Attached files
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8-K - CURRENT REPORT - NRX Pharmaceuticals, Inc. | brpa_8k.htm |
EX-99.3 - PRESS RELEASE, DATED NOVEMBER 29, 2017 - NRX Pharmaceuticals, Inc. | brpa_ex993.htm |
EX-99.2 - PRO FORMA BALANCE SHEET - NRX Pharmaceuticals, Inc. | brpa_ex992.htm |
Exhibit
99.1
BIG ROCK PARTNERS ACQUISITION CORP.
INDEX TO FINANCIAL STATEMENTS
F.
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Page
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Report of Independent Registered Pubic Accounting Firm
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F-2
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Balance
Sheet
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F-3
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Notes to Financial Statements
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F-4
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F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
To the
Audit Committee of the Board of Directors and
Shareholders
of Big
Rock Partners Acquisition Corp.
We have
audited the accompanying balance sheet of Big Rock Partners
Acquisition Corp. (the “Company”) as of November 22,
2017. The balance sheet is the responsibility of the
Company’s management. Our responsibility is to express an
opinion on the balance sheet based on our audit.
We
conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable
assurance about whether the balance sheet is free of material
misstatement. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control
over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the balance sheet, assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall balance sheet presentation. We
believe that our audit provides a reasonable basis for our
opinion.
In our
opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of Big Rock Partners
Acquisition Corp. as of November 22, 2017, in conformity with
accounting principles generally accepted in the United States of
America.
/s/
Marcum LLP
Marcum
LLP
New
York, NY
November
29, 2017
F-2
BIG ROCK PARTNERS ACQUISITION CORP.
BALANCE SHEET
November 22, 2017
ASSETS
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Current
Assets
|
|
Cash
|
$741,476
|
Prepaid expenses
and other current assets
|
24,500
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Total Current
Assets
|
765,976
|
|
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Cash held in Trust
Account
|
60,000,000
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Total
Assets
|
$60,765,976
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
Current
liabilities
|
|
Accounts payable
and accrued expenses
|
$21,960
|
Accrued offering
costs
|
20,000
|
Promissory notes -
related parties
|
147,625
|
Total
Liabilities
|
189,585
|
|
|
Commitments
|
|
Common stock
subject to possible redemption, 5,557,639 shares at redemption
value
|
55,576,390
|
|
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Stockholders’
Equity
|
|
Preferred stock,
$0.001 par value; 1,000,000 shares authorized; none issued and
outstanding
|
—
|
Common stock,
$0.001 par value; 100,000,000 shares authorized; 2,537,361 shares
issued and outstanding (excluding 5,557,639 shares subject to
possible redemption)
|
2,537
|
Additional paid-in
capital
|
4,998,754
|
Accumulated
deficit
|
(1,290)
|
Total
Stockholders’ Equity
|
5,000,001
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$60,765,976
|
The
accompanying notes are an integral part of the balance
sheet.
F-3
BIG ROCK PARTNERS ACQUISITION CORP.
NOTES TO BALANCE SHEET
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Big
Rock Partners Acquisition Corp. (the “Company”) is a
newly organized blank check company incorporated in Delaware on
September 18, 2017. The Company was formed for the purpose of
acquiring, through a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization, recapitalization, or
other similar business transaction, one or more operating
businesses or entities that the Company has not yet identified (a
“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 in the senior housing and care industry in the
United States.
At
November 22, 2017, the Company had not yet commenced operations.
All activity through November 22, 2017 relates to the
Company’s formation and its initial public offering
(“Initial Public Offering”), which is described
below.
The
registration statements for the Company’s Initial Public
Offering were declared effective on November 20, 2017. On November
22, 2017, the Company consummated the Initial Public Offering of
6,000,000 units (“Units” and, with respect to the
common stock included in the Units being offered, the “Public
Shares”), generating gross proceeds of $60,000,000, which is
described in Note 3.
Simultaneously with
the closing of the Initial Public Offering, the Company consummated
the sale of 250,000 units (the “Private Placement
Units”) at a price of $10.00 per Unit in a private placement
to Big Rock Partners Sponsor, LLC (the “Sponsor”),
generating gross proceeds of $2,500,000, which is described in Note
4.
