AGBA (AGBA) - 2020 Q1 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements AGBA Acquisition Limited, a blank check company, reported a net loss of $132,771 for Q1 2020, with $47.7 million in total assets, mostly in trust Condensed Balance Sheets As of March 31, 2020, total assets were $47.70 million, with $46.84 million in the trust account, and total liabilities at $1.62 million Condensed Balance Sheet Data (in USD) | Account | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Assets | | | | Cash | $856,759 | $929,335 | | Cash and investments held in trust account | $46,838,626 | $46,603,976 | | Total Assets | $47,701,889 | $47,559,327 | | Liabilities & Equity | | | | Total Liabilities | $1,621,611 | $1,580,896 | | Ordinary shares subject to possible redemption | $41,080,277 | $40,978,430 | | Total Shareholder's Equity | $5,000,001 | $5,000,001 | Condensed Statements of Operations and Comprehensive Income (Loss) The company reported a net loss of $132,771 for Q1 2020, offset by an unrealized gain of $234,618, resulting in comprehensive income of $101,847 Statement of Operations Highlights (Three months ended March 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Formation, general and administrative expenses | $(132,978) | $(10,020) | | Net Loss | $(132,771) | $(10,015) | | Unrealized gain on securities | $234,618 | - | | Comprehensive Income (Loss) | $101,847 | $(10,015) | | Basic and diluted net loss per share | $(0.07) | $(0.02) | Condensed Statements of Cash Flows Net cash used in operating activities was $114,577 for Q1 2020, leading to a net decrease in cash of $72,576, with the cash balance ending at $856,759 Cash Flow Summary (Three months ended March 31) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Cash used in operating activities | $(114,577) | $(12,515) | | Net cash provided by financing activities | $42,001 | $450,048 | | Net Change in Cash | $(72,576) | $437,533 | | Cash, end of period | $856,759 | $437,533 | Notes to Condensed Financial Statements The blank check company targets China business combinations, with $46 million from its May 2019 IPO in a trust account, and a $460,000 note for deadline extension - The company is a blank check company formed to effect a business combination, intending to focus on operating businesses in the healthcare, education, entertainment, and financial services sectors with principal operations in China[20] - Following its IPO on May 16, 2019, the company placed $46,000,000 into a trust account. These funds are invested in U.S. government securities and are intended for a future business combination[22][23] - The company has an initial 12-month period to complete a business combination, which can be extended up to 21 months if the sponsor deposits additional funds into the trust account[33] - As of March 31, 2020, the trust account held $46,838,626, consisting of $46,828,127 in U.S. Treasury Bills and $10,499 in cash[59] - The company has an agreement to pay AGBA Holding Limited, a related party, a monthly fee of $10,000 for administrative services[68] - On May 11, 2020, the company issued an unsecured promissory note for $460,000 to AGBA Holding Limited to extend the time available to complete a business combination[93] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the blank check company's $132,771 net loss for Q1 2020, $856,759 cash liquidity, and COVID-19's impact on business combination efforts - The company is a blank check company with no revenue and has had losses since inception. Its activities are limited to soliciting a target business for a combination[97] - The COVID-19 pandemic has created a widespread health crisis, adversely affecting economies and financial markets, which may defer or end discussions with potential target companies and hinder the ability to complete a business combination[100][101] Quarterly Net Loss Comparison | Period | Net Loss | | :--- | :--- | | Quarter ended March 31, 2020 | $132,771 | | Quarter ended March 31, 2019 | $10,015 | - As of March 31, 2020, the company had $856,759 in cash. Its primary source of liquidity post-IPO is cash held outside the trust account, funded by the IPO and private placements[104] - The company has no off-balance sheet arrangements[109] Quantitative and Qualitative Disclosures about Market Risk Funds in the trust account are invested in short-term U.S. government securities, leading to no material interest rate risk - Proceeds held in the trust account are invested in U.S. government treasury bills, notes, or bonds with maturities of 180 days or less, or in money market funds investing solely in U.S. treasuries. The company believes there is no material exposure to interest rate risk due to the short-term nature of these investments[113] Controls and Procedures CEO and CFO concluded disclosure controls were effective as of March 31, 2020, with no material changes in internal control over financial reporting - The CEO and CFO evaluated the company's disclosure controls and procedures as of March 31, 2020, and concluded they were effective[114] - No changes in internal control over financial reporting occurred during the most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[115] PART II – OTHER INFORMATION Legal Proceedings The company reports no legal proceedings - None[117] Unregistered Sales of Equity Securities and Use of Proceeds The May 2019 IPO of 4.6 million units and a private placement of 225,000 units generated $46 million placed in a trust account - On May 16, 2019, the company completed its IPO of 4,600,000 units at $10.00 per unit, generating gross proceeds of $46,000,000[117] - Simultaneously with the IPO, the company sold 225,000 private units to the Sponsor at $10.00 per unit, generating $2,250,000[117] - A total of $46,000,000 from the IPO and private placement was deposited into a trust account for the benefit of public shareholders[119] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[119] Mine Safety Disclosures Not applicable to the company - Not applicable[119] Other Information The company reports no other information - None[121] Exhibits Exhibits filed with Form 10-Q include officer certifications (SOX 302/906) and XBRL data files - The exhibits filed with the report include Certifications of the Principal Executive Officer and Principal Financial Officer, and XBRL Instance Documents[122]