Notes to Condensed Financial Statements
March 31, 2019
(unaudited)
1. Organization and Business Operations
Incorporation
New Frontier
Corporation (the “Company”) was incorporated as a Cayman Islands exempted company on March 28, 2018. There
was nominal activity in the Company for the period from March 28, 2018 to March 31, 2018. The functional currency of the
Company is the United States dollar.
Sponsor
The Company’s
sponsor is New Frontier Public Holding Ltd., a Cayman Islands exempted company (the “Sponsor”).
Fiscal Year End
The Company has selected
December 31 as its fiscal year end.
Business Purpose
The Company was formed
for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or other similar business
combination with one or more operating businesses that it has not yet selected (a “Business Combination”). The Company
has neither engaged in any operations nor generated significant revenue to date.
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of its initial public offering of
Units (as defined below) (the “Initial Public Offering”), although substantially all of the net proceeds of the Initial
Public Offering are intended to be generally applied toward completing a Business Combination. Furthermore, there is no assurance
that the Company will be able to successfully complete a Business Combination.
As of March 31, 2019,
the Company had not commenced any operations. All activity for the period from March 28, 2018 (date of inception) through March
31, 2019 relates to the Company’s formation and the Initial Public Offering described below, and since the offering, the
search for a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion
of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income
on cash and cash equivalents from the proceeds derived from the Initial Public Offering.
Financing
The
registration statement for the Company’s Initial Public Offering was declared effective by the U.S. Securities and Exchange
Commission (“SEC”) on June 27, 2018.
On
July 3, 2018, the Company consummated its Initial Public Offering of 28,750,000 units (each, a “Unit” and collectively,
the “Units”), including 3,750,000 Units issued pursuant to the exercise in full of the underwriters’ over-allotment
option, at $10.00 per Unit, generating gross proceeds of $287.5 million, and incurring offering costs of approximately $12.0 million,
inclusive of $6.91 million in deferred underwriting commissions (Note 3). The Company intends to finance its initial Business Combination
with the proceeds from the Initial Public Offering and a $7.75 million private placement of warrants (the “Private Placement”)
(Note 4). Upon the closing of the Initial Public Offering and the Private Placement, $287.5 million was held in a trust account
(the “Trust Account”) (discussed below).
Trust Account
Upon the closing of
the Initial Public Offering and Private Placement, $287.5 million ($10.00 per Unit) of the net proceeds of the sale of the Units
in the Initial Public Offering and the Private Placement was placed in a segregated Trust Account located in London at Citibank,
maintained by Continental Stock Transfer & Trust Company, acting as trustee. The Trust Account
will be invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of
the Investment Company Act of 1940, as amended, which was referred to as the Investment Company Act, having a maturity of 180 days
or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act that
invest only in direct U.S. government treasury obligations.
The Company’s
amended and restated memorandum and articles of association provide that, other than the withdrawal of interest earned on the funds
that may be released to the Company to pay income taxes, if any, none of the funds held in trust will be released until the earlier
of: (i) the completion of the Business Combination; (ii) the redemption of 100% of the Class A ordinary shares included
in the Units being sold in the Initial Public Offering (the “public shares”) if the Company is unable to complete a
Business Combination within 24 months from the closing of the Initial Public Offering; or (iii) the redemption of any public
shares properly tendered in connection with a shareholder vote to amend the Company’s amended and restated memorandum and
articles of association to modify the substance or timing of the Company’s obligation to redeem 100% of the public shares
if the Company does not complete the Business Combination within 24 months from the closing of the Initial Public Offering.
Initial Business Combination
The Company, after signing
a definitive agreement for a Business Combination, will either (i) seek shareholder approval of the Business Combination at
a meeting called for such purpose in connection with which shareholders may seek to redeem their shares, regardless of whether
they vote for or against the Business Combination, for cash equal to their pro rata share of the aggregate amount then on
deposit in the Trust Account calculated as of two business days prior to the consummation of the Business Combination, including
interest earned on the funds held in the Trust Account and not previously released to the Company to pay income taxes, or (ii)
provide the holders of the public shares, “public shareholders,” with the opportunity to redeem their public shares
by means of a tender offer (and thereby avoid the need for a shareholder vote) for an amount in cash equal to their pro rata
share of the aggregate amount then on deposit in the Trust Account calculated as of two business days prior to commencement of
the tender offer, including interest earned on the funds held in the Trust Account and not previously released to the Company to
pay income taxes. The decision as to whether the Company will seek shareholder approval of the Business Combination or conduct
a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing
of the transaction and whether the terms of the transaction would otherwise require the Company to seek shareholder approval under
applicable law or stock exchange listing requirements. If the Company seeks shareholder approval, it will complete its Business
Combination only if a majority of the outstanding ordinary shares voted are voted in favor of the Business Combination. However,
in no event will the Company redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001.
