NOTES TO CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
March 31, 2020
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial
statements of Proficient Alpha Acquisition Corp. (the “Company”) have been prepared in accordance with the generally
accepted accounting principles in the United States of America (“GAAP”) for interim financial information and in accordance
with the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information or footnote disclosures normally included
in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the applicable rules and regulations
for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive
presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited
condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair
presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Annual Report on Form 10-K for the year ended September 30, 2019. The interim
results for the three and six months ended March 31, 2020 are not necessarily indicative of the results to be expected for the
year ending September 30, 2020 or for any future interim periods.
NOTE 2. DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS
The Company is a blank check company incorporated
in Nevada on July 27, 2018, which was formed 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 may, subject to certain limitations, pursue a Business Combination target with operations or prospects
in the financial services sector in China, including Hong Kong, Macau and mainland China. The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012.
As of March 31, 2020, the Company had not yet
commenced any operations. All activity for the period from July 27, 2018 (inception) through March 31, 2020 relates to the Company’s
formation and the initial public offering (“IPO”), and subsequent to the IPO, identifying a target company for a Business
Combination and activities in connection with the proposed acquisition of Lion Financial Group Limited, a corporation organized
under the laws of the British Virgin Islands (“Lion”) (see Note 3). The Company will not generate any operating revenues
until after consummation of the initial Business Combination, at the earliest. The Company will generate non-operating income in
the form of interest income from the proceeds derived from the IPO.
On June 3, 2019, the Company consummated
its IPO of 10,000,000 units (“Units”). Each Unit consists of one share of common stock, $0.001 par value per share
(“Common Stock”), one warrant (“Public Warrant”) to purchase one share of Common Stock at an exercise price
of $11.50 per share, and one right (“Right”) to receive one-tenth of one share of Common Stock upon consummation of
the Company’s initial Business Combination. The Units were sold at an offering price of $10.00 per Unit, generating
gross proceeds of $100,000,000. Pursuant to the Underwriting Agreement, the Company granted the underwriters in the IPO (the “Underwriters”)
a 30-day option to purchase up to 1,500,000 additional Units solely to cover over-allotments, if any (the “Over-Allotment
Option”); and simultaneously with the consummation of the IPO, the Underwriters exercised the Over-Allotment Option in full,
generating additional gross proceeds of $15,000,000 to the Company.
Simultaneously with the consummation of the
IPO and the sale of the Units, the Company consummated the private placement (“Private Placement”) of 5,375,000 warrants
(“Placement Warrants”) at a price of $1.00 per Placement Warrant, generating total proceeds of $5,375,000.
Following the closing of the IPO on June 3,
2019, an amount of $115,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the IPO and the Placement
Warrants was placed in a trust account (“Trust Account”) which may be 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 selected by the Company 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 distribution of the Trust Account, except that interest
earned on the Trust Account can be released to the Company to pay its tax obligations, as described below.
Transaction costs amounted to $6,625,439, consisting
of cash of $2,875,000 of underwriting fees and $315,120 of IPO costs, the fair value of 92,000 shares issued and 920,000 warrants
granted to the Underwriters in total amount of $3,435,319 pursuant to the Underwriting Agreement. In addition, $2,177,380 of cash
was held outside of the Trust Account and is available for working capital purposes.
On March 10, 2020, the Company entered into
a Business Combination Agreement (the “Business Combination Agreement”) with Lion and other relevant parties for a
proposed acquisition of Lion (see Note 3).
The Company’s initial Business Combination
must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust
Account (as defined below) (net of taxes payable) at the time of the signing an agreement to enter into a Business Combination.
The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of
the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not
to be required to register as an investment company under the Investment Company Act 1940, as amended, or the Investment Company
Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide its stockholders with
the opportunity to redeem all or a portion of their shares of Common Stock upon the completion of a Business Combination either
(i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The
decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made
by the Company, solely in its discretion. The stockholders will be entitled to redeem their shares for a pro rata portion of the
amount then on deposit in the Trust Account (initially approximately $10.00 per share, plus any pro rata interest earned on the
funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The Company will proceed with a Business Combination
if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company
seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination. If a stockholder
vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the
Company will, pursuant to its Amended and Restated Articles of Incorporation, conduct the redemptions pursuant to the tender offer
rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents with the SEC prior to completing
a Business Combination. If, however, a stockholder approval of the transaction is required by law, or the Company decides to obtain
stockholder approval for business or other legal reasons, the Company will offer to redeem the shares of the Common Stock sold
as part of the Units in the IPO (“Public Shares”) in conjunction with a proxy solicitation pursuant to the proxy rules
and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination,
the sponsor, officers and directors (the “Initial Stockholders”) have agreed to vote their founder shares and any Public
Shares held by them in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their
Public Shares irrespective of whether they vote for or against the proposed transaction.
