
consummation of the initial public offering, we consummated a private placement
with our Sponsor of 300,000 private units at a price of $10.00 per private unit,
each unit consisting of one ordinary share, one warrant to purchase one-half of
one ordinary share (each, a "Private Warrant") and one right to receive 1/10 of
an ordinary share upon the consummation of our initial business combination,
generating total proceeds of $3,000,000. On November 20, 2018, the underwriters
exercised the over-allotment option in part and purchased 1,487,992
over-allotment option units at an offering price of $10.00 per unit, generating
gross proceeds of $14,879,920. On November 20, 2018, simultaneously with the
sale of the over-allotment units, the Company consummated the private sale of an
additional 29,760 private units to our Sponsor, generating gross proceeds of
$297,600. On November 20, 2018, the underwriters waived their right to exercise
the reminder of the over-allotment option. In connection with such waiver, an
aggregate of 3,002 founder shares held by our initial shareholders were
forfeited.
As of the date thereof, a total of $114,879,920 of the net proceeds from the
initial public offering (including the partial exercise of the over-allotment
option) and the private placements were deposited in the Trust Account
established for the benefit of the Company's public shareholders.
17
Our management has broad discretion with respect to the specific application of
the net proceeds of initial public offering and the private placements, although
substantially all of the net proceeds are intended to be applied generally
towards consummating a business combination.
Our Sponsor
Our sponsor, Hong Ye Hong Kong Shareholding Co., Limited, founded in Hong Kong,
is a limited liability company.
Historical Extensions and Redemptions
When Alberton consummated its initial public offering in October 2018, Alberton
had until October 27, 2019 (or, if extended as described in the prospectus
relating to SolarMax' initial public offering, up to April 27, 2020) to complete
its initial business combination. Subsequently, Alberton has called several
special shareholder meetings to seek approval from shareholders to extend the
time that it needs to complete its initial business combination and provided
public shareholders with redemption rights in connection with each extension:
(i) at the special meeting held on April 23, 2020, Alberton's shareholders
approved an amendment to its then existing charter to allow Alberton to complete
its initial business combination by October 26, 2020 (the "April 2020
Extension"), and in connection with the April 2020 Extension, 10,073,512 public
shares were redeemed; (ii) at the special meeting held on October 26, 2020,
Alberton's shareholders approved an amendment to its then existing charter to
allow Alberton to complete its initial business combination by April 26, 2021
(the "October 2020 Extension"), and in connection with October 2020 Extension,
1,000 public shares were redeemed; (iii) at the special meeting held on April
23, 2021, Alberton's shareholders approved an amendment to its then existing
charter to allow Alberton to complete its initial business combination by
October 26, 2021 (the "April 2021 Extension"), and in connection with April 2021
Extension, 135,069 public shares were redeemed; and (iv) at the special meeting
held on October 22, 2021, Alberton's shareholders approved an amendment to its
then existing charter to allow Alberton to complete its initial business
combination by April 26, 2022 (the "October 2021 Extension"), and in connection
with October 2021 Extension, 50 public shares were redeemed. In order to induce
public shares to remain with Alberton, Alberton deposited additional cash
contributions to its trust account which were sourced by loans from the sponsor,
SolarMax and other parties and, in connection with the April 2020 Extension,
Alberton also issued one public warrant to each public share which was not
redeemed in connection with the April 2020 Extension for a total of 1,414,480
dividend warrants.
18
If Alberton is unable to consummate the Business Combination by April 26, 2022,
Alberton will, as promptly as possible but not more than ten business days
thereafter, redeem 100% of its outstanding public shares for a pro rata portion
of the funds held in the Trust Account and then seek to dissolve and liquidate.
