(1) Excludes an aggregate of up to 179,623 and 10,315,581 shares subject
to possible redemption at March 31, 2021 and 2020, respectively.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2021
(UNAUDITED)
Note 1 — Organization and Business Operations
Organization and General
Alberton Acquisition Corporation (the “Company”)
is a blank check company incorporated on February 16, 2018, under the laws of British Virgin Islands for the purpose of entering into
a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with
one or more businesses or entities (a “Business Combination”). The Company’s efforts to identify a prospective target
business are not limited to an industry or geographic location.
As of March 31, 2021, the Company had not yet
commenced any operations and 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 10,000,000 units at $10.00 per unit (“Units” or “Public Units” and, with respect to the ordinary shares
included in the Public Units offered, the “Public Shares”), generating gross proceeds of $100,000,000, which is described
in Note 3.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 300,000 units (the “Private Units”) at a price of $10.00 per Unit in
a private placement to the Company’s sponsor, Hong Ye Hong Kong Shareholding Co., Limited (the “Sponsor”), generating
gross proceeds of $3,000,000, which is described in Note 4.
On November
20, 2018, the underwriters exercised the over-allotment option in part and purchased 1,487,992 Public Units, which were sold at an offering
price of $10.00 per Unit, generating gross proceeds of $14,879,920. Simultaneously with the sale of the over-allotment Public Units, the
Company consummated the private placement of an additional 29,760 Private Units at a price of $10.00 per Unit, generating total additional
gross proceeds of $297,600.
Trust Account
Following
the closing of the Initial Public Offering on October 26, 2018, an amount of $100,000,000 ($10.00 per Unit) from the net proceeds of the
sale of the Public Units in the Initial Public Offering and the Private Units was placed in a trust account (“Trust Account”).
Following the closing of underwriters’ exercise of over-allotment option on November 20, 2018, an additional $14,879,920 of net
proceeds ($10.00 per Unit) was placed in the Trust Account, bringing the aggregate proceeds held in the Trust Account to $114,879,920.
On April
23, 2020, the Company filed an amendment to its Articles of Association with the Registrar of the British Virgin Islands to extend the
time that it needs to complete an initial Business Combination from April 27, 2020 to October 26, 2020 or such an earlier date as determined
by its board of directors (the “Extension”). In connection with the Extension, shareholders holding 10,073,512 public shares
exercised their right to redeem such shares for a pro rata portion of fund held in the Trust Account. As a result, an aggregate of $105,879,118
(or $10.51 per share) was removed from the Trust Account to pay such shareholders.
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 1,000 public
shares exercised their right to redeem such shares for a pro rata portion of fund held in the Trust Account. As a result, an aggregate
of $10,770 (or $10.77013 per share) was removed from the Trust Account to pay such shareholders.
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). In connection with the Third Extension, shareholders holding
135,069 public shares exercised their right to redeem such shares for a pro rata portion of fund held in the Trust Account. As
a result, an aggregate of $1,495,303.45 (or $11.07 per share) was released from the Trust Account to pay such shareholders.
The funds
in the Trust Account are invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company
Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment
company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined
by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the Company’s failure to consummate
a Business Combination by April 27, 2020 (the “Combination Period”). Placing funds in the Trust Account may not protect those
funds from third party claims against the Company. Although the Company will seek all vendors, service providers, prospective target businesses
or other entities it engages, to execute agreements with the Company waiving any claim of any kind in or to any monies held in the Trust
Account, there is no guarantee that such persons will execute such agreements. The remaining net proceeds (not held in the Trust Account)
may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative
expenses. Additionally, the interest earned on the Trust Account balance may be released to the Company to pay the Company’s tax
obligations.
Business Combination
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the Private
Units, although substantially all the net proceeds are intended to be generally applied toward consummating a Business Combination. The
Company’s Business Combination must be with one or more target businesses that together have a fair market value equal to at least
80% of the balance in the Trust Account (excluding any deferred underwriter’s fees and taxes payable on the income earned on the
Trust Account), which the Company refers to as the 80% test, at the time of the signing of an agreement to enter into a Business Combination.
However, the Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of
the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be
required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to
successfully effect a Business Combination. If less than 100% of the equity interests or assets of a target business or businesses are
owned or acquired by the post-transaction company, the portion of such business or businesses that is owned or acquired is what will be
valued for purposes of the 80% test.
The Company
will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business
Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender
offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will
be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their shares for a pro rata portion of the
amount then on deposit in the Trust Account ($10.00 per share, plus any pro rata interest earned on the funds held in the Trust Account
and not previously released to the Company to pay its tax obligations).
