GREENCITY ACQUISITION CORPORATION
CONDENSED BALANCE SHEETS
|
|
September 30,
|
|
|
December 31,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
|
(unaudited)
|
|
|
|
(audited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
684,238
|
|
|
$
|
526
|
|
Prepaid expenses
|
|
|
32,851
|
|
|
|
—
|
|
Total Current Assets
|
|
|
717,089
|
|
|
|
526
|
|
Security deposit
|
|
|
—
|
|
|
|
4,663
|
|
Deferred offering costs
|
|
|
—
|
|
|
|
193,089
|
|
Marketable securities held in Trust Account
|
|
|
40,603,840
|
|
|
|
—
|
|
TOTAL ASSETS
|
|
$
|
41,320,929
|
|
|
$
|
198,278
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
Accrued expenses
|
|
$
|
60,404
|
|
|
$
|
289
|
|
Accrued offering costs
|
|
|
30,000
|
|
|
|
3,166
|
|
Promissory note – related party
|
|
|
394,590
|
|
|
|
196,495
|
|
Total Current Liabilities
|
|
|
484,994
|
|
|
|
199,950
|
|
Deferred underwriting fee payable
|
|
|
1,000,000
|
|
|
|
—
|
|
Total Liabilities
|
|
|
1,484,994
|
|
|
|
199,950
|
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
|
Ordinary shares subject to possible redemption, 3,431,787 and no shares at redemption value as of September 30, 2020 and December 31, 2019, respectively
|
|
|
34,835,933
|
|
|
|
—
|
|
Shareholder’s Equity (Deficit)
|
|
|
|
|
|
|
|
|
Preference shares, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
Ordinary shares, $0.0001 par value; 100,000,000 shares authorized; 1,828,213 and 1,150,000 shares issued and outstanding (excluding 3,431,787 and no shares subject to possible redemption) as of September 30, 2020 and December 31, 2019, respectively
|
|
|
183
|
|
|
|
115
|
|
Additional paid-in capital
|
|
|
5,142,319
|
|
|
|
24,885
|
|
Accumulated deficit
|
|
|
(142,500
|
)
|
|
|
(26,672
|
)
|
Total Shareholders’ Equity (Deficit)
|
|
|
5,000,002
|
|
|
|
(1,672
|
)
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)
|
|
$
|
41,320,929
|
|
|
$
|
198,278
|
|
The accompanying notes are an integral part
of the unaudited condensed financial statements.
GREENCITY ACQUISITION CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Formation and operating costs
|
|
$
|
113,040
|
|
|
$
|
8,000
|
|
|
$
|
119,668
|
|
|
$
|
15,057
|
|
Loss from operations
|
|
|
(113,040
|
)
|
|
|
(8,000
|
)
|
|
|
(119,668
|
)
|
|
|
(15,057
|
)
|
Other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
5,822
|
|
|
|
—
|
|
|
|
5,822
|
|
|
|
—
|
|
Unrealized loss on marketable securities held in Trust Account
|
|
|
(1,982
|
)
|
|
|
—
|
|
|
|
(1,982
|
)
|
|
|
—
|
|
Other income, net
|
|
|
3,840
|
|
|
|
—
|
|
|
|
3,840
|
|
|
|
—
|
|
Net Loss
|
|
$
|
(109,200
|
)
|
|
$
|
(8,000
|
)
|
|
$
|
(115,828
|
)
|
|
$
|
(15,057
|
)
|
Weighted average shares outstanding, basic and diluted (1)
|
|
|
1,577,353
|
|
|
|
1,000,000
|
|
|
|
1,193,856
|
|
|
|
809,524
|
|
Basic and diluted net loss
per ordinary share (2)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.02
|
)
|
(1)
|
Excludes an aggregate of 3,431,787 shares subject to possible redemption at September 30, 2020. At September 30, 2019, excludes and an aggregate of up to 150,000 shares subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters.
|
(2)
|
Net loss per ordinary share – basic and diluted excludes income attributable to ordinary shares subject to possible redemption of $3,294 for the three and nine months ended September 30, 2020 (see Note 2).
|
The accompanying notes are an integral part
of the unaudited condensed financial statements.
