Notes
to Financial Statements
(unaudited)
Note
1 — Organization and Plan of Business Operations
Allegro
Merger Corp. (the “Company”) was incorporated in Delaware on August 7, 2017 as a blank check company whose objective
is to acquire, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other
similar business combination, one or more businesses or entities (a “Business Combination”).
All
activity through June 30, 2019 relates to the Company’s formation, the Company’s initial public offering of units
(“Initial Public Offering”) described below and since the Initial Public Offering, the search for a prospective initial
Business Combination.
The
registration statement for the Company’s Initial Public Offering was declared effective on July 2, 2018. On July 6, 2018,
the Company consummated the Initial Public Offering of 14,950,000 units (“Units” and, with respect to the common stock
included in the Units being offered, the “Public Shares”), including 1,950,000 Units issued pursuant to the exercise
in full of the underwriters’ overallotment option, generating gross proceeds of $149,500,000, which is described in Note
3. Each Unit consists of one share of the Company’s common stock, $0.0001 par value, one redeemable common stock purchase
warrant (the “Warrants”) and one right (the “Rights”). Each Warrant entitles the holder to purchase one
share of common stock at an exercise price of $11.50 per share (see Note 7). Each Right entitles the holder to receive one tenth
(1/10) of one share of common stock upon the completion of a Business Combination.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 372,500 units (“Private Units”),
at a price of $10.00 per Private Unit in a private placement to certain of the Initial Stockholders (defined below), Cantor Fitzgerald
& Co. and Chardan Capital Markets LLC (collectively, the “Insiders”), generating gross proceeds of $3,725,000,
which is described in Note 4.
Following
the closing of the Initial Public Offering on July 6, 2018, an amount of $149,500,000 ($10.00 per Unit) from the net proceeds
of the sale of the Units in the Initial Public Offering and the Private Units was placed in a trust account (“Trust Account”)
and is being invested in United States government treasury bills, bonds or notes, 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 until the earlier of
(i) the consummation of the Company’s initial Business Combination (ii) the redemption of any Public Shares that have been
properly tendered in connection with a stockholder vote to amend the Company’s Amended and Restated Certificate of Incorporation
to modify the substance or timing of its obligation to redeem 100% of such shares of common stock if it does not complete the
Initial Business Combination by January 6, 2020 (“Combination Period”); and (iii) the Company’s failure to consummate
a Business Combination within the prescribed time. Placing funds in the Trust Account may not protect those funds from third party
claims against the Company. Although the Company will seek to have all vendors, service providers except the Company’s independent
registered public accounting firm, prospective target businesses or other entities it engages, 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 Company’s Chief Executive Officer has agreed that he will be liable under certain circumstances to
ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities
that are owed money by the Company for services rendered, contracted for or products sold to the Company. There can be no assurance
that he will be able to satisfy those obligations should they arise. The remaining net proceeds (not held in the Trust Account)
may be used to pay for franchise and income taxes and up to $125,000 of interest on an annual basis for working capital purposes
to pay Nasdaq Capital Market (“NASDAQ”) continued listing fees, auditor fees, and trust/custodian administration fees.
Allegro
Merger Corp.
Notes
to Financial Statements
(unaudited)
On
July 6, 2018, in connection with the underwriters’ election to fully exercise their over-allotment option, the Company consummated
the sale of an additional 1,950,000 Units, at $10.00 per unit. Each Unit consists of one share of the Company’s common stock,
$0.0001 par value, one redeemable common stock purchase warrant (the “Warrants”) and one right (the “Rights”).
Each Warrant entitles the holder to purchase one share of common stock at an exercise price of $11.50 per share (see Note 7).
Each Right entitles the holder to receive one tenth (1/10) of one share of common stock upon the completion of a 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 sale
of Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company
must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held
in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on income earned on
the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only
complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an
investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”). There is no assurance
that the Company will be able to successfully effect a Business Combination.
The
Company will provide holders of shares included in the Units sold in the Initial Public Offering (“Public Shares”)
with the opportunity to redeem all or a portion of their Public Shares upon the completion of an initial Business Combination
either in connection with a stockholder meeting called to approve the Business Combination or by means of a tender offer. The
decision as to whether the Company will seek stockholder approval of a proposed Business Combination or conduct a tender offer
will be made by the Company, solely in the Company’s 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 require the Company to seek stockholder approval under the law
or stock exchange listing requirement. If the Company seeks stockholder approval, the Company will consummate the initial Business
combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Business Combination.
