SEC Form 10-Q Summary
Entity note: The supplied filing is for Trident Acquisitions Corp., not Sports Entertainment Gaming Global Corp. Investors should confirm that this is the intended filing.
Business context and reporting period
Unaudited quarterly report for the three and nine months ended September 30, 2020, filed November 16, 2020. Trident was a Nasdaq-listed blank-check company seeking a business combination; it had not commenced operating activities or generated revenue. It identified itself as a shell company.
Financial results and position
| Metric | Q3 / September 30, 2020 | Comparison |
|---|---|---|
| Revenue | None | No operating revenue reported |
| Operating costs | $532,732 for Q3; $1,129,649 for nine months | Q3 2019: $244,001; nine months 2019: $783,698 |
| Net income (loss) | $(362,526) for Q3; $(618,464) for nine months | Q3 2019: $723,357; nine months 2019: $2,345,649 |
| Basic and diluted EPS | $(0.05) for Q3; $(0.12) for nine months | 2019: $(0.02) and $(0.07), respectively |
| Cash flow | Nine-month operating cash used: $1,603,006; investing cash provided: $11,569,029; financing cash used: $9,803,626 | 2019 operating cash used: $1,199,673 |
| Cash and Trust Account | Cash outside Trust: $217,858; Trust securities: $63,154,834 | At December 31, 2019: $55,461 and $74,376,617 |
| Debt and liquidity | $3,825,000 related-party promissory notes; $4,139,238 current liabilities; adjusted working capital stated as $30,210 | Related-party notes were $180,000 at December 31, 2019 |
| Total assets / liabilities | $63,589,535 / $9,170,488 | At December 31, 2019: $74,536,195 / $6,050,058 |
Trust Account funds were primarily invested in U.S. Treasury securities or qualifying money market funds. The filing reports no operating margins; the company had no revenue-generating operations.
Material changes and notable items
- Operating costs increased versus 2019, while Trust Account interest and unrealized gains were substantially lower. The filing reports no unrealized gain for the 2020 periods; the 2019 comparison included gains of $800,740 for Q3 and $951,245 for nine months.
- Stockholders approved an extension in August 2020 to December 1, 2020. Related redemptions removed $6,781,851 from the Trust Account; the company reported $63.2 million remaining at September 30.
- At the report date, management planned to seek a further extension to March 31, 2021. If the extension was not approved and no business combination was completed by December 1, the company would wind up and liquidate.
- The company borrowed $3.825 million from related parties during 2020; the notes were non-interest-bearing and payable December 2, 2020. The filing says such loans would be repaid from Trust proceeds only if a business combination closed.
- A deferred underwriting fee of $5,031,250 is payable upon completion of a business combination. No long-term debt or off-balance-sheet arrangements were reported.
Outlook, risks, and management commentary
Management stated that additional funding might be needed and that insiders, officers, and directors were not obligated to provide it. The company warned that financing might not be available and that it could need to curtail operations, suspend transaction efforts, or reduce overhead. These conditions raised substantial doubt about its ability to continue as a going concern through the applicable business-combination deadline.
Management said COVID-19 could negatively affect its ability to identify a target, but the impact was not determinable. The filing reported no material changes to the risk factors in its 2019 Form 10-K, no legal proceedings, and effective disclosure controls at a reasonable assurance level.
Important facts for investors to verify
- Confirm the intended issuer: the filing is for Trident Acquisitions Corp., not the company named in the request metadata.
- Verify the then-pending extension vote, business-combination deadline, and any subsequent transaction or liquidation developments.
- Assess liquidity outside the Trust Account, the related-party loan repayment terms, and the availability of further financing.
- Reconcile share-count disclosures: the balance sheet and notes show differing figures for shares outstanding and shares subject to possible redemption at September 30, 2020.
- Review the going-concern warning, redemption mechanics, deferred underwriting fee, and potential loss of warrants if no business combination closes.