NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1—ORGANIZATION
AND NATURE OF BUSINESS OPERATIONS
Organization
and General
B.
Riley Principal Merger Corp. II (the “Company”), a blank check company, was incorporated as a Delaware corporation
on June 3, 2019. The Company is an emerging growth company, as defined in Section 2(a) of the Securities Act of 1933, as
amended, (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”).
The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more businesses (an “Initial Business Combination”).
As
of March 31, 2020, the Company had not commenced any operations. All activity of the Company includes the activity of the Company
from inception and activity related to the initial public offering (the “Public Offering”) described below. The Company
will not generate any operating revenues until after completion of its Initial Business Combination, at the earliest. The Company
will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from
the Public Offering described below. The Company has selected December 31st as its fiscal year end.
Public
Offering
The
Company completed the sale of 17,500,000 units (the “Units”) at an offering price of $10.00 per Unit in the Public
Offering on May 22, 2020. B. Riley Principal Sponsor Co. II, LLC (the “Sponsor”), a Delaware limited liability company
and a wholly-owned indirect subsidiary of B. Riley Financial, Inc. (“B. Riley Financial”), purchased an aggregate
of 650,000 Units at a price of $10.00 per Unit (the “Private Placement Units”) in a private placement that closed
on May 22, 2020 simultaneously with the Public Offering. The sale of the 17,500,000 Units in the Public Offering (the “Public
Units”) generated gross proceeds of $175,000,000, less underwriting commissions of $3,500,000 (2% of the gross proceeds
of the Public Offering) and other offering costs of $561,189. The Private Placement Units generated $6,500,000 of gross proceeds.
Each
Unit consists of one share of the Company’s Class A common stock, $0.0001 par value (each a “public share”),
and one-half of one redeemable warrant, with each whole warrant exercisable for one share of Class A common stock (each,
a “Warrant” and, with respect to the warrants underlying the Private Placement Units, the “Private Placement
Warrants” and, collectively, the “Warrants”). One Warrant entitles the holder thereof to purchase one whole
share of Class A common stock at a price of $11.50 per share.
The
Company has also granted the underwriters a 45-day option to purchase up to 2,625,000 additional Units at the Public Offering
price less the underwriting discounts. On May 28, 2020, the underwriters confirmed that they
will not be exercising their over-allotment option in whole or in part.
Sponsor
and Note Payable - Related Party
On
February 4, 2020, the Sponsor agreed to loan the Company up to $300,000 (see Note 3) to support the Company’s initial formation
and operations. At March 31, 2020, the Note Payable balance was $50,000. On April 21, 2020, the Company borrowed an additional
$50,000 which increased the Note Payable balance to $100,000 which was paid in full using proceeds from the Public Offering and
the Private Placement.
The
Trust Account
Upon
completion of the Public Offering, $176,750,000 of proceeds were held in the Company’s trust account at J.P. Morgan Chase
Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee (the “Trust Account”) and will be
invested in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, as amended, which we refer to as the Investment Company Act, having a maturity of 185 days or less or in
money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act that invest only in
direct U.S. government treasury obligations.. Unless and until the Company completes the Initial Business Combination, it may
pay its expenses only from the net proceeds of the Public Offering and the Private Placement held outside the Trust Account, which
was $1,284,805 on May 22, 2020, of which $100,000 was used to pay the Note Payable to Sponsor and $523,135 was used to pay the
offering costs.
Except
with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its taxes, the
proceeds from the Public Offering may not be released from the Trust Account until the earliest of: (i) the completion of
the Initial Business Combination; (ii) the redemption of any public shares properly submitted in connection with a stockholder
vote to amend the Company’s amended and restated certificate of incorporation to modify the substance or timing of the Company’s
obligation to redeem 100% of its public shares if it does not complete the Initial Business Combination by November 22, 2021,
18 months from the closing of the Public Offering; or (iii) the redemption of all of the Company’s public shares if
the Company is unable to complete the Initial Business Combination by November 22, 2021, 18 months from the closing of the Public
Offering (at which such time up to $100,000 of interest shall be available to the Company to pay dissolution expenses), subject
to applicable law. The proceeds deposited in the Trust Account could become subject to the claims of the Company’s creditors,
if any, which could have priority over the claims of the holders of the Company’s public shares (the “public stockholders”).