The Company
will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business
Combination and a majority of the issued and outstanding shares voted are voted in favor of the Business Combination. If a shareholder
vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company
will, pursuant to Amended and Restated Memorandum and Articles of Association, conduct the redemptions pursuant to the tender offer rules
of the Securities and Exchange Commission (“SEC”), and file tender offer documents with the SEC prior to completing a Business
Combination. If, however, a shareholder approval of the transaction is required by law, or the Company decides to obtain shareholder approval
for business or other legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the
proxy rules and not pursuant to the tender offer rules. If the Company seeks shareholder approval in connection with a Business Combination,
the Initial Shareholders (defined in Note 5 - Related Party Transactions) have agreed to vote their initial shares and private shares,
as well as any Public Shares acquired in or after the Initial Public Offering, in favor of any proposed Business Combination. Additionally,
each public shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
The amount
in the Trust Account (less the aggregate nominal par value of the shares of the Company’s public shareholders) under the Companies
Law will be treated as share premium which is distributable under the Companies Law provided that immediately following the date on which
the proposed distribution is proposed to be made, the Company is able to pay the debts as they fall due in the ordinary course of business.
If the Company is forced to liquidate the Trust Account, the public shareholders would be distributed the amount in the Trust Account
calculated as of the date that is two days prior to the distribution date (including any accrued interest).
The Initial
Shareholders have agreed to (i) vote their insider shares (as well as any Public Shares acquired in or after the Initial Public Offering)
in favor of any proposed Business Combination, (ii) waive their conversion rights with respect to their initial share (as well as any
other shares acquired in or after the Initial Public Offering) in connection with the consummation of a Business Combination, (iii) waive
their rights to liquidating distributions from the Trust Account with respect to their initial shares if the Company fails to consummate
a Business Combination within the Combination Period, and (iv) not propose an amendment to the Company’s Amended and Restated Memorandum
and Articles of Association that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares
if the Company does not complete a Business Combination, unless the Company provides the public shareholders with the opportunity to redeem
their shares in conjunction with any such amendment.
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 Technology, Inc., a Nevada corporation
(“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.
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 $1,148,799 on or prior to the date of such applicable deadline.
On October
18, 2019, the Company deposited $1,148,799 into its Trust Account (the “Extension Funds”) to extend the period to consummate
a Business Combination until January 24, 2020. The Extension Funds were proceeds of a note in the principal amount of $1,148,800 (the
“GN Note 1”) the Company issued to Global Nature Investment Holdings Limited (“Global Nature”), a company incorporated
under the laws of the Cayman Islands, its registered assignees or successor in interest (the “Payee”). The GN Note 1 was issued
in connection with a non-binding letter of intent entered into by and between Alberton and Global Nature on September 13, 2019, to consummate
a potential Business Combination with Global Nature (the “GN LOI”) (see Note 6).
On January
23, 2020, the Company deposited an additional $1,148,800 into the Trust Account to further extend the time available for the Company to
complete a Business Combination from January 24, 2020 to April 27, 2020 (the “Extension”). The Extension was partially funded
from a $780,000 loan provided by the Sponsor and $368,800 from the Company’s working capital. In connection with the loan provided
by the Sponsor, the Company issued a promissory note (the “Sponsor Note”) to the Sponsor in the aggregate principal amount
of $780,000 (see Note 5).
On April
23, 2020, the Company held a special meeting pursuant to which the Company’s shareholders approved extending the Extension from
April 27, 2020 to October 26, 2020 (the “Extended Date”). In connection with the approval of the extension, shareholders elected
to redeem an aggregate of 10,073,512 of the Company’s ordinary shares. As a result, an aggregate of $105,879,118 (or $10.51 per
share) was released from the Company’s Trust Account to pay such shareholders. On the same day, in connection with the Extension,
the Company filed with the Registrar of the British Virgin Islands an amendment to Regulation 47 of its Articles of Association., and
entered into an amendment to the trust agreement with the trust agent to extend the final liquidation date of the Trust Account to the
24-month anniversary of the closing of its Initial Public Offering, which is October 26, 2020.
The Company
agreed to contribute, or cause to be contributed on its behalf (the “Cash Contribution”), $60,000 for the aggregate number
of Public Shares that did not convert in connection with the Extension (the “Remaining Public Shares”) for each monthly period
or portion thereof that is needed to complete a Business Combination (commencing on April 27, 2020 until the earlier of the consummation
of a Business Combination and the expiry of the Extension). The Cash Contribution will be deposited as additional interest on the proceeds
in the Trust Account and will be distributed pro rata as a part of the redemption amount to each Remaining Public Share in connection
with a future redemption. In addition, at the earlier date (the “Issuance Date”) of the consummation of its initial Business
Combination and the expiry of the Extension, the Company will issue a dividend of one warrant to purchase one-half of one ordinary share
for each Remaining Public Share. Each such warrant will be identical to the warrants included in the Units sold in the Company’s
Initial Public Offering (the “Dividend”, collectively with the Cash Contribution, the “Contribution”). Through
December 31, 2020, the Company deposited an aggregate of $501,348 into the Trust Account to fund the Extension. The Extension was partially
funded from a $140,000 advance provided by the Sponsor (see Note 5), $100,000 from the AMC Note (defined below) and $261,348 from the
SolarMax Notes (see Note 6).