Following the
closing of the Initial Public Offering on November 22, 2017, an
amount of $60,000,000 ($10.00 per Unit) from the net proceeds of
the sale of the Units in the Initial Public Offering and the
Private Placement Units was placed in a trust account (“Trust
Account”) which may 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 selected by the Company 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.
Transaction costs
amounted to $1,947,419, consisting of $1,500,000 of underwriting
fees and $447,419 of Initial Public Offering costs. In addition,
$741,476 of cash was held outside of the Trust Account and is
available for working capital purposes.
On
November 29, 2017, in connection with the underwriters’
exercise of their over-allotment option in full, the Company
consummated the sale of an additional 900,000 Units, and the sale
of an additional 22,500 Private Placement Units at $10.00 per unit,
generating total gross proceeds of $9,225,000. A total of
$9,000,000 of the net proceeds were deposited in the Trust Account,
bringing the aggregate proceeds held in the Trust Account to
$69,000,000 (see Note 8).
The
Company’s management has broad discretion with respect to the
specific application of the net proceeds of the Initial Public
Offering and Private Placement Units, although substantially all of
the net proceeds are intended to be applied generally toward
consummating a Business Combination. The Company’s initial
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 (excluding taxes payable on income
earned on the Trust Account) at the time of the signing 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.
F-4
BIG ROCK PARTNERS ACQUISITION CORP.
NOTES TO BALANCE SHEET
The
Company will provide its stockholders with the opportunity to
redeem all or a portion of their shares included in the Units sold
in the Initial Public Offering (the “Public Shares”)
upon the completion of a Business Combination either (i) in
connection with a stockholder meeting called to approve the
Business Combination or (ii) by means of a tender offer. The
decision as to whether the Company will seek stockholder approval
of a Business Combination or conduct a tender offer will be made by
the Company, solely in its discretion. The stockholders will be
entitled to redeem their shares for a pro rata portion of the
amount then on deposit in the Trust Account ($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 franchise and
income tax obligations). There will be no redemption rights upon
the completion of a Business Combination with respect to the
Company’s warrants.
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, if the Company seeks stockholder
approval, a majority of the outstanding shares voted are voted in
favor of the Business Combination. If a stockholder vote is not
required by law and the Company does not decide to hold a
stockholder vote for business or other legal reasons, the Company
will, pursuant to its Amended and Restated Certificate of
Incorporation, 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
stockholder approval of the transaction is required by law, or the
Company decides to obtain stockholder 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
stockholder approval in connection with a Business Combination, the
Company’s Sponsor, officers and directors (the “Initial
Stockholders”) have agreed (a) to vote their Founder’s
Shares (as defined in Note 5), Placement Shares (as defined in Note
4) and any Public Shares held by them in favor of approving a
Business Combination and (b) not to convert any Founder’s
Shares, Placement Shares and any Public Shares held by them in
connection with a stockholder vote to approve a Business
Combination or sell any such shares to the Company in a tender
offer in connection with a Business Combination. Additionally, each
public stockholder may elect to redeem their Public Shares
irrespective of whether they vote for or against the proposed
transaction.
The
Company will have until 12 months from the closing of the Initial
Public Offering to consummate a Business Combination. However, if
the Company anticipates that it may not be able to consummate a
Business Combination within 12 months, the Company may extend the
period of time to consummate a Business Combination up to two
times, each by an additional three months (for a total of up to 18
months to complete a Business Combination) (the “Combination
Period”). Pursuant to the terms of the Amended and Restated
Certificate of Incorporation and the trust agreement entered into
between the Company and Continental Stock Transfer & Trust
Company on November 20, 2017, 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
$690,000 ($0.10 per share), up to an aggregate of $1,380,000, or
$0.20 per share, if the Company extends for the full six months, on
or prior to the date of the applicable deadline, for each three
month extension. 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.