Proposed Business Combination with SolarMax
During Alberton's search for a suitable target for a business combination,
Alberton had looked at more than 50 potential target companies and signed letter
of intent or memo mutual understanding with three of them, including its initial
proposal to SolarMax. The Alberton management team held frequent discussion
regarding the various targets during this period both internally and with a wide
range of management teams at potential targets. Alberton learned about SolarMax
in May 2020 when Wang Guan, the CEO and Chairwoman of the board of directors of
Alberton, received a letter from a partner of a BDO accounting firm's member
firm in Los Angeles, California. The letter recommended a solar energy company
named "SolarMax Technology Inc." In October 2020, we selected SolarMax as a
potential target for a SPAC transaction.
SolarMax is an integrated solar energy company. It was founded in 2008 to
conduct business in the United States and subsequently commenced operation in
China following two acquisitions in 2015. SolarMax operates in two segments -
the United States operations and the China operations. SolarMax' United States
operations primarily consist of (i) the sale and installation of photovoltaic
and battery backup systems for residential and commercial customers, (ii)
financing the sale of its photovoltaic and battery backup systems, and (iii)
sales of LED systems and services to government and commercial users. SolarMax'
China operations consist primarily of identifying and procuring solar farm
projects for resale to third parties and performing EPC services primarily for
solar farm projects. For more information regarding the Merger Agreement, see
the registration statement on Form S-4 that we filed with the Securities and
Exchange Commission on February 10, 2021, file No. 333-251825.
Merger Agreement
On October 27, 2020, Alberton entered into a certain agreement and plan of
merger, as amended by an amendment dated November 10, 2020, and further amended
by an amendment dated March 19, 2021, August 11, 2021, September 10, 2021, and
October 4, 2021, respectively, which agreement, as amended being referred to as
the "Merger Agreement", by and among Alberton, Merger Sub, and SolarMax. The
Merger Agreement provides for the Merger of Merger Sub with and into SolarMax,
with SolarMax continuing as the surviving corporation in the Merger. Subject to
the terms and conditions set forth in the Merger Agreement, at the effective
time of the Merger (the "Effective Time"): (i) all shares of SolarMax common
stock (the "SolarMax Stock") issued and outstanding immediately prior to the
Effective Time will be converted into the right to receive the Stockholder
Merger Consideration (as defined below); (ii) each outstanding option to acquire
SolarMax Stock (whether vested or unvested) shall be assumed by combined entity
and automatically converted into an option to acquire shares of combined
entity's common stock, with its price and number of shares adjusted based on the
Exchange Ratio, which is the number of shares of Alberton Common Stock issuable
in respect of one share of SolarMax Stock (each, an "Assumed Option") and (iii)
each outstanding convertible notes of SolarMax shall become convertible into
shares of Alberton's common stock determined by dividing the conversion price of
such notes at the Effective Time by the applicable conversion ratio.
19
The Merger Agreement also provides that, immediately prior to the Closing,
Alberton will re-domesticate from a British Virgin Islands corporation into a
Nevada corporation so as to continue as a Nevada corporation (the
"Redomestication"). At the closing of the Merger (the "Closing"), Alberton will
change its name to "SolarMax Technology Holdings, Inc." (the "Successor"). In
connection with the Redomestication, the provision in Alberton's amended and
restated Memorandum and Articles of Association which provides that Alberton
have net tangible assets of at least US$5,000,001 upon such consummation of the
business combination is to be amended to require that the net tangible asset
test be met "prior to or upon" consummation of the business combination. This
means that the net tangible asset test does not have to be made upon completion
of the Business Combination as long as the test is met before the consummation
of the Business Combination.
Prior to the Closing, Alberton will continue out of the British Virgin Islands
and domesticate as a Nevada corporation and will no longer be considered a
company incorporated in the British Virgin Islands.
Outstanding Promissory Notes and Loans
The GN Notes
On September 18, 2019, Alberton issued an unsecured promissory note in the
amount of $1,148,800 (the "GN Note 1") to Global Nature to fund a three-month
extension payment and, accordingly, $1,148,799 was deposited into the Trust
Account. GN Note 1 was issued in connection with a non-binding letter of intent
entered into by and between Global Nature and Alberton on September 13, 2019, to
consummate a potential business combination with Global Nature (the "Global
Nature LOI").