GREENCITY ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’
EQUITY (DEFICIT)
(Unaudited)
THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2020
|
|
Ordinary Shares
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Shareholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
(Deficit) Equity
|
|
Balance – January 1, 2020
|
|
|
1,150,000
|
|
|
$
|
115
|
|
|
$
|
24,885
|
|
|
$
|
(26,672
|
)
|
|
$
|
(1,672
|
)
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,425
|
)
|
|
|
(5,425
|
)
|
Balance – March 31, 2020
|
|
|
1,150,000
|
|
|
|
115
|
|
|
|
24,885
|
|
|
|
(32,097
|
)
|
|
|
(7,097
|
)
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,203
|
)
|
|
|
(1,203
|
)
|
Balance – June 30, 2020
|
|
|
1,150,000
|
|
|
|
115
|
|
|
|
24,885
|
|
|
|
(33,300
|
)
|
|
|
(8,300
|
)
|
Sale of 4,000,000 Units, net of underwriting discounts and offering costs
|
|
|
4,000,000
|
|
|
|
400
|
|
|
|
37,352,935
|
|
|
|
—
|
|
|
|
37,353,335
|
|
Sale of 260,000 Private Units
|
|
|
260,000
|
|
|
|
26
|
|
|
|
2,599,974
|
|
|
|
—
|
|
|
|
2,600,000
|
|
Sale of unit purchase option
|
|
|
—
|
|
|
|
—
|
|
|
|
100
|
|
|
|
—
|
|
|
|
100
|
|
Forfeiture of Founder Shares
|
|
|
(150,000
|
)
|
|
|
(15
|
)
|
|
|
15
|
|
|
|
—
|
|
|
|
—
|
|
Ordinary shares subject to possible redemption
|
|
|
(3,431,787
|
)
|
|
|
(343
|
)
|
|
|
(34,835,590
|
)
|
|
|
—
|
|
|
|
(34,835,933
|
)
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(109,200
|
)
|
|
|
(109,200
|
)
|
Balance – September 30, 2020
|
|
|
1,828,213
|
|
|
$
|
183
|
|
|
$
|
5,142,319
|
|
|
$
|
(142,500
|
)
|
|
$
|
5,000,002
|
|
THREE AND NINE MONTHS ENDED SEPTEMBER
30, 2019
|
|
Ordinary Shares
|
|
|
Additional
Paid-in
|
|
|
Accumulated
|
|
|
Total
Shareholder’s
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance – January 1, 2019
|
|
|
1
|
|
|
$
|
—
|
|
|
$
|
25,000
|
|
|
$
|
(4,000
|
)
|
|
$
|
21,000
|
|
Issuance of Class B ordinary shares to Sponsor (1)
|
|
|
1,149,999
|
|
|
|
115
|
|
|
|
(115
|
)
|
|
|
—
|
|
|
|
—
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(32
|
)
|
|
|
(32
|
)
|
Balance – March 31, 2019
|
|
|
1,150,000
|
|
|
|
115
|
|
|
|
24,885
|
|
|
|
(4,032
|
)
|
|
|
20,968
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(7,025
|
)
|
|
|
(7,025
|
)
|
Balance – June 30, 2019
|
|
|
1,150,000
|
|
|
|
115
|
|
|
|
24,885
|
|
|
|
(11,057
|
)
|
|
|
13,943
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(8,000
|
)
|
|
|
(8,000
|
)
|
Balance – September 30, 2019
|
|
|
1,150,000
|
|
|
$
|
115
|
|
|
$
|
24,885
|
|
|
$
|
(19,057
|
)
|
|
$
|
5,943
|
|
(1)
|
Included an aggregate of up to 150,000 shares that were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full (see Note 5).
|
The accompanying notes are an integral part
of the unaudited condensed financial statements.
GREENCITY ACQUISITION CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
Nine Months Ended September 30,
|
|
|
|
2020
|
|
|
2019
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(115,828
|
)
|
|
$
|
(15,057
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Interest earned on securities held in Trust Account
|
|
|
(5,822
|
)
|
|
|
—
|
|
Unrealized loss on securities held in Trust Account
|
|
|
1,982
|
|
|
|
—
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
|
(32,851
|
)
|
|
|
(6,652
|
)
|
Accrued expenses
|
|
|
60,115
|
|
|
|
(4,000
|
)
|
Net cash used in operating activities
|
|
|
(92,404
|
)
|
|
|
(25,709
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Security deposit
|
|
|
4,663
|
|
|
|
(4,663
|
)
|
Investment of cash in Trust Account
|
|
|
(40,600,000
|
)
|
|
|
—
|
|
Net cash used in operating activities
|
|
|
(40,595,337
|
)
|
|
|
(4,663
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from sale of Units, net of underwriting discounts paid
|
|
|
39,000,000
|
|
|
|
|
|
Proceeds from sale of Placement Units
|
|
|
2,600,000
|
|
|
|
—
|
|
Proceeds from sale of unit purchase option
|
|
|
100
|
|
|
|
—
|
|
Proceeds from promissory note - related party
|
|
|
198,095
|
|
|
|
310,500
|
|
Payment of offering costs
|
|
|
(426,742
|
)
|
|
|
(117,086
|
)
|
Net cash provided by financing activities
|
|
|
41,371,453
|
|
|
|
193,414
|
|
|
|
|
|
|
|
|
|
|
Net Change in Cash
|
|
|
683,712
|
|
|
|
163,042
|
|
Cash – Beginning
|
|
|
526
|
|
|
|
49,995
|
|
Cash – Ending
|
|
$
|
684,238
|
|
|
$
|
213,037
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Deferred offering costs included in accrued offering costs
|
|
$
|
30,000
|
|
|
$
|
50,000
|
|
Conversion of advance from related party to promissory note – relate party
|
|
$
|
—
|
|
|
$
|
24,995
|
|
Initial classification of ordinary shares subject to possible redemption
|
|
$
|
34,944,655
|
|
|
$
|
—
|
|
Change in value of ordinary shares subject to possible redemption
|
|
$
|
(108,722
|
)
|
|
$
|
—
|
|
Deferred underwriting fee payable
|
|
$
|
1,000,000
|
|
|
$
|
—
|
|
The accompanying notes are an integral part
of the unaudited condensed financial statements.