In such case, the Company would not proceed with the redemption of its public shares and the related Business Combination, and
instead may search for an alternate Business Combination.
If the Company holds
a shareholder vote in connection with a Business Combination, a public shareholder will have the right to redeem its shares for
an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account calculated as
of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the
Trust Account but not previously released to the Company to pay income taxes. As a result, such ordinary shares will be recorded
at redemption amount and classified as temporary equity upon the completion of the Initial Public Offering, in accordance with
FASB, ASC 480, “Distinguishing Liabilities from Equity.” The amount in the Trust Account initially was $10.00 per public
ordinary share ($287,500,000 held in the Trust Account divided by 28,750,000 public ordinary shares).
The Company will only
have 24 months from the closing of the Initial Public Offering to complete its initial Business Combination. If the Company
does not complete a Business Combination within this period of time, it will (i) cease all operations except for the purposes
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 (less
up to $100,000 of interest to pay dissolution expenses and net of taxes payable), divided by the number of then outstanding public
shares, which redemption will completely extinguish public shareholder’s rights as shareholders (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 its remaining shareholders and its board of directors, liquidate and dissolve, subject in the case of clauses (ii) and
(iii) to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The Company’s amended and restated memorandum and articles of association provide that, in the event it commences a liquidation
and all public shares have been redeemed, all Founder Shares (as defined below) not held by the Sponsor shall be surrendered to
the Company for no consideration, such that only the Founder Shares held by the Sponsor share in any assets in liquidation.
The Sponsor and certain
accredited investors have entered into forward purchase agreements (“Forward Purchase Agreements”) with the Company
(the “anchor investors” and collectively with the Sponsor, the “initial shareholders”) pursuant to which
they have agreed to (i) waive their redemption rights with respect to their Founder Shares and, with respect to the initial
shareholders other than the anchor investors, public shares in connection with the completion of the Company’s initial Business
Combination, (ii) waive their redemption rights with respect to their Founder Shares and, with respect to the initial shareholders
other than the anchor investors, public shares in connection with a shareholder vote to approve an amendment to the Company’s
amended and restated memorandum and articles of association to modify the substance or timing of the Company’s obligation
to redeem 100% of the public shares if it has not consummated an initial Business Combination within 24 months from the closing
of the Initial Public Offering and (iii) waive their rights to liquidating distributions from the Trust Account with respect to
their Founder Shares if the Company fails to complete its initial Business Combination within 24 months from the closing of
the Initial Public Offering (although they will be entitled to liquidating distributions from the Trust Account with respect to
any public shares they hold if the Company fails to complete its initial Business Combination within the prescribed time frame).
Emerging Growth Company
Section 102(b)(1)
of the Jumpstart Our Business Startups Act of 2012 (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 registration
statement under the Securities Act of 1933, as amended (the “Securities Act”), declared effective or do not have a
class of securities registered under the Securities Exchange Act of 1934, as amended) 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 an 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 accountant
standards used.
2. Summary of Significant Accounting
Policies
Basis of Presentation
The accompanying unaudited
interim condensed financial statements of the Company should be read in conjunction with the Company’s Annual Report on Form
10-K for the year ended December 31, 2018 as filed with the SEC on April 1, 2019, which contains the audited financial statements
and notes thereto, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations. The
accompanying unaudited interim condensed financial statements have been prepared in U.S. dollars in conformity with accounting
principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in
accordance with the instructions to Form 10-Q and Article 8 and Article 10 of Regulation S-X. Accordingly, since they are interim
statements, the accompanying financial statements do not include all of the information and notes required by U.S. GAAP for a complete
financial statement presentation. In the opinion of management, the unaudited interim condensed financial statements reflect all
adjustments (consisting of normal, recurring adjustments) that are necessary for a fair presentation of the financial position,
results of operations and cash flows for the period presented. Interim results are not necessarily indicative of results for a
full year.
Net Income (Loss) Per Ordinary
Share
Net income (loss) per
ordinary share is computed by dividing net income (loss) applicable to ordinary shares by the weighted average number of shares
outstanding for the period. The Company has not considered the effect of the warrants sold in the Initial Public Offering and Private
Placement to purchase an aggregate of 22,125,000 Class A ordinary shares in the calculation of diluted income (loss) per share,
since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted income (loss) per ordinary share
is the same as basic income (loss) per ordinary share for the period.