The GN Note 1 is non-interest bearing and is payable on the date on which
Alberton 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. Pursuant to the GN Note 1, in the event that the Global Nature
notifies Alberton in written that it does not wish to proceed with the Qualified
Business Combination (the "Withdrawal Request"), Alberton shall only be
obligated to repay the Note, as follows: (i) the full principal amount of the GN
Note 1 within 5 business days of such Withdrawal Request if such Withdrawal
Request is given on or before September 24, 2019; (ii) 50% of the principal
amount of the GN Note 1 within 5 business days of such Withdrawal Request if the
Withdrawal Request is given from after September 24, 2019 and on or before
October 15, 2019 or the date the subscription amount of this GN Note 1 is
transferred into the Trust Account (whichever is later); (iii) 50% of the
principal amount of the GN Note 1 as soon as possible with best efforts but no
later than 5 business days after Alberton's business combination if the
Withdrawal Request is given from after October 15, 2019 or the date the
subscription amount of this Note is transferred into the Trust Account
(whichever is later); or (iv) the full principal amount of the Note as soon as
possible with best efforts but no later than 5 business days after Alberton's
business combination or the date of expiry of the term of Alberton (whichever is
earlier), if the parties have not entered into a definitive agreement with
regard to the Qualified Business Combination within 45 days from the date of the
GN Note 1 as a result of the disagreement on the valuation of the Qualified
Business Combination. On March 12, 2020, Alberton 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 Alberton's business combination or the date of expiry
of the term of us (whichever is earlier).
On December 3, 2019, Alberton, upon receipt of the principal, issued an
unsecured promissory note in the aggregate principal amount of $500,000 (the "GN
Note 2," together with GN Note 1, the "GN Notes") to Global Nature, its
registered assignees or successor in interest as working capital.
The GN Note 2 is non-interest bearing and is payable on the earlier date of (i)
that Alberton consummates a Qualified Business Combination, and (ii) expiry of
the term of us. The principal balance may be prepaid prior to the Maturity Date
without penalty. Pursuant to the GN Note 2, in the event that (i) the parties do
not agree with the valuation of the Qualified Business Combination; (ii) a
definitive agreement with regard to the Qualified Business Combination with the
Payee is not entered into within 45 days from the date of this GN Note 2; or
(iii) the Qualified Business Combination is not consummated for any reason prior
to the date of expiry of the term of us, Alberton shall repay the principal
amount of the GN Note 2 no later than 5 business days after Alberton's initial
business combination or the date of expiry of the term of Alberton, whichever is
earlier. As a result that the parties did not enter into a definitive agreement
within 45 days from the GN Note 2, such note becomes payable no later than 5
business days after our initial business combination or the date of expiry of
the term of us.
20
The Sponsor Notes
On July 6, 2018, the Sponsor loaned us $300,000 under a promissory note (the
"Sponsor Note 1"), a portion of which was used to pay for costs associated with
the Initial Public Offering.
On January 24, 2020, we, upon receipt of the principal, issued an unsecured
promissory note (the "Sponsor Note 2", together with the Sponsor Note 1, the
"Sponsor Notes") in the aggregate principal amount of $780,000 to our Sponsor
and its registered assignees or successors in interest.
The Sponsor Notes are non-interest bearing and is payable on the date on which
we consummate our initial business combination. The Sponsor, however, has the
right to convert the Sponsor Notes, in whole or in part, into our private units,
as described in the public offering prospectus we filed with the Securities and
Exchange Commission on October 24, 2018, file No. 333-227652. As of the date
hereof, there was $1,080,000 outstanding under the Sponsor Notes.
The AMC Note
On April 17, 2020, we 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 "Payee"). The AMC
Note was issued in connection with a non-binding letter of intent entered into
by and between us 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
principle of the AMC Note of $500,000 will be paid in instalments according to
the needs of Alberton, with the first payment of no less than $100,000 to be
made within one business day after execution of the AMC Note. The AMC Note is
non-interest bearing and is payable on the date on which we consummate its
initial business combination with 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. As of the date
hereof, AMC Sino advanced only $100,000 to Alberton, which is the current
principal amount due on the AMC Note.
