The accompanying notes are an integral part
of the unaudited condensed financial statements
(1) Excludes 13,966,659 shares subject to redemption
at June 30, 2017 and 562,500 shares subject to forfeiture at June 30, 2016 for failure by the underwriters to exercise their
overallotment option.
The accompanying notes are an integral
part of the unaudited condensed financial statements
The accompanying notes are an integral part
of the unaudited condensed financial statements
Notes
to Condensed Financial Statements (unaudited)
NOTE 1 — DESCRIPTION OF ORGANIZATION
AND BUSINESS OPERATIONS
Organization and General:
M III Acquisition Corp. (the ‘‘Company’’)
was incorporated in Delaware on August 4, 2015. The Company was formed for the purpose of effecting a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the ‘‘Business
Combination’’). While it may pursue an acquisition opportunity in any business, industry or sector and in any geographic
region, the Company expects to focus on businesses based in North America that engage primarily in the financial services, healthcare
services and industrials sectors. The Company is an ‘‘emerging growth company,’’ as defined in Section
2(a) of the Securities Act of 1933, as amended, or the ‘‘Securities Act,’’ as modified by the Jumpstart
Our Business Startups Act of 2012 (the ‘‘JOBS Act’’).
At June 30, 2017, the Company had not commenced
any operations. All activity through June 30, 2017 relates to the Company’s formation, the initial public offering (‘‘Offering’’)
described below and work to identify a potential target for the Business Combination. The Company will not generate any operating
revenues until after completion of its Business Combination, at the earliest. The Company has generated non-operating income in
the form of interest income on cash and cash equivalents from the proceeds derived from the Offering.
The registration statement for the Offering
was declared effective on July 6, 2016. On July 12, 2016, the Company consummated the Offering of 15,000,000 units (“Units”
and, with respect to the common shares included in the Units, the “Public Shares”) at $10.00 per Unit, generating gross
proceeds of $150,000,000, which is described more fully in Note 3.
Simultaneously with the closing of the Offering,
the Company consummated the sale of 460,000 Units (the “Private Units” and, with respect to the shares included in
the Private Units, the “Private Shares”), at a price of $10.00 per Unit in a private placement (the “Private
Placement”) to the Company’s sponsor described below, and Cantor Fitzgerald & Co., the lead underwriter for the
Offering (“Cantor Fitzgerald”), generating gross proceeds of $4,600,000, which is described more fully in Note 4.
Sponsor and Financing:
The Company’s sponsors are M III Sponsor
I LLC, a Delaware limited liability company, and M III Sponsor I LP, a Delaware limited partnership (“M III LLC” and
“M III LP,” respectively; and collectively, the ‘‘Sponsor’’). The Company intends to finance
its Business Combination with net proceeds from the Offering (Note 3) and the Private Placement (Note 4). The net proceeds of the
Offering and the Private Placement are held in the Trust Account (as defined below).
The Trust Account:
Following the closing of the Offering and the
Private Placement on July 12, 2016, an amount of $150.0 million ($10.00 per unit) from the net proceeds of the sale of the Units
in the Offering and the Private Placement was placed in a United States-based trust account (the “Trust Account”) at
Citibank, N.A. maintained by Continental Stock Transfer & Trust Company, acting as trustee, which funds may be invested only
in U.S. government treasury bills with a maturity of one hundred and eighty (180) days or less or in money market funds meeting
certain conditions under Rule 2a-7 under the Investment Company Act of 1940 which invest only in direct U.S. government obligations.
The funds will remain in the Trust Account until the earlier of (i) the consummation of the Business Combination or (ii) the distribution
of the Trust Account as described below, except that interest earned on the funds in the Trust Account may be released to pay taxes
and up to $50,000 of dissolution expenses. The remaining proceeds of the Offering and the Private Placement, which are held outside
the Trust Account, may be used to pay for business, legal and accounting due diligence on prospective acquisitions and continuing
general and administrative expenses.
The Company’s amended and restated certificate
of incorporation provides that, other than the withdrawal of interest to pay taxes and up to $50,000 of dissolution expenses, if
any, none of the funds held in the Trust Account will be released until the earliest of: (i) the completion of the Business Combination;
(ii) the redemption of 100% of the common stock included in the Units sold in the Offering, if the Company is unable to complete
its Business Combination by July 12, 2018 (subject to the requirements of law); or (iii) the redemption of shares in connection
with a vote seeking to amend any provisions of the Company’s amended and restated certificate of incorporation relating to
stockholders’ rights or pre-Business Combination activity, with it being understood that funds held in the Trust Account
may be released in connection with the first to occur of such transactions.
