Giovanni Caruso 

Partner

 

345 Park Avenue
New York, NY 10154 

Direct    212.407.4866
Main      212.407.4000
Fax         212.937.3943
gcaruso@loeb.com
     
  Via Edgar  

 

July 2, 2018

 

Mara L. Ransom
U.S. Securities & Exchange Commission

100 F Street, NE

Washington, D.C. 20549

 

Re:Atlantic Acquisition Corp.

Amendment No. 2 to Preliminary Proxy Statement on Schedule 14A

Filed June 15, 2018

File No. 001-38180

 

Dear Ms. Ransom:

 

On behalf of our client, Atlantic Acquisition Corp. (the “Company”), we hereby provide a response to the oral comment provided on June 28, 2018 (the “Staff’s Comment”) regarding the Company’s Preliminary Proxy Statement on Schedule 14A (the “Proxy Statement”).

 

The Staff requested information about how the Company calculated equivalent pro-forma earnings per share and requested that disclosure about equivalent pro-forma book value per share be added to the disclosure.

 

Calculation for equivalent pro forma net earnings per share

 

Prior to January 1, 2018, some of HF Group’s subsidiaries have elected under the Internal Revenue Code to be S corporations and some were formed as partnerships. As of January 1, 2018, all of these entities have been converted to C corporations and will be subject to regular corporate income tax rates going forward.

 

Equivalent pro forma net earnings per share for HF Group was calculated by multiplying the share exchange ratio between Atlantic and HF Group (approximately 1/200=100,000/19,969,833) by pro forma income per share of HF Group after considering adjustments reflecting income tax expenses as if such entities were taxed as a C Corporation (the adjustment for the three months ended March 31, 2018 is 0).

 

Equivalent pro forma net earnings per share for HF Group for three months ended March 31, 2018=1/200 (share exchange ratio) * $13.48 (equal to the historical income per share of HF Group (which does not include any adjustments for taxes as the entities were already converted to “C” Corporations)) = $0.07.

 

Los Angeles   New York   Chicago   Nashville   Washington, DC   Beijing   Hong Kong   www.loeb.com

 

For the United States offices, a limited liability partnership including professional corporations. For Hong Kong office, a limited liability partnership.

 

 

 

 

July 2, 2018

Page 2

 

Equivalent pro forma net earnings per share for HF Group for the year ended December 31, 2017=1/200(share exchange ratio) * $62.06 (pro forma income per share of HF Group with tax adjustment for C Corporation, which equals $9,646,071 of net income, less $3,439,857 of tax adjustment, and then divided by 100,000 of HF Group’s historical outstanding shares) = $0.31.

 

The numbers and explanation notes on page 63, 64, 67 and 68 were revised accordingly and are reproduced as Exhibit A attached hereto.

 

Equivalent pro forma book value per share

 

Equivalent pro forma book value per share of HF Group was calculated by multiplying the share exchange ratio between Atlantic and HF Group (approximately 1/200) by pro forma book value per share of HF Group.

 

Equivalent pro forma book value per share for HF Group as of March 31, 2018=1/200(share exchange ratio) * $269.75 (equals to historical book value per share of HF Group) = $1.35.

 

The numbers and explanation notes on page 64 and 66 were revised accordingly and are reproduced as Exhibit A attached hereto.

 

Please call me at 212 407-4866 if you would like additional information with respect to any of the foregoing. Thank you.

 

Sincerely,

 

/s/ Giovanni Caruso

Giovanni Caruso
Partner

 

 

 

Exhibit A

 

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

    Atlantic Acquisition Corp. Historical     HF Group  Holding Corporation Historical     (1)
Pro Forma Unaudited, Combined Assuming  Maximum Conversion
    (2)
Pro Forma Unaudited, Combined Assuming No Conversion
 
Three Months ended March 31, 2018                        
Net revenue   $     $ 74,580,771     $ 74,580,771     $ 74,580,771  
Gross profit   $     $ 12,104,066     $ 12,104,066     $ 12,104,066  
Net (Loss) income attributable to common stock holders   $ (118,230 )   $ 1,347,950     $ 1,229,720     $ 1,328,779  
Net (loss) income per share - basic and diluted   $ (0.06 )     13.48     $ 0.05     $ 0.05  
Equivalent pro forma earnings per share – basic and diluted (1)             0.07                  
                                 