The stockholders prior to the Initial Public Offering (“Initial Stockholders”) have agreed to vote their Founder Shares
and shares underlying the Private Units (“Private Shares”) in favor of the initial Business Combination.
If
the Company seeks stockholder approval of an initial Business Combination, any Public Stockholder voting either for or against
such Business Combination will be entitled to demand that his Public Shares be converted into a full pro rata portion of the amount
then in the Trust Account (initially $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 or necessary to pay its taxes). Holders of warrants and rights sold as part of the
Units will not be entitled to vote on the Business Combination and will have no conversion or liquidation rights with respect
to the shares of common stock underlying such warrants or rights.
Allegro
Merger Corp.
Notes
to Financial Statements
(unaudited)
Notwithstanding
the foregoing, the Amended and Restated Certificate of Incorporation of the Company will provide that a Public Stockholder, together
with any affiliate or other person with whom such Public Stockholder is acting in concert or as a “group” (within
the meaning of Section 13 of the Securities Act of 1934, as amended), will be restricted from seeking conversion rights with respect
to an aggregate of more than 20% of the Public Shares (but only with respect to the amount over 20% of the Public Shares). A “group”
will be deemed to exist if Public Stockholders (i) file a Schedule 13D or 13G indicated the presence of a group or (ii) acknowledge
to the Company that they are acting, or intend to act, as a group.
Pursuant
to the Company’s Amended and Restated Certificate of Incorporation, if the Company is unable to complete its initial Business
Combination by the end of the Combination Period, the Company will (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding public
shares and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining holders
of common stock and the Company’s board of directors, dissolve and liquidate. Holders of rights and warrants will receive
no proceeds in connection with the liquidation. The Initial Stockholder and the holders of Private Units will not participate
in any redemption distribution with respect to their Founder Shares and Private Units, including the Private Shares.
If
the Company is unable to complete its initial Business Combination and expends all of the net proceeds of the Initial Public Offering
not deposited in the Trust Account, without taking into account any interest earned on the Trust Account, the Company expects
that the initial per-share redemption price for common stock will be $10.00. The proceeds deposited in the Trust Account could,
however, become subject to claims of the Company’s creditors that are in preference to the claims of the Company’s
stockholders. In addition, if the Company is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against
it that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included
in its bankruptcy estate and subject to the claims of third parties with priority over the claims of the Company’s common
stockholders. Therefore, the actual per-share redemption price may be less than approximately $10.00.
Going
Concern and Liquidity
As of June 30, 2019, the
Company had a cash balance of $392,865 and a working capital balance of $343,830 but $58,041 can be paid by interest income from
investments held in the Trust Account, which includes interest income of $1,797,952. The interest income is available to the Company
for tax obligations and withdrawal of up to $125,000 for certain working capital purposes on an annual basis. During the quarter
ended June 30, 2019, the Company has withdrawn $507,778 of interest income to pay its franchise and income taxes.
Until
the consummation of a Business Combination, the Company will be using funds held outside of the Trust Account for paying existing
accounts payable, identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective
target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing
corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring,
negotiating and consummating the business combination. If the Company’s estimates of the costs of identifying a target business,
undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so,
the Company may have insufficient funds available to operate its business prior to a Business Combination. Moreover, the Company
may need to obtain additional financing either to complete a Business Combination or because it becomes obligated to redeem a
significant number of its public shares upon completion of a Business Combination, in which case the Company may issue additional
securities or incur debt in connection with such Business Combination. In order to finance transaction costs in connection with
a Business Combination, the Initial Stockholders, the Company’s officers or directors or an affiliate of the Initial Stockholders,
officers or directors may, but are not obligated to, loan the Company funds as may be required. If the Company completes a Business
Combination, the Company would repay such loaned amounts. In the event that a Business Combination does not close, the Company
may use a portion of the working capital held outside the Trust Account to repay any such loaned amounts and up to $125,000 of
interest on an annual basis for certain working capital purposes, but no other proceeds from the Trust Account would be used for
such repayment.
If
the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which
could include, but not necessarily be limited to, suspending the pursuit of a potential transaction. The Company cannot provide
any assurance that new financing will be available to it on commercially acceptable terms, if at all.
In
addition, 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 liquidity, 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 January 6, 2020.
Allegro
Merger Corp.
