UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarter ended
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) |
(Address of principal executive offices)
+
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one ordinary share, one redeemable warrant, and one right | ALACU | The Nasdaq Stock Market LLC | ||
The | ||||
Redeemable warrants, each warrant exercisable for one-half (1/2) of one ordinary share | ALACW | The Nasdaq Stock Market LLC | ||
Rights, each to receive one-tenth (1/10) of one ordinary share | ALACR | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant
has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging Growth Company |
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of the date hereof, there were
ALBERTON ACQUISITION CORPORATION
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2021
TABLE OF CONTENTS
i
PART I – FINANCIAL INFORMATION
ALBERTON ACQUISITION CORPORATION
CONDENSED BALANCE SHEETS
(UNAUDITED)
June 30, | December 31, | |||||||
2021 | 2020 | |||||||
Assets | ||||||||
Cash | $ | $ | ||||||
Prepaid assets | ||||||||
Total Current Assets | ||||||||
Cash and investments held in Trust Account | ||||||||
Total Assets | $ | $ | ||||||
Liabilities and Shareholders’ Equity | ||||||||
Accounts payable and accrued expenses | $ | $ | ||||||
Due to related parties | ||||||||
Promissory notes | ||||||||
Promissory notes - related party | ||||||||
Total Current Liabilities | ||||||||
Warrants liabilities | ||||||||
Deferred underwriting compensation | ||||||||
Total Liabilities | ||||||||
Commitments and Contingencies | ||||||||
Ordinary shares subject to possible redemption, | ||||||||
Shareholders’ Equity: | ||||||||
Retained earnings | ||||||||
Total Shareholders’ Equity | ||||||||
Total Liabilities and Shareholders’ Equity | $ | $ |
The accompanying notes are an integral part of these unaudited condensed financial statements.
1
ALBERTON ACQUISITION CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Operating costs | $ | $ | $ | $ | ||||||||||||
Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Other income: | ||||||||||||||||
Interest income - bank | - | - | ||||||||||||||
Interest income | ||||||||||||||||
Change in fair value of warrant liabilities | ||||||||||||||||
Total other income | ||||||||||||||||
Net (loss) income | ( | ) | ( | ) | ( | ) | ||||||||||
Less: income attributable to ordinary shares subject to possible redemption | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Adjusted net loss (income) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
Basic and diluted weighted average shares outstanding (1) | ||||||||||||||||
Adjusted basic and diluted net (loss) income per ordinary share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
(1) |
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
ALBERTON ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(UNAUDITED)
Six Months Ended June 30, 2020
Ordinary Shares | Retained | Shareholders’ | ||||||||||||||
Shares | Capital | Earnings | Equity | |||||||||||||
Balance - January 1, 2020 | $ | $ | $ | |||||||||||||
Change in ordinary shares subject to possible redemption | ( | ) | ( | ) | ||||||||||||
Net income | - | |||||||||||||||
Balance - March 31, 2020 | ||||||||||||||||
Change in ordinary shares subject to possible redemption | ||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||
Balance - June 30, 2020 | $ | $ | $ |
Six Months Ended June 30, 2021
Ordinary Shares | Retained | Shareholders’ | ||||||||||||||
Shares | Capital | Earnings | Equity | |||||||||||||
Balance - January 1, 2021 | $ | $ | $ | |||||||||||||
Change in ordinary shares subject to possible redemption | ||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||
Balance - March 31, 2021 | ||||||||||||||||
Distribution of dividend warrants | - | ( | ) | - | ||||||||||||
Change in ordinary shares subject to possible redemption | ||||||||||||||||
Net loss | - | ( | ) | ( | ) | |||||||||||
Balance - June 30, 2021 | $ | $ | $ |
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
ALBERTON ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30, | ||||||||
2021 | 2020 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | ( | ) | $ | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Interest earned on investment held in Trust Account | ( | ) | ( | ) | ||||
Change in fair value of warrant liabilities | ( | ) | ( | ) | ||||
Changes in current assets and current liabilities: | ||||||||
Prepaid assets | ( | ) | ( | ) | ||||
Accounts payable and accrued expense | ||||||||
Due to related parties | ||||||||
Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Purchase of investment held in Trust Account | ( | ) | ( | ) | ||||
Cash withdrawn from Trust Account to pay redeeming shareholders | ||||||||
Net Cash Provided by Investing Activities | ||||||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from promissory notes | ||||||||
Proceeds from promissory note – related party | ||||||||
Redemption of ordinary shares | ( | ) | ( | ) | ||||
Net Cash Used in Financing Activities | ( | ) | ( | ) | ||||
Net Decrease in Cash | ( | ) | ( | ) | ||||
Cash – Beginning of the period | ||||||||
Cash – Ending of period | $ | $ | ||||||
Supplemental Disclosure of Non-cash Financing Activities: | ||||||||
Change in value of ordinary shares subject to possible redemption | $ | $ | ||||||
Distribution of dividend warrants | $ | $ |
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
Note 1 — Organization and Business Operations
Organization and General
Alberton Acquisition Corporation (the “Company”or “Alberton”) 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 are not limited to an industry or geographic location.
As of June 30, 2021, the Company had not yet commenced any operations. The Company previously had until April 26, 2021 to consummate a Business Combination. On March 26, 2021, the Company filed a definitive proxy statement in Form 14A for the purposes of seeking its shareholder approval to extend the date before which the Company 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, at the 2020 Annual Meeting, the Company’s shareholders approved to amend the Company’s memorandum and articles of association to extend the date before which the Company must complete a business combination (the “Termination Date”) from April 26, 2021 (the “Current Termination Date”) to October 26, 2021 or such earlier date as determined by the Board.
The Company has one subsidiary, Alberton Merger Subsidiary Inc., a wholly owned subsidiary of the Company incorporated in Nevada on October 16, 2020 (“Merger Sub”). The Merger Sub was established for the purpose of the potential Business Combination with SolarMax Technology, Inc. (“SolarMax”), a Nevada corporation. Alberton will re-domesticate from a British Virgin Islands corporation into a Nevada corporation so as to continue as a Nevada corporation immediately prior to the closing of the Business Combination with SolarMax, if consummated by October 26, 2021.
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, 2021.
Financing
The registration statement for the Company’s
initial public offering (the “Initial Public Offering” as described in Note 3) was declared effective by the United States
Securities and Exchange Commission (“SEC”) on October 23, 2018. On October 26, 2018, the Company consummated the Initial Public
Offering of
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of
On November 20, 2018, the underwriters exercised
the over-allotment option in part and purchased
5
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
Trust Account
Following the closing of the Initial Public Offering
on October 26, 2018, an amount of $
On April 23, 2020, the Company filed an amendment
to its Articles of Association with the Registrar of the British Virgin Islands to extend the time that it needs to complete an initial
Business Combination from April 27, 2020 to October 26, 2020 or such an earlier date as determined by its board of directors (the “Extension”).
On October 26, 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 October 26, 2020 to April 26, 2021 or such an earlier date as determined by its board of directors (the “Second
Extension”). In connection with the Second Extension, shareholders holding
On April 23, 2021, at the 2020 Annual Meeting,
the Company’s shareholders approved to amend the Company’s memorandum and articles of association to extend the date before
which the Company must complete a business combination from April 26, 2021 to October 26, 2021 or such earlier date as determined by the
Board (the “Third Extension).
The funds in the Trust Account are invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the Company’s failure to consummate a Business Combination by April 27, 2020 (the “Combination Period”), and extended to October 26, 2021. 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.