The Company will have until June 3, 2020 (or
December 3, 2020 if the Company extends the period to consummate a Business Combination by the full amount) to consummate a Business
Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination
Period, the Company will (i) cease all operations except for the purpose of winding up, (ii)
as promptly as reasonably possible, but not more than 10 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 net of interest that may be used by the Company to pay its taxes payable and for dissolution expenses, divided by the number
of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders
(including the right to receive further liquidation distributions, if any), and (iii) as promptly as reasonably possible following
such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors,
dissolve and liquidate, subject in the cases of clauses (ii) and (iii) to the Company’s obligations under Nevada law to provide
for claims of creditors and other requirements of applicable law.
The Initial Stockholders have agreed to (i)
waive any and all right, title, interest or claim of any kind the Initial Stockholders may have in the future in or to any distribution
of the Trust Account and any remaining net assets of the Company as a result of, or arising out of, any contracts or agreements
with the Company and will not seek recourse against the Trust Account for any reason whatsoever; (ii) waive any right to exercise
conversion rights with respect to any shares of the Common Stock owned or to be owned by the Initial Stockholders, directly or
indirectly, whether such shares be part of the founder shares or shares of Common Stock purchased by the Initial Stockholders in
the IPO or in the aftermarket, and each agrees not to seek conversion with respect to such shares in connection with any vote to
approve a Business Combination or to sell any such shares in a tender offer undertaken by the Company in connection with a Business
Combination; and (iii) not propose, or vote in favor of, an amendment to Article Sixth of the Company’s Amended and Restated
Articles of Incorporation, as the same may be amended from time to time, prior to the consummation of a Business Combination unless
the Company provides public stockholders with the opportunity to redeem their shares of Common Stock upon such approval in accordance
with such Article Sixth thereof. In the event that the Company does not consummate a Business Combination and must liquidate and
its remaining net assets are insufficient to complete such liquidation, each of the Initial Stockholders agrees to advance such
funds necessary to complete such liquidation and agrees not to seek repayment for such expenses.
In order to protect the amounts held in the
Trust Account, Mr. Shih-Chung Chou, our sponsor at the time of the IPO (the “Original Sponsor”), agreed to be personally
liable to ensure that the proceeds in the Trust Account are not reduced below $10.00 per Public Share by the claims of target businesses
or claims of vendors or other entities that are owed money by the Company for services rendered or contracted for or products sold
to the Company. Additionally, the agreement entered by the Original Sponsor specifically
provided for two exceptions to the indemnity he has given: he will have no liability (1) as to any claimed amounts owed to a target
business or vendor or other entity who has executed an agreement with us waiving any right, title, interest or claim of any kind
they may have in or to any monies held in the Trust Account, or (2) as to any claims for indemnification by the Underwriters of
the IPO against certain liabilities, including liabilities under the Securities Act. We have not independently verified whether
the Original Sponsor has sufficient funds to satisfy his indemnity obligations and
we have not asked the Original Sponsor to reserve for such indemnification obligations.
The Company agreed to seek to reduce the possibility that the Original Sponsor will
have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective
target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right,
title, interest or claim of any kind in or to monies held in the Trust Account.
On March 12, 2020, the Original Sponsor assigned
to Complex Zenith Limited, a British Virgin Islands company wholly-owned by the Original Sponsor (the “New Sponsor”),
pursuant to a Securities Assignment and Joinder Agreement, dated as of March 12, 2020 (the “Joinder”),
all of his equity interest in the Company (including 431,250 shares of the Company’s Common Stock and Placement Warrants
to purchase 5,375,000 shares of the Company’s Common Stock at $11.50 per share) and
his rights and obligations under certain agreements entered in connection with the IPO, including (i) a letter agreement, dated
as of May 29, 2019, by and among the Company, I-Bankers Securities, Inc. (“I-Bankers”)
and the Original Sponsor, (ii) a letter agreement, dated as of May 29, 2019, by and among the Company, I-Bankers and the Initial
Stockholders, (iii) a Share Escrow Agreement, dated as of May 29, 2019, by and among the Company, American Stock Transfer
& Trust Company, LLC, as escrow agent (the “Escrow Agent” ), and the Initial
Stockholders, and (iv) the Founder Registration Rights Agreement (the foregoing agreements, collectively the “IPO
Agreements”). Pursuant to the Joinder, the New Sponsor agreed to become a party to
each of the IPO Agreements and to be bound by the terms of each IPO Agreement, and the other parties to each of the IPO Agreements
have agreed to accept the New Sponsor as a party to each of the IPO Agreements.