GREENCITY ACQUISITION
CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Greencity Acquisition
Corporation (the “Company”) is a blank check company incorporated in the Cayman Islands on May 14, 2018. The Company
was formed for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all
or substantially all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination
with one or more businesses or entities (“Business Combination”). Although the Company is not limited to a particular
industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on businesses that
have a connection to the Asia market.
At September 30, 2020,
the Company had not yet commenced any operations. All activity through September 30, 2020 relates to the Company’s formation
and the Initial Public Offering (as defined below).
The registration statement
for the Company’s Initial Public Offering was declared effective on July 23, 2020. On July 28, 2020, the Company consummated
the Initial Public Offering of 4,000,000 units (the “Units” and, with respect to the ordinary shares included in the
Units sold, the “Public Shares”), generating gross proceeds of $40,000,000, which is described in Note 3.
Simultaneously with
the closing of the Initial Public Offering, the Company consummated the sale of 260,000 units (the “Private Units”)
at a price of $10.00 per Private Unit in a private placement to Cynthia Management Corporation (the “Sponsor”), generating
gross proceeds of $2,600,000, which is described in Note 4.
Transaction costs amounted
to $2,646,665, consisting of $1,000,000 of underwriting fees, $1,000,000 of deferred underwriting fees and $646,665 of other offering
costs. In addition, at September 30, 2020, cash of $684,238 was held outside of the Trust Account (as defined below) and is available
for working capital purposes.
Following the closing
of the Initial Public Offering on July 28, 2020, an amount of $40,600,000 ($10.15 per Unit) from the net proceeds of the sale of
the Units in the Initial Public Offering and the sale of the Private Units was placed in a trust account (the “Trust Account”)
invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of
1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less, or in any open-ended investment
company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act, as
determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of
the funds in the Trust Account to the Company’s shareholders, as described below.
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and
sale of the Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating
a Business Combination. NASDAQ rules provide that the Business Combination must be with 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 of the signing of an agreement to enter into a Business Combination. The Company
will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding
voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required
to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully
effect a Business Combination.
The Company will provide
its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination
either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender
offer. In connection with a proposed Business Combination, if the Company is no longer a foreign private issuer, the Company may
seek shareholder approval of a Business Combination at a meeting called for such purpose at which shareholders may seek to redeem
their shares, regardless of whether they vote for or against a Business Combination. The Company will proceed with a Business Combination
only if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon such consummation of a Business
Combination and, if the Company seeks shareholder approval, a majority of the outstanding shares voted are voted in favor of the
Business Combination.
If the Company seeks
shareholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s
Amended and Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of
such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under
Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking
redemption rights with respect to 15% or more of the Public Shares without the Company’s prior written consent.
GREENCITY ACQUISITION
CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
If the Company
continues to be a foreign private issuer or if a shareholder vote is not required and the Company does not decide to hold a
shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and
Articles of Association, offer such redemption pursuant to the tender offer rules of the Securities and Exchange Commission
(“SEC”), and file tender offer documents containing substantially the same information as would be included in a
proxy statement with the SEC prior to completing a Business Combination.
The shareholders will
be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.15
per Public Share, subject to increase of up to an additional $0.30 per Public Share in the event that the Sponsor elects to extend
the period of time to consummate a Business Combination (see below), plus any pro rata interest earned on the funds held in
the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed
to shareholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay
to the underwriter (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with
respect to the Company’s warrants.
The Sponsor and any
of the Company’s officers or directors that may hold founder shares (the “initial shareholders”) will agree (a) to
vote their founder shares, the ordinary shares included in the Private Units (the “Private Shares”) and any Public
Shares purchased during or after the Initial Public Offering in favor of a Business Combination, (b) not to propose an amendment
to the Company’s Amended and Restated Memorandum and Articles of Association with respect to the Company’s pre-Business
Combination activities prior to the consummation of a Business Combination unless the Company provides dissenting public shareholders
with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to redeem any shares (including
the founder shares) and Private Shares into the right to receive cash from the Trust Account in connection with a shareholder vote
to approve a Business Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company
does not seek shareholder approval in connection therewith) or a vote to amend the provisions of the Amended and Restated Memorandum
and Articles of Association relating to shareholders’ rights of pre-Business Combination activity and (d) that the founder
shares and Private Shares shall not participate in any liquidating distributions upon winding up if a Business Combination is not
consummated. However, the initial shareholders will be entitled to liquidating distributions from the Trust Account with respect
to any Public Shares purchased during or after the Initial Public Offering if the Company fails to complete its Business Combination.
The Company will have
until July 28, 2021 to consummate a Business Combination. However, if the Company anticipates that it may not be able to consummate
a Business Combination by July 28, 2021, the Company may extend the period of time to consummate a Business Combination up to nine
times, each by an additional month (for a total of 21 months to complete a Business Combination (the “Combination
Period”). In order to extend the time available for the Company to consummate a Business Combination, the Sponsor or its
affiliate or designees must deposit into the Trust Account $133,334, up to an aggregate of $1,200,000, or $0.30 per Public Share,
on or prior to the date of the applicable deadline, for each monthly extension.