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
6
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
The Company will provide its shareholders with
the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection
with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the
Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its
discretion. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust
Account ($
The Company will proceed with a Business Combination
if the Company has net tangible assets of at least $
The amount in the Trust Account (less the aggregate nominal par value of the shares of the Company’s public shareholders) under the Companies Law will be treated as share premium which is distributable under the Companies Law provided that immediately following the date on which the proposed distribution is proposed to be made, the Company is able to pay the debts as they fall due in the ordinary course of business. If the Company is forced to liquidate the Trust Account, the public shareholders would be distributed the amount in the Trust Account calculated as of the date that is two days prior to the distribution date (including any accrued interest).
The Initial Shareholders have agreed to (i) vote
their insider shares (as well as any Public Shares acquired in or after the Initial Public Offering) in favor of any proposed Business
Combination, (ii) waive their conversion rights with respect to their initial share (as well as any other shares acquired in or after
the Initial Public Offering) in connection with the consummation of a Business Combination, (iii) waive their rights to liquidating distributions
from the Trust Account with respect to their initial shares if the Company fails to consummate a Business Combination within the Combination
Period, and (iv) not propose an amendment to the Company’s Amended and Restated Memorandum and Articles of Association that would
affect the substance or timing of the Company’s obligation to redeem
Agreement and Plan of Merger with SolarMax
On October 27, 2020, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Merger Sub and SolarMax. SolarMax is an integrated solar energy company. It was founded in 2008 to conduct business in the U.S. and subsequently commenced operation in China following two acquisitions in 2015. Through its subsidiaries, it is primarily engaged selling and installing integrated photovoltaic systems for residential and commercial customers in the United States which is its original business, identifying and procuring solar farm system projects for resale to third party developers and related services in China; providing engineering, procuring and construction services, which are referred to in the industry as EPC services, for solar farms in China, financing the sale of its photovoltaic systems and servicing installment sales by its customers in the United States and providing exterior and interior light-emitting diodes, known as LED, lighting sales and retrofitting services for governmental and commercial applications.
7
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
Pursuant to the Merger Agreement, among other things, Merger Sub will merge with and into SolarMax, with SolarMax continuing as the surviving entity and a wholly-owned subsidiary of the Company (the “Merger”). The Merger will become effective at such time on the date of closing, pursuant to the Merger Agreement, as the articles of merger is duly filed with the Secretary of State of the State of Nevada or such later time as may be specified in the articles of merger (the “Effective Time”). The transactions contemplated in the Merger Agreement are referred to as “Business Combination”. The closing of the Merger Agreement shall be upon the consummation of the Business Combination (the “Closing”). At the Closing, the Company will change its name to “SolarMax Technology Holdings, Inc.” (the “Successor”). The Closing is contingent upon shareholder approval and other customary Closing conditions.
On April 23, 2021, the Company’s shareholders approved to amend the Company’s memorandum and articles of association to extend the date before which the Company must complete a business combination from April 26, 2021 to October 26, 2021 or such earlier date as determined by the Board. If the Company is unable to complete its initial business combination by October 26, 2021 or such longer period that its shareholders may approve, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the Trust Account not previously released to the Company for its tax obligations, divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, seek to dissolve and liquidate subject to its obligations under British Virgin Islands law to provide for claims of creditors in all cases subject to and the other requirements of applicable law. This redemption of public shares from the Trust Account shall be effected as required by function of its amended and restated memorandum and articles of association and prior to any voluntary winding up, although at all times subject to the Companies Act.
Following the redemption of public shares, the Company intends to enter “voluntary liquidation” which is the statutory process for formally closing and dissolving a company under the laws of the British Virgin Islands. Given that the Company intends to enter voluntary liquidation following the redemption of public shareholders from the Trust Account, the Company does not expect that the voluntary liquidation process will cause any delay to the payment of redemption proceeds from its Trust Account. In connection with such a voluntary liquidation, the liquidator would give notice to creditors inviting them to submit their claims for payment, by notifying known creditors (if any) who have not submitted claims and by placing a public advertisement in at least one newspaper published in the British Virgin Islands and in at least one newspaper circulating in the location where the Company has its principal place of business, and taking any other steps the liquidator considers appropriate to identify its creditors, after which its remaining assets would be distributed. As soon as its affairs are fully wound-up, the liquidator must complete his statement of account and make a notice filing with the registrar. The Company would be dissolved once the registrar issues a Certificate of Dissolution.
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 $
8
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
On October 18, 2019, the Company deposited $
On January 23, 2020, the Company deposited an
additional $
On April 23, 2020, the Company held a special
meeting pursuant to which the Company’s shareholders approved extending the Extension from April 27, 2020 to October 26, 2020 (the
“Extended Date”).
The Company agreed to contribute, or cause to
be contributed on its behalf (the “Cash Contribution”), $
On October 26, 2020, the Company held a special
meeting pursuant to which the Company’s shareholders approved extending the Extended Date from October 26, 2020 to April 26, 2021
or such earlier date as determined by the Board was voted on and approved (the “Second Extended Date”). In connection with
the approval of the extension (the “Second Extension”), shareholders elected to redeem an aggregate of
The Company agreed to contribute, or cause to
be contributed on its behalf (the “Second Cash Contribution”), $
9
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
On April 15, 2021, the Company announced that
it has agreed that if the Extension is approved, for the aggregate public shares that are not redeemed by the Company’s shareholders
in connection with the Extension (collectively, the “Remaining Shares”, each, a “Remaining Share”), for each monthly
period, or portion thereof, that is needed by the Company to complete an initial business combination during the Extension, it will deposit
$
The per-share pro rata portion of the trust account
on March 18, 2021 (the “Record Date”) after taking into account taxes owed but not paid by such date (which is expected to
be the same approximate amount two business days prior to the meeting) was approximately $
On April 23, 2021, the Company held its special meeting in lieu of the 2020 annual meeting of the shareholders. At the Special Meeting, the Company’s shareholders approved to amend the Company’s memorandum and articles of association to extend the date before which the Company must complete a business combination from April 26, 2021 to October 26, 2021.
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.
Through June 30, 2021,
NASDAQ Delisting Notifications and Regaining Compliance
On September 1, 2020, the Company received a notice from the Listing Qualifications Department of The NASDAQ Stock Market (“Nasdaq”) indicating that the Company was not in compliance with Listing Rule 5550(a)(3) (the “Minimum Public Holders Rule”), which requires the Company to have at least 300 public holders for continued listing on the NASDAQ Capital Market. The Company had until October 15, 2020 to provide NASDAQ with a plan to regain compliance with the Minimum Public Holders Rule. The notice is a notification of deficiency, not of imminent delisting, and had no current effect on the listing or trading of the Company’s securities on NASDAQ.
The Company submitted its plan of compliance on October 16, 2020. On October 29, 2020, the Company received a notification letter from NASDAQ stating that the Nasdaq Staff had determined to grant the Company an extension of time through March 1, 2021 to regain compliance with Minimum Public Holders Rule. On February 18, 2021, the Company 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.
On January 4, 2021, NASDAQ advised the Company that it no longer complies with Nasdaq Listing Rule 5620(a) due to the Company’s failure to hold an annual meeting of shareholders within twelve months of the end of the Company’s fiscal year ended December 31, 2019 (the “Annual Meeting Requirement”).
On March 16, 2021, after the Company’s submission of a plan to regain compliance with Annual Meeting Requirement, the Company received a notification letter from NASDAQ stating that the Nasdaq Staff had determined to grant the Company an extension of time through June 29, 2021 to regain compliance with the Annual Meeting Requirement.
On March 26, 2021, the Company filed a definitive proxy statement in Form 14A for the purposes of seeking its shareholder approval to extend the date before which the Company 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.