The
Company’s condensed statement of operations includes a presentation of net income (loss) per share for ordinary shares
subject to redemption in a manner similar to the two-class method. Net income (loss) per ordinary share, basic and diluted
for Class A ordinary shares is calculated by dividing the interest income earned on the trust account, net of any applicable
income tax expense, by the weighted average number of Class A ordinary shares outstanding for the period. Net loss per ordinary share, basic and diluted for Class B ordinary shares is calculated
by dividing the net income, less income attributable to Class A ordinary shares, by the weighted average number of Class B
ordinary shares outstanding for the period.
Common
Stock Subject to Possible Redemption
The Company accounts
for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” Common stock subject to mandatory redemption is classified as
a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features
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) is classified as temporary equity. At all other times, common stock is 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, at March 31, 2019 and December
31, 2018, 28,186,287 and 28,048,981 shares of common stock subject to possible redemption is presented as temporary equity, outside
of the stockholders’ equity section of the Company’s condensed balance sheets.
Concentration of Credit Risk
Financial instruments
that potentially subject the Company to concentration 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. Deposits of cash held outside
the United States totaled approximately $1.98 million and $2.35 million at March 31, 2019 and December 31, 2018, respectively.
Fair Value of Financial Instruments
The fair value of the
Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “
Fair Value Measurements
and Disclosures,
” approximates the carrying amounts represented in the condensed balance sheets.
Fair Value Measurements
Fair value is defined
as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between
market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used
in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
• Level 1, defined as observable
inputs such as quoted prices (unadjusted) for identical instruments in active markets;
• Level 2, defined as inputs
other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar
instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
• Level 3, defined as unobservable
inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations
derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In some circumstances,
the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances,
the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant
to the fair value measurement.
Use of Estimates
The preparation of financial
statements in conformity with U.S. 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. Actual results
could differ from those estimates.
Deferred Offering Costs
The Company complies
with the requirements of the ASC 340-10-S99-1. Offering costs consisted principally of costs incurred through the balance sheet
date that are related to the preparation for the Initial Public Offering. These costs together with the underwriters’ discount
were charged to equity upon completion of the public offering in July 2018.
Income Taxes
The Company complies
with the accounting and reporting requirements of Financial Accounting Standards Board Accounting Standard Codification, or FASB
ASC, 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.
There were no
unrecognized tax benefits as of March 31, 2019 and December 31, 2018. FASB ASC 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 Cayman Islands is the Company’s only major tax
jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. No amounts were accrued for the payment of interest and penalties at March 31, 2019. 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.
There is currently no
taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income tax regulations, income taxes
are not levied on the Company. Consequently, income taxes are not reflected in the Company's financial statements.
Recent Accounting Pronouncements
Management does not
believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material
effect on the Company’s financial statements.
Subsequent
Events
Management has evaluated subsequent events to determine if events or transactions occurring after the date
of the balance sheet were issued, require potential adjustment to or disclosure in the balance sheet and has concluded that
all such events that would require adjustment or disclosure have been recognized or disclosed.
3. Initial Public Offering
Public Units
On
July 3, 2018, the Company closed its Initial Public Offering of
28,750,000
Units at
a price of $10.00 per Unit, including
3,750,000
Units issued pursuant to the exercise
in full of the underwriters’ over-allotment option.
Each Unit consists of one of the Company’s Class A
ordinary shares, par value $0.0001 per share, and one-half of one redeemable warrant (the “Warrants”). Each whole Warrant
entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share. Each Warrant will become
exercisable on the later of 30 days after the completion of the initial Business Combination or 12 months from the closing
of the Initial Public Offering. However, if the Company does not complete its initial Business Combination on or prior to the 24-month
period allotted to complete the Business Combination, the Warrants will expire at the end of such period. If the Company is unable
to deliver registered ordinary shares to the holder upon exercise of Warrants during the exercise period, there will be no net
cash settlement of these Warrants and the Warrants will expire worthless, unless they may be exercised on a cashless basis in the
circumstances described in the warrant agreement governing the Company’s warrants.
The Company paid an
underwriting discount at the closing of the Initial Public Offering of $3.95 million. An additional fee of approximately $6.91
million was deferred and will become payable upon the Company’s completion of an initial Business Combination. The deferred
portion of the discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event
the Company completes its initial Business Combination.