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), divided by the number of
then outstanding Public Shares, which redemption will completely
extinguish public stockholders’ rights as stockholders
(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 stockholders 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. In the event of such
distribution, it is possible that the per share value of the assets
remaining available for distribution (including Trust Account
assets) will be less than the $10.00 per Unit in the Proposed
Offering.
F-5
BIG ROCK PARTNERS ACQUISITION CORP.
NOTES TO BALANCE SHEET
The
Initial Stockholders have agreed to (i) waive their redemption
rights with respect to Founder Shares, Placement Shares and any
Public Shares they may acquire during or after the Initial Public
Offering in connection with the consummation of a Business
Combination, (ii) to waive their rights to liquidating
distributions from the Trust Account with respect to their
Founder’s Shares and Placement Shares if the Company fails to
consummate a Business Combination within the Combination Period and
(iii) not to propose an amendment to the Company’s Amended
and Restated Certificate of Incorporation 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
stockholders with the opportunity to redeem their Public Shares in
conjunction with any such amendment. However, the Initial
Stockholders will be entitled to liquidating distributions with
respect to any Public Shares acquired if the Company fails to
consummate a Business Combination or liquidates within the
Combination Period.
In
order to protect the amounts held in the Trust Account, A/Z
Property Partners, LLC (“AZ Property Partners”), and
entity majority owned and controlled by Richard Ackerman, the
Company’s Chairman, President and Chief Executive Officer,
has agreed to be liable to the Company if and to the extent any
claims by a vendor for services rendered or products sold to the
Company, or a prospective target business with which the Company
has discussed entering into a transaction agreement, reduce the
amount of funds in the Trust Account. This liability will not apply
with respect to any claims by a third party who executed a waiver
of any right, title, interest or claim of any kind in or to any
monies held in the Trust Account or 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”). Moreover, in the event that an executed waiver is
deemed to be unenforceable against a third party, A/Z Property
Partners will not be responsible to the extent of any liability for
such third party claims. The Company will seek to reduce the
possibility that A/Z Property Partners 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The
accompanying balance sheet is presented in conformity with
accounting principles generally accepted in the United States of
America (“GAAP”) and pursuant to the rules and
regulations of the SEC.
Emerging growth company
The
Company is an “emerging growth company,” as defined in
Section 2(a) of the Securities Act, as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”), and
it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not
being required to comply with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act, 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
stockholder 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.
F-6
BIG ROCK PARTNERS ACQUISITION CORP.
NOTES TO BALANCE SHEET
Use of estimates
The
preparation of the balance sheet 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 balance
sheet.
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 balance sheet, which management considered in
formulating its estimate, could change in the near term due to one
or more future 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
November 22, 2017.
Cash held in Trust Account
At
November 22, 2017, the assets held in the Trust Account were held
in cash.
Common stock subject to possible redemption
The
Company accounts for its common stock subject to possible
redemption in accordance with the guidance in Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Common stock subject to mandatory
redemption (if any) is classified as a liability instrument and is
measured at fair value. Conditionally redeemable common stock
(including common stock that features 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) is classified as temporary equity. At all
other times, common stock is classified as stockholders’
equity. The Company’s common stock features certain
redemption rights that are considered to be outside of the
Company’s control and subject to occurrence of uncertain
future events. Accordingly, at November 22, 2017, common stock
subject to possible redemption is presented as temporary equity,
outside of the stockholders’ equity section of the
Company’s balance sheet.
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
$1,947,419 were charged to stockholders’ equity upon the
completion of the Initial Public Offering.
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 recognizes accrued interest and penalties
related to unrecognized tax benefits as income tax expense. As of
November 22, 2017, there were no unrecognized tax benefits 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.
F-7
BIG ROCK PARTNERS ACQUISITION CORP.
NOTES TO BALANCE SHEET
The
Company may be subject to potential examination by federal, state
and city taxing authorities in the areas 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 federal, state and city 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.
Concentration of credit risk
Financial
instruments that potentially subject the Company to concentration
of credit risk consist of cash accounts in a financial institution
which, at times may exceed the Federal depository insurance
coverage of $250,000. At November 22, 2017, the Company had 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 Measurements and Disclosures,” approximates the
carrying amounts represented in the accompanying balance sheet,
primarily due to their short-term nature.