10
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
On May 3, 2021, the Company received a letter from Nasdaq, advising the Company that the Company had regained compliance with the Annual Meeting Requirement based on the Company’s Form 8-K filed on April 26, 2021, indicating that the Company’s proxy was distributed on April 15, 2021 and its annual meeting of shareholders was held on April 23, 2021.
On June 9, 2021, the Company 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). This Notice received has no immediate effect on the listing or trading of the Company’s shares. Nasdaq has provided the Company with 60 calendar days, until August 9, 2021 to submit a plan to regain compliance. If Nasdaq accepts the Company’s plan, then Nasdaq may grant the Company up to 180 days from the prescribed due date for the filing of the 2021 10-Q, or November 22, 2021, to regain compliance.
On June 23, 2021, the Company received a written notification from the Nasdaq Stock Market Listing Qualifications Staff, indicating that the Company has regained compliance with the periodic filing requirement for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5250(c), based on the Company’s filing of its Quarterly Report on Form 10-Q for the period ended March 31, 2021 on June 22, 2021.
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. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal years ended December 31, 2020 and 2019. Operating results for the six month periods ended June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021.
11
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
Use of Estimates
The preparation of unaudited 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, 2021 and December 31, 2020.
Investments Held in Trust Account
At June 30, 2021 and December 31, 2020, the assets held in the Trust Account were held in money market funds, which are invested in U.S. Treasury securities.
Warrants Liabilities
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity” (“ASC 480”) and ASC 815, “Derivatives and Hedging” (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as liabilities at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
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 unaudited condensed balance sheets.
12
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
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, 2021 and December 31, 2020 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 periods 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, 2021 and 2020, 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, 2021 and 2020, the Company has not considered the effect of the warrants sold in the
Initial Public Offering and the dividend warrants issued in April 2021 to purchase an aggregate of
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 $
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 balance sheets, primarily due to their short-term nature.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
● | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. |
13
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
● | Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments. |
● | Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value. |
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Level | June 30, 2021 | December 31, 2020 | ||||||||
Warrant liabilities – Private Warrants | 3 | $ | $ |
The change in the fair value of warrant liabilities regarding Level 3 fair value measurements is summarized as follows
Warrant liabilities at December 31, 2019 | $ | |||
Change in fair value of warrants liabilities for the year ended December 31, 2020 | ( | ) | ||
Warrant liabilities at December 31, 2020 | ||||
Change in fair value of warrants liabilities for the six months ended June 30, 2021 | ( | ) | ||
Warrant liabilities at June 30, 2021 | $ |
The Private Warrants are accounted for as liabilities in accordance with ASC 815-40 as the Company concluded that its Private Warrants are not indexed to the Company’s ordinary shares because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares and are presented within warrant liabilities on the Company’s accompanying balance sheets. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the statement of operations.
The fair value of the Private Warrants was estimated using the Black-Scholes option-pricing model. The application of the Black-Scholes option-pricing model requires the use of a number of inputs and significant assumptions including volatility. Significant judgment is required in determining the expected volatility of the ordinary shares. Due to the limited history of trading of the Company’s ordinary shares, the Company determined expected volatility based on a peer group of publicly traded companies. The following reflects the inputs and assumptions used:
June 30, 2021 | December 31, 2020 | |||||||
Stock price | $ | $ | ||||||
Exercise price | $ | $ | ||||||
Risk-free interest rate | % | % | ||||||
Expected term (in years) | ||||||||
Expected dividend yield | % | % | ||||||
Expected volatility | % | % | ||||||
Merger probability adjustment | % | % |
14
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
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 financial statements.
Note 3 — Initial Public Offering
Public Unit
Pursuant to the Initial Public Offering on October
26, 2018, the Company sold
If the Company does not complete its Business Combination within the necessary time period described in Note 1, the Public Warrants and Public Rights will expire and be worthless. Since the Company is not required to net cash settle the Public Warrants and Public Rights, and the Public Warrants and Public Rights are convertible upon the consummation of the Business Combination, management determined that the Public Warrants and Public Rights are classified within shareholders’ equity as “Additional paid-in capital” upon their issuance in accordance with ASC 815-40. The proceeds from the sale are allocated to Public Shares and Public Warrants and Public Rights based on the relative fair value of the securities in accordance with ASC 470-20-30. The value of the Public Shares, Public Warrants and Public Rights was based on the closing price paid by investors.
At the closing of the Initial Public Offering
and over-allotment option, the Company paid an upfront underwriting discount of $
Purchase Option
On October 26, 2018, the Company sold the underwriter
(and its designees), for $
The Company accounted for the unit purchase option,
inclusive of the receipt of $
15
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
Note 4 — Private Placements
Simultaneously with the Initial Public Offering,
the Company’s Sponsor purchased an aggregate of
The Private Units are identical to the units sold in the Initial Public Offering except the Private Units are non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the Sponsor or its permitted transferees. The purchasers of the Private Units have agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to the same permitted transferees as the founder shares) until the completion of the Business Combination.
If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law).
Note 5 — Related Party Transactions
Founder Shares
In August 2018, the Company issued
The founder shares are identical to the ordinary shares included in the units sold in the Initial Public Offering. However, the Initial Shareholders have agreed to (A) to vote any shares owned by them in favor of any proposed Business Combination, (B) not to convert any shares in connection with a shareholder vote to approve a proposed initial Business Combination or any amendment to the Company’s charter documents prior to consummation of an initial Business Combination, or sell any shares to the Company in a tender offer in connection with a proposed initial Business Combination and (C) that the founder shares shall not participate in any liquidating distribution from the Trust Account upon winding up if a Business Combination is not consummated.
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.
16
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
Related Party Advances
During the year ended December 31, 2020, the Company
received an aggregate of $
From December 2020 to April 2021, SolarMax made
a series of non-interest bearing loans to the Sponsor in the aggregate principal amount of $
Related Party Loans
In addition, in order to finance transaction costs
in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and
directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company
completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released
to the Company. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at
the lender’s discretion, up to $
On July 6, 2018, the Sponsor loaned the Company
$
17
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
On January 24, 2020, the Sponsor loaned the Company
an additional $
Administrative Service Fee
The Company has agreed, commencing on August 1,
2018, to pay the Sponsor, a monthly fee of an aggregate of $
Other than the $
Note 6 — Promissory Notes
Promissory notes are comprised of the following as of June 30, 2021 and December 31, 2020:
June 30, 2021 |
December 31, 2020 |
|||||||
GN Note 1 | $ | $ | ||||||
GN Note 2 | ||||||||
AMC Note | ||||||||
SolarMax Notes 1 | ||||||||
SolarMax Notes 2 | ||||||||
SolarMax Notes 3 | ||||||||
Total | $ | $ |
On September 18, 2019, the Company issued an unsecured
promissory note in the aggregate principal amount of $
18
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
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, 2021 and December
31, 2020, there was $
Pursuant to the GN Note 1, in the event that Global
Nature notifies the Company that it does not wish to proceed with the Qualified Business Combination (the “Withdrawal Request”),
the Company shall only be obligated to repay the GN Note 1 as follows:
All amounts owed by the Company under the GN Note 1 become immediately due and payable upon an event of default, which includes the Company’s failure to pay the principal amount due within 5 business days of the Maturity Date and the Company’s voluntary or involuntary bankruptcy.
On December 3, 2019, the Company issued an unsecured
promissory note in the aggregate principal amount of $
On April 17, 2020, the Company issued an unsecured
promissory note in the aggregate principal amount of $
From September 2020 to December 2020,
19
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
From January to March 2021,
From April to June 2021,
Note 7 — Cash and Investments Held in Trust Account
As of June 30, 2021 and December 31, 2020, assets
held in the Trust Account were comprised of $
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis at June 30, 2021 and December 31, 2020 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | Level | June 30, 2021 | December 31, 2020 | |||||||
Assets: | ||||||||||
Trust Account - U.S. Treasury Securities Money Market Fund | 1 | $ | $ |
Note 8 — Commitments and Contingencies
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic 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 complete the SolarMax Business Combination, the specific impact is not readily determinable as of the date of these financial statements. The 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.