Initial
Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering,
although substantially all of the net proceeds of the Public Offering and the Private Placement are intended to be generally applied
toward consummating an Initial Business Combination. The Initial Business Combination must occur with one or more businesses or
assets with a fair market value equal to at least 80% of the assets held in the Trust Account. There is no assurance that the
Company will be able to successfully effect an Initial Business Combination.
The
Company will provide its public stockholders with the opportunity to redeem all or a portion of their shares upon the completion
of the Initial Business Combination, either (i) in connection with a stockholder meeting called to approve the business combination
or (ii) by means of a tender offer. However, in no event will the Company redeem its public shares in an amount that would
cause its net tangible assets to be less than $5,000,001.
If
the Company holds a stockholder meeting to approve the Initial Business Combination, a public stockholder will have the right
to redeem its public shares for an amount in cash equal to its pro rata share of the aggregate amount then on deposit in the Trust
Account as of two business days prior to the consummation of the Initial Business Combination, including interest but less taxes
payable. As a result, such shares of Class A common stock have been recorded at redemption amount and classified as temporary
equity upon the completion of the Public Offering, in accordance with the Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity.”
Pursuant
to the Company’s amended and restated certificate of incorporation, if the Company is unable to complete the Initial Business
Combination by November 22, 2021, 18 months from the closing of the Public Offering, 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 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 (less up to $100,000 of interest to pay dissolution expenses), 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 the Initial Business Combination within
18 months of the closing of the Public Offering.
The
Sponsor and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which
they have agreed to waive their rights to liquidating distributions from the Trust Account with respect to any Founder Shares
and Private Placement Shares (as defined below) held by them if the Company fails to complete the Initial Business Combination
within 18 months of the closing of the Public Offering. However, if the Sponsor or any of the Company’s directors or officers
acquires shares of Class A common stock in or after the Public Offering, they will be entitled to liquidating distributions from
the Trust Account with respect to such public shares if the Company fails to complete the Initial Business Combination within
the prescribed time period.
In
the event of a liquidation, dissolution or winding up of the Company after an Initial Business Combination, the Company’s
remaining stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment
of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. The Company’s
stockholders have no preemptive or other subscription rights. The Company will provide its stockholders with the opportunity to
redeem their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account,
under the circumstances, and, subject to the limitations, described herein.
Letter Agreement
The
Company’s Sponsor, officers and directors have entered into a letter agreement with the Company, pursuant to which they
have agreed, among other things (a) to waive their redemption rights with respect to any Founder Shares, Private Placement Shares
and any Public Shares held by them in connection with the completion of the Initial Business Combination, (b) to waive their redemption
rights with respect to their Founder Shares, Private Placement Shares and public shares in connection with a stockholder vote
to approve an amendment to the Company’s amended and restated certificate of incorporation to modify the substance or timing
of its obligation to redeem 100% of its public shares if it does not complete an Initial Business Combination within 18 months
from the closing of the Public Offering and (c) to vote their Founder Shares and any Public Shares purchased during or after the
Public Offering (including in open market and privately negotiated transactions) in favor of the Initial Business Combination.
Forward Purchase Agreement
B.
Riley Principal Investments, LLC (“BRPI”), a Delaware limited liability company, an affiliate of the Sponsor entered
into a forward purchase agreement (the “Forward Purchase Agreement”) with the Company to provide for the purchase
by it (or its designees) of an aggregate of 2,500,000 Units at $10.00 per Unit (the “Forward Purchase Units”) for
an aggregate purchase price of $25,000,000 in a private placement to close concurrently with the closing of the Initial Business
Combination (the “Forward Purchase”). The obligations under the Forward Purchase Agreement do not depend on whether
any public stockholders redeem their Class A common stock and provide the Company with a minimum funding level for the Initial
Business Combination. The Forward Purchase Agreement includes registration rights with respect to the Forward Purchase Units.
The
proceeds from the sale of the Forward Purchase Units may be used as part of the consideration to the sellers in the Initial Business
Combination, to pay expenses in connection with the Initial Business Combination or for working capital in the post-Business Combination
company. The Forward Purchase will be required to be made regardless of whether any Class A common stock is redeemed by the Company’s
public stockholders and is intended to provide the Company with a minimum funding level for the Initial Business Combination.