Business Combination:
The Company’s management has broad discretion
with respect to the specific application of the net proceeds of the Offering and the Private Placement, although substantially
all of the net proceeds of the Offering and the Private Placement are intended to be generally applied toward consummating its
Business Combination with (or acquisition of) a Target Business. A ‘‘Target Business’’ means one or more
target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (less any deferred
underwriting commissions and taxes payable on interest earned) at the time the Company signs a definitive agreement in connection
with the Business Combination. There is no assurance that the Company will be able to successfully effect its Business Combination.
The Company, after signing a definitive agreement
for its Business Combination, will either (i) seek stockholder approval of the Business Combination at a meeting called for such
purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the
Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of
two business days prior to the consummation of the Business Combination, including interest but less taxes payable, or (ii) provide
stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for
a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account
as of two business days prior to commencement of the tender offer, including interest but less taxes payable. The decision as to
whether the Company will seek stockholder approval of the Business Combination or will allow stockholders to sell their shares
in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the
timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval.
If the Company seeks stockholder approval, it will complete its Business Combination only if a majority of the outstanding shares
of common stock voted are voted in favor of the Business Combination. However, in no event will the Company redeem its Public Shares
in an amount that would cause its net tangible assets upon consummation of its Business Combination to be less than $5,000,001.
In such case, the Company would not proceed with the redemption of its Public Shares and the related Business Combination, and
instead may search for an alternate Business Combination.
If the Company holds a stockholder vote or there
is a tender offer for shares in connection with the Business Combination, a public stockholder will have the right to redeem its
shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust Account as of two
business days prior to the consummation of the Business Combination, including interest but less taxes payable. As a result, such
shares of common stock are recorded at redemption amount and classified as temporary equity in accordance with Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, ‘‘Distinguishing Liabilities
from Equity.’’ The amount in the Trust Account as of June 30, 2017 is approximately $10.03 per Public Share ($150,422,455
held in the Trust Account divided by 15,000,000 Public Shares).
If the Company seeks stockholder approval of
the Business Combination and it does not conduct redemptions in connection with the Business Combination pursuant to the tender
offer rules, the Company’s amended and restated certificate of incorporation provides that a public stockholder, together
with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a ‘‘group’’
(as defined under Section 13 of the Exchange Act) will be restricted from redeeming its shares with respect to more than an aggregate
of 20% of the shares sold in the Offering (‘‘Excess Shares’’). However, the Company would not be restricting
the stockholders’ ability to vote all of their shares (including Excess Shares) for or against the Business Combination.
The Company must complete its Business Combination
by July 12, 2018. If the Company does not complete its Business Combination by July 12, 2018, then it shall (i) cease all operations
except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter,
redeem the Public Shares for a per share pro rata portion of the Trust Account, including interest, but less taxes payable (and
less up to $50,000 of such net interest to pay dissolution expenses) and (iii) as promptly as possible following such redemption,
dissolve and liquidate the balance of the Company’s net assets to its remaining stockholders, as part of its plan of dissolution
and liquidation. The initial stockholders have entered into letter agreements with the Company (and Cantor Fitzgerald has agreed
as part of its unit purchase agreement), pursuant to which they have waived their rights to participate in any redemption with
respect to their initial shares; however, if the initial stockholders or any of the Company’s officers, directors or affiliates
acquire shares of common stock in or after the Offering, they will be entitled to a pro rata share of the Trust Account with respect
to such shares only upon the Company’s redemption or liquidation in the event the Company does not complete its Business
Combination within the required time period.
In the event of such distribution, it is possible
that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less
than the initial public offering price per Unit in the Offering. In order to protect the amounts held in the Trust Account, the
Company’s Chairman and Chief Executive Officer has agreed that he will be liable to the Company if and to the extent any
claims by a vendor for services rendered or products sold to the Company, or a prospective Target Business, reduce the amount of
funds in the Trust Account. This liability will not apply with respect to any claims by a third party who executed a waiver of
any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters
of the Offering against certain liabilities, including liabilities under the Securities Act. Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third party, then the Company’s Chairman and Chief Executive Officer will
not be responsible to the extent of any liability for such third party claims.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation:
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated
by of the Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included
in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations
of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a
comprehensive presentation of the Company’s financial position, results of operations, or cash flows. In the opinion of
management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring
nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods
presented. Operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2017 or any other period. The accompanying unaudited condensed financial statements
should be read in conjunction with the Company’s annual report on Form 10-K filed on March 30, 2017.