The SolarMax Notes
From September 2020 to December 2020, we issued unsecured promissory notes in
the aggregate principal amount of $ 261,348 to SolarMax (the "SolarMax Notes 1")
to finance the extension of the period that Alberton must complete the Mergger.
The SolarMax Notes 1 are non-interest bearing and payable on the earlier of (i)
the consummation of a Business Combination, (ii) the Second Extended Date, or
(iii) the date on which either (x) the letter of intent dated September 3, 2020
(the "LOI") or (y) the Acquisition Agreement, as defined in the LOI, are
terminated for any reason. At December 31, 2021 and December 31, 2020, there was
$ 261,348 outstanding under the SolarMax Notes 1.
From January to March 2021, Alberton issued additional unsecured promissory
notes in the aggregate principal amount of $212,022 to SolarMax (the "SolarMax
Notes 2") to finance the extension of the period that Alberton must complete a
Business Combination to April 26, 2021. SolarMax Notes 2 are non-interest
bearing, unsecured and payable upon the first to occur of (i) the Closing Date,
as defined in the Merger Agreement, or (ii) the date on which, pursuant to the
organization documents of Alberton, Alberton must complete a Business
Combination, which date is presently October 26, 2021, or (iii) the date on
which the Merger Agreement is terminated or (iv) the date an Event of Default
shall occur. At December 31, 2021, there was $212,022 outstanding under the
SolarMax Notes 2.
From April to June 2021, Alberton issued additional unsecured promissory notes
in the aggregate principal amount of $224,083 to SolarMax (the "SolarMax Notes
3") to finance the extension of the period that Alberton must complete a
Business Combination to October 26, 2021. SolarMax Notes 3 are non-interest
bearing, unsecured and payable upon the first to occur of (i) the Closing Date,
as defined in the Merger Agreement, or (ii) the date on which, pursuant to the
organization documents of Alberton, Alberton must complete a Business
Combination, which date is presently April 26, 2022, or (iii) the date on which
the Merger Agreement is terminated or (iv) the date an Event of Default shall
occur. At December 31, 2021, there was $224,083 outstanding under the SolarMax
Notes 3.
In September 2021, Alberton issued additional unsecured promissory notes in the
aggregate principal amount of $230,114 to SolarMax (the "SolarMax Notes 4") to
finance the extension of the period that Alberton must complete a Business
Combination to October 26, 2021. SolarMax Notes 4 are non-interest bearing,
unsecured and payable upon the first to occur of (i) the Closing Date, as
defined in the Merger Agreement, or (ii) the date on which, pursuant to the
organization documents of Alberton, Alberton must complete a Business
Combination, which date is presently April 26, 2022, or (iii) the date on which
the Merger Agreement is terminated or (iv) the date an Event of Default shall
occur. At December 31, 2021, there was $230,114 outstanding under the SolarMax
Notes 4.
21
From October to December 2021, Alberton issued additional unsecured promissory
notes in the aggregate principal amount of $332,377 to SolarMax (the "SolarMax
Notes 5") to finance the extension of the period that Alberton must complete a
Business Combination to October 26, 2021, which date is presently extended to
April 26, 2022. SolarMax Notes 5 are non-interest bearing, unsecured and payable
upon the first to occur of (i) the Closing Date, as defined in the Merger
Agreement, or (ii) the date on which, pursuant to the organization documents of
Alberton, Alberton must complete a Business Combination, which date is presently
April 26, 2022, or (iii) the date on which the Merger Agreement is terminated or
(iv) the date an Event of Default shall occur. At December 31, 2021, there was
$332,377 outstanding under the SolarMax Notes 5.