20
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
Note 9 — Deferred Underwriter Compensation
The Company is obligated to pay the underwriters
a deferred underwriting discounts and commissions equal to
Note 10 — Shareholders’ Equity
Preferred Shares - The Company is
authorized to issue
Ordinary Shares - The Company is authorized
to issue
Warrants - Each warrant entitles the
registered holder to purchase one-half (1/2) of one ordinary share at a price of $
The warrants issued in the Private Units (“Private Warrants”) are identical to the Public Warrants sold in the Initial Public Offering except the Private Warrants will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted transferees.
The Company may call the warrants for redemption (excluding the Private Warrants and any warrants issued to its initial shareholders, officers or directors in payment of working capital loans made to the Company, but including outstanding warrants issued upon exercise of the unit purchase option issued to Chardan Capital Markets LLC), in whole and not in part, at a price of $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.
21
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
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.”
On January 19, 2021, the board of the Company approved the issuance
of
As of June 30, 2021 and December 31, 2020, the Company has outstanding
warrants of
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. 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 or loss 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 per ordinary share is as follows:
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Net (loss) income | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
Less: income attributable to ordinary shares subject to redemption (1) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Adjusted net loss (income) | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ||||||
Basic and diluted weighted average shares outstanding (2) | ||||||||||||||||
Basic and diluted adjusted net loss (income) per ordinary share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ |
(1) |
(2) | Excludes an aggregate of up to |
22
ALBERTON ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
JUNE 30, 2021
(UNAUDITED)
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 financial statements were issued. Based upon this review, other than as described below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
Related Party Advances
In July 2021, SolarMax made non-interest bearing
loans to the Sponsor in the aggregate principal amount of $
In August 2021, SolarMax made non-interest bearing
loans to the Sponsor in the aggregate principal amount of $
Amendment to the Merger Agreement
On August 11, 2021, Alberton, Merger Sub and SolarMax entered into
an amendment (the “Third Amendment”) to the Merger Agreement.
In conjunction with the Third Amendment, Alberton has entered into the following agreements with various parties:
23
Note Conversion Agreements
On August 11, 2021, Alberton entered into certain
note conversion agreements (the “Note Conversion Agreements”) with each of Hong Ye Hong Kong Shareholding Co., Limited (“Hong
Ye”), Global Nature Investment Holdings Limited (“Global Nature”) and Qingdao Zhongxin Huirong Distressed Asset Disposal
Co., Ltd. (“AMC Sino” and collectively with Hong Ye and Global Nature, the “Noteholders”). Pursuant to the terms
of the Note Conversion Agreements, Alberton shall convert
Pursuant to the terms of the Note Conversion Agreements, Alberton shall register the Conversion Shares on a registration statement on Form S-1, which will be filed as soon as possible following the filing of an amendment to its proxy statement including SolarMax’s consolidated financial statements for the six months ended June 30, 2021.
Share Forfeiture Agreement
On August 11, 2021, Alberton entered into a certain
share forfeiture agreement (the “Forfeiture Agreement”) with SolarMax and certain initial shareholders of Alberton including
Hong Ye, Bin (Ben) Wang and Keqing (Kevin) Liu (collectively, the “Initial Shareholders”), pursuant to which the Initial Shareholders
have agreed to forfeit an aggregate of
Backstop and Private Placement
On August 11, 2021, Alberton entered into certain backstop agreements (collectively, the “Backstop Agreements”) with four backstop investors (collectively, the “Backstop Investors”), pursuant to which the Backstop Investors shall commit to purchase an aggregate of no less than $18 million of Ordinary Shares in open market or private transactions from time to time, or from holders of public shares of Alberton who have exercised their redemption rights pursuant to Alberton’s organization documents, pursuant to the terms of the Backstop Agreements.
On August 11, 2021, Alberton also entered into
certain stock purchase agreement (the “PIPE SPA”) with JSDC Investment LLC (the “PIPE Investor”) who is a minority
existing shareholder of SolarMax, pursuant to which the PIPE Investor shall purchase Ordinary Shares of Alberton at the amount equal to
(i) $
Investor Relations Consulting Agreement
On August 11, 2021, Alberton entered into a certain
letter agreement (the “IR Agreement”) with Citiking, pursuant to which Citiking shall render investor relations services to
Alberton and to generally act as its investor relations consultant for the Asian market pursuant to the terms of the IR Agreement. Under
the terms of the IR Agreement, Alberton has agreed to issue an aggregate of
24
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission (“SEC”) filings. References to “we”, “us”, “our” or the “Company” are to Alberton Acquisition Corporation, except where the context requires otherwise. The following discussion should be read in conjunction with our condensed financial statements and related notes thereto included elsewhere in this report.
Overview
We were incorporated on February 16, 2018 under the laws of British Virgin Islands for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar Business Combination with one or more businesses or entities. The Company’s efforts to identify a prospective target business are not limited to a particular industry or geographic location. We have not selected any target business for our initial Business Combination.
We presently have no revenue, have had losses since inception from incurring formation and operating costs and have had no operations other than identifying and evaluating suitable acquisition transaction candidates. We have relied upon the sale of our securities and loans from Hong Ye Hong Kong Shareholding Co., Limited (our “Sponsor”) to fund our operations.
On October 26, 2018, we consummated our Initial Public Offering of 10,000,000 Units. Each Unit consists of one ordinary share, one redeemable warrant to purchase one-half of one ordinary share and one right to receive 1/10 of an ordinary share upon the consummation of our initial Business Combination. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $100,000,000. On October 26, 2018, simultaneously with the consummation of the Initial Public Offering, we consummated a private placement with our Sponsor of 300,000 Private Units at a price of $10.00 per Private Unit, generating total proceeds of $3,000,000. On November 20, 2018, the underwriters exercised the over-allotment option in part and purchased 1,487,992 over-allotment option Units at an offering price of $10.00 per Unit, generating gross proceeds of $14,879,920. On November 20, 2018, simultaneously with the sale of the over-allotment units, the Company consummated the private sale of an additional 29,760 Private Units to our Sponsor, generating gross proceeds of $297,600. On November 20, 2018, the underwriters waived their right to exercise the reminder of the over-allotment option. In connection with such waiver, an aggregate of 3,002 founder shares held by our initial shareholders were forfeited.
A total of $114,879,920 of the net proceeds from the Initial Public Offering (including the partial exercise of the over-allotment option) and the private placements were deposited in a Trust Account established for the benefit of the Company’s public shareholders.
Our management has broad discretion with respect to the specific application of the net proceeds of Initial Public Offering and the private placements, although substantially all of the net proceeds are intended to be applied generally towards consummating a Business Combination.
25
Recent Developments
April 2020 Special Shareholder Meeting
We initially had until October 25, 2019 to consummate a Business Combination. However, as we anticipated that we may not be able to consummate a Business Combination by October 25, 2019, we extended the period of time to consummate a Business Combination until October 26, 2020 or such an earlier date as determined by our board. On April 23, 2020, we held a special meeting pursuant to which our shareholders approved extending the Extension from April 27, 2020 to October 26, 2020 (the “Extended Date”). In connection with the approval of the extension, shareholders elected to redeem an aggregate of 10,073,512 of our ordinary shares. As a result, an aggregate of $105,879,118 (or $10.51 per share) was released from our Trust Account to pay such shareholders. On the same day, we entered into an amendment to the trust agreement to extend the final liquidation date of the trust account to the 24-month anniversary of the closing of its Initial Public Offering.