Emerging Growth Company:
The Company is an “emerging growth company,”
as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS
Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public
companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation
in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive
compensation and shareholder approval of any golden parachute payments not previously approved.
Section 102(b)(1) of the JOBS Act exempts emerging
growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that
a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth
companies, but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition
period which means that when an accounting standard is issued or revised and it has different application dates for public or private
companies, the Company, as an emerging growth company, can adopt the new or revised accounting standard at the time private companies
adopt the new or revised standard.
Cash, Cash Equivalents and Securities
Held in Trust Account:
The amounts held in the Trust Account represent
substantially all of the proceeds of the Offering and the Private Placement and are classified as restricted assets since such
amounts can only be used by the Company in connection with the consummation of a Business Combination, except that interest earned
on funds in the Trust Account may be used to pay taxes and up to $50,000 of dissolution expenses, if any. At June 30, 2017, all
of the assets in the Trust Account were invested in the J.P. Morgan 100% US Treasury Money Market Fund (199) Institutional Share
Class. As of June 30, 2017, the Trust Account had earned $321,984 in interest, which is held in the Trust Account, but may be
released to the Company to pay its tax obligations and up to $50,000 of dissolution expenses.
Concentration of Credit Risk:
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which at times, may exceed the
Federal depository insurance coverage of $250,000. The Company has not experienced losses on these accounts and management believes
the Company is not exposed to significant risks on such accounts.
Fair Value Measurement:
ASC 820 establishes a fair value hierarchy that
prioritizes and ranks the level of observability of inputs used to measure investments at fair value. The observability of inputs
is impacted by a number of factors, including the type of investment, characteristics specific to the investment, market conditions
and other factors. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets
or liabilities (Level I measurements) and the lowest priority to unobservable inputs (Level III measurements).
Investments with readily available quoted prices
or for which fair value can be measured from quoted prices in active markets will typically have a higher degree of input observability
and a lesser degree of judgment applied in determining fair value.
The three levels of the fair value hierarchy
under ASC 820 are as follows:
Level I – Quoted prices
(unadjusted) in active markets for identical investments at the measurement date are used.
Level II – Pricing
inputs are other than quoted prices included within Level I that are observable for the investment, either directly or indirectly.
Level II pricing inputs include quoted prices for similar investments in active markets, quoted prices for identical or similar
investments in markets that are not active, inputs other than quoted prices that are observable for the investment, and inputs
that are derived principally from or corroborated by observable market data by correlation or other means.
Level III – Pricing
inputs are unobservable and include situations where there is little, if any, market activity for the investment. The inputs used
in determination of fair value require significant judgment and estimation.
In some cases, the inputs used to measure fair
value might fall within different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within
which the investment is categorized in its entirety is determined based on the lowest level input that is significant to the investment.
Assessing the significance of a particular input to the valuation of an investment in its entirety requires judgment and considers
factors specific to the investment. The categorization of an investment within the hierarchy is based upon the pricing transparency
of the investment and does not necessarily correspond to the perceived risk of that investment.
Financial Instruments:
The fair value of the Company’s financial
instruments, such as cash and payables, approximates the carrying amounts represented in the balance sheet due to the short-term
nature of these instruments.
Use of Estimates:
The preparation of financial statements in conformity
with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Income Taxes:
The Company complies with the accounting and
reporting requirements of FASB ASC 740, ‘‘Income Taxes,’’ which requires an asset and liability approach
to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences
between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts
and are based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB ASC 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken
in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. There were no uncertain tax benefits as of June 30, 2017.
The Company is required to file income tax returns
in the United States (federal) and in various state and local jurisdictions. The Company has been subject to income tax examinations
by various taxing authorities since its inception. These potential examinations may include questioning the timing and amount of
deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s
management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
The Company’s policy for recording interest
and penalties associated with audits is to record such expense as a component of income tax expense. There were no amounts accrued
for penalties or interest as of June 30, 2017. Management is currently unaware of any issues under review that could result in
significant payments, accruals or material deviations from its position.