Year ended December 31, 2017                                
Net revenue   $     $ 295,549,980     $ 295,549,980     $ 295,549,980  
Gross profit   $     $ 43,934,967     $ 43,934,967     $ 43,934,967  
Net (Loss) income attributable to common stock holders   $ (75,729 )   $ 9,646,071     $ 9,570,342     $ 9,700,985  
Net (loss) income per share - basic and diluted   $ (0.06 )     96.46     $ 0.43     $ 0.37  
Equivalent pro forma earnings per share – basic and diluted (1)   $       $ *0.31     $            
                                 
As of March 31, 2018                                
Cash   $ 444,634     $ 5,864,289     $ 10,355,753     $ 50,120,928  
Total assets   $ 45,922,722     $ 79,815,826     $ 84,367,123     $ 124,132,298  
Total liabilities   $ 1,157,546     $ 51,801,239     $ 51,852,535     $ 51,852,535  
Total shareholders’ equity   $ 5,000,001     $ 28,014,587     $ 32,514,588     $ 72,279,763  

 

  (1) Prior to January 1, 2018, some of HF Group’s subsidiaries have elected under the Internal Revenue Code to be S corporations and some were formed as partnerships. As of January 1, 2018, all of these entities have been converted to C corporations and will be subject to regular corporate income tax rates going forward. Equivalent pro forma net earnings per share for HF Group was calculated with multiplying the share exchange ratio between Atlantic and HF Group (approximately 1/200) by pro forma income per share of HF Group after considering adjustments reflecting income tax expenses as if such entities were taxed as a C Corporation (the adjustment for the three months ended March 31, 2018 is 0).

 

Los Angeles   New York   Chicago   Nashville   Washington, DC   Beijing   Hong Kong   www.loeb.com

 

For the United States offices, a limited liability partnership including professional corporations. For Hong Kong office, a limited liability partnership.

 

 

 

COMPARATIVE PER SHARE DATA

 

    Atlantic Acquisition Corp. Historical     HF Group Holding Corporation Historical     (1)
Pro Forma Unaudited, Combined Assuming Maximum Conversion
    (2)
Pro Forma Unaudited, Combined Assuming No Conversion
 
       
Three Months ended March 31, 2018                                
Net (Loss) income attributable to common stock holders   $ (118,230 )   $ 1,347,950     $ 1,229,720     $ 1,328,779  
Weighted Average Shares Outstanding — Basic and Diluted     1,996,450       100,000       22,442,908       26,318,955  
(Loss) Income or Pro Forma Earnings Per Share – Basic and Diluted   $ (0.06 )     13.48     $ 0.05     $ 0.05  
Equivalent pro forma earnings per share – basic and diluted (1)             0.07                  
                                 
Year ended December 31, 2017                                
Net (Loss) income attributable to common stock holders   $ (75,729 )   $ 9,646,071     $ 9,570,342     $ 9,700,985  
Weighted Average Shares Outstanding — Basic and Diluted     1,368,301       100,000       22,434,295       26,318,955  
(Loss) Income or Pro Forma Earnings Per Share – Basic and Diluted   $ (0.06 )   $ 96.46     $ 0.43     $ 0.37  
Equivalent Pro Forma Earnings Per Share – Basic and Diluted (1)   $       $ 0.31     $            
                                 
As of March 31, 2018                                
Shares Outstanding as of March 31, 2018     1,996,450       100,000       22,442,908       26,318,955  
Book Value Per Share or Pro Forma Book Value Per Share (2)   $ 2.50     $ 269.75     $ 1.45     $ 2.75  
Equivalent Pro Forma Book Value Per Share as of March 31, 2018(2) (3)             1.35                  

   