We agreed to contribute, or cause to be contributed on our behalf (the “Cash Contribution”), $60,000 for the aggregate number of Public Shares that did not convert in connection with the extension (the “Remaining Public Shares”) for each monthly period or portion thereof that is needed to complete a Business Combination (commencing on April 27, 2020 until the earlier of the consummation of a Business Combination and the expiry of the Extension). The Cash Contribution will be deposited as additional interest on the proceeds in the Trust Account and will be distributed pro rata as a part of redemption amount to each Remaining Public Share in connection with a future redemption. In addition, at the earlier date (the “Issuance Date”) of the consummation of its initial Business Combination and the expiry of the Extension, we will issue a dividend of one warrant to purchase one-half of one ordinary share for each Remaining Public Share. Each such warrant will be identical to the warrants included in the Units sold in our Initial Public Offering (the “Dividend”, collectively with the Cash Contribution, the “Contribution”).
The Cash Contribution is subject to the following deposit schedule (the “Deposit Schedule”): the aggregate amount of the Cash Contribution of first two months of $120,000 will be deposited into the Trust Account within 7 business days of April 27, 2020 and the Cash Contribution of each subsequent month of $60,000 will be deposited into the Trust Account with 7 business days of 27th day of such month. We deposited the proceeds of AMC Note into the Trust Account as the Cash Contribution pursuant to the Deposit Schedule. Through June 30, 2021, we deposited an aggregate of $937,453 into the trust account to fund the Extension. The Extension was partially funded from an $140,000 advance provided by the Sponsor, $100,000 from the AMC Note and $697,453 from the SolarMax Notes.
Any additional loans that may be made to us to fund the Contribution, will not bear interest and will be repayable by us upon consummation of a Business Combination. Our officers, directors or affiliates will have the sole discretion whether to continue extending additional loans for additional calendar months until the Extended Date and if the officers, directors or affiliates determine not to continue extending additional loans for additional calendar months, their obligation to extend additional loans following such determination will terminate.
Agreement and Plan of Merger with SolarMax
On September 3, 2020, we entered into a certain letter of intent for the business combination with SolarMax (the “SolarMax LOI”) and formally started to discuss the related matters for the business combination.
On October 27, 2020, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among the Company, Alberton Merger Subsidiary Inc., a wholly owned subsidiary of the Company incorporated in Nevada on October 16, 2020 (“Merger Sub”), and SolarMax. The Merger Agreement provides for the merger of Merger Sub with and into SolarMax (the “Merger”), 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 equitably adjusted based on the conversion 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 common stock determined by dividing the conversion price of such notes at the Effective Time by the applicable conversion ratio.
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The Merger Agreement also provides that, immediately prior to the Closing, we 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”), we will change its name to “SolarMax Technology Holdings, Inc.” In connection with the Redomestication, the provision in Alberton’s amended and restated memorandum and articles of association which provides that we 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.
Prior to the Closing, we 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.
As consideration for the Merger, SolarMax shareholders as of immediately prior to the Effective Time (but excluding holders of SolarMax options) collectively will receive from us, in the aggregate, a number of Alberton common stock equal to: (i) $300,000,000, divided by (ii) the Redemption Price (defined below) (such shares of Alberton common stock is referred as the “Stockholder Merger Consideration”). The holders of SolarMax options shall receive Assumed Options to purchase the number of shares of Alberton common stock as described above in accordance with the terms and conditions set forth in the Merger Agreement. For the purpose of the Merger Agreement, Redemption Price means a price per share equal to the price at which each share of Alberton common stock is redeemed pursuant to the redemption by our public stockholders in connection with our initial business combination, as required by its amended and restated certificate of incorporation immediately prior to the Effective Time (the “Redemption”).Consummation of the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver by the respective parties of a number of conditions, including the approval of the Merger Agreement and the transactions contemplated thereby by SolarMax’s and the Company’s respective stockholders. Other closing conditions include, among others: (i) the respective representations of the parties to each other being true and correct; (ii) receipt of requisite regulatory approvals; (iii) no law or order preventing or prohibiting the Merger or the other transactions contemplated by the Merger Agreement; (iv) no pending litigation to enjoin or restrict the consummation of the Closing; (v) we having at least $5,000,001 in net tangible assets as of the Closing, after giving effect to the completion of the Redemption, consummation of the Merger and any private financings; (vi) the Redomestication, (vii) the election or appointment of members to the our board of directors as described above; (vii) the effectiveness of the Registration Statement (as defined in the Merger Agreement), and (viii) being advised by Nasdaq that upon consummation of the Merger, we shall continue to be listed and all outstanding deficiencies have been addressed to the satisfaction of Nasdaq.
On October 27, 2020, Alberton, Merger Sub and SolarMax entered into an amendment to the Merger Agreement (the “First Amendment”) to increase certain Extension Loans (as defined in the Merger Agreement) to be provided by SolarMax from $60,000 monthly to $70,674 monthly. As a result, the First Amendment (i) amends Section 5.12(a) of the Merger Agreement by changing clause (x) to read as follows: “(x) $60,000 per month prior to the date of this Amendment and $70,674 commencing with payments made on or after the date of this Amendment or” (“Section 5.12 Amendment”); and (ii) provides that, to the extent that the payments made by SolarMax exceed the amount of the Extension Loans (as defined in the Merger Agreement) to be made by Alberton pursuant to the Section 5.12(a) prior to Section 5.12 Amendment, Alberton shall, at the Closing (as defined in the Merger Agreement), cause to be delivered to the Surviving Corporation (as defined in the Merger Agreement) for cancellation, such number of Sponsor Shares as have a value, determined as provided in the Merger Agreement, equal to such excess.
On March 19, 2021, Alberton, Merger Sub and SolarMax entered into an amendment (the “Second Amendment”) to the Merger Agreement. Pursuant to the Second Amendment, Alberton agreed to make up to two additional Extension Loans (“Additional Loans”) in the amount of $70,674 per month.
The Merger also calls for additional agreements, including, among others, the Lock-Up Agreements and the Voting Agreement, as described elsewhere in the current report on Form 8-K filed with the Securities and Exchange Commission on October 28, 2020. The First Amendment and the Second Amendment are incorporated by reference from the current reports on Form 8-K filed with the Securities and Exchange Commission on November 3, 2020 and March 23, 2021, respectively.
