Financial Position - The company has $251,886,105 in the trust account as of December 31, 2018, available for business combinations[27]. - The initial public offering generated gross proceeds of $220,000,000 from the sale of 22,000,000 units at $10.00 per unit[28]. - An additional 3,000,000 units were sold through the over-allotment option, generating gross proceeds of $30,000,000[29]. - The company has completed a private placement of 11,800,000 warrants, generating gross proceeds of $5,900,000[28]. - The trust account holds approximately $10.08 per public share as of December 31, 2018[71]. - The company is obligated to pay a fee of 3.5% of the gross proceeds of its initial public offering upon consummation of its initial business combination[76]. - The company may need to repay or issue warrants upon conversion of up to $1,000,000 of working capital loans from initial shareholders[77]. - The net proceeds from the initial public offering are invested in money market funds that only invest in direct U.S. government treasury obligations, minimizing interest rate risk[327]. Business Strategy - The company aims to focus on consumer/lifestyle sectors, particularly in the PRC market, which is expected to grow significantly[20]. - By 2025, China's luxury consumers are projected to account for approximately 44% of the global luxury market[20]. - The company plans to leverage technology to enhance e-commerce strategies, which contributed to 42% of the global market in 2016[23]. - The management team believes in identifying attractive risk-adjusted returns through strategic partnerships and acquisitions[18]. - The company intends to acquire businesses available at substantial discounts due to deleveraging needs[25]. - The investment strategy includes targeting businesses at an inflection point with untapped potential for new products or services[25]. - The company anticipates that target business candidates will continue to be sourced from various unaffiliated financial community members, including investment bankers and private equity funds[33]. Acquisition Criteria - The target business must have a fair market value of at least 80% of the balance in the trust account at the time of executing a definitive agreement for the initial business combination[35]. - The company plans to structure a business combination to acquire 100% of the equity interests or assets of the target business, although it may also consider acquiring less than 100%[48]. - The fair market value of the target will be determined based on standards such as actual and potential sales, earnings, cash flow, and/or book value[48]. - If Nasdaq delists the company's securities, it would not be required to satisfy the fair market value requirement and could complete a business combination with a target business having a fair market value substantially below 80% of the trust account balance[49]. Risks and Challenges - The company may face challenges in enforcing contractual arrangements with target businesses in China due to uncertainties in the Chinese legal system[46]. - The lack of business diversification may subject the company to significant economic, competitive, and regulatory risks, impacting the performance of the single operating business post-combination[51]. - The company may encounter intense competition from well-established entities with greater resources in identifying and effecting business combinations[75]. - The obligation to seek shareholder approval for business combinations may delay or prevent transaction completion[76]. Due Diligence and Compliance - The company intends to conduct extensive due diligence on prospective target businesses, including meetings with management and facility inspections[37]. - The financial statements of any prospective target business will need to be prepared in accordance with U.S. GAAP or IFRS and may require auditing[82]. - The company is required to comply with the internal control requirements of the Sarbanes-Oxley Act starting for the fiscal year ending December 31, 2019[83]. Shareholder Matters - Initial shareholders have agreed not to convert any public shares, requiring only 9,275,001 public shares (approximately 37.1%) to be voted in favor of a proposed business combination for approval[56]. - Public shareholders can convert their shares into their pro rata share of the trust account, less any taxes due[60]. - The company anticipates that distributions from the trust account will be made based on the amount calculated two days prior to the distribution date[69]. - There is a nominal cost associated with the tendering process, typically around $45 charged by the transfer agent[64]. - The company may require public shareholders to deliver their shares to the transfer agent to exercise conversion rights[63]. - Initial shareholders have waived their rights to participate in any liquidation of the trust account[70]. - TKK Capital Holding may face claims from creditors that could reduce the per-share distribution below $10.00[74]. Timeline and Extensions - If a business combination is not completed by February 20, 2020, it will trigger automatic liquidation of the trust account[68]. - The company may extend the time to complete a business combination by issuing up to 25,000,000 potential extension warrants[58]. - The company does not intend to have any full-time employees prior to the consummation of a business combination[80].
Glory Star(GSMG) - 2018 Q4 - Annual Report