In November 2021, Alberton issued additional unsecured promissory notes in the
aggregate principal amount of $115,647 to SolarMax (the "SolarMax Notes 6") to
provide Alberton with funds to pay for Alberton's operating costs. SolarMax
Notes 6 are non-interest bearing, unsecured and payable upon the first to occur
of (i) the Closing Date, as defined in the Merger Agreement, or (ii) the date on
which, pursuant to the organization documents of Alberton, Alberton must
complete a Business Combination, which date is presently April 26, 2022, or
(iii) the date on which the Merger Agreement is terminated or (iv) the date an
Event of Default shall occur. At December 31, 2021, there was $115,647
outstanding under the SolarMax Notes 6.
In January 2022 Alberton issued additional unsecured promissory notes in the
aggregate principal amount of $127,836 to SolarMax (the "SolarMax Notes 7") to
finance the extension of the period that Alberton must complete a Business
Combination to April 26, 2022. SolarMax Notes 7 are non-interest bearing,
unsecured and payable upon the first to occur of (i) the Closing Date, as
defined in the Merger Agreement, or (ii) the date on which, pursuant to the
organization documents of Alberton, Alberton must complete a Business
Combination, which date is presently April 26, 2022, or (iii) the date on which
the Merger Agreement is terminated or (iv) the date an Event of Default shall
occur.
In March 2022, Alberton issued additional unsecured promissory notes in the
aggregate principal amount of $161,020 to SolarMax (the "SolarMax Notes 8") to
provide Alberton with funds to pay for Alberton's operating costs. SolarMax
Notes 8 are non-interest bearing, unsecured and payable upon the first to occur
of (i) the Closing Date, as defined in the Merger Agreement, or (ii) the date on
which, pursuant to the organization documents of Alberton, Alberton must
complete a Business Combination, which date is presently April 26, 2022, or
(iii) the date on which the Merger Agreement is terminated or (iv) the date an
Event of Default shall occur.
As of the date hereof, we have outstanding SolarMax notes in the aggregate
amount of $[1,664,447].
Under the terms of the Merger Agreement, all the loans are to be paid at the
closing of the Merger from the proceeds of the convertible notes of $10 million.
Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard;
Transfer of Listing.
On September 1, 2020, Alberton received a written notice (the "Notice") from the
Listing Qualifications Department of The Nasdaq Stock Market ("Nasdaq")
indicating that Alberton was not in compliance with Listing Rule 5550(a)(3) (the
"Minimum Public Holders Rule"), which requires Alberton to have at least 300
public holders for continued listing on the Nasdaq Capital Market. On February
18, 2021, we received a letter from Nasdaq, advising the Company that the
Company had regained compliance with the Minimum Public Holders Rule based on
the Company's submissions to Nasdaq of shareholder records dated January 20,
2021.
22
On January 4, 2021, Nasdaq advised Alberton that it no longer complies with
Nasdaq Listing Rule 5620(a) due to the Alberton's failure to hold an annual
meeting of shareholders within twelve months of the end of the Alberton's fiscal
year ended December 31, 2019 (the "Annual Meeting Requirement").
On March 16, 2021, we received a notification letter from Nasdaq stating that
the Nasdaq Staff had determined to grant us an extension of time through June
29, 2021 to regain compliance with the Annual Meeting Requirement.
On March 26, 2021, we filed a definitive proxy statement in Form 14A for the
purposes of seeking our shareholder approval to extend the date before which we
must complete an initial business combination until October 26, 2021 or such
earlier date as determined and related matters at a special meeting in lieu of
the 2020 Annual Meeting in order to be compliance with Annual Meeting
Requirement.
On April 23, 2021, Alberton held its special meeting in lieu of the 2020 annual
meeting of the shareholders. At the meeting, Alberton's shareholders approved an
extension of the date that Alberton need to complete its business combination
from April 26, 2021 to October 26, 2021, elected directors and ratified the
selection of Friedman LLP as its independent registered certified public
accounting firm.
