| Organization and Business Operations | Note
1 — Organization and Business Operations Organization
and General CM
Seven Star Acquisition Corporation (the “Company”) is a newly incorporated blank check company incorporated on November
28, 2016, under the laws of the Cayman Islands for the purpose of entering into a merger, share exchange, asset acquisition, stock
purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business
Combination”). The Company’s efforts to identify a prospective target business will not be limited to a particular
industry or geographic location. As
of December 31, 2017, the Company had not yet commenced any operations. The Company has selected December 31 as its fiscal year
end. Financing The
registration statements for the Company’s initial public offering (“Initial Public Offering”) were declared
effective on October 25, 2017. On October 30, 2017, the Company consummated the Initial Public Offering of 18,000,000 units (“Units”
or “Public Units” and, with respect to the ordinary shares included in the Public Units being offered, the “Public
Shares”), generating gross proceeds of $180,000,000, which is described in Note 3. Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 475,000 units (the “Private Units”)
at a price of $10.00 per Unit in a private placement to the Company’s sponsor (the “Sponsor”), generating gross
proceeds of $4,750,000, which is described in Note 4. Contained
in the underwriting agreement for the Public Offering is an overallotment option allowing the underwriters to purchase from the
Company up to an additional 2,700,000 Public Units and the sale of an additional 54,000 Private Units at $10.00 per Unit (as described
in Note 3 – Initial Public Offering and Note 4 - Private Placement). The Company received a commitment from the Sponsor
to purchase additional Private Units in order to maintain the amount of cash in the Trust equal to $10.00 per Public Share (as
described in Note 4 - Private Placement). On
November 3, 2017, the underwriters exercised the option in part and purchased 2,636,293 Public Units, which were sold at an offering
price of $10.00 per Unit, generating gross proceeds of $26,362,930. Simultaneously with the sale of the over-allotment Public
Units, the Company consummated the private placement of an additional 52,726 Private Units at a price of $10.00 per Unit, generating
total additional gross proceeds of $527,260. Trust
Account Following
the closing of the Initial Public Offering on October 30, 2017, an amount of $180,000,000 ($10.00 per Unit) from the net proceeds
of the sale of the Public Units in the Initial Public Offering and the Private Units was placed in a trust account (“Trust
Account”). Following the closing of underwriters’ exercise of over-allotment option on November 3, 2017, an additional
$26,362,930 of net proceeds ($10.00 per Unit) was placed in the Trust Account, bringing the aggregate proceeds held in the Trust
Account to $206,362,930. The
funds in the Trust Account can be 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 Trust Account as described below, except that interest earned on the Trust Account can be released
to pay the Company’s income or other tax obligations. Initial
Business Combination The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering and the Private Units, although substantially all of the net proceeds are intended to be generally applied toward consummating
a Business Combination. The Company’s 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 (as defined below) (net of taxes payable) at the
time of the signing an agreement to enter into a Business Combination. However, 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 shares included in the Public Units
sold in the Initial Public Offering (the “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. The decision
as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the
Company, solely in its discretion. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount
then on deposit in the Trust Account (initially approximately $10.00 per share, 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
ordinary shares subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion
of the Initial Public Offering, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible
assets of at least $5,000,001 upon such consummation of a Business Combination and a majority of the issued and outstanding shares
voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does not decide
to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to Amended and Restated Memorandum
and Articles of Association, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission
(“SEC”), and file tender offer documents with the SEC prior to completing a Business Combination. If, however, a shareholder
approval of the transaction is required by law, or the Company decides to obtain shareholder approval for business or other legal
reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not
pursuant to the tender offer rules. If the Company seeks shareholder approval in connection with a Business Combination, the Initial
Shareholders (defined in Note 5- Related Party Transactions) have agreed to vote their initial shares and private shares, as well
as any public shares acquired in or after this offering, in favor of any proposed business combination. Additionally, each public
shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. The
Company will have 15 months from the closing of the Initial Public Offering to consummate a Business Combination (the “Combination
Period”). If the Company is unable to complete a Business Combination within the Combination Period, it will trigger the
automatic winding up, dissolution and liquidation pursuant to the terms of the Amended and Restated Memorandum and Articles of
Association. However, if the Company anticipates that it may not be able to consummate a Business Combination within 15 months,
the Company may, but is not obligated to, extend the period of time to consummate a Business Combination by an additional three
months (for a total of up to 18 months to complete a Business Combination). Pursuant to the terms of the Amended and Restated
Memorandum and Articles of Association and the trust agreement entered into between the Company and Continental Stock Transfer
& Trust Company, LLC, in order to extend the time available for the Company to consummate a Business Combination, the Company’s
insiders or their affiliates or designees, upon five days advance notice prior to the applicable deadline, must deposit into the
trust account $2,063,629 ($0.10 per share), on or prior to the date of the applicable deadline. The insiders will receive a non-interest
bearing, unsecured promissory note equal to the amount of any such deposit that will not be repaid in the event that the Company
is unable to close a Business Combination unless there are funds available outside the trust account to do so. Such notes would