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 1,000 of the Company’s ordinary shares. As a result, an aggregate of $10,770 (or $10.77013 per share) was released
from the Company’s Trust Account to pay such shareholders. On the same day, in connection with the Second Extension, the Company
filed with the Registrar of the British Virgin Islands another amendment to Regulation 47 of its Articles of Association and entered into
another amendment to the trust agreement with the trust agent to extend the final liquidation date of the Trust Account to the 30-month
anniversary of the closing of its Initial Public Offering, which is April 26, 2021.
The Company
agreed to contribute, or cause to be contributed on its behalf (the “Second Cash Contribution”), $0.05 per share for the aggregate
number of Public Shares that did not convert in connection with the Second Extension (the “Remaining Public Shares Post Second Extension”)
for each monthly period or portion thereof that is needed to complete a Business Combination (commencing on October 26, 2020 until the
earlier of the consummation of a Business Combination and the expiry of the Second Extension). The Second Cash Contribution will be deposited
as additional interest on the proceeds in the Trust Account and will be distributed pro rata as a part of the redemption amount to each
Remaining Public Share in connection with a future redemption.
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 $0.06 per Remaining Share. If no shares are redeemed, the monthly payment to the trust account as
additional interest will be $84,808.80, based on a commitment from its sponsor (the “Cash Contribution”).
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 $10.97. If
the Extension is approved and the Company takes the full six months to complete its initial business combination, the redemption amount
per share at the meeting for such business combination or the Company’s subsequent liquidation will be approximately $11.33, in
comparison to the current redemption amount of $10.97 (solely based on redemption price as of the current Record Date).
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.
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.
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.
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.
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 March 31, 2021 and December 31, 2020.
Investments Held in Trust Account
At March 31, 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.
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 March 31, 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 March 31, 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 March 31, 2021 and 2020, the Company did not have
any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in
the income (loss) of the Company. As a result, diluted adjusted net (loss) income per ordinary share is the same as basic adjusted net
(loss) income per ordinary share for the periods presented.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the Federal
depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes the Company
is not exposed to significant risks on such accounts.
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.
|
|
●
|
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 March 31, 2021 and December 31, 2020
and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
|
|
Level
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities – Private Warrants
|
|
3
|
|
$
|
466,900
|
|
|
$
|
522,579
|
|
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
|
|
$
|
533,319
|
|
Change in fair value of warrants liabilities for the year ended December 31, 2020
|
|
|
(10,740
|
)
|
Warrant liabilities at December 31, 2020
|
|
|
522,579
|
|
Change in fair value of warrants liabilities for the three months ended March 31, 2021
|
|
|
(55,679
|
)
|
Warrant liabilities at March 31, 2021
|
|
$
|
466,900
|
|
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:
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Stock price
|
|
$
|
10.93
|
|
|
$
|
11.41
|
|
Exercise price
|
|
$
|
11.50
|
|
|
$
|
11.50
|
|
Risk-free interest rate
|
|
|
0.98
|
%
|
|
|
0.40
|
%
|
Expected term (in years)
|
|
|
5.25
|
|
|
|
5.25
|
|
Expected dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
Expected volatility
|
|
|
42.04
|
%
|
|
|
41.59
|
%
|
Merger probability adjustment
|
|
|
70.00
|
%
|
|
|
75.00
|
%
|
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 10,000,000 Units at a purchase price of $10.00 per Unit. On November
20, 2018, in connection with the underwriters’ exercise of their over-allotment option, the Company consummated the sale of an additional
1,487,992 Public Units at $10.00 per Unit. Each Unit consists of one ordinary share, one redeemable warrant (“Public Warrant”),
and one right (“Public Right”). Each whole redeemable warrant entitles the holder to purchase one half of one ordinary share
at an exercise price of $11.50 (see Note 10). Every 10 Public Rights will convert automatically into one ordinary share upon consummation
of a Business Combination (see Note 10).
If the Company
does not complete its Business Combination within the necessary time period described in Note 1, the Public Warrants and Public Rights
will expire and be worthless. Since the Company is not required to net cash settle the Public Warrants and Public Rights, and the Public
Warrants and Public Rights are convertible upon the consummation of the Business Combination, management determined that the Public Warrants
and Public Rights are classified within shareholders’ equity as “Additional paid-in capital” upon their issuance in
accordance with ASC 815-40. The proceeds from the sale are allocated to Public Shares and Public Warrants and Public Rights based on the
relative fair value of the securities in accordance with ASC 470-20-30. The value of the Public Shares, Public Warrants and Public Rights
was based on the closing price paid by investors.
