Business context and reporting period
This is Trident Acquisitions Corp.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2019. The filing describes Trident as a blank-check company seeking a business combination, with no operating business or operating revenue to date. The request metadata names Sports Entertainment Gaming Global Corp.; that name does not match the registrant identified in the filing and should be verified.
Financial results and position
- Revenue and margins: No operating revenue was generated; operating margins are therefore not meaningful. Operating costs were $244,001 for Q3 2019 and $783,698 for the first nine months of 2019.
- Net income: Reported net income was $723,357 for Q3 2019, versus $603,603 in Q3 2018; for the first nine months, it was $2,345,649 versus $696,760. Results primarily reflect interest and unrealized gains on trust investments, not operating activity.
- Per-share result: Basic and diluted net loss per common share was reported as $0.02 for Q3 2019 and $0.07 for the first nine months, compared with $0.02 and $0.05, respectively, in 2018. The filing adjusts net income for the share of trust earnings attributable to redeemable shares.
- Cash flow: Operating activities used $1,199,673 in the first nine months of 2019, versus $418,396 in 2018. Investing activities provided $577,315, principally from trust withdrawals for taxes; financing activities provided no cash. Cash and escrowed cash totaled $633,459 at period-end.
- Liquidity and assets: Cash outside the Trust Account was $247,429; cash held in escrow was $386,030. Trust Account marketable securities were $210,945,869. Total assets were $211,619,271.
- Liabilities and equity: Total liabilities were $6,190,107, including a $425,000 related-party promissory note and $5,031,250 deferred underwriting fee payable. No long-term debt was reported. Redeemable common stock, classified as temporary equity, was $200,429,159; stockholders’ equity was $5,000,005.
Material changes versus the prior comparable period
For the first nine months, net income increased to $2.35 million from $0.70 million, as trust interest income and unrealized gains were higher. Operating costs also rose to $784,000 from $410,000. Trust assets increased from $207.75 million at December 31, 2018 to $210.95 million at September 30, 2019, while cash outside the Trust Account declined from $1.26 million to $247,429. The filing reports no material changes to previously disclosed risk factors.
Outlook, risks, contingencies and unusual items
- The company’s business-combination deadline was December 1, 2019. It scheduled a November 26, 2019 stockholder meeting to seek an extension to May 29, 2020; approval was uncertain. Without an approved extension or completed transaction, the company would wind up and redeem public shares, subject to applicable terms.
- Management said it did not expect to need additional funds for operations, but warned that underestimated transaction costs or a need to finance a transaction or redemptions could require additional funding. Related parties may, but are not obligated to, provide working-capital loans.
- The $5.03 million deferred underwriting fee is payable from the Trust Account upon a completed business combination. If no combination is completed, the underwriter waives the fee.
- Trust funds are invested in short-term U.S. Treasury securities or qualifying money-market funds. Management stated it believed interest-rate exposure was not material due to the short maturities.
- Management reported effective disclosure controls at a reasonable-assurance level and no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Confirm the correct issuer: the filing is for Trident Acquisitions Corp., not the company named in the request metadata.
- Verify whether stockholders approved the proposed extension and whether a business combination was completed before the applicable deadline.
- Review the Trust Account balance, redemption terms, and funds available outside the trust to assess transaction and liquidation outcomes.
- Assess the distinction between reported net income and the loss per common share after allocating trust earnings to redeemable shares.
- Check the related-party note, deferred underwriting fee, and any subsequent financing or transaction obligations.