either be paid upon consummation of the initial Business Combination, or, at the lender’s discretion, converted upon consummation
of the Business Combination into additional private units at a price of $10.00 per unit. The Company’s stockholders have
approved the issuance of the private units upon conversion of such notes, to the extent the holder wishes to so convert such notes
at the time of the consummation of a Business Combination. In the event that the Company receives notice from its insiders five
days prior to the applicable deadline of their intent to effect an extension, the Company intends to issue a press release announcing
such intention at least three days prior to the applicable deadline. In addition, the Company intends to issue a press release
the day after the applicable deadline announcing whether or not the funds had been timely deposited. The Company’s insiders
and their affiliates or designees are not obligated to fund the trust account to extend the time for the Company to complete its
initial Business Combination. To the extent that some, but not all, of the Company’s insiders, decide to extend the period
of time to consummate its initial Business Combinations, such insiders (or their affiliates or designees) may deposit the entire
amount required. The
amount in the Trust Account (less the aggregate nominal par value of the shares of the Company’s public shareholders) under
the Companies Law will be treated as share premium which is distributable under the Companies Law provided that immediately following
the date on which the proposed distribution is proposed to be made, the Company is able to pay the debts as they fall due in the
ordinary course of business. If the Company is forced to liquidate the Trust Account, the public shareholders would be distributed
the amount in the Trust Account calculated as of the date that is two days prior to the distribution date (including any accrued
interest). The
Initial Shareholders have agreed to (i) vote their insider shares (as well as any Public Shares acquired in or after this offering)
in favor of any proposed Business Combination (ii) waive their conversion rights with respect to their initial share (as well
as any other shares acquired in or after this offering) in connection with the consummation of a Business Combination, (iii) to
waive their rights to liquidating distributions from the Trust Account with respect to their initial shares if the Company fails
to consummate a Business Combination within the Combination Period and (iv) not to propose an amendment to the Company’s
Amended and Restated Memorandum and Articles of Association that would affect the substance or timing of the Company’s obligation
to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public
shareholders with the opportunity to redeem their shares in conjunction with any such amendment. Liquidation However,
the holders of the initial shares will not participate in any liquidation distribution with respect to such securities. 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 $10.00 per Unit in the Initial Public Offering. In order to protect the
amounts held in the Trust Account, an affiliate of the sponsor will contractually agree, pursuant to a written agreement to the
Company, that if the Company liquidates the Trust Account prior to the consummation of a business combination, it will be liable
to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other
entities that are owed money by the Company for services rendered or contracted for or products sold to the Company. This liability
will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any
kind in or to any monies held in the Trust Account. Moreover, in the event that an executed waiver is deemed to be unenforceable
against a third party, the affiliate of 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 affiliate of the sponsor will have to indemnify the Trust Account
due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent auditors),
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. The
Company will pay the costs of liquidating the trust account from the remaining assets outside of the trust account. If such funds
are insufficient, the Sponsor has contractually agreed to advance the Company the funds necessary to complete
such liquidation (currently anticipated to be no more than approximately $18,500) and has contractually agreed not to seek repayment
for such expenses. Liquidity As
of December 31, 2017, the Company had cash outside the Trust Account of $165,405 available for working capital needs. All remaining
cash was held in the Trust Account and is generally unavailable for our use, prior to an initial Business Combination, and is
restricted for use either in a Business Combination or to redeem ordinary shares. As of December 31, 2017, none of the amount
on deposit in the Trust Account was available to be withdrawn as described above. Through
December 31, 2017, the Company’s liquidity needs were satisfied through receipt of $31,038 from the sale of the insider
shares, advances from our sponsor and an affiliate of our sponsor in an aggregate amount of $663,009 which were repaid upon the
IPO, and the remaining net proceeds from the IPO and Private Placement (as described in Note 5). On April 9, 2018, the Sponsor
agreed to loan to the Company an additional $500,000 pursuant to a non-convertible non-interest bearing promissory note, which
will be repaid promptly after the date on which the Company consummates a Business Combination. In the event that we are unable
to consummate a business combination, as described in the prospectus relating to the IPO, the balance of such note will be forgiven
and our sponsor will not be entitled to any payment thereunder. Until
consummation of its Business Combination, the Company will be using the funds not held in the Trust Account, and any additional
funding from our Sponsor’s promissory note commitment, for identifying and evaluating prospective acquisition candidates,
performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations
of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting
the target business to acquire and structuring, negotiating and consummating the Business Combination. If
the Company’s estimates of the costs of undertaking in-depth due diligence and negotiating Business Combination is less
than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to
the Business Combination. Moreover, the Company will need to raise additional capital through loans from its Sponsor, officers,
directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest
in, the Company. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve
liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business
plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially
acceptable terms, if at all. These conditions raise substantial doubt about the Company’s ability to continue as a going
concern. These financial statements do not include any adjustments that might result from the outcome of these uncertainties. |