If the Company is unable
to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter, redeem 100% of the
outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest earned (net of taxes payable and less interest to pay dissolution expenses up to $50,000), divided by the number
of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders
(including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Company’s board
of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case
to its obligations to provide for claims of creditors and the requirements of applicable law. The underwriter has agreed to waive
its rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business
Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account
that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the
per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit
($10.00).
The Sponsor has agreed
that it will be liable to the Company, if and to the extent any claims by a vendor (other than the Company’s independent
auditors) for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed
entering into a transaction agreement, reduce the amounts in the Trust Account to below (i) $10.15 per share or (ii) such lesser
amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the
value of the trust assets, except as 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 Initial Public
Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). In the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be
responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the
Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers,
prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving
any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Liquidity
The Company has principally
financed its operations from inception using proceeds from the sale of its equity securities to its shareholders prior to the
Initial Public Offering and such amount of proceeds from the Initial Public Offering that were placed in an account outside of
the Trust Account for working capital purposes. As of September 30, 2020, the Company had $684,238 in its operating bank accounts,
$40,603,840 in securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem its ordinary
shares in connection therewith and working capital of $626,685. Based on the foregoing, the Company believes it will have sufficient
cash to meet its needs through July 28, 2021, the deadline to complete a Business Combination pursuant to the Company's Amended
and Restated Memorandum and Articles of Association (unless otherwise amended by shareholders).
GREENCITY ACQUISITION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
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 8 of Regulation S-X of 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 complete presentation of
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.
The accompanying unaudited
condensed financial statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering
as filed with the SEC on July 24, 2020, as well as the Company’s Current Reports on Form 8-K, as filed with the SEC
on July 28, 2020 and August 3, 2020. The interim results for the three and nine months ended September 30, 2020 are not necessarily
indicative of the results to be expected for the year ending December 31, 2020 or for any future periods.
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 independent registered public accounting firm 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.
Further, 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 election to opt out is irrevocable. The Company has elected not to opt
out of such extended transition period which means that when a 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 standard at the time
private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with
another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using
the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the
financial statements in conformity with GAAP requires 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.
Making estimates requires
management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition,
situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could
differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers
all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company
did not have any cash equivalents as of September 30, 2020 and December 31, 2019.
Marketable Securities Held in Trust
Account
At September 30, 2020, substantially all of the assets held in the Trust Account were held
in money market funds, which primarily invest in U.S. Treasury Bills. At December 31, 2019, substantially all of the assets held in the
Trust Account were held in U.S. Treasury Bills. Through September 30, 2020, the Company withdrew an aggregate of $2,037,054 of interest
income from the Trust Account to pay for its franchise and income taxes, of which $1,295,252 was withdrawn during the nine months ended
September 30, 2020
Offering Costs
Offering costs consist
of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to the
Initial Public Offering. Offering costs amounting to $2,646,665 were charged to shareholders’ equity upon the completion
of the Initial Public Offering.
GREENCITY ACQUISITION
CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Ordinary Shares Subject to Possible
Redemption
The Company accounts
for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified
as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that
feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are
classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption rights that
are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly,
at September 30, 2020, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside
of the shareholders’ equity section of the Company’s condensed balance sheet.
Income Taxes
The Company complies
with the accounting and reporting requirements of ASC Topic 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,
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.
ASC Topic 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. The Company’s management determined that the Cayman Islands is the Company’s
only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any,
as income tax expense. There were no unrecognized tax benefits as of September 30, 2020 and no amounts accrued for interest and
penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or
material deviation from its position.
The Company may be subject
to potential examination by foreign taxing authorities in the area of income taxes. These potential examinations may include questioning
the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with foreign 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 is considered
to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income
taxes or income tax filing requirements in the Cayman Islands or the United States. As such, the Company’s tax provision
was zero for the periods presented.
Net Loss Per Ordinary Share
Net loss per
ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding for the period.
The Company applies the two-class method in calculating earnings per share. Ordinary shares subject to possible redemption at
September 30, 2020, which are not currently redeemable and are not redeemable at fair value, have been excluded from the
calculation of basic net loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of
the Trust Account earnings. The Company has not considered the effect of warrants sold in (i) the Initial Public Offering
(ii) in unit purchase option and (iii) the private placement to purchase an aggregate of 2,490,000 ordinary shares in the
calculation of diluted loss per share, since the exercise of the warrants into ordinary shares is contingent upon the
occurrence of future events. As a result, diluted net loss per ordinary share is the same as basic net loss per ordinary
share for the period presented.