Redeemable Common Stock:
All of the 15,000,000 shares of common stock
sold as part of the Units in the Offering contain a redemption feature which allows for the redemption of such common stock under
the Company's liquidation or tender offer/stockholder approval provisions. The initial stockholders and Cantor Fitzgerald have
waived their rights to participate in such redemption with respect to their initial shares. In accordance with FASB ASC 480, redemption
provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary
liquidation events, which involve the redemption and liquidation of all of the entity's equity instruments, are excluded from the
provisions of FASB ASC 480. Although the Company’s amended and restated certificate of incorporation does not specify a maximum
redemption threshold, it provides that in no event will the Company redeem its Public Shares in an amount that would cause its
net tangible assets to be less than $5,000,001 upon the closing of its Business Combination.
The Company recognizes changes in redemption
value immediately as they occur and adjusts the carrying value of the securities to equal the redemption value at the end of each
reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional
paid-in capital.
Accordingly, at June 30, 2017 and December 31, 2016,
13,966,659 and 13,991,772, respectively, of the 15,000,000 Public Shares are classified outside of permanent equity at
their redemption value. The redemption value is equal to the pro rata share of the aggregate amount then on deposit in the
Trust Account, including interest but less taxes payable (approximately $10.03 per share at June 30, 2017).
Recent Accounting Pronouncements:
Management does not believe that any recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s
financial statements.
Offering Costs:
Offering costs consist principally of legal, underwriting commissions
and other costs that are directly related to the Offering. All of such underwriting costs, amounting to approximately $9,600,000
(including $3,000,000 of underwriting commissions paid upon the closing of the Offering), were incurred prior to or shortly after
the consummation of the Offering and were charged to stockholders’ equity upon completion of the Offering, except that $6,000,000
of such amount is recorded as a liability in the accompanying balance sheet on account of deferred underwriting commissions.
Net Income (Loss) per Share:
Net income (loss) per share is computed by dividing
net income (loss) by the weighted-average number of shares of common stock outstanding during the period. An aggregate of
13,966,659 shares of common stock subject to possible redemption at June 30, 2017 have been excluded from the calculation of
basic loss per share since such shares, if redeemed, only participate in their pro rata share of the Trust Account.
Additionally, an aggregate of 562,500 shares that were forfeited in August 2016 upon the expiration of the
underwriters’ over-allotment option without exercise have been excluded from such calculation at June 30, 2016. The
Company has not considered the effect of the warrants sold in the Offering and the Private Placement to purchase 7,730,000
shares of the Company’s common stock in the calculation of diluted net income (loss) per share because the exercise of
the warrants is contingent on the occurrence of future events.
NOTE 3 — SUBSEQUENT EVENTS
Management has evaluated subsequent events to
determine if events or transactions occurring through the date the financial statements were issued require potential adjustment
to, or disclosure in, the financial statements and has concluded that all such events that would require recognition or disclosure
have been recognized or disclosed.
NOTE 4 — LIQUIDITY
As of June 30, 2017, the Company had $667,445
in its operating bank account.
Based on the foregoing, management believes
that the Company will have sufficient working capital to meet the Company's needs through the earlier of consummation of its Business
Combination or July 12, 2018. Over this time period, the Company will be using these funds for paying existing accounts payable,
identifying and evaluating prospective merger or acquisition candidates, performing due diligence on prospective target businesses,
paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating
the Business Combination. The Company anticipates that its uses of cash for the next twelve months from the filing date of this
Form 10-Q will be approximately $400,000 for expenses incurred in the search for target businesses, including the legal, accounting
and other third-party expenses attendant to the due diligence investigations, structuring and negotiating of its Business Combination.
As of June 30, 2017, the Company also had $150,422,455 in cash
and cash equivalents in the Trust Account. Such amounts can only be used by the Company in connection with the consummation of
a Business Combination, except that interest earned on funds in the Trust Account may be used to pay taxes and up to $50,000 of
dissolution expenses, if any.