Antony Leung and Carl
Wu, Chairman and Chief Executive Officer of the Company, purchased 900,000 Units in the Initial Public Offering and certain other
investors identified by Mr. Leung and Mr. Wu purchased 8.1 million Units in the Initial Public Offering. The underwriters
did not and will not receive any underwriting discounts or commissions on the 9 million units purchased by such parties, including
Mr. Leung and Mr. Wu.
4. Related Party Transactions
Founder Shares
The Sponsor received
10,750,000 Class B ordinary shares, par value $0.0001 per share (the “Founder Shares”), in exchange for a capital
contribution of $25,000.
Up to 5,000,000 Class
B ordinary shares were subject to forfeiture by the Sponsor and anchor investors ratably to the extent the aggregate amount committed
to be purchased pursuant to the Forward Purchase Agreements would be less than $200,000,000.
On June 12, 2018,
the Sponsor forfeited 475,000 Founder Shares for no consideration in connection with the Forward Purchase Agreements totaling $181,000,000
rather than $200,000,000. In June 2018, the Company effected two share capitalizations resulting in an aggregate of 11,712,500
Class B ordinary shares outstanding, of which the Sponsor and the anchor investors held an aggregate of 9,450,000 and 2,262,500
shares, respectively, as of June 27, 2018. All share amounts have been retroactively restated to reflect the share capitalizations.
Subsequent to the closing
of the Initial Public Offering, the Sponsor transferred 10,000 Founder Shares to Edward Leong Che-hung and 5,000 Founder Shares
to each of two trusts for the benefit of family members of David Johnson in connection with Messrs. Leong and Johnson’s service
as members of the Company’s board of directors.
The Founder Shares are
identical to the public shares except that the Founder Shares are subject to certain transfer restrictions, as described in more
detail below.
If the underwriters
did not exercise their over-allotment option in full, the Sponsor would have forfeited up to 937,500 Founder Shares for no consideration.
On July 3, 2018, the underwriters exercised the over-allotment option in full; thus, these shares were no longer subject to forfeiture.
The Sponsor, Antony
Leung and Carl Wu have agreed not to transfer, assign or sell any of its or his Founder Shares and any Class A ordinary shares
issued upon conversion thereof until the earlier of (a) one year after the completion of the initial Business
Combination with respect to 50% of its or his Founder Shares and any Class A ordinary shares issued upon conversion thereof,
(b) two years after the completion of the initial Business Combination with respect to the remaining 50% of its or his
Founder Shares and any Class A ordinary shares issued upon conversion thereof, and (c) the date on which the Company
completes a liquidation, merger, share exchange or other similar transaction after the initial Business Combination that results
in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities
or other property. The Anchor Investors and the members of the Company’s management team (other than Antony Leung and Carl
Wu) have agreed to not transfer, assign or sell any of their founder shares and any Class A ordinary shares issued upon conversion
thereof until the earlier of (A) one year after the completion of our initial Business Combination or (B) subsequent
to the initial Business Combination, if (x) the closing price of the Class A ordinary shares equals or
exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any
20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination, or (y) the
Company completes a liquidation, merger, share exchange or other similar transaction that results in all of the Company’s
shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.
Private Placement Warrants
Upon
the closing of the Initial Public Offering on July 3, 2018, the Sponsor purchased an aggregate of
7,750,000 private
placement warrants, each exercisable to purchase one Class A ordinary share at $11.50 per share (the “Private Placement
Warrants”), at a price of $1.00 per warrant ($7,750,000 in the aggregate). Each Private Placement Warrant entitles
the holder to purchase one Class A ordinary share at $11.50 per share. The purchase price of the Private Placement Warrants
was added to the proceeds from the Initial Public Offering held in the Trust Account pending completion of the Company’s
initial Business Combination. The Private Placement Warrants (including the Class A ordinary shares issuable upon exercise
of the Private Placement Warrants) will not be transferable, assignable or salable until 30 days after the completion of the
initial Business Combination and they will be non-redeemable so long as they are held by the Sponsor or its permitted transferees.
If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement
Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the warrants included in the Units
being sold in the Initial Public Offering. Otherwise, the Private Placement Warrants have terms and provisions that are identical
to those of the Warrants being sold as part of the Units in the Initial Public Offering and have no net cash settlement provisions.
If the Company does
not complete a Business Combination, then the proceeds will be part of the liquidating distribution to the public shareholders
and the Private Placement Warrants will expire worthless.