At the closing of the Initial
Public Offering and over-allotment option, the Company paid an upfront underwriting discount of $2,000,000 and $297,598, 2.0% of the per
unit offering price to the underwriter, respectively, with an additional fee of $3,500,000 and $520,797 (the “Deferred Discount”),
3.5% of the gross offering proceeds payable upon the completion of the Business Combination, respectively. The Deferred Discount will
become payable to the underwriter from the amounts held in the Trust Account solely in the event the Company completes its Business Combination.
In the event that the Company does not close a Business Combination, the underwriter has waived its right to receive the Deferred Discount.
The underwriter is not entitled to any interest accrued on the Deferred Discount. Total offering costs were $3,060,924, which consisted
of $2,297,598 of underwriter’s commissions and $763,326 of other offering costs.
Purchase Option
On October
26, 2018, the Company sold the underwriter (and its designees), for $100, an option to purchase up to 500,000 Units exercisable at $11.50
per Unit (or an aggregate exercise price of $5,750,000) commencing on the consummation of a Business Combination. The purchase option
may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from the effective date of the
registration statement related to the Initial Public Offering. The Units issuable upon exercise of this option are identical to those
offered in the Initial Public Offering, with 500,000 ordinary shares, warrants to purchase 250,000 shares and rights to receive 50,000
ordinary shares that may be issued upon exercise of the option.
The Company
accounted for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Initial Public Offering resulting
in a charge directly to shareholders’ equity. The Company estimated the fair value of this unit purchase option to be approximately
$1,603,060 (or $3.206 per Unit) using the Black-Scholes option-pricing model. The fair value of the unit purchase option granted to the
underwriters was estimated as of the date of grant using the following assumptions: (1) expected volatility of 38%, (2) risk-free interest
rate of 2.29% (the interest rate on a three-month US Treasury Bill on October 26, 2018) and (3) expected life of five years.
Note 4 — Private Placements
Simultaneously
with the Initial Public Offering, the Company’s Sponsor purchased an aggregate of 300,000 Private Units at $10.00 per Unit (for
a total purchase price of $3,000,000). On November 20, 2018, in connection with the underwriters’ partial exercise of their over-allotment
option, the Company consummated the sale of additional 29,760 Private Units, generating gross proceeds of $297,600. The proceeds from
the Private Units were added to the proceeds from the Initial Public Offering held in the Trust Account.
The Private
Units are identical to the units sold in the Initial Public Offering except the Private Units are non-redeemable and may be exercised
on a cashless basis, in each case so long as they continue to be held by the Sponsor or its permitted transferees. The purchasers of the
Private Units have agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to the same permitted
transferees as the founder shares) until the completion of the Business Combination.
If the Company
does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Units will be used to
fund the redemption of the Public Shares (subject to the requirements of applicable law).
Note 5 — Related Party Transactions
Founder Shares
In August
2018, the Company issued 1,725,000 Class B ordinary shares to its initial shareholders as founder shares, of which an aggregate of 1,650,000
Class B ordinary shares were issued for an aggregate purchase price of $17,250 or $0.010454545 per share, and an aggregate of 75,000 Class
B ordinary shares were issued for services rendered. On September 10, 2018, the Company issued an additional 1,150,000 Class B ordinary
shares to its initial shareholders as founder shares, of which an aggregate of 1,135,000 Class B ordinary shares were issued for an aggregate
purchase price of $2,300 or approximately $0.00202643 per share, and an aggregate of 15,000 Class B ordinary shares were issued for services
rendered. On September 14, 2018, the Company’s initial shareholders converted all of their Class B ordinary shares, constituting
all of the outstanding Class B ordinary shares of the Company, into Class A ordinary shares and, immediately thereafter, the Company amended
and restated its Memorandum and Articles of Association to eliminate the Class B ordinary shares and re-designate the Class A ordinary
shares as “ordinary shares.” As a result, prior to the Initial Public Offering, the Company’s initial shareholders held
2,875,000 founder shares. The 2,875,000 founder shares included an aggregate of up to 375,000 ordinary shares subject to forfeiture to
the extent that the over-allotment option was not exercised by the underwriters in full or in part. On November 20, 2018, as a result
of the underwriters’ partial exercise of their over-allotment option, 3,002 founder shares were forfeited.
The founder
shares are identical to the ordinary shares included in the units sold in the Initial Public Offering. However, the Initial Shareholders
have agreed to (A) to vote any shares owned by them in favor of any proposed Business Combination, (B) not to convert any shares in connection
with a shareholder vote to approve a proposed initial Business Combination or any amendment to the Company’s charter documents prior
to consummation of an initial Business Combination, or sell any shares to the Company in a tender offer in connection with a proposed
initial Business Combination and (C) that the founder shares shall not participate in any liquidating distribution from the Trust Account
upon winding up if a Business Combination is not consummated.
