Business context and reporting period
Important issuer mismatch: The supplied filing is Atlantic Acquisition Corp.’s Form 10-K for the year ended December 31, 2017—not a 10-K filed by HF Foods Group Inc. Atlantic was a blank-check company with no substantive operating business or revenue during the reporting period. It sought a business combination, initially focusing on companies serving ethnic-minority communities.
After year-end, on March 28, 2018, Atlantic entered into a merger agreement with HF Group Holding Corporation, described in the filing as a foodservice distributor serving Chinese and Asian restaurants. The filing does not provide the transaction’s detailed terms or HF Group’s financial results.
Financial performance, cash flow and liquidity
| Metric | FY 2017 / Dec. 31, 2017 | Prior comparable period |
|---|---|---|
| Revenue | None; Atlantic had not commenced substantive operations | None reported |
| Net result | Net income of $54,914, comprising $183,185 interest income, less $93,901 general and administrative expense and $34,370 state franchise taxes. After income attributable to redeemable shares, adjusted net loss was $75,729, or $0.06 per share. | $700 net loss from inception on May 19, 2016 through Dec. 31, 2016 |
| Cash from operations | Net cash used: $140,954 | Net cash used: $225 |
| Cash and trust assets | $560,204 cash outside the trust; $45,318,185 in cash and investments held in trust | $44,955 cash; no trust assets |
| Debt and liabilities | No long-term debt. Total liabilities were $1,143,625, including $1,106,250 deferred underwriting compensation and $34,370 accrued state franchise taxes. | Total liabilities were $175,475, including a $175,000 related-party note |
| Equity and redeemable shares | Stockholders’ equity was $5,000,001; 3,884,660 shares were classified as subject to possible redemption, with a carrying value of $39,784,346. | Stockholders’ equity was $24,300 |
Trust assets were primarily U.S. Treasury bills. Atlantic reported no off-balance-sheet arrangements or long-term contractual obligations. The company said cash outside the trust was expected to fund operations for 12 months from the 10-K filing date, assuming no business combination during that period.
Changes, outlook and risks
- The 2017 IPO and private placements generated gross proceeds from public units of $44.25 million, alongside private-unit proceeds; $45.135 million of net proceeds was initially placed in trust. Atlantic reported $45.318 million in trust assets at year-end.
- Atlantic expected expenses to rise due to public-company reporting, legal and accounting costs, and transaction due diligence. It warned that cash could be insufficient if diligence costs exceeded estimates or trust interest was lower than expected, potentially requiring additional financing.
- The company had 18 months from the IPO closing to complete a business combination, with up to two three-month extensions requiring insider deposits. If no deal closed within the applicable period, public shares were to be redeemed; holders of rights would receive nothing in liquidation.
- Public-share conversions, the $5,000,001 minimum net tangible asset condition, the deferred underwriting fee, and possible financing needs could constrain or prevent a transaction. A single combination would also leave the post-combination company exposed to one business’s performance.
- Management disclosed potential conflicts because officers and directors had other business affiliations and were not required to devote full time to Atlantic. Trust assets could also be exposed to creditor or bankruptcy claims despite efforts to obtain waivers and certain insider indemnification commitments.
- Management concluded disclosure controls were effective. The 10-K did not include management’s assessment or auditor attestation on internal control over financial reporting. The auditor issued an unqualified opinion on the financial statements.
Key facts investors should verify
- Confirm the intended issuer: this document reports Atlantic Acquisition Corp.’s 2017 results, not HF Foods Group Inc.’s operating results.
- Review the March 28, 2018 merger agreement and subsequent filings for transaction terms, financing, redemptions, dilution, and the combined company’s governance.
- Reconcile reported net income of $54,914 with the $75,729 adjusted loss attributable to common shares after redeemable-share income allocation.
- Check trust-account balances, redemption elections, the deferred underwriting fee, and any subsequent extension or financing activity.
- Assess HF Group’s audited financial statements and operating risks separately; this filing provides no clear revenue, profit, cash flow, or debt figures for HF Group.