The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral
part of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Orisun Acquisition Corp. (the “Company”)
was incorporated in Delaware on October 22, 2018. The Company was formed for the purpose of entering into a merger, share exchange,
asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses
or entities (the “Business Combination”).
Although the Company is not limited to
a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search on
companies in and around the high-tech industry. The Company is an early stage and emerging growth company and, as such, the Company
is subject to all of the risks associated with early stage and emerging growth companies.
As of March 31, 2020, the Company had not
commenced any operations. All activity through March 31, 2020 relates to the Company’s formation, the initial public offering
(“Initial Public Offering”), which is described below, and identifying a target company for a Business Combination.
The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The
Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s
Initial Public Offering was declared effective on August 2, 2019. On August 6, 2019, the Company consummated the Initial Public
Offering of 4,000,000 units (the “Units” and, with respect to the shares of common stock included in the Units sold,
the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $40,000,000, which is described in Note 4.
Simultaneously with the closing of the
Initial Public Offering, the Company consummated the sale of 220,000 units (the “Private Units”) at a price of $10.00
per Private Unit in a private placement to Everstone Investments, LLC (the “Sponsor”) and Chardan Capital Markets LLC
(and their designees) (“Chardan”), generating gross proceeds of $2,200,000, which is described in Note 5.
Following the closing of the Initial Public
Offering on August 6, 2019, an amount of $40,000,000 ($10.00 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”), located in the
United States which has been 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 completion of a Business Combination and
(ii) the distribution of the Trust Account, as described below.
On August 28, 2019, in connection with
the underwriters’ election to partially exercise their over-allotment option, the Company consummated the sale of an additional
440,024 Units at a price of $10.00 per Unit and the sale of an additional 13,201 Private Units at a price of at $10.00 per unit,
generating total gross proceeds of $4,532,250. Following the closing, an additional $4,400,240 of net proceeds ($10.00 per Unit)
was placed in the Trust Account, resulting in $44,400,240 ($10.00 per Unit) held in the Trust Account.
Transaction costs amounted to $3,180,906,
consisting of $1,332,010 of underwriting fees, $1,332,010 of deferred underwriting fees and $516,886 of other offering costs. In
addition, at March 31, 2020, cash of $274,975 was held outside of the Trust Account (as defined below) and is available for working
capital purposes.
The Company’s management has broad
discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private
Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete
a Business Combination having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding
the deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the agreement to
enter into an initial Business Combination. The Company will only complete a Business Combination if the post-transaction 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.
ORISUN ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
The Company will provide its holders of
the outstanding Public Shares (the “public stockholders”) 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 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 public stockholders
will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated
to be $10.00 per Public 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 Public Shares subject to redemption will be recorded at a redemption
value and classified as temporary equity upon the completion of the Proposed Offering in accordance with the Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” 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 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 (the “Amended and Restated Certificate
of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission
(“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder
approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or 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. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they
vote for or against the proposed transaction. If the Company seeks stockholder approval in connection with a Business Combination,
the Company’s Sponsor and any of the Company’s officers or directors that may hold Founder Shares (as defined in Note
6) (the “Initial Stockholders”) and Chardan have agreed (a) to vote their Founder Shares, Private Shares (as defined
in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination
and (b) not to convert any shares (including the Founder Shares) in connection with a stockholder vote to approve, or sell the
shares to the Company in any tender offer in connection with, a proposed Business Combination.
If the Company seeks stockholder approval
of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate
of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom
such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate
of 20% or more of the Public Shares, without the prior consent of the Company.
The Initial Stockholders and Chardan have
agreed (a) to waive their redemption rights with respect to the Founder Shares, Private Shares and Public Shares held by them in
connection with the completion of a Business Combination and (b) not to propose, or vote in favor of, an amendment to the 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.