The purchaser will not have the ability to approve the Initial Business Combination prior to the signing of a material definitive
agreement. The Forward Purchase Units will be issued only in connection with the closing of the Initial Business Combination.
NOTE
2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
financial statements of the Company are presented in conformity with accounting principles generally accepted in the United States
of America (“GAAP”).
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 Securities Exchange Act of 1934, as amended) 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 an 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.
The
Company’s unaudited condensed interim financial statements have been prepared in accordance with U.S. GAAP and the rules and
regulations of the SEC for interim financial information and the instructions to Form 10-Q. Accordingly, the financial
statements do not include all of the information and footnotes required by U.S. GAAP. In the opinion of management, all adjustments
considered for a fair presentation have been included. Operating results for the three months ended March 31, 2020 are not
necessarily indicative of the results that may be expected for the year ending December 31, 2020 or any other period. The
accompanying unaudited condensed interim financial statements should be read in conjunction with the Company’s audited financial
statements and notes thereto included in the Company’s prospectus filed with the SEC on May 20, 2020, as well as the Company’s
audited balance sheet statement and notes thereto included in the Company’s Form 8-K filed with the SEC on May 28,
2020.
Loss
Per Common Share
The
Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net loss per
common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period, excluding
shares of common stock subject to forfeiture. Net loss per common share is computed by dividing net gain/(loss) applicable to
common stockholders by the weighted average number of common shares outstanding during the period, plus, to the extent dilutive,
the incremental number of shares of common stock to settle warrants, as calculated using the treasury stock method. At March 31,
2020, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted
into common stock and then share in the earnings of the Company under the treasury stock method. As a result, diluted loss per
common share is the same as basic loss per common share for the periods. In February 2020, the Company completed a stock split
of 1 to 575 shares of Class B common stock, resulting in 5,750,000 shares of Class B common stock issued and outstanding.
The financial statements have been retroactively adjusted to reflect the stock split for all periods presented.
Cash and Cash Equivalents
The
Company considers all short-term investments with an original maturity date 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.
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 balance sheet, primarily due to their short-term
nature.
Use
of Estimates
The
preparation of 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. Actual results could differ
from those estimates.
Deferred
Offering Costs
The
Company complies with the requirements of the FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A — “Expenses
of Offering.” Deferred offering costs of $35,000 as of March 31, 2020, consisted principally of costs incurred in connection
with preparation for the Public Offering. The total offering costs incurred by the Company in connection with the Public Offering
was $561,189. These costs and the underwriter discount, of $3,500,000, were charged to capital upon completion of the Public Offering
on May 22, 2020.
Income
Taxes
The
Company is included in the consolidated tax return of B. Riley Financial (the “Parent”). The Company calculates
the provision for income taxes by using a “separate return” method. Under this method the Company is assumed
to file a separate return with the tax authority, thereby reporting its taxable income or loss and paying the applicable tax to,
or receiving the appropriate refund from, the Parent. The Company’s current provision is the amount of tax payable
or refundable on the basis of a hypothetical, current year, separate return.
Any
difference between the tax provision (or benefit) allocated to the Company under the separate return method and payments to be
made by (or received from) the Parent for tax expense are treated as either dividends or capital contribution. Accordingly,
the amount by which the Company’s tax liability under the separate return method exceeds the amount of tax liability ultimately
settled as a result of using incremental expenses of the Parent is periodically settled as a capital contribution from the Parent
to the Company.
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 March 31, 2020 and December 31, 2019, 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.
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.
There
was no provision for income taxes for the three months ended March 31, 2020.
Following
changes in ownership on May 22, 2020, the Company deconsolidated from the Parent for tax purposes. Beginning May 22, 2020, the
Company files separate corporate federal and state and local income tax returns.