On June 9, 2021, Alberton received a notice from Nasdaq notifying the Company
that, because its Form 10-Q for the period ended March 31, 2021 was not filed
with the SEC by the required due date of May 17, 2021, the Company is therefore
not in compliance with the periodic filing requirements for continued listing
set forth in NASDAQ Listing Rule 5250(c)(1). Alberton satisfied the periodic
filing requirement with the filing of its Form 10-Q for the period ended March
31, 2021 on June 22, 2021.
On October 28, 2021, Alberton received a notice from the staff of the Listing
Qualifications Department of Nasdaq indicating that, unless Alberton timely
requests a hearing before the Panel, Alberton's securities (ordinary shares,
warrants, units and rights) would be subject to suspension and delisting from
Nasdaq due to Alberton's non-compliance with Nasdaq IM-5101-2, which requires
that a special purpose acquisition company must complete one or more business
combinations within 36 months of the effectiveness of its IPO registration
statement. Following the submission of a hearing request by Alberton, a hearing
was held on December 16, 2021. On January 3, 2022, Alberton received a notice
from Nasdaq Office of General Counsel that the Panel had granted the Company's
request to continue its listing on Nasdaq through March 14, 2022.
On February 28, 2022, Alberton submitted a request for additional extension from
the Original Granted Extension Date to April 26, 2022, the Outside Date, because
it needed additional time to prepare and include the audited financial
statements for the fiscal year ended December 31, 2021 of each of Alberton and
SolarMax in the Proxy Statement/Prospectus, which request was granted by the
Panel on March 3, 2022. The Panel's decision is subject to certain conditions,
including that the Company will have completed the Merger SolarMax on or before
the Outside Date and will have demonstrated compliance with all applicable
requirements for initial listing on Nasdaq. The Panel stated that April 26, 2022
represents the full extent of the Panel's discretion to grant continued listing
while the Company is non-compliant. As a result, if the Merger is not completed
and Alberton does not demonstrate compliance with the applicable Nasdaq listing
requirements by April 26, 2022, the Panel will issue a final delist
determination and Alberton's securities will be suspended from trading on
Nasdaq.
Issuance of the Extension Warrants
On January 19, 2021, the board of directors of Alberton approved the issuance of
1,414,480 Extension Warrants to those public shareholders who were shareholders
on April 21, 2020 and did not exercise their right of redemption in connection
with the April 2020 Extension, and Alberton instructed such issuance. Alberton
was advised that the Extension Warrants were processed on or about February 5,
2021, although the date of delivery may be delayed as a result of processing
time by DTC, broker and dealer, and other relevant parties.
Results of Operations
Our entire activity from inception up to October 26, 2018 was related to the
Company's formation, the initial public offering and general and administrative
activities. Since the initial public offering, our activity has been limited to
the evaluation of business combination candidates, and we will not be generating
any operating revenues until the closing and completion of our initial business
combination. We generate non-operating income in the form of interest income on
investments. We are incurring expenses as a result of being a public company
(for legal, financial reporting, accounting and auditing compliance), as well as
for due diligence expenses.
23
For the year ended December 31, 2021, we had net loss of $615,039, consisting of
$1,472 of interest income from investments in our Trust Account, and $111,541
gain on change in fair value of warrants liabilities, offset by $728,052 of
operating costs, consisting mostly of general and administrative expenses.
For the year ended December 31, 2020, we had net income of $25,302, consisting
of $559,404 of interest income from investments in our Trust Account, $10,740
gain on change in fair value of warrants liabilities, and $836 of interest
income from deposits in our corporate bank account, offset by $545,678 of
operating costs, consisting mostly of general and administrative expenses.
Liquidity and Capital Resources
For the year ended December 31, 2021, cash used in operating activities was
$115,916. As of December 31, 2021, we had cash outside the Trust Account of
$1,276 available for working capital needs. All remaining cash is held in the
Trust Account and is generally unavailable for our use, prior to an initial
business combination, and is restricted for use either in a business combination
or to redeem ordinary shares. As of December 31, 2021, none of the amount on
deposit in the Trust Account was available to be withdrawn as described above.