NOTE 3. DESCRIPTION
OF THE TRANSACTIONS
On March 10, 2020, the Company entered into
the Business Combination Agreement with Lion, Lion Group Holding Ltd., a Cayman Islands exempted company and a wholly-owned subsidiary
of Lion (“Pubco”), Lion MergerCo 1, Inc., a Delaware corporation and a wholly-owned subsidiary of Pubco (“Merger
Sub”), Shih-Chung Chou, an individual, in the capacity as the Purchaser Representative thereunder, Jian Wang and Legend Success
Ventures Limited, each, in the capacity as a Seller Representative thereunder, and each of the holders of Lion’s outstanding
capital shares (the “Sellers”).
Pursuant to the Business Combination Agreement,
subject to the terms and conditions set forth therein, at the closing of the transactions contemplated by the Business Combination
Agreement (the “Closing”), (a) Merger Sub will merge with and into the Company, with the Company continuing as the
surviving entity (the “Merger”), and with holders of the Company’s securities receiving substantially identical
securities of Pubco, and (b) immediately prior to the Merger, Pubco will acquire all of the issued and outstanding ordinary shares
of Lion (the “Purchased Shares”) from the Sellers in exchange for Class A and Class B ordinary shares of Pubco, with
Lion becoming a wholly-owned subsidiary of Pubco (the “Share Exchange”, and together with the Merger and the other
transactions contemplated by the Business Combination Agreement, the “Transactions”).
The total consideration to be paid by Pubco
to the Sellers for the Purchased Shares shall be an aggregate
number of Pubco ordinary shares (the “Exchange Shares”) with
an aggregate value (the “Exchange Consideration”) equal to, without duplication, (i) $125,000,000, plus (or minus,
if negative) (ii) Lion’s net working capital less a target net working capital of $815,000, minus (iii) the aggregate amount
of any outstanding indebtedness, net of cash and cash equivalents, of Lion and its subsidiaries, and minus (iv) the amount of
any unpaid transaction expenses of Lion, with each Pubco ordinary share to be issued to the Sellers valued at a price equal to
the price at which each share of the Common Stock is redeemed (the “Redemption Price”) pursuant to the redemption
by the Company of its public stockholders in connection with the Company’s initial Business Combination, as required by
its amended and restated articles of incorporation (the “Redemption”). Jian Wang, the Chairman of Lion (the “Main
Seller”), and Legacy Success Ventures Limited (collectively, the “Class B Sellers”), shall each receive solely
Pubco Class B ordinary shares (the “Class B Exchange Shares”) and all of the other Sellers (the “Class A Sellers”)
shall receive solely Pubco Class A ordinary shares (the “Class A Exchange Shares”). The Pubco Class A ordinary shares
and the Pubco Class B ordinary shares will be identical in rights except that the Class B ordinary shares will (i) entitle the
holder to 10 votes per share and (ii) be convertible, at the election of the holder, into Pubco Class A ordinary shares on a one-to-one
basis.
The Exchange Consideration is subject to adjustment
after the Closing based on final confirmation of Lion’s net working capital, the outstanding indebtedness of Lion and its
subsidiaries net of cash and cash equivalents, and any unpaid transaction expenses of Lion, as of the date of the Closing. If
the finally determined number of Exchange Shares is (i) greater than the estimated number of Exchange Shares, Pubco will issue
an additional number of Pubco Class A ordinary shares and Pubco Class B ordinary shares equal to such difference to the Sellers,
subject to a maximum amount equal to the amount of Indemnity Escrow Property (defined below) at such time or (ii) less than the
estimated number of Exchange Shares, Pubco will cause the Escrow Agent to release from escrow a number of Indemnity Escrow Shares
(defined below) equal to such difference to Pubco, subject to a maximum amount equal to the Indemnity Escrow Property at such
time.