The Company will have until August 6, 2020
to consummate a Business Combination. However, if the Company anticipates that it may not be able to consummate a Business Combination
by August 6, 2020, the Company may extend the period of time to consummate a Business Combination up to three times, each by an
additional three months (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 $444,002 ($0.10 per Public Share), or an aggregate of $1,332,010, or $0.30 per Unit, on or
prior to the date of the applicable deadline for each three month 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 not more than ten business days thereafter, redeem the 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 on the funds
held in the Trust Account and not previously released to the Company to pay franchise and income taxes, 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 liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s
board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions
with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination
within the Combination Period.
ORISUN ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
The Sponsor and Chardan have agreed to
waive their liquidation rights with respect to the Founder Shares and Private Shares if the Company fails to complete a Business
Combination within the Combination Period. However, if the Sponsor or Chardan acquires Public Shares in or after the Initial Public
Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete
a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting
commission (see Note 7) held in the Trust Account in the event the Company does not complete a Business Combination within in the
Combination Period and, in such event, such amounts will be included with the other 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).
In order to protect the amounts held in
the Trust Account, Ms. Wei Chen, the Company’s 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 to below
$10.00 per Public Share, except as to any claims by a third party who executed a valid and enforceable agreement with the Company
waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account and except
as to any claims under the Company’s indemnity of the underwriters of 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, Ms. Wei Chen, the chief executive officer, will not be
responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that Ms.
Chen Wei 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.
NOTE 2. LIQUIDITY AND GOING CONCERN
As of March 31, 2020, the Company had $274,975
in its operating bank accounts, $44,791,789 in securities held in the Trust Account to be used for a Business Combination or to
repurchase or redeem its common stock in connection therewith and working capital of $154,776, which excludes franchise and income
taxes payable as these amounts can be paid from the interest earned in the Trust Account. As of March 31, 2020, approximately $392,000
of the amount on deposit in the Trust Account represented interest income, which is available to pay the Company’s tax obligations.
Until the consummation of a Business Combination,
the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates,
performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire,
and structuring, negotiating and consummating the Business Combination.
The Company will need to raise additional
capital through loans or additional investments from its Sponsor, officers, directors, or their affiliates. The Company’s
officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in whatever
amount they deem reasonable in their sole discretion, to meet the Company’s working capital needs. Accordingly, the Company
may not be able to obtain additional financing. 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 a potential transaction, 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 through August 6, 2020, the date that the Company will be required to cease all operations,
except for the purpose of winding up, if a Business Combination is not consummated. These financial statements do not include any
adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should
the Company be unable to continue as a going concern.
ORISUN ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE 3. 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 Securities
and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial
reporting. Accordingly, they do not include all the information and footnotes necessary for a 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 Annual Report on Form 10-K for the year ended December 31, 2019
as filed with the SEC on March 30, 2020, which contains the audited financial statements and notes thereto. The financial information
as of December 31, 2019 is derived from the audited financial statements presented in the Company’s Annual Report on Form
10-K for the year ended December 31, 2019. The interim results for the three months ended March 31, 2020 are not necessarily indicative
of the results to be expected for the year ending December 31, 2020 or for any future interim 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, 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 statement 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 condensed financial
statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
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 March 31, 2020 and December 31, 2019.
ORISUN ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
Marketable securities held in Trust Account
At March 31, 2020 and December 31, 2019, the
assets held in the Trust Account were substantially held in U.S. Treasury Bills. Through March 31, 2020, an aggregate of $46,795
was withdrawn from the interest earned on the Trust Account to pay trustee fees of $6,250 and $40,545 was withdrawn during the
three months ended March 31, 2020 to pay for franchise taxes.
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 is classified as a liability
instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption
rights that is 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, common stock subject to possible redemption is presented
at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s condensed balance
sheets.
Income taxes
The Company follows the asset and liability
method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
ASC 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken
in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination
by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of March 31, 2020 and December
31, 2019. 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 is subject to income tax examinations by major taxing authorities since inception.
The effective tax rate of 7% differs from the statutory tax rate of 21% for the three ended March 31, 2020 due to the utilization
of net operating losses to offset taxable income.