Additionally,
subject to certain limited exceptions, the Initial Shareholders have agreed not to transfer, assign or sell any of the founder shares
(except to certain permitted transferees) until, with respect to 50% of the founder shares, the earlier of (i) six months after the date
of the consummation of a Business Combination, or (ii) the date on which the closing price of the Company’s ordinary shares equals
or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading
days within any 30-trading day period commencing after a Business Combination, and with respect to the remaining 50% of the founder shares,
upon six months after the date of the consummation of a Business Combination, or earlier, in each case, if, subsequent to a Business Combination,
the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s
shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Related Party Advances
During the
year ended December 31, 2020, the Company received an aggregate of $273,640 in advances from the Company’s Chief Executive
Officer for working capital purposes, of which $140,000 was used to partially fund the Extension. The advances are non-interest bearing
and due on demand. At March 31, 2021 and December 31, 2020, advances of $273,640 were outstanding which are included in due to related
parties in the accompanying unaudited condensed balance sheets.
In December
2020, SolarMax made non-interest bearing loans to the Sponsor in the aggregate principal amount of $128,466, to enable the Sponsor to
provide the Company with funds to pay for the Company’s operating costs. Upon the completion of the Business Combination, these
notes are to be satisfied by the delivery of the Sponsor shares having a value equal to the principal amount of the notes. Otherwise,
the due date will be upon the earlier of the date on which the Merger Agreement is terminated or the date an Event of Default shall occur.
At March 31, 2021 and December 31, 2020, advances of $128,466 were outstanding which are included in due to related parties in the
accompanying unaudited condensed balance sheets.
In February
2021, SolarMax made non-interest bearing loans to the Sponsor in the aggregate principal amount of $155,232, to enable the Sponsor to
provide the Company with funds to pay for the Company’s operating costs. Upon the completion of the Business Combination, these
notes are to be satisfied by the delivery of the Sponsor shares having a value equal to the principal amount of the notes. Otherwise,
the due date will be upon the earlier of the date on which the Merger Agreement is terminated or the date an Event of Default shall occur.
At March 31, 2021, advances of $155,232 were outstanding which are included in due to related parties in the accompanying unaudited condensed
balance sheets.
In March
2021, SolarMax made non-interest bearing loans to the Sponsor in the aggregate principal amount of $76,826, to enable the Sponsor to provide
the Company with funds to pay for the Company’s operating costs. Upon the completion of the Business Combination, these notes are
to be satisfied by the delivery of the Sponsor shares having a value equal to the principal amount of the notes. Otherwise, the due date
will be upon the earlier of the date on which the Merger Agreement is terminated or the date an Event of Default shall occur. At March
31, 2021, advances of $76,826 were outstanding which are included in due to related parties in the accompanying unaudited condensed balance
sheets.
Related Party Loans
In addition, in order to finance
transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”).
If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account
released to the Company. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest,
or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be converted into units of the post Business
Combination entity at a price of $10.00 per unit. The units would be identical to the Private Units. In the event that a Business
Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans
but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
On July 6, 2018, the Sponsor
loaned the Company $300,000 under a promissory note (the “Sponsor Note 1”), a portion of which was used to pay for costs associated
with the Initial Public Offering. The loan is non-interest bearing, unsecured and due at the closing of a Business Combination. As of
March 31, 2021 and December 31, 2020, there was $300,000 outstanding under the Sponsor Note 1.
On January
24, 2020, the Sponsor loaned the Company an additional $780,000 under a promissory note (the “Sponsor Note 2”) in order to
partially fund the amount required to be deposited into the Trust Account to extend the period of time required by the Company to complete
a Business Combination. The loan is non-interest bearing, unsecured and due at the closing of a Business Combination. The Sponsor Note
2 may also be converted, at the Sponsor’s discretion, into units of the post Business Combination entity at a purchase price of
$10.00 per unit. The units would be identical to the Private Units. As of March 31, 2021 and December 31, 2020, there was $780,000 outstanding
under the Sponsor Note 2.
Administrative Service Fee
The Company has agreed, commencing on August 1,
2018, to pay the Sponsor, a monthly fee of an aggregate of $1,000 for general and administrative services including office space, utilities
and secretarial support, due before the first day of each month. This arrangement will terminate upon the completion of a Business Combination
or a distribution of the Trust Account to the public shareholders. For each of the three months ended March 31, 2021 and 2020, the Company
incurred $3,000 of administrative fees. At March 31, 2021 and December 31, 2020, $9,000 and $6,000, respectively, of such fees are included
in accounts payable and accrued expenses in the accompanying unaudited condensed balance
sheets.