Reconciliation of Net Loss Per Ordinary
Share
The Company’s
net loss is adjusted for the portion of income that is attributable to ordinary shares subject to possible redemption, as these
shares only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly, basic and
diluted loss per ordinary share is calculated as follows:
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net loss
|
|
$
|
(109,200
|
)
|
|
$
|
(8,000
|
)
|
|
$
|
(115,828
|
)
|
|
$
|
(15,057
|
)
|
Less: Income attributable to ordinary shares subject to possible redemption
|
|
|
(3,294
|
)
|
|
|
—
|
|
|
|
(3,294
|
)
|
|
|
—
|
|
Adjusted net loss
|
|
$
|
(112,494
|
)
|
|
$
|
(8,000
|
)
|
|
$
|
(119,122
|
)
|
|
$
|
(15,057
|
)
|
Weighted average shares outstanding, basic and diluted
|
|
|
1,577,353
|
|
|
|
1,000,000
|
|
|
|
1,193,856
|
|
|
|
809,524
|
|
Basic and diluted net loss per ordinary share
|
|
$
|
(0.07
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(0.02
|
)
|
GREENCITY ACQUISITION
CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Concentration of Credit Risk
Financial instruments
that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution. The
Company has not experienced losses on this account and management believes the Company is not exposed to significant risks on such
account.
Fair Value of Financial Instruments
The fair value of the
Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,”
approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
Recent Accounting Standards
Management does not
believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect
on the accompanying condensed financial statements.
Risks and Uncertainties
In March 2020, the World
Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout
the United States and the World. As of the date the financial statements were issued, there was considerable uncertainty around
the expected duration of this pandemic. The Company has concluded that while it is reasonably possible that COVID-19 could have
a negative effect on identifying a target company for a Business Combination, the specific impact is not readily determinable as
of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome
of this uncertainty.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial
Public Offering, the Company sold 4,000,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one ordinary
share and one redeemable warrant (“Public Warrant”). Each Public Warrant will entitle the holder to purchase one-half
of one ordinary share at an exercise price of $11.50 per whole share (see Note 7).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with
the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 260,000 Private Units at a price of $10.00 per
Private Unit, for an aggregate purchase price of $2,600,000. The Sponsor has agreed to purchase up to an aggregate of 284,000 Private
Units to the extent the underwriters’ over-allotment option is exercised in full. The proceeds from the Private Units were
added to the net proceeds from the Initial Public Offering held in the Trust Account. The Private Units are identical to the Units
sold in the Initial Public Offering, except for the private warrants (“Private Warrants”), as described in Note 7.
If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private
Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private
Units and underlying securities will be worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In December 2018,
the Company received $25,000 for the anticipated issuance of 1,150,000 founder shares to the Sponsor. As of December 31, 2018,
one founder share was issued to the Sponsor. The remaining 1,149,999 founder shares were issued to the Sponsor on February 21,
2019.
The 1,150,000
founder shares include an aggregate of up to 150,000 shares subject to forfeiture by the Sponsor to the extent that the
underwriters’ over-allotment is not exercised in full or in part, so that the Sponsor will collectively own 20% of the
Company’s issued and outstanding shares after the Initial Public Offering (assuming the initial shareholders do not
purchase any Public Units in the Initial Public Offering and excluding the Private Units and underlying securities). On
September 10, 2020, the underwriters’ election to exercise their over-allotment option expired unexercised, resulting
in the forfeiture of 150,000 founder shares. Accordingly, as of September 30, 2020, there are 1,000,000 Founder Shares issued
and outstanding.
GREENCITY ACQUISITION
CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
The initial shareholders
have agreed not to transfer, assign or sell any of the founder shares (except to certain permitted transferees) until, with respect
to 50% of the founder shares, the earlier of (i) six months after the date of the consummation of a Business Combination,
or (ii) the date on which the closing price of the Company’s ordinary shares equals or exceeds $12.50 per share (as adjusted
for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period
commencing after a Business Combination, with respect to the remaining 50% of the founder shares, upon six months after the
date of the consummation of a Business Combination, or earlier, in each case, if, subsequent to a Business Combination, the Company
consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s
shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Advance from Related Party
As of December 31,
2018, the Sponsor advanced the Company an aggregate of $24,995. The advance was non-interest bearing and due on demand. In February 2019,
the advance was converted into a promissory note. As of September 30, 2020 and December 31, 2019, there were no advances outstanding.
Promissory Note — Related Party
On February 21, 2019,
the Company issued a non-interest bearing, unsecured promissory note to the Sponsor, pursuant to which the Company may borrow up
to an aggregate principal amount of $300,000. On June 30, 2019, the Company amended the promissory note such that the Company may
borrow up to an aggregate total principal amount of $500,000 (the “Promissory Note”) and on June 20, 2020, the Company
further amended the Promissory Note such that the Promissory Note is payable on the earlier of (i) December 31, 2020 or (ii)
the consummation of the Initial Public Offering. In connection with the Promissory Note, the Company converted $24,995 in advances
as of December 31, 2018 into amounts outstanding under the Promissory Note. On July 28, 2020, the Company amended the Promissory
Note such that it is payable upon the consummation of a Business Combination. At September 30, 2020 and December 31, 2019, there
was $394,590 and 196,495, respectively, outstanding under the Promissory Note. In the event that a Business Combination does not
close, the Company may use a portion of proceeds held outside the Trust Account to repay the Promissory Note but no proceeds held
in the Trust Account would be used to repay the Promissory Note.