Recently issued accounting standards
Management does not
believe that any recently issued, but not yet effective, accounting
pronouncements, if currently adopted, would have a material effect
on the Company’s financial statements.
3. INITIAL PUBLIC OFFERING
Pursuant to the
Initial Public Offering, the Company sold 6,000,000 units at a
purchase price of $10.00 per Unit. Each Unit consists of one share
of common stock, one right (“Public Right”) and
one-half of one warrant (“Public Warrant”). Each Public
Right will convert into one-tenth (1/10) of one share of common
stock upon consummation of a Business Combination (see Note 7).
Each whole Public Warrant entitles the holder to purchase one share
of common stock at an exercise price of $11.50 per whole share (see
Note 7).
4. PRIVATE PLACEMENT
Simultaneously with
the Initial Public Offering, the Sponsor purchased 250,000 Private
Placement Units, at $10.00 per Private Placement Unit, for an
aggregate purchase price of $2,500,000. Each Private Placement Unit
consists of one share of common stock (“Placement
Share”), one right (“Placement Right”) and
one-half of one warrant (each, a “Placement Warrant”),
each whole Placement Warrant exercisable to purchase one share of
common stock at an exercise price of $11.50. The proceeds from the
Private Placement Units were added to the proceeds from the Initial
Public Offering held in the Trust Account. If the Company does not
complete a Business Combination within the Combination Period, the
proceeds from the sale of the Private Placement Units will be used
to fund the redemption of the Public Shares (subject to the
requirements of applicable law), and the Placement Rights and the
Placement Warrants will expire worthless.
The
Private Placement Units are identical to the Units sold in the
Initial Public Offering except that the Placement Warrants (i) are
not be redeemable by the Company and (ii) may be exercised for cash
or on a cashless basis, so long as they are held by the initial
purchaser or any of its permitted transferees. In addition, the
Private Placement Units and their component securities may not be
transferable, assignable or salable until after the consummation of
a Business Combination, subject to certain limited exceptions. If
the Placement Warrants are held by someone other than the initial
purchasers or their permitted transferees, the Placement Warrants
will be redeemable by the Company and exercisable by such holders
on the same basis as the Public Warrants.
F-8
BIG ROCK PARTNERS ACQUISITION CORP.
NOTES TO BALANCE SHEET
5. RELATED PARTY TRANSACTIONS
Founder Shares
In
September 2017, the Company issued an aggregate of 1,437,500 shares
of common stock to the Sponsor (“Founder’s
Shares”) for an aggregate purchase price of $25,000.
On November 20, 2017, the Company
effectuated a 1.2-for-1 stock dividend of its common stock
resulting in an aggregate of 1,725,000 Founder's Shares
outstanding. The Founder’s Shares included an aggregate of up
to 225,000 shares subject to forfeiture by the Sponsor to the
extent that the underwriters’ over-allotment was not
exercised in full or in part, so that the Initial Stockholders
would own 20% of the Company’s issued and outstanding shares
after the Initial Public Offering (assuming the Initial
Stockholders do not purchase any Public Shares in the Initial
Public Offering and excluding the Private Placement Units and the
Representative Shares (as defined in Note 6)) (see Note
8).
The Initial Stockholders have agreed not to
transfer, assign or sell any of the Founder’s Shares until
the earlier of (i) one year after the date of the
consummation of a Business Combination, or (ii) with respect to 50%
of the Founder Shares, the date on which the closing price of the
Company’s common stock 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, or earlier, in
each case, if subsequent to a Business
Combination, the Company consummates a subsequent liquidation,
merger, stock exchange, reorganization or other similar transaction
which results in all of the Company’s stockholders having the
right to exchange their common stock for cash, securities or other
property.