NOTE 5 — PUBLIC OFFERING
On July 12, 2016, the Company consummated the
Offering of 15,000,000 Units at $10.00 per Unit. Each Unit consists of one share of the Company’s common stock, $0.0001 par
value and one redeemable common stock purchase warrant (the ‘‘Warrants’’). Each Warrant entitles the holder
to purchase one-half of one share of common stock at a price of $5.75 (i.e., $11.50 per whole share). No fractional shares will
be issued upon exercise of the Warrants. If, upon exercise of the Warrants, a holder would be entitled to receive a fractional
interest in a share, the Company will, upon exercise, round down to the nearest whole number the number of shares of common stock
to be issued to the Warrant holder. Each Warrant will become exercisable on the later of 30 days after the completion of the Business
Combination or July 12, 2017 and will expire five years after the completion of the Business Combination or earlier upon redemption
or liquidation. However, if the Company does not complete its Business Combination on or prior to July 12, 2018, the Warrants will
expire at the end of such period. If the Company is unable to deliver registered shares of common stock to the Warrant holder upon
exercise of the Warrants during the exercise period, there will be no net cash settlement of these Warrants and the Warrants will
expire worthless, unless they may be exercised on a cashless basis in the circumstances described in the warrant agreement. Once
the Warrants become exercisable, the Company may redeem the outstanding Warrants in whole and not in part at a price of $0.01 per
Warrant upon a minimum of 30 days’ prior written notice of redemption, but only in the event that the last sale price of
the Company’s shares of common stock equals or exceeds $24.00 per share for any 20 trading days within the 30-trading day
period ending on the third trading day before the Company sends the notice of redemption to the Warrant holders.
The Company granted the underwriters a 45-day
option to purchase up to 2,250,000 additional Units to cover any over-allotments, at the Offering price less the underwriting discounts
and commissions. The underwriters did not exercise the over-allotment option.
NOTE 6 — RELATED PARTY TRANSACTIONS
Founder Shares:
In August 2015, M III LLC purchased an aggregate
3,593,750 shares of common stock (the “Founder Shares”) for an aggregate purchase price of $25,000, or approximately
$0.007 per share. On November 5, 2015, the Company effectuated a 1.760-for-1 stock split in the form of a dividend. All share and
per-share amounts have been retroactively restated for the effect of this stock split. On December 31, 2015, the Company cancelled
1,293,750 Founder Shares issued in the stock split, and on July 6, 2016, the Company cancelled a further 718,750 Founder Shares
issued in the stock split, resulting in an aggregate of 4,312,500 Founder Shares outstanding. After giving effect to the forfeiture
of 562,500 shares because the underwriters’ over-allotment option was not exercised, there are 3,750,000 Founder Shares currently
outstanding. As a result of the stock split and subsequent partial cancellations and forfeiture, the per-share purchase price of
the Founder Shares decreased to $0.006 per share. The Founder Shares are identical to the common stock included in the Units sold
in the Offering except that the Founder Shares are subject to certain transfer restrictions, as described in more detail below.
The Company’s initial stockholders have
agreed not to transfer, assign or sell any of their Founder Shares until the earlier of (A) one year after the completion of the
Business Combination, or (B) the date on which the Company completes a liquidation, merger, stock exchange or other similar transaction
after the Business Combination that results in all of the Company’s stockholders having the right to exchange their shares
of common stock for cash, securities or other property (the ‘‘Lock Up Period’’). If subsequent to the Business
Combination, the last sale price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period
commencing at least 150 days after the Business Combination, the Founder Shares will be released from the lock-up.
Private Placement Units:
On July 12, 2016, the Sponsor and Cantor Fitzgerald
purchased from the Company an aggregate of 460,000 private placement units, each consisting of one share of common stock and one
warrant to purchase one-half of one share of common stock with an exercise price of $5.75 per half share, at a price of $10.00
per unit (the ‘‘Private Placement Units’’). 340,000 Private Placement Units were purchased by the Sponsor
and 120,000 Private Placement Units were purchased by Cantor Fitzgerald. The purchase price of the Private Placement Units was
added to the net proceeds from the Offering deposited in the Trust Account pending completion of the Business Combination. The
Private Placement Units (including their component securities) are not transferable, assignable or salable until 30 days after
the completion of the Business Combination and the Private Placement Warrants will be non-redeemable so long as they are held by
the Sponsor, Cantor Fitzgerald or their permitted transferees. If the Private Placement Warrants are held by someone other than
the Sponsor, Cantor Fitzgerald or their permitted transferees, the Private Placement Warrants contained in the Private Placement
Units are redeemable by the Company and exercisable by such holders on the same basis as the Warrants included in the Units sold
in the Offering. In addition, for as long as the Private Placement Warrants are held by Cantor Fitzgerald or its designees or affiliates,
they may not be exercised after five years from the effective date of the registration statement related to the Offering. Otherwise,
the Private Placement Warrants contained in the Private Placement Units have terms and provisions that are identical to those of
the Warrants sold as part of the Units in the Offering and have no net cash settlement provisions.
