Filing Summary
Entity and period: The supplied filing is Atlantic Acquisition Corp.’s unaudited Form 10-Q for the quarter ended June 30, 2017. It is not a filing by HF Foods Group Inc.; investors should verify the issuer before relying on this summary.
Business context
Atlantic was a blank-check company formed to pursue a business combination. It had not commenced operating activities by June 30, 2017; its stated target focus included U.S. businesses operated by or serving ethnic minorities, particularly Asian-American communities. Accordingly, the filing reports formation and administrative costs rather than operating-business results.
Financial results and position
| Metric | Period / date | Amount |
|---|---|---|
| Revenue | Three and six months ended June 30, 2017 | None reported |
| Net loss | Three months ended June 30, 2017 | $56 |
| Net loss | Six months ended June 30, 2017 | $82 |
| Cash | June 30, 2017 | $38,985 |
| Total assets | June 30, 2017 | $199,693 |
| Total liabilities | June 30, 2017 | $175,475 |
| Related-party note payable | June 30, 2017 | $175,000 |
| Stockholders’ equity | June 30, 2017 | $24,218 |
| Net cash used in operating activities | Six months ended June 30, 2017 | $82 |
| Net cash used in financing activities | Six months ended June 30, 2017 | $5,888 |
No operating margins are meaningful because the company reported no revenue. The filing’s prior-period income comparison is the period from inception on May 19, 2016 through June 30, 2016, not a comparable three- or six-month period; that period’s net loss was $525. Compared with December 31, 2016, cash decreased from $44,955 to $38,985, while total assets were nearly unchanged. The related-party note remained $175,000 at both balance-sheet dates.
Subsequent events, outlook, and risks
- After quarter-end, the company completed an IPO and private placements, including a partial over-allotment. It reported that $45.135 million was placed in a trust account; approximately $700,000 was expected to remain outside the trust for expenses and operations.
- The related-party $175,000 note was repaid using a replacement note in June and converted into Private Units at the IPO closing in August.
- Management expected no operating revenue until a business combination and anticipated increased public-company, due-diligence, and transaction expenses. It stated that outside-trust funds were expected to support operations until August 14, 2019, assuming no earlier combination.
- The company generally had 18 months from the offering to complete a business combination, with up to two three-month extensions subject to insider deposits. Failure to complete a transaction would trigger redemption of public shares and liquidation; rights would expire worthless. Trust assets may remain exposed to third-party claims.
- A business combination was subject to an 80% target-value test under Nasdaq rules, a minimum $5,000,001 net tangible asset condition, and shareholder approval if that route was used. The company might need additional financing, and management warned actual due-diligence and transaction costs could exceed estimates.
- A deferred underwriting commission of $1,106,250 was payable only if a business combination closed. The filing reported no off-balance-sheet arrangements or material market-risk exposure as of June 30, 2017. Management concluded disclosure controls were effective and reported no material change in internal controls.
Most important facts to verify
- Confirm that Atlantic Acquisition Corp., rather than HF Foods Group Inc., is the intended issuer and filing.
- Verify the post-quarter IPO, partial over-allotment, trust funding, and cash available outside the trust against subsequent filings.
- Check the business-combination deadline and any extension deposits; the filing discusses 18-month and extension timing, and also references February 14, 2019 and August 14, 2019 in different contexts.
- Review the terms and potential dilution from rights, insider shares, Private Units, the underwriter’s unit purchase option, and any working-capital loans.
- Assess the ability to fund transaction expenses, the risk of third-party claims against trust funds, and the consequences of failing to complete a business combination.