Promissory Notes – Related Parties
On
September 26, 2017, the Company issued to the Sponsor and its Chief
Executive Officer, unsecured promissory notes pursuant to which the
Company may borrow up to an aggregate amount of $150,000 and
$25,000, respectively (the “Promissory Notes”). As of
November 22, 2017, an aggregate of $147,625 was outstanding under
the Promissory Notes. The Promissory Notes are non-interest bearing
and payable on the earlier to occur of (i) December 31, 2018, or
(ii) the consummation of the Initial Public Offering. The
Promissory Notes were repaid on November 24, 2017.
Administrative Services Agreement
The
Company entered into an agreement whereby, commencing on November
20, 2017 through the earlier of the consummation of a Business
Combination or the Company’s liquidation, the Company will
pay the Sponsor a monthly fee of $10,000 for office space,
utilities and administrative support.
Related Party Loans
In
order to finance transaction costs in connection with a Business
Combination, the Sponsor, an affiliate of the Sponsor, or the
Company’s officers and directors may, but are not obligated
to, loan the Company funds from time to time or at any time, as may
be required (“Working Capital Loans”). Each Working
Capital Loan would be evidenced by a promissory note. The Working
Capital Loans would either be paid upon consummation of a Business
Combination, without interest, or, at the holder’s
discretion, up to $1,500,000 of the Working Capital Loans may be
converted into units at a price of $10.00 per unit. The units would
be identical to the Private Placement Units. In the event that a
Business Combination does not close, the loans will be
forgiven.
F-9
BIG ROCK PARTNERS ACQUISITION CORP.
NOTES TO BALANCE SHEET
6. COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a
registration rights agreement entered into on November 20, 2017,
the holders of the Founder Shares, Private Placement Units (and
their underlying securities), Representative Shares (as defined
below) and any Units that may be issued upon conversion of the
Working Capital Loans (and their underlying securities) are
entitled to registration rights. The holders of a majority of these
securities will be entitled to make up to three demands, excluding
short form demands, that the Company register such securities. The
holders of the majority of the Founder’s Shares can elect to
exercise these registration rights at any time commencing three
months prior to the date on which these shares of common stock are
to be released from escrow. The holders of a majority of the
Private Placement Units or Units issued to the Sponsor, officers,
directors or their affiliates in payment of Working Capital Loans
made to the Company (in each case, including the underlying
securities) can elect to exercise these registration rights at any
time after the Company consummates a Business Combination. In
addition, the holders will have certain “piggy-back”
registration rights with respect to registration statements filed
subsequent to the completion 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
anything to the contrary, EarlyBirdCapital, Inc.
(“EarlyBirdCapital”) and its designees may participate
in a “piggy-back” registration during the seven year
period beginning on the effective date of the registration
statement. However, the registration rights agreement will provide
that the Company will not permit any registration statement filed
under the Securities Act to become effective until termination of
the applicable lock-up period. The Company will bear the expenses
incurred in connection with the filing of any such registration
statements.
Underwriters Agreement
The
Company granted the underwriters a 45-day option to purchase up to
900,000 additional Units to cover over-allotments at the Initial
Public Offering price, less the underwriting discounts and
commissions (see Note 8).
The
underwriters were paid a cash underwriting discount of two percent
and one-half percent (2.5%) of the gross proceeds of the Initial
Public Offering, or $1,500,000.
In
addition, at the closing of the Initial Public Offering, the
Company issued EarlyBirdCapital and its designees 120,000 shares of
common stock (the “Representative Shares”) (see Note
8). The Company accounted for the Representative Shares as an
expense of the Initial Public Offering resulting in a charge
directly to stockholders’ equity. The Company determined the
fair value of Representative Shares to be $1,200,000 (or $1,380,000
if the underwriters’ over-allotment option is exercised in
full) based upon the offering price of the Units of $10.00 per
Unit. The underwriter has agreed not to transfer, assign or sell
any such shares until the completion of a Business Combination. In
addition, the underwriter and its designees have agreed (i) to
waive their redemption rights with respect to such shares in
connection with the completion of a Business Combination and (ii)
to waive their rights to liquidating distributions from the Trust
Account with respect to such shares if the Company fails to
complete a Business Combination within the Combination
Period.