Net loss per common share
Net loss per share is computed by dividing
net loss by the weighted average number of shares of common stock outstanding during the period. At March 31, 2019, weighted average
shares were reduced for the effect of an aggregate of 150,000 shares of common stock that were subject to forfeiture if the over-allotment
option was not exercised by the underwriters. The Company applies the two-class method in calculating earnings per share. Shares
of common stock subject to possible redemption at March 31, 2020, which are not currently redeemable and are not redeemable at
fair value, have been excluded from the calculation of basic loss per common 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 (1) warrants sold in the Initial
Public Offering and private placement to purchase 2,336,613 shares of common stock (2) rights sold in the Initial Public Offering
and private placement that convert into 467,323 share of common stock and (3) a unit purchase option sold to the underwriter that
is exercisable for 333,002 shares of common stock, warrants to purchase 166,501 shares of common stock and rights that convert
into 33,300 shares of common stock, in the calculation of diluted loss per share, since the exercise of the warrants and the conversion
of the rights into shares of common stock are contingent upon the occurrence of future events. As a result, diluted loss per share
is the same as basic loss per share for the periods presented.
ORISUN ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
Reconciliation of net loss per common
share
The Company’s net income (loss) is
adjusted for the portion of income that is attributable to common stock 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 common
share is calculated as follows:
|
|
Three Months Ended
March 31,
|
|
|
|
2020
|
|
|
2019
|
|
Net income (loss)
|
|
$
|
43,072
|
|
|
$
|
(16,656
|
)
|
Less: Income attributable to shares subject to possible redemption
|
|
|
(100,702
|
)
|
|
|
—
|
|
Adjusted net loss
|
|
$
|
(57,630
|
)
|
|
$
|
(16,656
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic and diluted
|
|
|
1,952,097
|
|
|
|
1,000,000
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
Concentration of credit risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times may exceed
the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on these accounts and management
believes the Company is not exposed to significant risks on such accounts.
Fair value 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 pronouncements
Management does not believe that any recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s
condensed financial statements.
NOTE 4. PUBLIC OFFERING
Pursuant to the Initial Public Offering,
the Company sold 4,440,024 units at $10.00 per Unit, inclusive of 440,024 Units sold to the underwriters on August 28, 2019 upon
the underwriters’ election to partially exercise their over-allotment option. Each Unit consists of one share of common stock,
one right (“Public Right”) and one warrant (“Public Warrant”). Each Public Right will convert into one-tenth
(1/10) of one share of common stock upon the consummation of a Business Combination (see Note 8). Each Public Warrant entitles
the holder to purchase one half of one share of common stock at a price of $11.50 per whole share, subject to adjustment
(see Note 8).
ORISUN ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE 5. PRIVATE PLACEMENT
Simultaneously with the closing of the
Initial Public Offering, the Sponsor and Chardan (and their designees) purchased an aggregate of 220,000 Private Units at a price
of $10.00 per Private Unit, of which 200,000 Private Units were purchased by the Sponsor and 20,000 Private Units were purchased
by Chardan, for an aggregate purchase price of $2,200,000. On August 28, 2019, the Company consummated the sale of an additional
13,201 Private Units at a price of $10.00 per Private Unit, which was purchased by the Sponsor and Chardan, generating gross proceeds
of $132,010. Each Private Unit consists of one share of common stock (“Private Share”), one right (“Private Right”)
and one warrant (“Private Warrant”). Each Private Right will convert into one-tenth (1/10) of one share of common stock
upon the consummation of a Business Combination (see Note 8). Each Private Warrant is exercisable to purchase one-half of one share
of common stock at an exercise price of $11.50 per whole share, subject to adjustment (see Note 8). The proceeds from the Private
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 Units will be used to fund the redemption
of the Public Shares (subject to the requirements of applicable law), and the Private Units and all underlying securities will
expire worthless.
