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using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the
funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
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limitations on our flexibility in planning for and reacting to changes in our business and in the industry in
which we operate;
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increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse
changes in government regulation; and
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limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt
service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
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Recent Developments
Under our Charter,
we had until November 17, 2018 (the Initial Date) to complete a Business Combination, or February 17, 2019 if we executed a letter of intent, agreement in principle or definitive agreement for a Business Combination by the
Initial Date but had not completed a Business Combination by such date. Effective October 31, 2018, we signed a
non-binding
letter of intent with respect to the Akazoo Business Combination. As a result,
we had until February 17, 2019 to consummate our business combination.
On January 24, 2019, we entered into the Business
Transaction Agreement by and among the Company, Akazoo, Mr. Zervos, LuxCo and PubCo.
On February 8, 2019, we held a meeting of
our stockholders at which the stockholders approved, among other things, an amendment (the First Charter Amendment) to our Charter to extend the deadline to complete a Business Combination from February 17, 2019 to June 17,
2019. In connection with the First Charter Amendment, the Sponsor agreed to provide the Contribution, in the form of a loan. In connection with the approval of the First Charter Amendment, stockholders elected to redeem an aggregate of 5,942,681
shares of the Companys common stock. Following the completion of such redemptions, the Company had 19,932,319 shares of common stock issued and outstanding.
On June 14, 2019, the Company held a special meeting of the stockholders at which the stockholders approved, among other things, a
proposal to amend (the Second Charter Amendment) the Companys Charter to extend the deadline to complete a Business Combination from June 17, 2019 to September 17, 2019 (the Combination Deadline). In
connection with the approval of the Second Charter Amendment, stockholders elected to redeem an aggregate of 13,350,654 shares of the Companys common stock. Following the completion of such redemptions, as of June 30, 2019, the Company
had approximately $14.5 million in cash remaining in the trust account and 6,581,665 shares of common stock issued and outstanding. The Company intends to obtain additional capital to supplement the amounts that will be available in the trust
account from one or more financing arrangements that would be entered into concurrently with completion of the Akazoo Business Combination.
If the Company does not consummate the pending Akazoo Business Combination, or any other business combination, on or before the Combination
Deadline, and that date is not otherwise extended by the Companys stockholders, the Company would be required to distribute the proceeds held in trust to its stockholders in accordance with the Charter.
Results of Operations
As of
June 30, 2019, we had neither engaged in any operations nor generated any revenues. We will not generate any operating revenues until after completion of our initial business combination. We will continue to generate
non-operating
income in the form of interest income on marketable securities held in the trust account.
For the three months ended June 30, 2019, we had net income of $173,176, which consisted of interest income on marketable securities held
in the trust account of $870,220, offset by operating costs of $510,846, and a provision for income taxes of $186,198.
For the three
months ended June 30, 2018, we had net income of $479,497, which consisted of interest income on marketable securities held in the trust account of $802,262, offset by operating costs of $164,711 and a provision for income taxes of $158,054.
We are incurring increased expenses for due diligence expenses in connection with the evaluation of a potential initial business
combination.
Liquidity and Capital Resources
As of June 30, 2019, we had investments held in the Trust Account of $14,525,384 (including approximately $131,000 of interest income)
consisting of money market funds. Interest income on the balance in the Trust Account may be used by us to pay taxes, and to pay up to $50,000 of any dissolution expenses. Through June 30, 2019, we had withdrawn approximately $1,560,000 of
interest earned on the trust account balance for taxes, of which approximately $81,000 was withdrawn during the three months ended June 30, 2019. In connection with the approval of the First Charter Amendment in February 2019, and pursuant to
the terms of the Charter, stockholders elected to
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