(1) Prior to January 1, 2018, some of HF Group’s subsidiaries have elected under the Internal Revenue Code to be S corporations and some were formed as partnerships. As of January 1, 2018, all of these entities have been converted to C corporations and will be subject to regular corporate income tax rates going forward. Equivalent pro forma net earnings per share of HF Group was calculated with multiplying the share exchange ratio between Atlantic and HF Group (approximately 1/200) by pro forma income per share of HF Group after considering adjustments reflecting income tax expenses as if such entities were taxed as a C Corporation (the adjustment for the three months ended March 31, 2018 is 0).
(2) The equity of noncontrolling interest was excluded from the calculation of book value per share related to HF Group Holding Corporation and pro forma book value per share after merger because it was not attributable to the common stockholders of HF Group Holding Corporation before the business combination and will not be attributable to HF Foods Group Inc. (formerly Atlantic Acquisition Corp.) after the business combination, but will be attributable to the minority shareholders of one of the Group’s subsidiaries.
(3) Equivalent pro forma book value per share of HF Group was calculated with multiplying the share exchange ratio between Atlantic and HF Group (approximately 1/200) by pro forma book value per share of HF Group.

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

 

HF Foods Group Inc. 

(formerly Atlantic Acquisition Corp.) 

Pro Forma Condensed Combined Balance Sheet 

As of March 31, 2018

(Unaudited)

 

    Atlantic
Acquisition Corp. Historical
Audited
    HF Group
Holding Corporation Historical
Audited
    Adjustment for
Merger Assuming Conversion
    (1)
Pro Forma
Assuming
Conversion
    Adjustment for Merger Assuming No Conversion     (2)
Pro Forma
Assuming
No Conversion
 
ASSET                                                
Current assets:                                                
Cash   $ 444,634     $ 5,864,289     $ 45,418,255 (a)   $ 10,355,753     $ 45,418,255 (a)   $ 50,120,928  
                      (39,765,175 )(b)             (1,106,250 )(f)        
                      (1,106,250 )(f)             (500,000 )(g)        
                      (500,000 )(g)                        
Accounts receivable, net           15,373,300             15,373,300             15,373,300  
Accounts receivable - related parties, net           1,535,647             1,535,647             1,535,647  
Inventories, net           22,411,921             22,411,921             22,411,921  
Advances to suppliers, net           495,118             495,118             495,118  
Advances to suppliers - related parties, net           2,377,471             2,377,471             2,377,471  
Other current assets     59,833       383,671             443,504             443,504  
Total current assets     504,467       48,441,417       4,046,830       52,992,714       43,812,005       92,757,889  
Property and equipment, net           22,563,065             22,563,065             22,563,065  
Long-term notes receivables           2,112,477             2,112,477             2,112,477  
Long-term notes receivables - related parties           6,618,472             6,618,472             6,618,472  
Other long-term assets           80,395             80,395             80,395  
Cash and investments held in trust account     45,418,255             (45,418,255 )(a)           (45,418,255 )(a)      
Total assets   $ 45,922,722     $ 79,815,826     $ (41,371,425 )   $ 84,367,123     $ (1,606,250 )   $ 124,132,298  
                                                 
LIABILITIES AND STOCKHOLDER’S EQUITY                                                
Current liabilities:                                                
Lines of credit   $     $ 11,194,146     $     $ 11,194,146     $     $ 11,194,146  
Accounts payable     30,034       18,504,323               18,534,357               18,534,357  
Accounts payable - related parties           3,158,647             3,158,647             3,158,647  
Advance from customers           42,221             42,221             42,221  
Advance from customers - related parties           154,143             154,143             154,143  
Current portion of long-term debt, net           1,330,746             1,330,746             1,330,746  
Current portion of obligations under capital leases           434,003             434,003             434,003  
Income tax payable           1,019,293             1,019,293             1,019,293  
Shareholder distribution payable           958,174             958,174             958,174  
Deferred underwriting compensation     1,106,250             (1,106,250 )(f)           (1,106,250 )(f)      
Accrued expense and other current liabilities     21,262       515,937             537,199             537,199  
Total current liabilities     1,157,546       37,311,633       (1,106,250 )     37,362,929       (1,106,250 )     37,362,929  
Long-term debt           14,041,019             14,041,019             14,041,019  
Obligations under capital leases, non-current           15,771             15,771             15,771  
Deferred tax liabilities           432,816             432,816             432,816  
Total liabilities     1,157,546       51,801,239       (1,106,250 )     51,852,535       (1,106,250 )     51,852,535  
                                                 