NOTE 6. RELATED PARTY TRANSACTIONS
Founder Shares
In December 2018, the Sponsor purchased
1,150,000 shares (the “Founder Shares”) of the Company’s common stock for an aggregate price of $25,000. The
Founder Shares included an aggregate of up to 150,000 shares subject to forfeiture by the Initial Stockholders to the extent that
the underwriters’ over-allotment was not exercised in full or in part, so that the Initial Stockholders would collectively
own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Initial Stockholders
did not purchase any Public Shares in the Initial Public Offering and excluding the Private Units). On August 28, 2019, as a result
of the underwriters’ election to partially exercise their over-allotment option, 110,010 Founder Shares are no longer subject
to forfeiture. The underwriters elected not to exercise the remaining portion of the over-allotment option and, therefore, 39,990
Founder Shares were forfeited.
The Initial Stockholders have agreed, subject
to certain limited exceptions, not to transfer, assign or sell any of their Founder Shares until, with respect to 50% of the Founder
Shares, the earlier of six months after the consummation of a Business Combination and the date on which the closing price of the
common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within a 30-trading day period commencing after a Business Combination and, with respect
to the remaining 50% of the Founder Shares, until the six months after the consummation of a Business Combination, or earlier,
in either case, if, subsequent to a Business Combination, the Company completes a liquidation, merger, stock exchange or other
similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of common
stock for cash, securities or other property.
Advances — Related Party
The Sponsor advanced the Company an aggregate
of $57,500 to cover expenses related to the Initial Public Offering. The advances were non-interest bearing and due on demand.
At March 31, 2020 and December 31, 2019, advances of $57,500 were outstanding and due on demand.
Promissory Note — Related Party
On December 28, 2018, the Company issued
an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company may borrow up to
an aggregate principal amount of $300,000, of which $225,000 was outstanding under the Promissory Note as of June 30, 2019. The
Promissory Note is non-interest bearing and due on the earlier of the consummation of the Initial Public Offering or on the date
on which the Company determines not to proceed with the Initial Public Offering. On August 9, 2019, the outstanding balance of
$234,000 under the Promissory Note was repaid in full.
ORISUN ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
Related Party Loans
In addition, in order to finance transaction
costs in connection with a Business Combination, the Sponsor, or certain of the Company’s officers and directors or their
affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the
Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account
released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account.
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.
Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist
with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without
interest, or, at the lender’s discretion, up to $500,000 of such Working Capital Loans may be converted into units of the
post Business Combination entity at a price of $10.00 per unit. The units would be identical to the Private Units.
Related Party Extension Loans
As discussed in Note 1, the Company may
extend the period of time to consummate a Business Combination up to three times, each by an additional three months (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 $444,002 ($0.10 per Public
Share), or an aggregate of $1,332,010, or $0.30 per Unit, on or prior to the date of the applicable deadline. The Sponsor will
receive a non-interest bearing, unsecured promissory note 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. The note would either be repaid upon
consummation of a Business Combination or, at the lender’s discretion, converted upon the consummation of a Business Combination
into additional Private Units at a price of $10.00 per unit. The initial stockholders 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.
NOTE 7. COMMITMENTS
Risks and Uncertainties
Management is currently evaluating the impact
of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative
effect on the Company’s financial position, results of its operations and/or search for a target company, 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.
Registration Rights
Pursuant to a registration rights agreement
entered into on August 2, 2019, the holders of the Founder Shares, Private Units (and all underlying securities), and any shares
that may be issued upon conversion of Working Capital Loans will be entitled to registration rights. The holders of the majority
of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority
of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on
which the Founder Shares are to be released from escrow. The holders of a majority of the Private Units and units issued in payment
of Working Capital Loans made to the Company can elect to exercise these registration rights at any time commencing on the date
that the Company consummates a Business Combination. In addition, the holders have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to the consummation of a Business Combination. 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, if any, at the Initial Public Offering price
less the underwriting discounts and commissions. On August 28, 2019, the underwriters elected to partially exercise their over-allotment
option to purchase an additional 440,024 Units at a purchase price of $10.00 per Unit.
In connection with the closing of the Initial
Public Offering and the over-allotment option, the underwriters are entitled to a deferred fee of $0.30 per Unit, or $1,332,010
in the aggregate. The deferred fee will be forfeited by the underwriters solely in the event that the Company fails to complete
a Business Combination, subject to the terms of the underwriting agreement.