The parties agreed that at or prior to the
Closing, Pubco, the Sellers and the Escrow Agent will enter into an Escrow Agreement, effective as of the Closing, in form and
substance reasonably satisfactory to the Company and Lion (the “Escrow Agreement”), pursuant to which Pubco will deliver
to the Escrow Agent a number of Class B Exchange Shares (each valued at the Redemption Price) equal to 15% of the estimated Exchange
Consideration otherwise issuable to the Sellers at the Closing (such Class B Exchange Shares, together with any equity securities
paid as dividends or distributions with respect to such shares or into which such shares are exchanged or converted the “Indemnity
Escrow Shares”) to be held, along with any dividends, distributions or income thereon (together with the Indemnity Escrow
Shares, the “Indemnity Escrow Property”) in a segregated account (the “Indemnity Escrow Account”) and disbursed
in accordance with the Business Combination Agreement and the Escrow Agreement. The Indemnity Escrow Shares will be held in the
Indemnity Escrow Account for a period of 24 months after the Closing and shall be the sole and exclusive source of payment for
any post-Closing purchase price adjustment and for any post-closing indemnification claims (other than certain fraud claims and
breaches of Lion and the Sellers’ fundamental representations); provided that half of the Indemnity Escrow Property will
be released to the Class B Sellers on the 12 month anniversary of the Closing. Within three business days of the 24 month anniversary
of the Closing, all remaining Indemnity Escrow Property will be released to the Class B Sellers in accordance with the Business
Combination Agreement. However, an amount of Indemnity Escrow Property equal to the value of any pending and unresolved claims
will remain in the Indemnity Escrow Account until finally resolved.
Additionally, at the Closing, Pubco will deliver
to the Escrow Agent a number of Class B Exchange Shares (each valued at the Redemption Price) equal to thirty percent (30%) of
the estimated Exchange Consideration otherwise issuable to the Sellers at the Closing (such Class B Exchange Shares, together with
any equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged or
converted, the “Earnout Escrow Shares”) to be held, along with any dividends, distributions or income thereon (together
with the Earnout Escrow Shares, the “Earnout Escrow Property”) in a segregated account and disbursed in accordance
with the Business Combination Agreement and the Escrow Agreement.
In the event that the net income for the calendar
year ending December 31, 2021 (the “2021 Net Income”), as set forth in Pubco’s audited financial statements,
is equal to or greater than $19,000,000 (the “First Net Income Target”), then, the Class B Sellers’ rights to
50% of the Earnout Escrow Property (the “First Half Earnout Property”) shall vest and shall no longer be subject to
forfeiture. If the 2021 Net Income is less than the First Net Income Target, but is equal to or greater than $9,500,000, then the
Class B Sellers’ rights to 50% of the First Half Earnout Property shall vest and shall no longer be subject to forfeiture.
In all other cases, the First Half Earnout Property will be forfeited.
In the event that the net income for the calendar
year ending December 31, 2022 (the “2022 Net Income”), as set forth in Pubco’s audited financial statements,
is equal to or greater than $21,850,000 (the “Second Net Income Target”), then the Class B Sellers’ rights to
the remaining Earnout Escrow Property (after giving effect to any forfeitures for the 2021 calendar year, the “Second Half
Earnout Property”) shall vest and shall no longer be subject to forfeiture. If the 2022 Net Income is less than the Second
Net Income Target, but is equal to or greater than $10,925,000, then the Class B Sellers’ rights to 50% of the Second Half
Earnout Property shall vest and shall no longer be subject to forfeiture. In all other cases, the Second Half Earnout Property
will be forfeited.
The Transactions were not closed as of March
31, 2020.
NOTE 4. GOVERNMENT SECURITIES HELD IN TRUST
ACCOUNT
As of March 31, 2020, the assets of $117,116,839
held in the Trust Account were substantially held in U.S. Treasury Bills with maturity of six months. Management elects to measure
the government securities at fair value in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 825 “Financial Instruments”. Any changes in fair value of the government securities are recognized in net income.
Impairment of government securities is recognized in earnings when a decline in value has occurred that is deemed to be other than
temporary, and the current fair value becomes the new cost basis for the securities.
NOTE
5. ESCROW DEPOSIT
On October 2, 2019, the escrow deposit of $800,000
was released by the escrow agent and returned to the Company due to the termination of a non-binding letter of intent with a potential
target company for an initial Business Combination entered into by and between the Company and such potential target company on
July 18, 2019.
NOTE 6. PREPAID EXPENSES
As of March 31, 2020, the Company had prepaid
expenses of $35,000 in connection with the prepayment for D&O insurance.
NOTE 7. ACCRUED EXPENSES
As of March 31, 2020, the Company had accrued
expenses of $529,239 due primarily to legal fees in connection with the potential Business Combination.