Until consummation of the business combination, we will be using the funds not
held in the Trust Account, and any additional funding that may be loaned to us
by our Sponsor, for identifying and evaluating prospective acquisition
candidates, performing business due diligence on prospective target businesses,
traveling to and from the offices, plants or similar locations of prospective
target businesses, reviewing corporate documents and material agreements of
prospective target businesses, selecting the target business to acquire and
structuring, negotiating and consummating the business combination.
If our estimates of the costs of undertaking in-depth due diligence and
negotiating business combination are less than the actual amount necessary to do
so, we may have insufficient funds available to operate our business prior to
the business combination and will need to raise additional capital. In this
event, our officers, directors or their affiliates may, but are not obligated
to, loan us funds as may be required. If we consummate an initial business
combination, we would repay such loaned amounts out of the proceeds of the Trust
Account released to us upon consummation of the business combination, or, at the
lender's discretion, up to $1,500,000 of such loans may be convertible into
units of the post business combination entity at a price of $10.00 per unit. In
the event that the initial business combination does not close, we may use a
portion of the working capital held outside the Trust Account to repay such
loaned amounts, but no proceeds from our Trust Account would be used for such
repayment. The terms of such loans by our Initial Shareholders, officers and
directors, if any, have not been determined and no written agreements exist with
respect to such loans.
Moreover, we may need to obtain additional financing either to consummate our
initial business combination or because we become obligated to redeem a
significant number of our public shares upon consummation of our initial
business combination, in which case we may issue additional securities or incur
debt in connection with such business combination. Subject to compliance with
applicable securities laws, we would only consummate such financing
simultaneously with the consummation of our initial business combination.
Following our initial business combination, if cash on hand is insufficient, we
may need to obtain additional financing in order to meet our obligations.
Going Concern
In connection with our assessment of going concern considerations in accordance
with Financial Accounting Standard Board's Accounting Standards Update ("ASU")
2014-15, "Disclosures of Uncertainties about an Entity's Ability to Continue as
a Going Concern," management has determined that the mandatory liquidation and
subsequent dissolution raises substantial doubt about our ability to continue as
a going concern. No adjustments have been made to the carrying amounts of assets
or liabilities should we be required to liquidate after April 26, 2022.
24
Off-Balance Sheet Financing Arrangements
As of December 31, 2021, we did not have any off-balance sheet arrangements. We
have no obligations, assets or liabilities which would be considered off-balance
sheet arrangements. We do not participate in transactions that create
relationships with unconsolidated entities or financial partnerships, often
referred to as variable interest entities, which would have been established for
the purpose of facilitating off-balance sheet arrangements. We have not entered
into any off-balance sheet financing arrangements, established any special
purpose entities, guaranteed any debt or commitments of other entities, or
entered into any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of the Sponsor a monthly fee of $1,000 for general and administrative
services including office space, utilities and secretarial support. We began
incurring these fees on August 1, 2018 and will continue to incur these fees
monthly until the earlier of the completion of the business combination or our
liquidation.
The underwriters are entitled to a deferred underwriting discounts and
commissions equal to 3.5% of the gross proceeds of the initial public offering.
Upon completion of the business combination, $4,020,797 (with consideration of
the underwriters' exercise of their over-allotment option on November 20, 2018)
will be paid to the underwriters from the funds held in the Trust Account. No
discounts or commissions will be paid with respect to the purchase of the
private units. Pursuant to the Merger Agreement, these fees would be paid out
from the proceeds of the convertible notes of $10 million at the closing of the
Merger.
As of the date thereof, we have issued promissory notes to various parties and
due to our Sponsor in the aggregate amount of $5,418,256, which will be paid in
cash at Closing.
Critical Accounting Estimates
The preparation of the financial statements and related disclosures in
conformity with accounting principles generally accepted in the United States of
America ("GAAP") requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and income and
expenses during the periods reported. Actual results could materially differ
from those estimates. We have not identified any critical accounting estimates.
© Edgar Online, source Glimpses
ALBERTON ACQUISITION CORPORATION 