Commitments and contingencies                                                
Redeemable common stock     39,765,175             (39,765,175 )(b)           (39,765,175 )(b)      
Stockholder’s equity                                                
Preferred Stock                                    
Common stock     200             1,997 (d)     2,244       388 (b)     2,632  
                      48 (e)             1,997 (d)        
                                      48 (e)        
Additional paid-in capital     4,964,758       21,551,700       35,043 (c)     26,049,457       39,764,787 (b)     65,814,244  
                      (1,997 )(d)             35,043 (c)        
                      (48 )(e)             (1,997 )(d)        
                      (500,000 )(g)             (48 )(e)        
                                      (500,000 )(g)        
Retained earnings     35,043       5,423,074       (35,043 )(c)     5,423,074       (35,043 )(c)     5,423,074  
Noncontrolling interest           1,039,813             1,039,813             1,039,813  
Total stockholders’ equity     5,000,001       28,014,587       (500,000 )     32,514,588       39,265,175       72,279,763  
Total liabilities and stockholder’s equity   $ 45,922,722     $ 79,815,826     $ (41,371,425 )   $ 84,367,123     $ (1,606,250 )   $ 124,132,298  
                                                 
Shares Outstanding as of March 31, 2018     1,996,450       100,000               22,442,908               26,318,955  
Book Value Per Share or Pro Forma Book Value Per Share as of March 31, 2018(1)   $ 2.50     $ 269.75             $ 1.45             $ 2.75  
Equivalent Pro Forma Book Value Per Share as of March 31, 2018(2)             1.35                                  

 

  (1) The equity of noncontrolling interest was excluded from the calculation of book value per share related to HF Group Holding Corporation and pro forma book value per share after merger because it was not attributable to the common stockholders of HF Group Holding Corporation before the business combination and will not be attributable to HF Foods Group Inc. (formerly Atlantic Acquisition Corp.) after the business combination, but will be attributable to the minority shareholders of one of the Group’s subsidiaries.
  (2) Equivalent pro forma book value per share of HF Group was calculated with multiplying the share exchange ratio between Atlantic and HF Group (approximately 1/200) by pro forma book value per share of HF Group.

 

 

 

HF Foods Group Inc.

(formerly Atlantic Acquisition Corp.) 

Pro Forma Condensed Combined Income Statement 

For the Three Months ended March 31, 2018 

(Unaudited)

 

    Atlantic Acquisition Corp. Historical Audited     HF Group Holding Corporation Historical Audited     Adjustment for Merger Assuming Maximum Conversion     (1) Pro Forma Combined Conversion     Adjustment for Merger Assuming No Conversion     (2) Pro Forma Combined No Conversion  
Net revenue - third parties   $     $ 69,875,910     $     $ 69,875,910     $     $ 69,875,910  
Net revenue - related parties           4,704,861             4,704,861             4,704,861  
Total net revenue           74,580,771             74,580,771             74,580,771  
Cost of revenue           62,476,705             62,476,705             62,476,705  
      Gross profit           12,104,066             12,104,066             12,104,066  
Distribution, selling and administrative expenses     153,521       10,072,612             10,226,133             10,226,133  
Income from operations     (153,521 )     2,031,454             1,877,933             1,877,933  
Interest income     134,350       6,875             141,225             141,225  
Interest expenses and bank charges           (405,563 )           (405,563 )           (405,563 )
Other income           257,190             257,190             257,190  
Income before income tax provision     (19,171 )     1,889,956             1,870,785             1,870,785  
Income tax provision           503,481             503,481             503,481  
Net income   $ (19,171 )   $ 1,386,475     $     $ 1,367,304     $     $ 1,367,304  
Less: income attributable to common stock subject to redemption     99,059                   99,059       (99,059 )(h)      
Less: net income attributable to noncontrolling interest           38,525             38,525             38,525  
Net income (loss) attributable to common stockholders   $ (118,230 )   $ 1,347,950     $     $ 1,229,720     $ 99,059     $ 1,328,779  
Weighted Average Shares Outstanding — Basic and Diluted     1,996,450       100,000               22,442,908               26,318,955  
(Loss) Income or Pro Forma Earnings Per Share – Basic and Diluted   $ (0.06 )   $ 13.48             $ 0.05             $ 0.05  
(Loss) Income or Equivalent Pro Forma Earnings Per Share – Basic and Diluted (1)             0.07                                  