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On August 11, 2021, Alberton, Merger Sub and SolarMax entered into an amendment (the “Third Amendment”) to the Merger Agreement. Pursuant to the Third Amendment: (i) the number of Alberton ordinary shares to be issued to the SolarMax shareholders was changed to provide that the number of shares is determined by dividing $300,000,000 by $10.50 rather than by the Redemption Price; (ii) SolarMax, which had already made Extension Loans totaling $697,453.32, agreed to make up to three additional Extension Loans each in the amount of $76,704.66, for a total of a maximum of $927,567.30, as compared with a maximum of $360,000 in the initial Merger Agreement, and SolarMax agreed to the cancelation of all of the Extension Loans at the Closing. The Extension Loans are loans made by SolarMax to Alberton to provide Alberton with funds to make payments required to be made by Alberton to the trust which were required in connection with each extension of the last day on which Alberton must complete a business combination; (iii) the requirement that Alberton satisfies its obligation with respect to the deferred underwriting compensation of $4,020,797 due to Chardan Capital Markets, LLC, the underwriter of Alberton’s initial public offering, through the delivery of Sponsor Shares was eliminated, and the deferred underwriting compensation is to be paid in cash; (iv) the requirement that the notes outstanding at September 3, 2020 be settled through the delivery of Sponsor Shares was replaced by the agreement that such notes, as well as an additional loan from the Sponsor in the amount of $273,640, be settled by (a) the issuance by Alberton of ordinary shares valued at the Conversion Loan Valuation Price, which is ten (10) times the average trading price of the Alberton Rights during a period of twenty-five (25) trading days ending on the second trading day prior to mailing of the final Proxy Statement to Alberton’s shareholders in connection with the Special Meeting, in payment of 50% of the loans and, pursuant to an agreement with the noteholders, agreeing to register those shares and (b) cash payment of the other 50%. The total principal amount of these notes is $3,102,440, of which notes in the principal amount of $1,353,640 are due to the Sponsor. Pursuant to agreements with the noteholders, Alberton agreed to register the ordinary shares issued to the noteholders. In the event that the registration statement covering the shares issued upon conversion of 50% of the principal amount of such notes (the “Conversion Shares”) has not been declared effective by the SEC within 15 business days after the Closing (other than as a result of the failure of noteholder to provide required information), the Conversion Shares shall be automatically forfeited with no action to be taken by the Alberton or the noteholder and Alberton shall, within ten business days of such forfeiture, pay the 50% of the note with respect to which the shares were issued; (v) 800,000 Sponsor Shares will be canceled; (vi) all outstanding private warrants, each exercisable for one-half of one Alberton ordinary shares (or Purchaser Common Stock following Redomestication), including all rights to receive additional private warrants which may be issued upon conversion of any notes or other advances made to Alberton, shall be cancelled, and Alberton shall issue to the holder of the private warrants (including any right to receive additional private warrants) a total of 44,467 Alberton ordinary shares; (vii) pursuant to loan agreements with the Sponsor, SolarMax had made loans to the Sponsor for payment of obligations of Alberton of $528,602.62 and agreed to make additional advances of up to $1,031.43. These loans will be satisfied by a portion of the 800,000 shares being delivered for cancellation. The loans from the Sponsor to Alberton are being treated as contributions to capital and not as a loan; (viii) the provision of the Merger Agreement that provide that, to the extent that Extension Loans made by SolarMax exceed the amount which SolarMax initially agreed to advance to Alberton ($360,000) was amended and the Sponsor’s obligation to deliver Sponsor Shares with respect to such excess advances, shall be satisfied by the delivery of a portion of the 800,000 ordinary shares being delivered for cancellation; (ix) the Sponsor agreed to provide up to $100,000 to provide Alberton with funds to pay its obligations. Such funds will be treated as a contribution to capital and not as a loan; (x) Alberton agrees that a $50,000 obligation which the Sponsor had agreed to pay to Alberton’s former chairman and chief executive officer, will be paid by Alberton, and (xi) at the Closing, Alberton shall issue, under the Incentive Plan, to each of William Walter Young, Qing S. Huang and Peng Gao 30,000 shares of Common Stock as the compensation shares for their service as independent directors of Alberton until the Closing and to Citiking International Limited, a company organized under the laws of Hong Kong (“Citiking”), 200,000 shares pursuant to certain IR Agreement (defined below) between the Purchaser and Citiking, among which 50,000 shares shall vest immediately, 50,000 shares shall vest upon the first anniversary of the Closing, 50,000 shares shall vest on the second anniversary of the Closing and remaining 50,000 shares shall vest on the third anniversary of the Closing.
In conjunction with the Third Amendment, Alberton has entered into the following agreements with various parties:
Note Conversion Agreements
On August 11, 2021, Alberton entered into certain note conversion agreements (the “Note Conversion Agreements”) with each of Hong Ye Hong Kong Shareholding Co., Limited (“Hong Ye”), Global Nature Investment Holdings Limited (“Global Nature”) and Qingdao Zhongxin Huirong Distressed Asset Disposal Co., Ltd. (“AMC Sino” and collectively with Hong Ye and Global Nature, the “Noteholders”). Pursuant to the terms of the Note Conversion Agreements, Alberton shall convert 50% of the balance (in the aggregated amount of $1,551,220) of respective note(s) (in the aggregated amount of $3,102,440) with each of the Noteholder into Ordinary Shares (the “Conversion Shares”), immediately prior to, but subject to the completion of the closing of the merger pursuant to the Merger Agreement, at a conversion price equal to ten (10) times the average trading price of the rights of Alberton, during a period of twenty-five (25) trading days ending on the second trading day prior to mailing of the final proxy statement/prospectus on Form S-4 (file number 333-251825) to Alberton’s shareholders in connection with the special meeting.
Pursuant to the terms of the Note Conversion Agreements, Alberton shall register the Conversion Shares on a registration statement on Form S-1, which will be filed as soon as possible following the filing of an amendment to its proxy statement including SolarMax’s consolidated financial statements for the six months ended June 30, 2021.
Share Forfeiture Agreement
On August 11, 2021, Alberton entered into a certain share forfeiture agreement (the “Forfeiture Agreement”) with SolarMax and certain initial shareholders of Alberton including Hong Ye, Bin (Ben) Wang and Keqing (Kevin) Liu (collectively, the “Initial Shareholders”), pursuant to which the Initial Shareholders have agreed to forfeit an aggregate of 800,000 Ordinary Shares upon the closing of the merger pursuant to the terms of the Forfeiture Agreement.
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Backstop and Private Placement
On August 11, 2021, Alberton entered into certain backstop agreements (collectively, the “Backstop Agreements”) with four backstop investors (collectively, the “Backstop Investors”), pursuant to which the Backstop Investors shall commit to purchase an aggregate of no less than $18 million of Ordinary Shares in open market or private transactions from time to time, or from holders of public shares of Alberton who have exercised their redemption rights pursuant to Alberton’s organization documents, pursuant to the terms of the Backstop Agreements.
On August 11, 2021, Alberton also entered into certain stock purchase agreement (the “PIPE SPA”) with JSDC Investment LLC (the “PIPE Investor”) who is a minority existing shareholder of SolarMax, pursuant to which the PIPE Investor shall purchase Ordinary Shares of Alberton at the amount equal to (i) $6 million divided by (ii) a price per share equal to the price at which each share of Alberton is redeemed pursuant to the redemption by Alberton public shareholders in connection with the merger.
Investor Relations Consulting Agreement
On August 11, 2021, Alberton entered into a certain letter agreement (the “IR Agreement”) with Citiking, pursuant to which Citiking shall render investor relations services to Alberton and to generally act as its investor relations consultant for the Asian market pursuant to the terms of the IR Agreement. Under the terms of the IR Agreement, Alberton has agreed to issue an aggregate of 200,000 Ordinary Shares or Common Stock to Citiking as consideration for its services, subject to certain vesting provisions described in the IR Agreement.
SolarMax Notes
From September 2020 to December 2020, the Company issued unsecured promissory notes in the aggregate principal amount of $261,348 to SolarMax (the “SolarMax Notes 1”) to finance the extension of the Business Combination. 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 June 30, 2021 and December 31, 2020, there was $261,348 outstanding under the SolarMax Notes 1.
From January to March 2021, the Company 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 the Company 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 June 30, 2021, there was $212,022 outstanding under the SolarMax Notes 2.
From April to June 2021, the Company 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 the Company 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 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 June 30, 2021, there was $224,083 outstanding under the SolarMax Notes 3.
NASDAQ Delisting Notifications and Regaining Compliance
On September 1, 2020, we received a notice from the Nasdaq indicating that we were not in compliance with Listing Rule 5550(a)(3) (the “Minimum Public Holders Rule”), which required us to have at least 300 public holders for continued listing on the NASDAQ Capital Market. We had until October 15, 2020 to provide Nasdaq with a plan to regain compliance with the Minimum Public Holders Rule. The notice is a notification of deficiency, not of imminent delisting, and had no current effect on the listing or trading of our securities on Nasdaq.