The
shares have been deemed compensation by FINRA and are therefore
subject to a lock-up for a period of 180 days pursuant to Rule
5110(g)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA
Rule 5110(g)(1), these securities will not be the subject of any
hedging, short sale, derivative, put or call transaction that would
result in the economic disposition of the securities by any person
for a period of 180 days immediately following the date of the
Initial Public Offering, nor may they be sold, transferred,
assigned, pledged or hypothecated for a period of 180 days
immediately following the Initial Public Offering except to any
underwriter and selected dealer participating in the Initial Public
Offering and their bona fide officers or partners.
Business Combination Marketing Agreement
The
Company has engaged EarlyBirdCapital as an advisor in connection
with a Business Combination to assist the Company in holding
meetings with its stockholders to discuss a potential Business
Combination and the target business’ attributes, introduce
the Company to potential investors that are interested in
purchasing securities, assist the Company in obtaining stockholder
approval for the Business Combination and assist the Company with
its press releases and public filings in connection with a Business
Combination. The Company will pay EarlyBirdCapital a cash fee for
such services upon the consummation of a Business Combination in an
amount equal to 4.0% of the gross proceeds of the Initial Public
Offering (exclusive of any applicable finders’ fees which
might become payable).
F-10
BIG ROCK PARTNERS ACQUISITION CORP.
NOTES TO BALANCE SHEET
Unit Purchase Option
On
November 22, 2017, the Company sold to EarlyBirdCapital, for $100,
an option to purchase up to 600,000 Units exercisable at $10.00 per
Unit (or an aggregate exercise price of $6,000,000) commencing on
the later of November 20, 2018 and the consummation of a Business
Combination. The unit purchase option may be exercised for cash or
on a cashless basis, at the holder’s option, and expires five
years from November 20, 2018. The Units issuable upon exercise of
this 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
stockholders’ equity. The Company estimated the fair value of
this unit purchase option to be approximately $2,042,889 (or $3.40
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
2.05% and (3) expected life of five years. The option and such
units purchased pursuant to the option, as well as the common stock
underlying such units, the rights included in such units, the
common stock that is issuable for the rights included in 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 the date of Initial Public Offering 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 the effective
date of the registration statement 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 common stock at a
price below its exercise price.
7. STOCKHOLDERS’ EQUITY
Preferred Stock
— The Company is authorized to issue 1,000,000 shares of
preferred stock with a par value of $0.001 per share with such
designation, rights and preferences as may be determined from time
to time by the Company’s Board of Directors. At November 22,
2017, there were no shares of preferred stock issued or
outstanding.
Common Stock —
The Company is authorized to issue 100,000,000 shares of common
stock with a par value of $0.001 per share. Holders of the
Company’s common stock are entitled to one vote for each
share. At November 22, 2017, there were 2,537,361 shares of common
stock issued and outstanding (excluding 5,557,639 shares of common
stock subject to possible redemption), of which 225,000 shares were
subject to forfeiture to the extent that the underwriter’s
over-allotment option was not exercised in full so that the
Company’s Initial Stockholders will own 20% of the issued and
outstanding shares after the Initial Public Offering (assuming the
Initial Stockholders do not purchase any Public Shares in the
Initial Public Offering and excluding the Private Placement Units
and the Representative Shares).
Rights — Each
holder of a right will receive one-tenth (1/10) of one share of
common stock upon consummation of a Business Combination, even if
the holder of such right redeemed all shares held by it in
connection with a Business Combination. No fractional shares will
be issued upon conversion of the rights. No additional
consideration will be required to be paid by a holder of rights in
order to receive its additional shares upon consummation of a
Business Combination, as the consideration related thereto has been
included in the Unit purchase price paid for by investors in the
Initial Public Offering. If the Company enters into a definitive
agreement for a Business Combination in which the Company will not
be the surviving entity, the definitive agreement will provide for
the holders of rights to receive the same per share consideration
the holders of the common stock will receive in the transaction on
an as-converted into common stock basis and each holder of a right
will be required to affirmatively convert its rights in order to
receive 1/10 share underlying each right (without paying additional
consideration). The shares issuable upon conversion of the rights
will be freely tradable (except to the extent held by affiliates of
the Company).