Unrecognized
Tax Benefits
The
Company recognizes tax positions in its financial statements only when it is more likely than not that the position will be sustained
on examination by the relevant taxing authority based on the technical merits of the position. A position that meets this
standard is measured at the largest amount of benefit that will more likely than not be realized on settlement. A liability
is established for differences between positions taken in a tax return and amounts recognized in the financial statements. There
were no unrecognized tax benefits as of March 31, 2020. The Company recognizes accrued interest and penalties related to
unrecognized tax benefits as income tax expense. No amounts were accrued for interest expense and penalties related to income
tax matters as of March 31, 2020. The Company is subject to income tax examinations by major taxing authorities since inception.
Recent
Accounting Standards
Management
does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have
a material effect on the Company’s financial statements.
NOTE
3 — RELATED PARTY TRANSACTIONS
Founder Shares
On
June 3, 2019, 10,000 shares of the Company’s common stock were issued to B. Riley Principal Investments, LLC. On February
3, 2020, the Company conducted a 1:575 stock split and reclassification, resulting in B. Riley Principal Investments, LLC holding
5,750,000 shares of Class B common stock (the “Founder Shares”). All of the Founder Shares were contributed to the
Sponsor in January 2020. The financial statements reflect the issuance of these shares retroactively for all periods presented.
On April 21, 2020, 20,000 Founder Shares were transferred to each of Patrick Bartels, Jamie Kempner, Timothy Presutti and
Robert Suss, the Company’s independent directors, at their par value. On May 19, 2020, the Sponsor returned 718,750 shares
of Class B common stock to Company for cancellation, resulting in a total of 5,031,250 Founder Shares outstanding. As used herein,
unless the context otherwise requires, Founder Shares shall be deemed to include the shares of Class A common stock issuable upon
conversion thereof. The Founder Shares are identical to the Class A common stock included in the Units sold in the Public Offering,
the Founder Shares will automatically convert into shares of Class A common stock at the time of the Initial Business Combination
and are subject to certain transfer restrictions, as described in more detail below, and the holders of the Founder Shares, as
described in more detail above, have agreed to certain restrictions and will have certain registration rights with respect thereto.
Up to 656,250 Founder Shares were subject to forfeiture depending on the extent to which the underwriters’ over-allotment
option to purchase additional Units was exercised. On May 28, 2020, the underwriters confirmed that they will not be exercising
their over-allotment option in whole or in part, as such 656,250 Founder Shares have been forfeited. The number of Founder Shares
issued was determined based on the expectation that the Founder Shares would represent 20% of the outstanding shares of Company
common stock upon completion of the Public Offering excluding the shares underlying the Private Placement Units (the “Private
Placement Shares”).
The
Company’s initial stockholders, officers and directors have agreed, subject to limited exceptions, not to transfer, assign
or sell any Founder Shares held by them until the earlier to occur of: (i) one year after the completion of the Initial Business
Combination, (ii) the last sale price of Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after the Initial Business Combination, or (iii) the date following the completion of the Initial Business Combination
on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results
in all of the public stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Business Combination Marketing
Agreement
Pursuant
to a business combination marketing agreement, the Company engaged B. Riley FBR, Inc. as advisors in connection with its Initial
Business Combination to assist it in arranging meetings with its stockholders to discuss a potential business combination and
the target business’ attributes, introduce it to potential investors that may be interested in purchasing its securities,
assist it in obtaining stockholder approval for its Initial Business Combination and assist it with the preparation of press releases
and public filings in connection with the Initial Business Combination. The Company will pay B. Riley FBR, Inc. for such services
upon the consummation of the Initial Business Combination a cash fee in an amount equal to 3.5% of the gross proceeds of the Public
Offering (exclusive of any applicable finders’ fees which might become payable). Pursuant to the terms of the business combination
marketing agreement, no fee will be due if the Company does not complete an Initial Business Combination.
Administrative Fees
Commencing
on May 19, 2020, the Company agreed to pay an affiliate of the Sponsor a total of $10,000 per month for office space, utilities
and secretarial and administrative support. Upon completion of the Initial Business Combination or the Company’s liquidation,
it will cease paying these monthly fees.
Registration Rights
The
holders of Founder Shares (and any shares of Class A common stock issuable upon conversion of the Founder Shares), Private Placement
Units, Private Placement Shares, Private Placement Warrants (and any shares of Class A common stock issuable upon the exercise
of the Private Placement Warrants) and any securities that may be issued upon conversion of working capital loans, if any, have
registration rights to require the Company to register the resale of any of its securities held by them (in the case of the Founder
Shares, only after conversion of such shares to shares of Class A common stock) pursuant to a registration rights agreement.