Other than the $1,000 per month administrative
fee, the $290,000 payment to White and Williams LLP (an affiliate of our director) for its legal services to the Company in connection
with the IPO and other payments to such firm for legal services (including with respect to periodic filings) prior to the initial Business
Combination and the $1,080,000 of non-interest bearing loans described above, no compensation or fees of any kind, including finder’s
fee, consulting fees and other similar fees, will be paid to our initial shareholders, members of our management team or their respective
affiliates, for services rendered prior to, or in order to effectuate the consummation of, our initial Business Combination (regardless
of the type of transaction that it is). However, such individuals will receive reimbursement for any out-of-pocket expenses incurred by
them in connection with activities on our behalf, such as identifying potential target businesses, performing business due diligence on
suitable target businesses and Business Combination as well as traveling to and from the offices, plants or similar locations of prospective
target businesses to examine their operations. There is no limit on the amount of out-of-pocket expenses reimbursable by us.
Note 6 — Promissory Notes
Promissory
notes are comprised of the following as of March 31, 2021 and December 31, 2020:
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
GN Note 1
|
|
$
|
1,148,800
|
|
|
$
|
1,148,800
|
|
GN Note 2
|
|
|
500,000
|
|
|
|
500,000
|
|
AMC Note
|
|
|
100,000
|
|
|
|
100,000
|
|
SolarMax Notes 1
|
|
|
261,348
|
|
|
|
261,348
|
|
SolarMax Notes 2
|
|
|
212,022
|
|
|
|
-
|
|
Total
|
|
$
|
2,222,170
|
|
|
$
|
2,010,148
|
|
On September 18, 2019, the Company issued an unsecured
promissory note in the aggregate principal amount of $1,148,800 to Global Nature (the “GN Note 1”). The GN Note 1 was
issued in connection with the GN LOI entered into by and between Global Nature and the Company on September 13, 2019, to consummate a
potential Business Combination with Global Nature.
The GN Note
1 is non-interest bearing and is payable on the date on which the Company consummates its initial Business Combination with Global
Nature or another qualified target company (a “Qualified Business Combination” and such date, the “Maturity Date”),
subject to certain mandatory repayment arrangement set forth in the GN Note 1. The principal balance may be prepaid at any time without
penalty. As of March 31, 2021 and December 31, 2020, there was $1,148,800 outstanding under the GN Note 1.
Pursuant to the GN Note 1, in the event that Global
Nature notifies the Company that it does not wish to proceed with the Qualified Business Combination (the “Withdrawal Request”),
the Company shall only be obligated to repay the GN Note 1 as follows: (i) 50% of the principal amount of the GN Note 1 as soon as possible
with best efforts but no later than 5 business days after a Business Combination with another target if the Withdrawal Request is given
from after October 18, 2019; or (ii) the full principal amount of the GN Note 1 as soon as possible with best efforts but no later than
5 business days after a Business Combination or the date of expiry of the term of the Company (whichever is earlier), if the parties have
not entered into a definitive agreement with regard to the Qualified Business Combination within 45 days from the date of the GN Note
1 as a result of the disagreement on the valuation of the Qualified Business Combination. On March 12, 2020, the Company received the
Withdrawal Request from Global Nature that it did not wish to proceed with the Qualified Business Combination. The parties agreed that
the GN Note 1 which shall be repaid as soon as possible with best efforts but no later than 5 business days after the Company’s
Business Combination or the date of the expiry of the term of the Company (whichever is earlier).
All amounts owed by the Company under the GN Note
1 become immediately due and payable upon an event of default, which includes the Company’s failure to pay the principal amount
due within 5 business days of the Maturity Date and the Company’s voluntary or involuntary bankruptcy.
On December 3, 2019, the Company issued an unsecured
promissory note in the aggregate principal amount of $500,000 to Global Nature (the “GN Note 2”). The GN Note 2 was issued
in order to fund the Company’s working capital needs. The GN Note 2 is non-interest bearing and is payable as soon as possible but
in any event no later than 5 business days after the Company’s initial Business Combination or the date of the expiry of the term
of the Company, whichever is earlier. The principal balance may be prepaid at any time without penalty. As of March 31, 2021 and December
31, 2020, there was $500,000 outstanding under the GN Note 2.