F-11
BIG ROCK PARTNERS ACQUISITION CORP.
NOTES TO BALANCE SHEET
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 rights will not receive any of such funds
with respect to their rights, nor will they receive any
distribution from the Company’s assets held outside of the
Trust Account with respect to such rights, and the rights will
expire worthless. Further, there are no contractual penalties for
failure to deliver securities to the holders of the rights upon
consummation of a Business Combination. Additionally, in no event
will the Company be required to net cash settle the rights.
Accordingly, holders of the rights might not receive the shares of
common stock underlying the rights.
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
completion of a Business Combination; provided in that the Company
has an effective registration statement under the Securities Act
covering the shares of common stock issuable upon exercise of the
Public Warrants and a current prospectus relating to them is
available. The Company has agreed that as soon as practicable, the
Company will use its best efforts to file with the SEC a
registration statement for the registration, under the Securities
Act, of the shares of common stock issuable upon exercise of the
Public Warrants. The Company will use its best efforts to cause the
same to become effective and to maintain the effectiveness of such
registration statement, and a current prospectus relating thereto,
until the expiration of the Public Warrants in accordance with the
provisions of the warrant agreement. Notwithstanding the foregoing,
if a registration statement covering the shares of common stock
issuable upon exercise of the Public Warrants is not effective 90
days following the consummation of Business Combination, warrant
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 warrants
on a cashless basis pursuant to the exemption provided by Section
3(a)(9) of the Securities Act, provided that such exemption is
available. If that exemption, or another exemption, is not
available, holders will not be able to exercise their warrants on a
cashless basis. The Public Warrants will expire five years after
the completion of a Business Combination or earlier upon redemption
or liquidation.
The
Company may redeem the Public Warrants:
●
|
in
whole and not in part;
|
●
|
at a
price of $0.01 per warrant;
|
●
|
at any
time during the exercise period;
|
●
|
upon a
minimum of 30 days’ prior written notice of redemption;
and
|
●
|
if, and
only if, the last sale price of the Company’s common stock
equals or exceeds $21.00 per share for any 20 trading days within a
30-trading day period ending on the third business day prior to the
date on which the Company sends the notice of redemption to the
warrant holders.
|
●
|
If, and
only if, there is a current registration statement in effect with
respect to the shares of common stock underlying such
warrants.
|
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 shares of common stock issuable upon
exercise of the warrants may be adjusted in certain circumstances
including in the event of a stock dividend, or recapitalization,
reorganization, merger or consolidation. However, the warrants will
not be adjusted for issuance of common stock 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 the
respect to such warrants. Accordingly, the warrants may expire
worthless.
8. SUBSEQUENT EVENTS
The
Company evaluates subsequent events and transactions that occur
after the balance sheet date up to the date that the financial
statements were issued. Other than as described below, the Company
did not identify any subsequent events that would have required
adjustment or disclosure in the financial statements.
F-12
BIG ROCK PARTNERS ACQUISITION CORP.
NOTES TO BALANCE SHEET
On
November 29 2017, the underwriters exercised their over-allotment
option in full and purchased 900,000 additional Units at $10.00 per
unit, generating gross proceeds of $9,000,000. Simultaneously with
the sale of the additional Units, the Company consummated the sale
of an additional 22,500 Private Placement Units at $10.00 per unit,
generating gross proceeds of $225,000.
In
addition, on November 29, 2017, in connection with the
underwriters’ election to fully exercise their over-allotment
option, the Company issued EarlyBirdCapital and its designees an
additional 18,000 Representative Shares for no
consideration.
Transaction costs
amounted to $225,000, consisting of underwriting fees. A total of
$9,000,000 of the net proceeds were placed in the Trust Account,
bringing the aggregate proceeds held in the Trust Account to
$69,000,000 as of November 29, 2017.
As a
result of the underwriters’ election to exercise their
over-allotment option in full, 225,000 Founder’s Shares are
no longer subject to forfeiture.
On
November 24, 2017, the Company repaid the full amount of the
outstanding Promissory Notes of $147,625.
F-13