Administrative Services Arrangement
The Company entered
into an agreement whereby, commencing on July 24, 2020, through the earlier of the Company’s consummation of a Business Combination
and its liquidation, the Company will pay the Sponsor a total of $10,000 per month for certain general and administrative services,
including office space, utilities and administrative services, as the Company may require from time to time. For each of the three
and nine months ended September 30, 2020, the Company incurred $20,000 in fees for these services, of which such amount is included
within accrued expenses on the condensed balance sheets.
Related Party Loans
In order to finance
transaction costs in connection with a Business Combination, the Company’s Sponsor or an affiliate of the Sponsor, or the
Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working
Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon
consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be
converted upon consummation of a Business Combination into additional Private Units at a price of $10.00 per Unit. In the event
that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the
Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
Related Party Extension Loans
As discussed in
Note 1, the Company may extend the period of time to consummate a Business Combination up to nine times, each by an
additional month (for a total of 21 months to complete a Business Combination). In order to extend the time
available for the Company to consummate a Business Combination, the Sponsor or its affiliates or designees must deposit into
the Trust Account $133,334, or $153,334 if the underwriters’ over-allotment option is exercised in full ($0.033 per
Public Share in either case), up to an aggregate of $1,200,000 (or $1,380,000 if the underwriters’ over-allotment
option is exercised in full), or $0.30 per Public Share, on or prior to the date of the applicable deadline, for each monthly
extension. Any such payments would be made in the form of a loan. The terms of the promissory note to be issued in connection
with any such loans have not yet been negotiated. If the Company completes a Business Combination, the Company would repay
such loaned amounts out of the proceeds of the Trust Account released to the Company. If the Company does not complete a
Business Combination, the Company will not repay such loans. Furthermore, the letter agreement with the initial shareholders
contains a provision pursuant to which the Sponsor has agreed to waive its right to be repaid for such loans in the event
that the Company does not complete a Business Combination. The Sponsor and its affiliates or designees are not obligated to
fund the Trust Account to extend the time for the Company to complete a Business Combination.
GREENCITY ACQUISITION
CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration
rights agreement entered into on July 23, 2020, the holders of the founder shares, Private Units (and their underlying securities),
the shares underlying the warrants underlying the unit purchase option issued to the underwriters and any Units that may be issued
upon conversion of the Working Capital Loans (and underlying securities) are entitled to registration rights. The holders of these
securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In
addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to the consummation of a Business Combination and rights to require the Company to register for resale such securities pursuant
to Rule 415 under the Securities Act. Notwithstanding the foregoing, the underwriters may not exercise their demand and “piggyback”
registration rights after five (5) and seven (7) years after the effective date of the registration statement and may
not exercise their demand rights on more than one occasion. The Company will bear the expenses incurred in connection with the
filing of any such registration statements.
Underwriting Agreement
The Company granted
the underwriters a 45-day option to purchase up to 600,000 additional Units to cover over-allotments at the Initial Public Offering
price, less the underwriting discounts and commissions. On September 10, 2020, the underwriters’ election to exercise their
over-allotment option expired unexercised.
The underwriters were
paid a cash underwriting discount of two and one-half percent (2.5%) of the gross proceeds of the Initial Public Offering,
or $1,000,000. The underwriters are entitled to a deferred fee of two and one-half percent (2.5%) of the gross proceeds of
the Initial Public Offering, or $1,000,000 (or $1,150,000 if the underwriters’ over-allotment option is exercised in full).
The deferred fee will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject
to the terms of the underwriting agreement.
NOTE 7. SHAREHOLDERS’ EQUITY
Preference Shares
— On February 21, 2019, the Company filed an Amended and Restated Memorandum and Articles of Incorporation, pursuant
to which the Company is authorized to issue 1,000,000 preference shares with a par value of $0.0001 per share with such designation,
rights and preferences as may be determined from time to time by the Company’s Board of Directors. At September 30, 2020
and December 31, 2019, there were no preference shares designated, issued or outstanding.
Ordinary Shares
— On February 21, 2019, the Company filed an Amended and Restated Memorandum and Articles of Incorporation, pursuant
to which the Company is authorized to issue 100,000,000 ordinary shares, with a par value of $0.0001 per share. Holders of the
ordinary shares are entitled to one vote for each ordinary share. As of September 30, 2020 and December 31, 2019, there were 1,828,213
and 1,150,000 ordinary shares issued and outstanding, excluding 3,431,787 and no ordinary shares subject to possible redemption,
respectively.
Warrants —
Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public
Warrants. The Public Warrants will become exercisable on the later of (a) the consummation of a Business Combination or (b) 12 months
from the effective date of the registration statement relating to the Initial Public Offering. No Public Warrants will be exercisable
for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise
of the Public Warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration
statement covering the ordinary shares issuable upon the exercise of the Public Warrants is not effective within 60 days,
the holders may, until such time as there is an effective registration statement and during any period when the Company shall have
failed to maintain an effective registration statement, exercise the Public Warrants on a cashless basis pursuant to an available
exemption from registration under the Securities Act. If an exemption from registration is not available, holders will not be able
to exercise their Public Warrants on a cashless basis. The Public Warrants will expire five years from the consummation of
a Business Combination or earlier upon redemption or liquidation.