NOTE 8. INCOME TAXES
The Company is subject to federal taxes and
no state taxes in the State of Nevada. A reconciliation of the Company’s effective income tax rate to the federal statutory
rate is as follows:
|
|
March 31, 2020
|
Federal income tax expense at the statutory rate (20%)
|
|
$
|
17,231
|
|
State income taxes, net of federal benefit
|
|
|
—
|
|
Permanent differences
|
|
|
18,636
|
|
Change in valuation allowance
|
|
|
—
|
|
Provision for income taxes
|
|
$
|
35,867
|
|
As of March 31, 2020, the Company had income
tax payable in amount of $21,009. The Company accounts for its deferred tax assets and liabilities, including excess tax benefits
of share-based payments, based on the tax ordering of deductions to be used on its tax returns. The tax effects of temporary differences
that give rise to significant portions of deferred tax assets and deferred tax liabilities was $0 as of March 31, 2020.
NOTE 9. ACCRUED EXPENSES - RELATED PARTY
As of March 31, 2020, the Company had $56,997
due to related parties attributable to accrued compensation to the Company’s management and directors. Pursuant to the executed
offer letters, the Company pays the Company’s Chief Executive Officer and Chief Financial Officer, $2,000 and $5,000 in cash
per month starting from February 1, 2019 and August 1, 2018, respectively, and issued to each of them 50,000 founder shares. In
addition, the Company pays the Company’s directors $2,000 in cash per month starting from August 1, 2018 and will issue a
total of 250,000 shares of Common Stock within 10 days after the closing date of the initial Business Combination. The fair value
of this stock issuance was determined by the fair value of the Company’s Common Stock on the grant date, at a price
of $0.20 per share. Accordingly, the Company calculated the stock-based compensation of $70,000 at its fair value and amortized
pro rata within 18 months. A total of 100,000 founder shares to Chief Executive Officer and Chief Financial Officer were issued
and the 250,000 shares to directors will be issued within 10 days after the closing date of the initial Business Combination.
On March 20, 2019, the Company entered into
an offer letter with the Company’s current Chief Executive Officer, President and Secretary, pursuant to which, the Company
agreed to issue to him 50,000 shares of Common Stock for his services. The 50,000 shares will be issued within 10 days after the
closing date of the initial Business Combination. The fair value of this stock issuance was determined by the fair value of the
Company’s Common Stock on the grant date, at a price of $0.20 per share. Accordingly, the Company calculated the stock-based
compensation of $10,000 at its fair value and amortized pro rata within 18 months.
Accordingly, the Company recognized stock-based
compensation of $4,444 during the six months ended March 31, 2020. The Company recognized compensation expenses of $14,444 in connection
with the Common Stock hereto, which was included in the accrued expenses – related parties as of March 31, 2020. The unrecognized
stock-based compensation was $0 as of March 31, 2020.
NOTE 10. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820
for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial
assets and liabilities that are re-measured and reported at fair value at least annually.
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:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level 3:
|
Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at March 31, 2020, and indicates the fair value
hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
March 31, 2020
|
Assets:
|
|
|
|
|
|
|
|
|
Government securities held in Trust Account
|
|
|
1
|
|
|
$
|
117,116,839
|
|
NOTE 11. COMMON
STOCK SUBJECT TO POSSIBLE REDEMPTION
The Company accounts for its Common Stock
subject to possible conversion in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from
Equity.” Shares of Common Stock subject to mandatory redemption are classified as a liability instrument and are
measured at fair value. Shares of conditionally redeemable Common Stock (including shares of Common Stock 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, shares of
Common Stock are classified as stockholders’ equity. The Company’s Common Stock features certain redemption
rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events.
Accordingly, as of March 31, 2020, the shares of Common Stock subject to possible redemption are presented at redemption
value of $112,887,543 as temporary equity, outside of the stockholders’ equity section of the Company’s balance
sheet.
NOTE
12. CREDIT ARRANGEMENT
On July 24, 2019, the Company and the Original
Sponsor entered into an unsecured promissory note (the “Note”) for a principal amount of up to $800,000 to be used
by the Company for working capital purposes. Pursuant to the terms of the Note, the Original Sponsor agreed to loan to the
Company up to a total of $800,000, in the event that the Company’s cash held outside of its Trust Account is less than $150,000.
The Note bears no interest and is repayable in full upon the earlier of the closing of the Company’s initial Business Combination
and the date of the winding up of the Company.