Notes
to Financial Statements
(unaudited)
Note
2 — Summary of Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited financial statements have been prepared in accordance with United States generally accepted accounting
principles (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the SEC. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, all adjustments
(consisting of normal accruals) considered for a fair presentation have been included. Operating results for the three and six
months ended June 30, 2019 are not necessarily indicative of the results that may be expected for any future period. The accompanying
unaudited financial statements should be read in conjunction with the financial statements and footnotes thereto included in the
Company’s Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on April 1, 2019.
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 accountant
standards used.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires the Company’s 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 periods presented. Actual results could
differ from those estimates.
Cash
and cash equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of June 30, 2019 and December 31, 2018.
Allegro
Merger Corp.
Notes
to Financial Statements
(unaudited)
Marketable
securities held in Trust Account
At
June 30, 2019 and December 31, 2018, the assets held in the Trust Account were substantially held in U.S. Treasury Bills.
Common
stock subject to possible redemption
The
Company accounts for its common stock shares 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
redemptions (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock
(including common stock that feature redemption rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within the Company’s control) 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 June 30, 2019 and December 31, 2018, common stock subject to possible redemption is presented as temporary equity,
outside of the stockholders’ equity section of the Company’s balance sheets.
Income
Taxes
The Company accounts for
income taxes under ASC 740 Income Taxes (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities
for both the expected impact of differences between the financial statements and tax basis of assets and liabilities and for the
expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation
allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.
Management has determined that a full valuation allowance on the deferred tax asset (related to start up costs) is appropriate
at this time after consideration of all available positive and negative evidence related to the realization of the deferred tax
asset.
ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and
prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position
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. ASC 740 also provides guidance on derecognition, classification, interest
and penalties, accounting in interim periods, disclosure and transition. The Company is required to file income tax returns in
the United States (federal) and in various state and local jurisdictions. Based on the Company’s evaluation, it has been
concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements
as of June 30, 2019 and December 31, 2018. The Company is subject to income tax examinations by major taxing authorities since
inception, The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate
any adjustments that would result in a material change to its financial position.
The
Company’s policy for recording interest and penalties associated with audits is to record such expense as a component of
income tax expense. There were no amounts accrued for penalties or interest as of June 30, 2019 and December 31, 2018. Management
is currently unaware of any issues under review that could result in significant payments, accruals or material deviations from
its position.
Allegro
Merger Corp.
Notes
to Financial Statements
(unaudited)
Net
Income (Loss) Per Share
The Company complies with
accounting and disclosure requirements of FASB ASC Topic 260, “
Earnings Per Share
.” Net income per share is
computed by dividing net income applicable to common stockholders by the weighted average number of shares of common stock outstanding
for the period. The Company has not considered the effect of the warrants and rights sold in the Initial Public Offering and Private
Placement to purchase an aggregate of
16,854,750 Public Shares
in the calculation
of diluted earnings per share, since their inclusion would be anti-dilutive under the treasury stock method. As a result, diluted
earnings per share is the same as basic earnings per share for the period.
The
Company’s statements of operations includes a presentation of income per share for common stock subject to redemption in
a manner similar to the two-class method of income per share. Net income per share, basic and diluted for Public
Shares is calculated dividing the interest income earned on the Trust Account, net of franchise and income taxes in the amount
of $429,394 and $125,000 per annum in funds available to be withdrawn from Trust for working capital purposes less income attributable
to Public Shares, by the weighted average number of Public Shares outstanding since the original issuance. The Founder Shares
and Private Shares are calculated separately from Public Shares as these shares do not have any redemption features and do not
participate in the income earned on the Trust Account.
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. At June 30, 2019 and December 31, 2018, the
Company had 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 Measurements and Disclosures
,” approximates the carrying amounts represented in the accompanying balance sheets,
primarily due to their short-term nature.
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value
at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company
would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an
orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets
and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and
to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).
The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable
inputs used in order to value the assets and liabilities:
|
|
Level
1:
|
|
Quoted
prices in active markets for identical assets and liabilities. An active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing
basis.
|
|
|
|
|
|
|
|
Level
2:
|
|
Observable
inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or
liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
|
|
|
Level
3:
|
|
Unobservable
inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
Allegro
Merger Corp.
Notes
to Financial Statements
(unaudited)
Recent
Accounting Pronouncements
The
Company’s 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.