On April
17, 2020, the Company issued an unsecured promissory note in the aggregate principal amount of $500,000 (the “AMC Note”)
to Qingdao Zhongxin Huirong Distressed Asset Disposal Co., Ltd. (“AMC Sino”), a PRC company based in Qingdao, China, its registered
assignees or successor in interest (the “AMC Payee”). The AMC Note was issued in connection with a non-binding letter of intent
entered (“AMC LOI”) into by and between the Company and Zhongxin AmcAsset Limited (“AmcAsset”), a holding company
incorporated in the British Virgin Islands, to consummate a potential business combination with AmcAsset. AmcAsset is a transnational
distressed asset management company with foothold in the U.S. and China, and undergoing global expansion. AmcAsset holds 100% equity
interest of Quest Mark Capital Inc., a California corporation located in Los Angeles, and Qingdao Zhongbiao Distressed Asset Management
Co., Ltd (“Zhongbiao”), to which AMC Sino is related. The principal of the AMC Note of $500,000 will be paid in
installments according to the needs of the Company. The AMC Note is non-interest bearing and is payable on the date on which the Company
consummates its initial business combination with AMC Payee or another qualified target company, subject to certain mandatory
repayment arrangement set forth in the AMC Note. The principal balance may be prepaid at any time without penalty. On May 5, 2020, the
Company received first installment of $100,000 under the AMC Note.
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 period that the Company must complete a 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 March 31, 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 March 31, 2021, there was $212,022 outstanding under the SolarMax Notes 2.
Note 7 — Cash and Investments Held in
Trust Account
As of March 31, 2021 and December 31, 2020, assets
held in the Trust Account were comprised of $15,577,394 and $15,364,991, respectively, in money market funds which are invested in U.S.
Treasury Securities.
The following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at March 31, 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
|
|
|
March 31,
2021
|
|
|
December 31,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
Trust Account - U.S. Treasury Securities Money Market Fund
|
|
|
1
|
|
|
$
|
15,577,394
|
|
|
$
|
15,364,991
|
|
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.
Note 9 — Deferred Underwriter Compensation
The Company
is obligated to pay the underwriters a deferred underwriting discounts and commissions equal to 3.5% of the gross proceeds of the
Initial Public Offering. Upon completion of the Business Combination, $4,020,797 (with consideration of the underwriters’ exercise
of their over-allotment option on November 20, 2018) will be paid to the underwriters from the funds held in the Trust Account. No discounts
or commissions will be paid with respect to the purchase of the Private Units.
Note 10 — Shareholders’ Equity
Preferred Shares - The Company is
authorized to issue 100,000,000 shares of no par value preferred shares, with such designation, rights and preferences as may
be determined from time to time by the Company’s board of directors. As of March 31, 2021 and December 31, 2020, there are no preferred
shares designated, issued or outstanding.
Ordinary Shares - The Company is authorized
to issue 300,000,000 ordinary shares, no par value. As of March 31, 2021 and December 31, 2020, the Company had issued an aggregate
of 4,435,615 and 4,417,482 ordinary shares, excluding 179,623 and 197,756 shares of ordinary shares subject to possible
redemption, respectively.
Warrants - Each
warrant entitles the registered holder to purchase one-half (1/2) of one ordinary share at a price of $11.50 per whole ordinary share,
subject to adjustment as discussed below, at any time commencing on the later of the completion of the Business Combination or 12 months
from the date of the effective date of the registration statement. However, no warrants will be exercisable for cash unless the Company
has an effective and current registration statement covering the ordinary shares issuable upon exercise of the warrants. Notwithstanding
the foregoing, if a registration statement covering the ordinary shares issuable upon exercise of the public warrants is not effective
within a specified period following the consummation of the Company’s Business Combination, warrant holders may, until such time
as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration
statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act, provided
that such exemption is available. In such event, each holder would pay the exercise price by surrendering the warrants for that number
of ordinary shares equal to the quotient obtained by dividing (x) the product of the number of ordinary shares underlying the warrants,
multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y)
the fair market value. The “fair market value” for this purpose will mean the average reported last sale price of the ordinary
shares for the 20 trading days ending on the third trading day immediately prior to the date of exercise. If that exemption, or another
exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. The warrants will expire on the
fifth anniversary of the closing of the initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or
liquidation.
The warrants issued in the Private Units (“Private
Warrants”) are identical to the Public Warrants sold in the Initial Public Offering except the Private Warrants will be non-redeemable
and may be exercised on a cashless basis, in each case so long as they continue to be held by the initial purchasers or their permitted
transferees.
The Company
may call the warrants for redemption (excluding the private warrants and any warrants issued to its initial shareholders, officers or
directors in payment of working capital loans made to the Company, but including outstanding warrants issued upon exercise of the unit
purchase option issued to Chardan Capital Markets LLC), in whole and not in part, at a price of $0.01 per warrant,
|
●
|
at any time after the warrants become exercisable,
|
|
●
|
upon not less than 30 days’ prior written notice of redemption
to each warrant holder,
|
|
●
|
if, and only if, the reported last sale price of the ordinary shares equals or exceeds $16.00 per share
(as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day
period ending on the third business day prior to the notice of redemption to warrant holders; and
|
|
●
|
if, and only if, there is a current registration statement in effect with respect to the ordinary shares
underlying such warrants
|
The right to exercise will be forfeited unless
the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder
of a warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such
warrant.