The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that the
Company register such securities. These holders are also entitled to certain piggyback registration rights with respect to registration
statements filed subsequent to the completion of the Initial Business Combination and rights to require the Company to register
for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides
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 for the securities to be registered. The Company will bear the expenses incurred in connection
with the filing of any such registration statements. Notwithstanding the foregoing, the Sponsor may not exercise its demand and
piggyback registration rights after five and seven years, respectively, after the effective date of the registration statement
of which this prospectus forms a part and may not exercise its demand rights on more than one occasion. The Forward Purchase Units
and securities underlying the Forward Purchase Units have substantially similar registration rights.
Note
Payable - Related Party
The
Company had a Note Payable to the Sponsor which allowed the Company to borrow up to $300,000 without interest to be used for a
portion of the expenses associated with the Public Offering. The Note Payable was payable on the earlier of: (i) December 31,
2019 or (ii) the date on which the Company consummated an initial public offering of its securities. At March 31, 2020, the Note
Payable balance was $50,000. On April 21, 2020, the Company borrowed an additional $50,000 which increased the Note Payable balance
to $100,000 which was paid in full using proceeds from the Public Offering and the Private Placement on May 27, 2020.
NOTE
4 — STOCKHOLDER’S EQUITY
Common Stock
The authorized common
stock of the Company includes up to 100,000,000 shares of Class A common stock and 25,000,000 shares of Class B common
stock. If the Company enters into an Initial Business Combination, it may (depending on the terms of such an Initial Business
Combination) be required to increase the number of shares of Class A common stock which the Company is authorized to issue
at the same time as the Company’s stockholders vote on the Initial Business Combination, to the extent the Company seeks
stockholder approval in connection with the Initial Business Combination. Holders of the Company’s common stock are entitled
to one vote for each share of common stock. On February 3, 2020, the Company conducted a 1:575 stock split and reclassification
resulting in 5,750,000 shares of Class B common stock outstanding (up to 750,000 shares of which are subject to forfeiture
depending on the extent to which the underwriters’ over-allotment option is exercised) at March 31, 2020 and December
31, 2019. On April 21, 2020, 80,000 founder shares were transferred to the Company’s independent directors, at their
par value. On May 19, 2020, 718,750 shares of Class B common stock were returned to Company by the Sponsor for cancellation,
resulting in a total of 5,031,250 Class B common stock outstanding (up to 656,250 shares of which are subject to forfeiture
depending on the extent to which the underwriters’ over-allotment option is exercised).
Preferred Stock
The
Company is authorized to issue 1,000,000 shares of preferred stock with such designations, voting and other rights and preferences
as may be determined from time to time by the Company’s board of directors. At March 31, 2020 and December 31, 2019, there
were no shares of preferred stock issued or outstanding.
Warrants
Warrants
may only be exercised for a whole number of shares. No fractional Warrants will be issued upon separation of the Units and only
whole Warrants will trade. The Warrants will become exercisable on the later of (a) 30 days after the completion of the Initial
Business Combination or (b) 12 months from the closing of the Public Offering; provided in each case that the Company has an effective
registration statement under the Securities Act covering the shares of Class A common stock issuable upon exercise of the Warrants
and a current prospectus relating to them is available (or the Company permits holders to exercise their Warrants on a cashless
basis and such cashless exercise is exempt from registration under the Securities Act). The Company will as soon as practicable,
but in no event later than 15 business days, after the closing of the Initial Business Combination, use its best efforts to file
with the Securities and Exchange Commission (“SEC”) a registration statement for the registration, under the Securities
Act, of the shares of Class A common stock issuable upon exercise of the Warrants, to cause such registration statement to become
effective within 60 business days after the closing of the Initial Business Combination and to maintain a current prospectus relating
to those shares of Class A common stock until the Warrants expire or are redeemed, as specified in the Company’s warrant
agreement. If the shares issuable upon exercise of the Warrants are not registered under the Securities Act by the 60th business
day after the closing of the Initial Business Combination, the Company will be required to permit holders to exercise their Warrants
on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding
the above, if the Company’s Class A common stock is at the time of any exercise of a Warrant not listed on a national securities
exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act,
the Company may, at its option, require holders of Warrants who exercise their Warrants to do so on a “cashless basis”
in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company elects, the Company will not be required
to file or maintain in effect a registration statement, but the Company will use its best efforts to register or qualify the shares
under applicable blue sky laws to the extent an exemption is not available.