Right of First Refusal
The Company has granted Chardan a right
of first refusal, for a period of 18 months after the date of the consummation of a Business Combination, to act as lead investment
banker, or minimally as a co-manager, with at 30% of the economics or 20% if three investment banks are involved in the transaction,
for any public or private equity and debt offerings during such period.
ORISUN ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
Warrant Solicitation Fee
The Company has agreed to pay Chardan a
warrant solicitation fee of 5% of the exercise price of each Public Warrant exercised during the period commencing 12 months from
the effective date of the registration statement (August 2, 2019) other than (a) in conjunction with a force-call provision, or
(b) in the case that all solicitations to warrant holders are made exclusively by the Company and/or the Sponsor without third
party assistance on an engaged or non-engaged basis. The warrant solicitation fee will be payable in cash. There is no limitation
on the maximum warrant solicitation fee payable to Chardan except to the extent it is limited by the number of warrants outstanding.
NOTE 8. STOCKHOLDERS’ EQUITY
Common Stock — The
Company is authorized to issue 30,000,000 shares of common stock with a par value of $0.00001 per share. Holders of the common
stock are entitled to one vote for each share. At March 31, 2020 and December 31, 2019, there were 1,955,909 and 1,952,097 shares
of common stock issued and outstanding, excluding 3,827,326 and 3,831,138 shares of common stock subject to possible redemption,
respectively.
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 covert 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).
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 later of (a) the completion of a Business Combination or (b) 12 months from
the closing of the Initial Public Offering. No Public Warrants will be exercisable for cash unless the Company has an effective
and current registration statement covering the shares of common stock issuable upon exercise of the Public Warrants and a current
prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares
of common stock issuable upon exercise of the Public Warrants is not effective within 90 days from the consummation of a 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 the Public Warrants on a cashless basis pursuant
to the exemption from registration provided by Section 3(a)(9) of the Securities Act provided that such exemption is available.
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.
The Company may call the warrants for redemption
(excluding the private warrants and warrants underlying the units that may be issued upon conversion of working capital loans but
including any outstanding warrants issued upon exercise of the unit purchase option issued to Chardan Capital Markets, LLC), in
whole and not in part, at a price of $0.01 per warrant:
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at any time while the warrants are exercisable,
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upon not less than 30 days’ prior written notice of redemption to each warrant holder,
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if, and only if, the reported last sale price of the shares of common stock equals or exceeds $16.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to warrant holders, and
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if, and only if, there is a current registration statement in effect with respect to the shares of common stock 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.
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ORISUN ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
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, extraordinary
dividend or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances
of shares 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 respect to such warrants.
Accordingly, the warrants may expire worthless.
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 shares of common
stock issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until after the completion
of a Business Combination, subject to certain limited exceptions. 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
The Company sold to Chardan (and its designees),
for $100, an option to purchase 300,000 Units exercisable at $11.50 per Unit (or an aggregate exercise price of $3,450,000) commencing
on the later of February 2, 2020 and the consummation of a Business Combination. In connection with the underwriters election to
partially exercise their over-allotment option on August 28, 2019, the Company issued an additional 33,002 unit purchase options
to Chardan and its designees. The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s
option, and expires August 2, 2024. The Units issuable upon exercise of the option are identical to those sold 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
the unit purchase option to be approximately $941,000 (or $2.83 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 1.53% and (3) expected life of five years. The option and the underlying
securities that may be issued upon exercise of the option, 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 “piggyback” 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 shares of common stock at a price below its exercise price.
ORISUN ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE 9. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC
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:
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Level 1:
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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.
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Level 2:
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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.
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Level 3:
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Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
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The following table presents information
about the Company’s assets that are measured at fair value on a recurring basis at March 31, 2020 and December 31, 2019 and
indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
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March 31,
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December 31,
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Description
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Level
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2020
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2019
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Assets:
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Marketable securities held in Trust Account
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1
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$
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44,791,789
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$
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44,694,457
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NOTE 10. 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. Based upon
this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed
financial statements.