If the Company does not complete its Business
Combination, then the proceeds from the Private Placement Units will be part of the liquidating distribution to the public stockholders
and the Private Placement Units and their component securities issued to the Sponsor and Cantor Fitzgerald will expire worthless.
Related Party Loans:
M-III LLC had agreed to loan the Company an
aggregate of $250,000 against the issuance of an unsecured promissory note (the “Note”) to cover expenses related to
the Offering. This loan was non-interest bearing and payable on the earlier of July 31, 2016 or the completion of the Offering.
As of December 31, 2016, all amounts owed under the Note had been repaid. In addition to the Note, M-III LLC advanced the Company
an additional $2,766 to cover expenses related to the Offering, which was also repaid upon consummation of the Offering on July
12, 2016.
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors
may, but are not obligated to, loan the Company funds as may be required. If the Company completes its Business Combination, the
Company would repay such loaned amounts out of the proceeds released from the Trust Account. Otherwise, such loans would be repaid
only out of funds held outside the Trust Account. In the event that the Business Combination does not close, the Company may use
a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account
would be used to repay such loaned amounts. Up to $1,000,000 of such loans will be convertible into warrants of the post-Business
Combination entity at a price of $0.50 per warrant at the option of the lender. The warrants would be identical to the Private
Placement Warrants discussed above. The terms of such loans by the Sponsor and the Company’s officers and directors, if any,
have not been determined and no written agreements exist with respect to such loans.
NOTE 7 — COMMITMENTS AND CONTINGENCIES
Underwriting Agreement
The Company paid an underwriting discount of
2% of the Unit offering price to the underwriters at the closing of the Offering (or $3.0 million), with an additional fee (the
‘‘Deferred Discount’’) of 4% of the gross offering proceeds payable upon the Company’s completion
of a Business Combination. The Deferred Discount will be forfeited by the underwriters if the Company fails to complete its Business
Combination.
Registration Rights
The Company’s initial stockholders and
holders of the Private Placement Units (and their constituent securities) are entitled to registration rights pursuant to a registration
rights agreement signed on the date of the prospectus for the Offering. The Company’s initial stockholders and holders of
the Private Placement Units (and their constituent securities) are entitled to make up to three demands, excluding short form registration
demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have ‘‘piggy-back’’
registration rights to include their securities in other registration statements filed by the Company. The Company will bear the
expenses incurred in connection with the filing of any such registration statements. The registration rights agreement does not
provide for any cash penalties or additional penalties associated with any delays in registering the securities.
NOTE 8 — TRUST ACCOUNT AND FAIR VALUE
MEASUREMENT
Upon the closing of the Offering and the Private
Placement, a total of $150,000,000 was deposited into the Trust Account. All proceeds in the Trust Account may be invested only
in either U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions
under Rule 2a-7 under the Investment Company Act of 1940, as amended, and that invest solely in U.S. government treasury obligations.
At June 30, 2017, the proceeds in the Trust
Account were invested in money market funds holding U.S. government treasury bills yielding interest of approximately 0.10%. The
carrying value of the investment is stated at market and includes interest income of $422,455 at June 30, 2017, of which $321,983
was earned in the six months ended June 30, 2017.
The following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at June 30, 2017 and December 31, 2016, and indicates
the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
June 30, 2017
|
|
|
December 31, 2016
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and securities held in Trust Account
|
|
|
1
|
|
|
$
|
150,422,455
|
|
|
$
|
150,100,471
|
|
NOTE 9 — STOCKHOLDERS’ EQUITY
Common Stock
The number of authorized shares of common stock
of the Company is 35,000,000 shares. Holders of the Company’s common stock are entitled to one vote for each share of common
stock they own. At June 30, 2017, there were 19,210,000 shares of common stock issued and outstanding, including 13,966,659 shares
subject to redemption.
Preferred Stock
The Company is authorized to issue up to 1,000,000
shares of preferred stock with such designations, voting and other rights and preferences as may be determined from time to time
by the Board of Directors. At June 30, 2017, there were no shares of preferred stock issued and outstanding.