Forward Purchase Agreement
Effective June 4, 2018,
the Company entered into Forward Purchase Agreements with the anchor investors, pursuant to which the anchor investors agreed to
purchase an aggregate of 18,100,000 Class A ordinary shares plus 4,525,000 redeemable warrants for an aggregate purchase price
of $181 million in a private placement to close concurrently with the closing of the initial Business Combination. The forward
purchase warrants will have the same terms as the Public Warrants sold in the Initial Public Offering. The Sponsor transferred
2,262,500 Founder Shares to the anchor investors on June 19, 2018 as an inducement to enter into the Forward Purchase Agreements
for no cash consideration. The Company entered into an additional Forward Purchase Agreement as of June 29, 2018, with an accredited
investor providing for the purchase of 900,000 Class A ordinary shares, plus 225,000 forward purchase warrants, for an aggregate
purchase price of $9.0 million, or $10.00 per Class A ordinary share, in a private placement to close concurrently with the closing
of the initial Business Combination. As an inducement to such accredited investor to enter into the Forward Purchase Agreement,
the Company will issue an aggregate of 112,500 Class B ordinary shares to the accredited investor for nominal cash consideration
upon the completion of the initial Business Combination. The obligations under the Forward Purchase Agreements do not depend on
whether any public shareholders redeem their shares and provide the Company with a minimum funding level for the initial Business
Combination.
Registration Rights
Pursuant to a registration
rights agreement to be entered into concurrently with the closing of the Initial Public Offering, the holders of the Private Placement
Warrants, the warrants that may be issued upon conversion of the working capital loans, and the Founder Shares will be entitled
to registration rights with respect to such warrants and the Class A ordinary shares underlying such warrants and Founder
Shares. These holders will be entitled to make up to three demands, excluding short form registration demands, that the Company
register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration
rights to include their securities in other registration statements filed by the Company. However, the registration rights agreement
provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination
of the lock-up period applicable to the securities to be covered by such registration statement.
Related Party Loans and Advance
Related to Initial Public Offering
The Sponsor agreed to
loan the Company an aggregate of $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory
note (the “Note”). This loan was non-interest bearing and payable on the earlier of December 31, 2018 or the completion
of the Initial Public Offering. The Company borrowed an aggregate of $100,000 under the Note and repaid this amount on July 3,
2018.
In connection with the
Initial Public Offering and the purchase of the Private Placement Warrants, the Sponsor and its affiliates transferred $10,550,000
to the Company, of which $2,800,000 was in excess of the private placement, and paid $146,404 of offering costs related to the
Initial Public Offering. The amount in excess of the private placement and the offering costs were repaid by the Company to such
parties on July 3, 2018.
The Company has agreed to pay, pursuant to the letter agreement entered into by and among the Company, the Sponsor and the
Company's directors and officers entered into in connection with the Initial Public Offering, $50,000 cash per year to those
independent members of the Company's board of directors who have elected to not receive Founder Shares for services rendered
as board members prior to the completion of the initial Business Combination. Pursuant to such agreement, the Company paid
$25,000 to Frederick Ma Si-hang, an independent member of the Company's board of directors, on January 28, 2019 for services
rendered as a board member. All other independent members of the Company's board of directors elected to receive founder shares
pursuant to such agreement and, as a result, will not receive any cash payments thereunder.
As of March 31, 2019, the Company owes an affiliate $32,558 for reimbursable trip expenses.
Administrative Services Agreement
The Company has agreed
to pay $10,000 per month to an affiliate of the Sponsor for office space, secretarial and administrative services provided to members
of the Company’s management team. Upon completion of the initial Business Combination or the Company’s liquidation,
the Company will cease paying such monthly fees. For the three months ended March 31, 2019, the Company paid $30,000, which represents
the administrative services paid to the affiliate.
Working Capital Loans
In order to finance
transaction costs in connection with an intended initial Business Combination, our Sponsor may, but is not obligated to, loan the
Company funds as may be required. If the Company completes its initial Business Combination, the Company would repay such loaned
amounts out of the proceeds of the Trust Account released to the Company. Otherwise, such loans would be repaid only out of funds
held outside the Trust Account. In the event that the Company’s initial Business Combination does not close, the Company
may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust
Account would be used to repay such loaned amounts. Up to $2,000,000 of such loans may be convertible into warrants of the post
Business Combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical
to the Private Placement Warrants. Except as set forth above, the terms of such loans, if any, have not been determined and no
written agreements exist with respect to such loans.