GREENCITY ACQUISITION
CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
The Company may call
the warrants for redemption (excluding the Private Warrants but including any outstanding warrants issued upon exercise of the
unit purchase option issued to the underwriters or their designees):
|
•
|
in whole and not in part,
|
|
•
|
at a price of $0.01 per warrant,
|
|
•
|
upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder,
|
|
•
|
if, and only if, the reported last sale price of the ordinary shares equal or exceed $16.50 per share, (as adjusted for share splits, share capitalizations, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30 trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and
|
|
•
|
if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.
|
If the Company calls
the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants
to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares
issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary
dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not
be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be
required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period
and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect
to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with
respect to such warrants. Accordingly, the warrants may expire worthless.
In addition, if (x)
the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing
of a Business Combination at an issue price or effective issue price of less than $9.20 per ordinary share (with such issue price
or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such
issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates,
as applicable, prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances
represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination
on the date of the consummation of a Business Combination (net of redemptions), and (z) the volume weighted average trading price
of the ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates
a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of the warrants
will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued Price, and the
$16.50 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to 165% of the higher of the Market
Value and the Newly Issued Price.
The Private Warrants
are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants
and the ordinary shares issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until
30 days after the completion of a Business Combination, subject to certain limited exceptions and the Private Warrants underlying
the Private Units issued to the underwriter may not be exercised after five years from the effective date of the Initial Public
Offering. Additionally, the Private Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are
held by the initial purchasers or their permitted transferees. If the Private Warrants are held by someone other than the initial
purchasers or their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by such holders
on the same basis as the Public Warrants.
Unit Purchase Option
On July 28, 2020,
the Company sold the underwriter (and/or its designees), for $100, an option to purchase up to 240,000 Units exercisable at
$11.00 per Unit (or an aggregate exercise price of $2,640,000) commencing on the later of the consummation of a Business
Combination and January 28, 2021. The unit purchase option may be exercised for cash or on a cashless basis, at the
holder’s option, and expires five years from the effective date of the registration statement related to the Initial
Public Offering. The Units issuable upon exercise of the option are identical to those offered in the Initial Public
Offering. The Company accounted for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of
the Initial Public Offering resulting in a charge directly to shareholders’ equity. The Company estimated the fair
value of the unit purchase option to be approximately $665,000 (or $2.77 per Unit) using the Black-Scholes option-pricing
model. The fair value of the unit purchase option granted to the underwriters was estimated as of the date of grant using the
following assumptions: (1) expected volatility of 35%, (2) risk-free interest rate of 0.30% and (3) expected life of five
years. The option and such units purchased pursuant to the option, as well as the ordinary shares underlying such units, the
warrants included in such units, and the shares underlying such warrants, have been deemed compensation by FINRA and are
therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA’s NASDAQ Conduct Rules. Additionally, the
option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period (including the foregoing 180-day
period) following July 28, 2020 except to any underwriter and selected dealer participating in the Initial Public Offering
and their bona fide officers or partners. The option grants to holders demand and “piggy-back” rights for periods
of five and seven years, respectively, from July 28, 2020 with respect to the registration under the Securities Act of the
securities directly and indirectly issuable upon exercise of the option. The Company will bear all fees and expenses
attendant to registering the securities, other than underwriting commissions which will be paid for by the holders
themselves. The exercise price and number of units issuable upon exercise of the option may be adjusted in certain
circumstances including in the event of a stock dividend, or the Company’s recapitalization, reorganization, merger or
consolidation. However, the option will not be adjusted for issuances of ordinary shares at a price below its exercise
price.
GREENCITY ACQUISITION
CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 8. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC
Topic 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and
non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with
the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants
at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize
the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal
assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify
assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The following table presents information
about the Company’s assets that are measured at fair value on a recurring basis at September 30, 2020, and indicates the
fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
September 30,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
|
1
|
|
|
$
|
40,603,840
|
|
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were
issued. Other than as described in these financial statements, the Company did not identify any subsequent events that would have
required adjustment or disclosure in the financial statements.
ITEM 2. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly
Report”) to “we,” “us” or the “Company” refer to Greencity Acquisition Corporation. References
to our “management” or our “management team” refer to our officers and directors, and references to the
“Sponsor” refer to Cynthia Management Corporation. The following discussion and analysis of the Company’s financial
condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained
elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking
Statements
This Quarterly Report includes “forward-looking
statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are
not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected
and projected. All statements, other than statements of historical fact included in this Form 10-Q including, without limitation,
statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding
the Company’s financial position, business strategy and the plans and objectives of management for future operations, are
forward-looking statements. Words such as “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “intends,” “may,” “might,” “plan,”
“possible,” “potential,” “predict,” “project,” “should,” “would” and
variations thereof and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking
statements relate to future events or future performance, but reflect management’s current beliefs, based on information
currently available. A number of factors could cause actual events, performance or results to differ materially from the events,
performance and results discussed in the forward-looking statements. For information identifying important factors that could cause
actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors
section of the Company’s final prospectus for its Initial Public Offering filed with the SEC on July 24, 2020. The Company’s
securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required
by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements
whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated
in the Cayman Islands on May 14, 2019 formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase,
reorganization or similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using
cash derived from the proceeds of the Initial Public Offering and the sale of the Private Units, our shares, debt or a combination
of cash, shares and debt.