The
Warrants will expire at 5:00 p.m., New York City time, five years after the completion of a Business Combination or earlier upon
redemption or liquidation.
The
Private Placement Warrants are identical to the Warrants underlying the Units sold in the Public Offering, except that the Private
Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be
transferable, assignable or salable until 30 days after the completion of the Initial Business Combination, subject to certain
limited exceptions. Additionally, the Private Placement Warrants will be non-redeemable so long as they are held by the Sponsor
or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees,
the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants.
The
Company may call the Warrants for redemption (except with respect to the Private Placement Warrants):
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in
whole and not in part;
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·
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at
a price of $0.01 per warrant;
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·
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upon
a minimum of 30 days’ prior written notice of redemption (the “30-day redemption
period”); and
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·
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if,
and only if, the last sale price of the Class A common stock equals or exceeds $18.00
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 ending on the third
trading day prior to the date on which the Company sends the notice of redemption to
the warrant holders.
|
If
the Company calls the Warrants for redemption, management will have the option to require all holders that wish to exercise the
Warrants to do so on a “cashless basis,” as described in the warrant agreement.
The
exercise price and number of shares of Class A common stock issuable upon exercise of the Warrants may be adjusted in certain
circumstances including in the event of a share dividend, or recapitalization, reorganization, merger or consolidation. In addition,
if (x) the Company issues additional shares of Class A common stock or securities convertible into or exercisable or exchangeable
for shares of Class A common stock for capital raising purposes in connection with the closing of the Initial Business Combination
(excluding any issuance of securities under the forward purchase agreement), at an issue price or effective issue price of less
than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by
the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking
into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such issuance (the “Newly
Issued Price”)), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for funding the Initial Business Combination, and (z) the volume weighted average trading price
of the Class A common stock during the 20 trading day period starting on the trading day prior to the day on which the Company
consummates the Initial Business Combination (the “Market Value”) is below $9.20 per share, the exercise price of
the Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market Value and the Newly Issued
Price, and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest cent) to be equal to
180% of the higher of the Market Value and the Newly Issued Price. Additionally, in no event will the Company be required
to net cash settle any Warrant. In the event that a registration statement is not effective for the exercised Warrants, the purchaser
of a Unit containing such Warrant will have paid the full purchase price for the Unit solely for the share of Class A common stock
underlying such Unit. There will be no redemption rights or liquidating distributions with respect to the Warrants, which will
expire worthless if the Company fails to complete an Initial Business Combination within the 18-month time period.
NOTE
5 — 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 described in these financial statements in relation to the Company’s Initial Public Offering and the transaction on
June 24, 2020 described below, the Company did not identify any subsequent events that would have required adjustment or disclosure
in the financial statements.
On June 24, 2020, the Company
executed a letter of intent with privately held Eos Energy Storage LLC (“EOS”) for a business combination transaction
which would result in privately held EOS becoming a publicly listed company. Founded in 2008, EOS is an established provider of
long-duration energy storage focused on providing a domestic solution to a global need: low-cost, safe, and environmentally friendly
energy storage. The transaction contemplates a valuation of EOS of approximately $290,000,000. The proposed transaction would provide
EOS with approximately $225,000,000 of additional new equity financing, including $50,000,000 of proceeds from a fully backstopped
private placement of private equity by B. Riley Financial, assuming no public shareholders of the Company exercise their redemption
rights at closing. The proposed transaction is expected to be completed in the fourth quarter of 2020, subject to, among other
things, the negotiation and execution of a definitive agreement providing for the transaction, the approval by the Company’s
shareholders, satisfaction of the conditions stated in the letter of intent and other customary closing conditions. Accordingly,
there can be no assurance that a definitive agreement will be entered into or that the proposed transaction will be consummated.