 

(1)Prior to January 1, 2018, some of HF Group’s subsidiaries have elected under the Internal Revenue Code to be S corporations and some were formed as partnerships. As of January 1, 2018, all of these entities have been converted to C corporations and will be subject to regular corporate income tax rates going forward. Equivalent pro forma net earnings per share of HF Group was calculated with multiplying the share exchange ratio between Atlantic and HF Group (approximately 1/200) by pro forma income per share of HF Group after considering adjustment reflecting income tax expenses as if such entities were taxed as a C Corporation (the adjustment for the three months ended March 31, 2018 is 0).

 

 

 

HF Foods Group Inc. 

(formerly Atlantic Acquisition Corp.) 

Pro Forma Condensed Combined Income Statement 

For the Year ended December 31, 2017 

(Unaudited)

 

    Atlantic Acquisition Corp. Historical Audited     HF Group Holdings Corporation Historical Audited       Adjustment for Merger Assuming Maximum Conversion     (1) Pro Forma Unaudited, Combined Assuming Maximum Conversion       Adjustment for Merger Assuming No Conversion     (2) Pro Forma Unaudited, Combined Assuming No Conversion  
Net revenue - third parties   $     $ 277,100,116     $     $ 277,100,116     $     $ 277,100,116  
Net revenue - related parties           18,449,864             18,449,864             18,449,864  
Total net revenue           295,549,980             295,549,980             295,549,980  
Cost of revenue           251,615,013             251,615,013             251,615,013  
    Gross profit           43,934,967             43,934,967             43,934,967  
Distribution, selling and administrative expenses     128,271       32,924,877             33,053,148             33,053,148  
    Income from operations     (128,271 )     11,010,090             10,881,819             10,881,819  
Interest income     183,185       21,105             204,290             204,290  
Interest expenses and bank charges           (1,339,897 )           (1,339,897 )           (1,339,897 )
Other income           1,010,038             1,010,038             1,010,038  
Income before income tax provision     54,914       10,701,336             10,756,250             10,756,250  
Income tax provision           623,266             623,266             623,266  
    Net income   $ 54,914     $ 10,078,070     $     $ 10,132,984     $     $ 10,132,984  
Less: income attributable to common stock subject to redemption     130,643                   130,643       (130,643 )(h)      
Less: net income attributable to noncontrolling interest           431,999             431,999             431,999  
Net income (loss) attributable to common stockholders   $ (75,729 )   $ 9,646,071     $     $ 9,570,342     $ 130,643     $ 9,700,985  
      Net income   $ 54,914     $ 10,078,070     $     $ 10,132,984     $     $ 10,132,984  
Less: pro forma adjustment to reflect income tax expenses if taxed under C Corporation (1)           3,439,857             3,439,857             3,439,857  
Less: income attributable to common stock subject to redemption     130,643                   130,643       (130,643 )(h)      
Less: net income attributable to noncontrolling interest           431,999             431,999             431,999  
      Net income (loss) used to compute equivalent pro forma net earnings per share   $ (75,729 )   $ 6,206,214     $     $ 6,130,485     $ 130,643     $ 6,261,128  
Weighted Average Shares Outstanding — Basic and Diluted     1,368,301       100,000               22,434,295               26,318,955  
(Loss) Income or Pro Forma Earnings Per Share – Basic and Diluted   $ (0.06 )   $ 96.46             $ 0.43             $ 0.37  
Equivalent Pro Forma Earnings Per Share – Basic and Diluted (1)   $       $ 0.31             $               $    

  

  (1) Prior to January 1, 2018, some of HF Group’s subsidiaries have elected under the Internal Revenue Code to be S corporations and some were formed as partnerships. As of January 1, 2018, all of these entities have been converted to C corporations and will be subject to regular corporate income tax rates going forward. Equivalent pro forma net earnings per share of HF Group was calculated with multiplying the share exchange ratio between Atlantic and HF Group (approximately 1/200) by pro forma income per share of HF Group after considering adjustment reflecting income tax expenses as if such entities were taxed as a C Corporation.