If the Company calls the warrants for redemption
as described above, management will have the option to require all holders that wish to exercise warrants to do so on a “cashless
basis.”
On January 19, 2021, the board of the Company
approved the issuance of 1,414,480 dividend warrants to those public shareholders who were shareholders on April 21, 2020 and did not
exercise their right of redemption in connection with the April 2020 extension, and the Company instructed such issuance. The dividend
warrants are identical to the warrants included in the units sold in the Company’s Initial Public Offering, for which one dividend
warrant has the right to purchase one-half of one ordinary share at an exercise price of $11.50.
Rights - Each
holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even if a holder of
such right converted all ordinary shares held by it in connection with a Business Combination. No fractional shares will be issued upon
exchange of the rights. No additional consideration will be required to be paid by a holder of rights to receive its additional shares
upon consummation of a Business Combination as the consideration related thereto has been included in the Unit purchase price paid for
by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination in which the
Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share
consideration the holders of the ordinary shares will receive in the transaction on an as-converted into ordinary shares basis and each
holder of rights will be required to affirmatively covert its rights in order to receive 1/10 of a share underlying each right (without
paying additional consideration). The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by
affiliates of the Company).
If the Company
is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account,
holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are no contractual
penalties for failure to deliver securities to the holders of the rights upon consummation of a Business Combination. Additionally, in
no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
The rights included in the Private Units sold
in the private placement are identical to the rights included in the Units sold in the Initial Public Offering, except that, among others,
the rights including the shares issuable upon exchange of such rights, are being purchased pursuant to an exemption from the registration
requirements of the Securities Act and will become tradable only after certain conditions are met or the resale of such rights (including
underlying securities) is registered under the Securities Act. Please refer to Note 4 Private Placement for more details.
Note 11 — Reconciliation of Adjusted
Net Loss 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
March 31,
|
|
|
|
2021
|
|
|
2020
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(170,160
|
)
|
|
$
|
402,558
|
|
Less: income attributable to ordinary shares subject to redemption (1)
|
|
|
(48
|
)
|
|
|
(479,809
|
)
|
Adjusted net loss
|
|
$
|
(170,208
|
)
|
|
$
|
(77,251
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding (2)
|
|
|
4,417,482
|
|
|
|
4,263,670
|
|
Basic and diluted adjusted net loss per ordinary share
|
|
$
|
(0.04
|
)
|
|
$
|
(0.02
|
)
|
|
(1)
|
Income attributable to ordinary shares subject to possible redemption was calculated in proportion of
the interest income earned in Trust Account, which would be distributed to shareholders in the event they choose to exercise their redemption
rights at the closing of a Business Combination.
|
|
(2)
|
Excludes an aggregate of up to 179,623 and 10,315,581 shares subject to possible redemption at March 31,
2021 and 2020, respectively.
|
Note 12 — Subsequent Events
The Company’s management reviewed all material
events that have occurred after the balance sheet date through the date which these 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 April 2021, SolarMax made non-interest bearing
loans to the Sponsor in the aggregate principal amount of $69,110, to enable the Sponsor to provide the Company with funds to pay for
the Company’s operating costs. Upon the completion of the Business Combination, these notes are to be satisfied by the delivery
of the Sponsor shares having a value equal to the principal amount of the notes. Otherwise, the due date will be upon the earlier of the
date on which the Merger Agreement is terminated or the date an Event of Default shall occur as defined in the notes.
Promissory Notes
In April
2021, the Company issued additional unsecured promissory notes in the aggregate principal amount of $70,674 to SolarMax (the “SolarMax
Notes 3”) to finance the extension of the period that the Company must complete a Business Combination to April 26, 2021. The SolarMax
Notes 3 are non-interest bearing 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.
In June 2021, the Company issued
additional unsecured promissory notes in the aggregate principal amount of $153,409 to SolarMax (the “SolarMax Notes 4”) to
be deposited into the trust account as additional extension interests in connection with the extension of the period that the Company
must complete a Business Combination to October 26, 2021. The SolarMax Notes 4 are non-interest bearing 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.
Dividend Warrants
In April
2021, the Company issued, 1,414,480 dividend warrants (the “Dividend Warrants”) to holders of public shares or public units
(with respect to the underlying public shares) as of April 22, 2020 who did not exercise the right to have its Public Shares redeemed
in connection with the April 2020 Extension. The Dividend Warrants were issued at the same terms and conditions as the Public Warrants,
each entitling the holder to purchase one-half of one ordinary share at an exercise price of $11.50 per whole share.