The Notice stated that we had 45 calendar days to submit a plan to regain compliance with the Minimum Public Holders Rule. We intended to submit a plan to regain compliance with the Minimum Public Holders Rule within the required timeframe. If Nasdaq accepted our plan, Nasdaq may grant us an extension of up to 180 calendar days from the date of the Notice to evidence compliance with the Minimum Public Holders Rule. If Nasdaq did not accept our plan, we would have the opportunity to appeal the decision in front of a Nasdaq Hearings Panel.
We submitted its plan of compliance on October 16, 2020 and based on the review of the materials submitted by us. On October 29, 2020, we received a notification letter from the Listing Qualifications Department of The Nasdaq stating that the Nasdaq Staff had determined to grant us an extension of time through March 1, 2021 to regain compliance with Minimum Public Holders Rule. On February 18, 2021, the Company 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.
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On January 4, 2021, Nasdaq advised the Company that it no longer complies with Nasdaq Listing Rule 5620(a) due to the Company’s failure to hold an annual meeting of shareholders within twelve months of the end of the Company’s fiscal year ended December 31, 2019 (the “Annual Meeting Requirement”)On March 16, 2021, after the Company’s submission of a plan to regain compliance with Annual Meeting Requirement, the Company received a notification letter from Nasdaq stating that the Nasdaq Staff had determined to grant the Company an extension of time through June 29, 2021 to regain compliance with the Annual Meeting Requirement.
On March 26, 2021, the Company filed a definitive proxy statement in Form 14A for the purposes of seeking its shareholder approval to extend the date before which the Company 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 May 3, 2021, the Company received a letter from Nasdaq, advising the Company that the Company had regained compliance with the Annual Meeting Requirement based on the Company’s Form 8-K filed on April 26, 2021, indicating that the Company’s proxy was distributed on April 15, 2021 and its annual meeting of shareholders was held on April 23, 2021.
On June 9, 2021, the Company 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). This Notice received has no immediate effect on the listing or trading of the Company's shares. Nasdaq has provided the Company with 60 calendar days, until August 9, 2021 to submit a plan to regain compliance. If Nasdaq accepts the Company's plan, then Nasdaq may grant the Company up to 180 days from the prescribed due date for the filing of the 2021 10-Q, or November 22, 2021, to regain compliance.
On June 23, 2021, the Company received a written notification from the Nasdaq Stock Market Listing Qualifications Staff, indicating that the Company has regained compliance with the periodic filing requirement for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5250(c), based on the Company’s filing of its Quarterly Report on Form 10-Q for the period ended March 31, 2021 on June 22, 2021.
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 19, 2020, Mr. John W. Allen resigned from his positions as an independent director and the chairman of the compensation committee of the Company and Mr. Harry Edelson resigned from his positions as an independent director and the chairman of audit committee of the Company. Their resignation did not result from a disagreement with the Company on any matter relating to our operations, policies or practices.
On October 20, 2020, the Board appointed Mr. William Walter Young as an independent director and the chairman of the compensation committee and Mr. Qing S. Huang as an independent director and the chairman of the audit committee of the Board of the Company to fill the vacancies created by Mr. Allen and Mr. Edelson, effective immediately.
On April 23, 2021, at the special meeting in lieu of the 2020 annual meeting of the shareholders, five directors to the Board were re-elected, with such directors to serve until the 2021 annual meeting of shareholders.
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As a result, the Board currently have two executive directors and three independent directors. The following table sets forth information about our directors and executive officers as of the date hereof.
Name | Age | Position | ||
Guan Wang | 42 | Chairwoman of the Board, Chief Executive Officer, and Treasurer | ||
Keqing (Kevin) Liu | 62 | Chief Financial Officer, Director, and Secretary of the Board | ||
William Walter Young | 75 | Independent Director | ||
Qing S. Huang | 38 | Independent Director | ||
Peng Gao | 54 | Independent Director |
Guan Wang, 42, Executive Director, Sinobay (Hong Kong) Commercial Real Estate & Management Co, Ltd, Shenzhen, China, since 2005. She has been in charge of Sinobay’s major investments for 13 years since its inception in 2005. From 2003 to 2005, she served as Director of Human Resources at Union Economic and Trading Investment Co. Ltd, Shenzhen, China, where she was responsible for Alberton’s human resource development, designing and improving Alberton’s organizational structure, and cultivating its corporate culture. From 1999 to 2002, she was an assistant in the Human Resources Division at CR Vanguard, a large national supermarket chain in China, a subsidiary of China Resources, a Fortune Global 500 company. Guan received her Bachelor of Science in Computer Application from Shenyang Aerospace University in China in 1999. Guan’s qualifications to serve as a director and Treasurer of Alberton include her work and investment management experience and her experience in human resources management in terms of evaluating top management of companies.
Keqing (Kevin) Liu, 62, a former partner of ACL Equity from June 2018 to October 2018, a financial services company in Beijing, China, where he focuses on deal origination and cross-border mergers and acquisitions. He began his career in 1983 at Agricultural Bank of China Jiangxi Provincial Branch as a project manager in a portfolio 50% funded by the World Bank, until 1993; from 1993 to 2001, a Senior Manager and Senior Economist at China Merchants Bank head office, Shenzhen, he led a project finance team to manage a portfolio exceeding US$1 billion; a member of the bank’s Mid-Term Development Strategies Working Group from 1997 to 2000, he represented the bank at the World Bank and International Monetary Fund annual meetings in Washington D.C.; from 2002 to 2004, he co-headed the International Department, Shenzhen Commercial Bank (now Ping An Bank) head office, to fund cross-border transactions and collaborate with more than 600 prime financial institutions worldwide; from 2005 to 2007, he was Consultant, CITIC Capital, Hong Kong, an investment banking arm of CITIC Group, one of China’s largest finance holding conglomerates, active in investment due diligence; in 2007, he founded Nanchang GlobeVision Investment, a company investing in carbon-dioxide emission reduction projects that generate saleable certified emission reduction credits, and served as Chief Executive Officer of such company from 2007 to 2010; from 2010 to June 2018, he was Partner, Wealth Assets and Capital (formerly Wealth Business Consultancy), Hong Kong, engaged in deal sourcing and due diligence. He has served as Adjunct Researcher, European Studies Center, Zhejiang University, one of China’s top institutions of higher learning. He holds a Bachelor of Economics in Statistics from Jiangxi University of Finance and Economics, China, in 1983. Kevin’s qualifications to serve as Chief Financial Officer and the Secretary of the Board include his 38-year international finance management and due diligence experience and deal-sourcing capability due to his high-level and extensive relationships with banks. His deal sourcing capability and extensive due diligence experience will greatly benefit Alberton.
William Walter Young, 75, Director and Chairman of Compensation Committee. Since April 1999, Mr. Young has been the chief executive officer of JBY enterprise Inc., a company based in Los Angeles operating import and export business of large electrical equipment, mechanical equipment, aircraft parts and automobile and special vehicles. From May 1998 to September 1985, Mr. Young served as the electrical maintenance engineer and the electrical maintenance supervisor in McDonald Douglas in Shenyang, China and the Chief Electrical Maintenance Engineer of Boeing Company based in Shenyang, China. From June 1985 to January 1970, Mr. Young served as the technician, associate engineer and electrical engineer in Motorola in Oklahoma. Mr. Young received his bachelor degree in mechanics from Oklahoma Central State University in 1965 and his bachelor degree in business administration from Embry University in 1997. Mr. Young’s qualifications to serve as a director and the chairman of the compensation committee include decades of experience as a chief executive officer of a private company.