Note
3 — Initial Public Offering
On
July 6, 2018, the Company consummated the Initial Public Offering and sold 14,950,000 Units, including 1,950,000 Units issued
pursuant to the exercise in full of the underwriters’ over-allotment option, at a purchase price of $10.00 per Unit. Each
Unit consists of one share of the Company’s common stock, $0.0001 par value, one Warrant and one Right. Each Warrant entitles
the holder to purchase one share of common stock at an exercise price of $11.50 per share (see Note 7). Each Right entitles the
holder to receive one tenth (1/10) of one share of common stock upon the completion of a Business Combination.
Note
4 — Private Placement
Simultaneously
with the Initial Public Offering, the Insiders purchased an aggregate of 372,500 Private Units, at $10.00 per Private Unit for
an aggregate purchase price of $3,725,000. Each Private Unit consists of one Private Share, one warrant (“Private Warrant”)
and one right (“Private Right”). The proceeds from the Private Units were added to the proceeds from the Initial Public
Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the
proceeds from the sale of the Private Units will be used to fund the redemption of the Public Shares (subject to the requirements
of applicable law) and the Private Rights and Private Warrants will expire worthless. Additionally, the holders have agreed not
to transfer, assign or sell any of the Private Units or underlying securities (except to certain permitted transferees and provided
the transferees agree to the same terms and restrictions as the permitted transferees of the insider shares must agree to) until
after the completion of a Business Combination.
The
Private Units are identical to the Units sold in the Public Offering, except that the holders have agreed (i) to vote the Private
Shares in favor of any Business Combination, (ii) not to convert any Private Shares into the right to receive cash from the Trust
Account in connection with a stockholder vote to approve the initial Business Combination and (iii) that the Private Shares shall
not participate in any liquidating distribution upon winding up if a Business Combination is not consummated. Additionally, the
holders have agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to certain permitted
transferees) until the completion of the initial Business Combination.
The
holders of the Private Units (or underlying shares of common stock) will be entitled to registration rights described in Note
6.
Allegro
Merger Corp.
Notes
to Financial Statements
(unaudited)
Note
5 — Related Party Transactions
Administrative
Service Fee
The
Company presently occupies office space provided by an entity controlled by the Company’s Chief Executive Officer. Such
entity has agreed that until the Company consummates a Business Combination, it will make such office space, as well as general
and administrative services including utilities and administrative support, available to the Company as may be required by the
Company from time to time. The Company has agreed to pay an aggregate of $12,500 per month for such services commencing on the
effective date of the Initial Public Offering. The Company expensed and paid the affiliate $37,500 and $75,000 for such services
for the three and six months ended June 30, 2019, respectively.
Promissory
Notes — Related Parties
The
Company issued two unsecured promissory notes totaling $30,000 to Eric S. Rosenfeld, the Company’s Chief Executive Officer,
in 2017. On February 5, 2018 the Company issued a $35,000 principal amount unsecured promissory note to Eric S. Rosenfeld. The
notes were non-interest bearing. The notes were paid off in full on July 13, 2018.
Founder
Shares
The
Initial Stockholders purchased an aggregate of 4,312,500 Founder Shares for an aggregate purchase price of $25,000, or approximately
$0.0058 per share.
In
April 2018, the Initial Stockholders surrendered an aggregate of 575,000 shares for no additional consideration, leaving them
with an aggregate of 3,737,500 Founder Shares.
Note
6 — Commitments and Contingencies
Registration
Rights
The
holders of the Founder Shares, Private Shares, Private Warrants, Private Rights, and any shares, warrants and rights that may
be issued upon conversion of working capital loans (and any shares issued upon the exercise of such warrants or conversion of
such rights) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the
effective date of the Initial Public Offering. The holders of the majority of these securities are entitled to make up to three
demands, excluding short form 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 our consummation of an initial Business Combination.
The Company will bear the costs and expenses of filing any such registration statements
Allegro
Merger Corp.
Notes
to Financial Statements
(unaudited)
Underwriting
Agreement
The
Company entered into an agreement with the underwriters of the Initial Public Offering (“Underwriting Agreement”), pursuant
to which the Company paid an underwriting discount of 2.0% of the gross proceeds of the Initial Public Offering, excluding the
over-allotment option, or $2,600,000 in the aggregate, to the underwriters at the closing of the Initial Public Offering, with
an additional fee (the “Deferred Underwriting Discount”) of 3.5% of the gross offering proceeds of the Initial Public
Offering, excluding the over-allotment option, and 5.5% of the gross proceeds of the over-allotment option, or $5,622,500 in the
aggregate. The Underwriting Agreement provides that the Deferred Underwriting Discount will only be payable to the underwriters
from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.