5. Trust Account and Fair Value Measurement
As of March 31,
2019, investment securities in the Company’s Trust Account consisted of $292,161,370 in United States Treasury Bills
and another $16,105 held as cash and cash equivalents. As of December 31, 2018, investment securities in the Company’s
Trust Account consisted of $290,445,374 in United States Treasury Bills and another $15,778 held as cash and cash
equivalents. The Company classifies its Treasury Instruments and equivalent securities as held-to-maturity in accordance with
FASB ASC 320 “Investments – Debt and Equity Securities”. Held-to-maturity securities are those securities
which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at
amortized cost on the accompanying balance sheets and adjusted for the amortization or accretion of premiums or discounts.
The following table presents fair value information as of March 31, 2019 and indicates the fair value hierarchy of the
valuation techniques the Company utilized to determine such fair value. In addition, the table presents the carrying value
(held to maturity), excluding accrued interest income and gross unrealized holding gain. Since all of the Company’s
permitted investments consist of U.S. government treasury bills and cash, fair values of its investments are determined by
Level 1 inputs utilizing quoted prices (unadjusted) in active markets for identical assets as follows:
|
|
|
|
|
|
Gross
|
|
|
Quoted Price
|
|
|
|
|
Carrying
|
|
|
Unrealized
|
|
|
in Active Markets
|
|
|
|
|
Value
|
|
|
Holding Gain (Loss)
|
|
|
(Level 1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government Treasury Securities as of March 31, 2019
|
|
$
|
292,161,370
|
|
|
$
|
18,182
|
|
|
$
|
292,179,552
|
|
|
U.S. Government Treasury Securities as of December 31, 2018
|
|
$
|
290,445,374
|
|
|
$
|
(36,313
|
)
|
|
$
|
290,409,061
|
|
6. Shareholders’ Equity
Class A Ordinary
Shares
— The Company is authorized to issue 180,000,000 Class A ordinary shares with a par value of $0.0001 per
share. At March 31, 2019 and December 31, 2018, there were 28,750,000 Class A ordinary shares issued or outstanding, and there
are 28,186,287 and 28,048,981 Class A ordinary shares, respectively, subject to possible redemption at March 31, 2019 and December
31, 2018.
Class B
Ordinary Shares
— The Company is authorized to issue 20,000,000 Class B ordinary shares with
a par value of $0.0001 per share. Holders of the Company’s Class B ordinary shares are entitled to one vote
for each share. On June 12, 2018, the Sponsor forfeited 475,000 Founder Shares for no consideration as a result of the
Forward Purchase Agreements totaling $181,000,000 rather than $200,000,000. In June 2018, the Company effected two share
capitalizations resulting in an aggregate of 11,712,500 Class B ordinary shares outstanding. Of these, the Sponsor and the
anchor investors hold an aggregate of 9,450,000 and 2,262,500 shares, respectively, as of June 27, 2018. All share
amounts have been retroactively restated to reflect the share capitalization. At March 31, 2019 and December 31, 2018 there
were 11,712,500 Class B ordinary shares issued and outstanding.
Preference
Shares
— The Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001
per share. At March 31, 2019 and December 31, 2018, there were no preference shares issued or outstanding.
Warrants
—
Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation
of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30
days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided
in each case that the Company has an effective registration statement under the Securities Act covering the Class A ordinary
shares issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits
holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the
Securities Act). The Company has agreed that as soon as practicable, but in no event later than 30 business days, after the closing
of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration,
under the Securities Act, of the Class A ordinary shares issuable upon exercise of the Public Warrants. The Company will use
its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a
current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant
agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the Public Warrants
is not effective by the sixtieth (60th) day after the closing of the initial Business Combination, warrant holders may, until such
time as there is an effective registration statement and during any period when the Company will have failed to maintain an effective
registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities
Act or another exemption. The Public Warrants will expire five years after the completion of a Business Combination or earlier
upon redemption or liquidation.
The Private Placement
Warrants are identical to the Public Warrants included in the Units sold in the Initial Public Offering, except that the Private
Placement Warrants and the Class A ordinary shares issuable upon exercise of the Private Placement Warrants will not be transferable,
assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally,
the Private Placement Warrants will be non-redeemable so long as they are held by the initial purchasers or
such purchasers’ permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its
permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the
same basis as the Public Warrants.
7. Subsequent Events
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial
statements were available to be issued. The Company did not identify any subsequent events that would have required an adjustment
or disclosure in the unaudited condensed financial statements.