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Qing S. Huang, 38, Director and Chairman of Audit Committee. Since January 2008, Mr. Huang has been serving as the principal of Boulder Accounting Service, a company based in El Monte, California, providing accounting and bookkeeping services. From November 2018 to May 2017, Mr. Huang served as vice president branch manager of CTBC Bank in Monterey Park, California, responsible for branch administration and daily operation of a full-service branch office and assistance with the retail planning department on developing new residential and commercial lending program. From May 2017 to May 2012, Mr. Huang served as the assistant vice president branch manager of East West Bank in Rancho Cucamonga, California, responsible for branch administration and daily operation and the development of new deposit and loan business by providing a superior level of customer relations. From April 2012 to December 2010, Mr. Huang served as a licensed banker in JPMorgan Chase Bank in Montebello, California, responsible for maintaining client’s relationship and cross-selling the banks financial products and services and analysis of financial information obtained from clients to determine strategies for meeting clients’ financial objectives. From November 2010 to January 2008, Mr. Huang served as a financial advisor in Ameriprise Financial in Glendale, California, responsible for providing comprehensive financial advice and services to its clients including brokerage and investment advisory. Mr. Huang currently holds several professional licenses, including Series 7 license, Series 66 license, and Chartered Financial Consultant, or ChFC®. Mr. Huang received his bachelor degree in business from University of Southern California in 2007. Mr. Huang’s qualifications to serve as a director and chairman of the audit committee include his accounting experience as well as his finance experience.
Peng Gao, 54, has been the chief attorney of Law Offices of Gao Peng, a law firm since June 2006. Mr. Gao received a Bachelor of Science from Fudan University China in 1988, his Master of Science from Georgia Institute of Technology in 1995, and his Juris Doctor degree from Pepperdine Law School in 2005. Mr. Gao has been admitted to State Bar of Los Angeles, CA, since 2006. Mr. Gao’s qualifications to serve as a director include his 14-year experience in the legal industry. His extensive legal experience will greatly benefit the Company.
Ms. Gao, Mr. Young and Mr. Huang are the “independent directors” under the Nasdaq Listing Rules. They also meet the criteria for independence set forth in Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended. Mr. Huang is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended. Mr. Young and Mr. Huang do not have any direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended.
April 2021 Special Shareholder Meeting in Lieu of the 2020 Annual Meeting of the Shareholders
We had until April 26, 2021 to consummate a Business Combination. However, as we anticipated that we may not be able to consummate a Business Combination by April 26, 2021, we extended the period of time to consummate a Business Combination until October 26, 2021 or such an earlier date as determined by our board. On April 23, 2021, we held a special meeting in lieu of the 2020 annual meeting of the shareholders pursuant to which our shareholders approved extending the Extension from April 26, 2021 to October 26, 2021 (the “April 2021 Extension”). In connection with the approval of the April 2021 Extension, shareholders elected to redeem an aggregate of 135,069 of our ordinary shares. As a result, an aggregate of $1,495,303.45 (or $11.07 per share) was released from our Trust Account to pay such shareholders.
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).
For the three months ended June 30, 2021, we had a net loss of $111,078, consisting of $139,044 of operating costs, consisting mostly of general and administrative expenses, offset by $365 of interest income from investments in our Trust Account and $27,601 gain on change in fair value of warrant liabilities.
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For the three months ended June 30, 2020, we had a net loss of $115,707, consisting of 146,045 of operating costs, consisting mostly of general and administrative expenses, offset by $24,271 of interest income from investments in our Trust Account, $5 of interest income from deposits in our corporate bank account and $6,062 gain on change in fair value of warrant liabilities.
For the six months ended June 30, 2021, we had a net loss of $281,238, consisting of $365,264 of operating costs, consisting mostly of general and administrative expenses, offset by $746 of interest income from investments in our Trust Account and $83,280 gain on change in fair value of warrant liabilities.
For the six months ended June 30, 2020, we had a net income of $286,851, consisting of $558,639 of interest income from investments in our Trust Account, $832 of interest income from deposits in our corporate bank account and $22,480 gain on change in fair value of warrant liabilities, offset by $295,100 of operating costs, consisting mostly of general and administrative expenses.
Liquidity and Capital Resources
As of June 30, 2021, we had cash outside the Trust Account of $1,381 available for working capital needs. All remaining cash is held in the Trust Account and is generally unavailable for our use, prior to an initial Business Combination, and is restricted for use either in a Business Combination or to redeem ordinary shares. As of June 30, 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 its business prior to the Business Combination and will need to raise additional capital. In this event, our officers, directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we consummate an initial Business Combination, we would repay such loaned amounts out of the proceeds of the Trust Account released to us upon consummation of the Business Combination, or, at the lender’s discretion, up to $1,500,000 of such loans may be convertible into units of the post Business Combination entity at a price of $10.00 per unit. In the event that the initial Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts, but no proceeds from our Trust Account would be used for such repayment. The terms of such loans by our initial shareholders, officers and directors, if any, have not been determined and no written agreements exist with respect to such loans.
Moreover, we may need to obtain additional financing either to consummate our initial Business Combination or because we become obligated to redeem a significant number of our Public Shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial Business Combination. Following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
Going Concern
In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the mandatory liquidation and subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after October 26, 2021.
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Off-Balance Sheet Arrangements
As of June 30, 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.
As of the date thereof, we have borrowed from our related parties and issued promissory notes to various parties including our Sponsor in the aggregate amount of $4,328,496, among which $337,453 will be paid by delivery of founder shares owned by our sponsor in the same value based on the redemption price. In connection with extensions to complete the initial business combination, we issued a series of unsecured promissory notes to SolarMax in an aggregate amount of $697,453. To the extent that these notes exceed $360,000, the Sponsor agreed to transfer to Successor for cancellation sponsor shares equal to such excess.
Critical Accounting Policies
The preparation of the condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. The Company has the following critical accounting policies:
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 unaudited condensed balance sheets.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
The net proceeds of our Initial Public Offering and the sale of the Private Units held in the Trust Account are invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended June 30, 2021, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective, due solely to the events that led to our restatement of our financial statements for the periods from March 31, 2019 to December 31, 2020, management has identified a material weakness in internal controls related to the accounting for warrants issued in connection with our initial public offering. In light of this material weakness, we performed additional analyses as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, as the circumstances that led to the restatement of our year-end financial statements on June 18, 2021 had not yet been identified. Due solely to the events that led to our restatement of our financial statements for the periods from March 31, 2019 to December 31, 2020, management has identified a material weakness in internal controls related to the accounting for warrants issued in connection with our initial public offering, as described in Note 2 to the Notes to our December 31, 2020 Financial Statements entitled “Restatement of Previously Issued Financial Statements.”
While we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our system of evaluating and implementing the accounting standards that apply to our financial statements, including through enhanced analyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not a party to any material legal proceedings and no material legal proceedings have been threatened by us or, to the best of our knowledge, against us.
Item 1A. Risk Factors
Not applicable to Smaller Reporting Companies. As provided in the Merger Agreement, we will file a proxy statement to seek shareholders’ approval to the Merger Agreement and the transactions contemplated thereunder and risk factors in connection with the Merger will be disclosed in such proxy statement.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
ALBERTON ACQUISITION CORPORATION | ||
Date: August 16, 2021 | By: | /s/ Guan Wang |
Guan Wang | ||
Chief Executive Officer (Principal executive officer) | ||
Date: August 16, 2021 | By: | /s/ Keqing (Kevin) Liu |
Keqing (Kevin) Liu | ||
Chief Financial Officer (Principal financial and accounting officer) |
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