We expect to incur significant costs in
the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Results of Operations
We have neither engaged in any operations
nor generated any operating revenues to date. Our only activities from inception through September 30, 2020 were organizational
activities, those necessary to prepare for the Initial Public Offering, described below, and identifying a target company for a
Business Combination. We do not expect to generate any operating revenues until after the completion of our initial Business Combination.
We expect to generate non-operating income in the form of interest income on marketable securities held after the Initial Public
Offering. We expect that we will incur increased expenses as a result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, a
Business Combination.
For the three months ended September 30,
2020, we had a net loss of $109,200, which consists of operating costs of $113,040 and an unrealized loss on marketable securities
held in our Trust Account of $5,822, offset by interest income on marketable securities held in the Trust Account of $1,982.
For the nine months ended September 30,
2020, we had a net loss of $115,828, which consists of operating costs of $119,668 and an unrealized loss on marketable securities
held in our Trust Account of $5,822, offset by interest income on marketable securities held in the Trust Account of $1,982.
For the three and nine months ended September
30, 2019, we had a net loss of $8,000 and $15,057, which consisted of operating and formation costs.
Liquidity and Capital Resources
Until the consummation of the Initial Public
Offering, our only source of liquidity was an initial purchase of ordinary shares by the Sponsor and loans from our Sponsor.
On July 28, 2020, we consummated the Initial
Public Offering of 4,000,000 Units, generating gross proceeds of $40,000,000. Simultaneously with the closing of the Initial Public
Offering, we consummated the sale of 260,000 Private Units to the Sponsor at a price of $10.00 per Private Unit generating gross
proceeds of $2,600,000.
Following the Initial Public Offering and
the sale of the Private Units, a total of $40,000,000 was placed in the Trust Account. We incurred $2,646,665 in transaction costs,
including $1,000,000 of underwriting fees, $1,000,000 of deferred underwriting fees and $646,665 of other offering costs.
For the nine months ended September
30, 2020, net cash used in operating activities was $92,404. Net loss of $115,828 was offset by interest earned on investments
of $5,822 and an unrealized loss on marketable securities of $1,982. Changes in operating assets and liabilities provided $27,264
of cash from operating activities.
For the nine months ended September
30, 2019, net cash used in operating activities was $25,709. Net loss of $15,057 was impacted by changes in operating assets and
liabilities used $10,652 of cash from operating activities.
At September 30, 2020, we had investments
held in the Trust Account of $40,603,840. We intend to use substantially all of the funds held in the Trust Account, including
any amounts representing interest earned on the Trust Account, excluding deferred underwriting commissions, to complete our Business
Combination. We may withdraw interest from the Trust Account to pay taxes, if any. To the extent that our share capital or debt
is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account
will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue
our growth strategies.
At September 30, 2020, we had cash of $684,238
held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate
target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar
locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements
of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies
or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of
our officers and directors may, but are not obligated to, loan us funds as may be required. Such Working Capital Loans would be
evidenced by promissory notes. If we complete a Business Combination, we may repay such notes out of the proceeds of the Trust
Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held
outside the Trust Account to repay such notes, but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000
of notes may be convertible into units, at a price of $10.00 per unit, at the option of the lender. The units would be identical
to the Private Units.
We do not believe we will need to raise
additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of
identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial Business Combination.
Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated
to redeem a significant number of our public shares upon completion of our Business Combination, in which case we may issue additional
securities or incur debt in connection with such Business Combination.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities
that would be considered off-balance sheet arrangements as of September 30, 2020. We do not participate in transactions that create
relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would
have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance
sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or
purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital
lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a monthly fee
of $10,000 for certain general and administrative services, including office space, utilities and administrative services, provided
to the Company. We began incurring these fees on July 24, 2020 and will continue to incur these fees monthly until the earlier
of the completion of a Business Combination and the Company’s liquidation.
The underwriters are entitled to a deferred
fee of two and one-half percent (2.5%) of the gross proceeds of the Initial Public Offering, or $1,000,000 (or $1,150,000
if the underwriters’ over-allotment option is exercised in full). The deferred fee will be paid in cash upon the closing
of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of condensed financial
statements and related disclosures in conformity with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods
reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Ordinary Shares Subject to Possible
Redemption
The Company accounts for its ordinary shares
subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480
“Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as a liability
instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely
within the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’
equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented
at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s condensed balance
sheets.
Net Loss Per Ordinary Share
We apply the two-class method in
calculating earnings per share. Ordinary shares subject to possible redemption, which are not currently redeemable and are
not redeemable at fair value, have been excluded from the calculation of basic net loss per ordinary share since such shares,
if redeemed, only participate in their pro rata share of the Trust Account earnings. Our net income (loss) is adjusted for
the portion of income that is attributable to ordinary shares subject to redemption, as these shares only participate in the
earnings of the Trust Account and not our income or losses.
Recent accounting standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our interim condensed
financial statements.