Note
7 — Stockholders’ Equity
Preferred
Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation,
rights and preferences as may be determined from time to time by the Company’s board of directors. At June 30, 2019 and
December 31, 2018, there were no shares of preferred stock issued or outstanding.
Common
Stock
The Company is authorized
to issue 40,000,000 shares of common stock with a par value of $0.0001 per share. Holders of the Company’s common stock
are entitled to one vote for each share.
At June 30, 2019 and December 31, 2018, there
were 19,060,000 shares of common stock issued and outstanding, respectively including 14,167,501 and 14,047,195 shares issued
and possible to redemption, respectively.
Rights
Each
holder of a Right will receive one-tenth (1/10) of one common stock upon consummation of a Business Combination, even if a holder
of such right converted all common stock 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 in order 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 common stock will receive in the transaction on an as-converted
into common stock 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 common stock 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 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.
Allegro
Merger Corp.
Notes
to Financial Statements
(unaudited)
Warrants
The
Warrants will become exercisable 30 days after the consummation of a Business Combination. No Warrants will be exercisable for
cash unless the Company has an effective and current registration statement covering the shares of common stock issuable upon
exercise of the Warrants and a current prospectus relating to such shares. Notwithstanding the foregoing, if a registration statement
covering the shares of common stock issuable upon the exercise of the Warrants is not effective within 20 business days from the
consummation of a Business Combination, the 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 the Warrants on a cashless
basis pursuant to an available exemption from registration under the Securities Act. If an exemption from registration is not
available, holders will not be able to exercise their Warrants on a cashless basis. The Warrants will expire five years from the
consummation of a Business Combination or earlier upon redemption or liquidation.
The Placement Warrants
are identical to the Warrants underlying the
Units sold
in the Initial Public Offering,
except the Placement Warrants are exercisable for cash (even if a registration statement covering the shares of common stock issuable
upon exercise of such Placement Warrants is not effective) or on a cashless basis, at the holder’s option,
and
not redeemable by the Company
, in each case so long as they are still held by the original purchasers or their affiliates.
The
Company may call the Warrants for redemption (excluding the Placement Warrants but including any outstanding Warrants issued upon
exercise of the unit purchase option issued to its underwriter), in whole and not in part, at a price of $.01 per Warrant:
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|
-
|
upon
not less than 30 days’ prior written notice of redemption to each Warrant holder,
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-
|
if,
and only if, the reported last sale price of the shares of common stock (or the closing
bid price of our common stock in the event shares of our common stock are not traded
on any specific day) equals or exceeds $18.00 per share, 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
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-
|
if,
and only if, there is a current registration statement in effect with respect to the
shares of common stock underlying such Warrants at the time of redemption and for the
entire 30-day redemption period and continuing each day thereafter until the date of
redemption.
|
If
the Company calls the Warrants for redemption, management will have the option to require all holders that wish to exercise the
Warrants to do so on a “cashless basis,” as described in the warrant agreement.
The
exercise price and number of shares of common stock issuable upon exercise of the Warrants may be adjusted in certain circumstances
including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation.
However, the Warrants will not be adjusted for issuances of shares of common stock at a price below its exercise price. Additionally,
in no event will the Company be required to net cash settle the Warrants. 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 Warrants will not receive
any of such funds with respect to their Warrants, nor will they receive any distribution from the Company’s assets held
outside of the Trust Account with respect to such Warrants. Accordingly, the Warrants may expire worthless.
Allegro
Merger Corp.
Notes
to Financial Statements
(unaudited)
Note
8 — Fair Value Measurements
The
following table presents information about the Company’s assets that are measured at fair value on a recurring basis at
June 30, 2019 and December 31, 2018, indicates the fair value hierarchy of the valuation inputs the Company utilized to determine
such fair value:
|
Description
|
|
Quoted Prices in Active Market
(Level 1)
|
|
|
Significant Other Observable Inputs
(Level 2)
|
|
|
Significant Other Unobservable Inputs
(Level 3)
|
|
|
Cash and Marketable securities held in Trust Account
|
|
|
|
|
|
|
|
|
|
|
June 30, 2019
|
|
$
|
151,953,687
|
|
|
|
-
|
|
|
|
-
|
|
|
December 31, 2018
|
|
$
|
151,022,524
|
|
|
|
-
|
|
|
|
-
|
|
As
of June 30, 2019 and December 31, 2018, there was a balance of $1,124 and $2,587, respectively, held as cash in Trust Account.
Note
9 — 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.