Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
Note
1 - Organization, Plan of Business Operations
Origo
Acquisition Corporation, formerly known as CB Pharma Acquisition Corp. (the “Company”), was incorporated in the Cayman
Islands on August 26, 2014 as a blank check company whose objective is to acquire, through a merger, share exchange, asset acquisition,
share purchase, recapitalization, reorganization or other similar business combination, one or more businesses or entities (a
“Business Combination”). The Company’s effort to identify a prospective target business is not limited to a
particular industry or geographic region of the world.
All
activity through February 28, 2018 relates to the Company’s formation, the initial public offering (“Initial Public
Offering”) and a search for a Business Combination candidate. 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.
The
registration statement for the Company’s Initial Public Offering was declared effective on December 12, 2014. The Company
consummated the Initial Public Offering of 4,000,000 units (“Units”) at $10.00 per Unit on December 17, 2014, generating
gross proceeds of $40 million (Note 3). On December 24, 2014, the Company consummated the closing of the sale of 200,000 additional
Units upon receiving notice of EarlyBirdCapital, Inc.’s (“EBC”), the representative of the underwriters in the
Initial Public Offering election to exercise its over-allotment option, generating an additional gross proceeds of $2 million
(“Over-allotment”).
Simultaneously
with the closing of the Initial Public Offering and the Over-allotment, the Company consummated the private placement (“Private
Placement”) selling 286,000 units (“Private Placement Units”) at a price of $10.00 per Unit, to Fortress Biotech,
Inc. (“Fortress”), formerly known as Coronado Biosciences, Inc., an affiliate of the Company’s former executive
officers and the holder of a majority of the Company’s Ordinary Shares prior to the Initial Public Offering, and EBC, generating
an aggregate of $2.86 million in gross proceeds (Note 4).
An
aggregate amount of approximately $42.85 million (approximately $10.20 per Unit) from the net proceeds of the sale of the Units
in the Initial Public Offering, the Over-Allotment, and the Private Placement Units, net of fees of approximately $1.84 million
associated with the Initial Public Offering, inclusive of approximately $1.37 million of underwriting fees, was placed in a trust
account (“Trust Account”) immediately after the sales and invested in U.S. government treasury bills. In connection
with the Initial Extension, Second Extension, Third Extension, Fourth Extension as discussed below, an aggregate of approximately
$10.76 million, $380,600, $11.8 million, and $3.7 million was removed from the Trust Account in June 2016, December 2016, March
2017, and September 2017, respectively, to fund conversions of ordinary shares. In addition, the Company’s management deposited
an aggregate of approximately $682,000 in the Trust Account to increase the conversion amount per share in any subsequent Business
Combination or liquidation out of loans from the new management and EBC during the year ended November 30, 2017. During the three
months ended February 28, 2018, the Company deposited an addition of approximately $123,000 to the Trust Account. In connection
with the Fifth Extension in March 2018 as described below, an aggregate of approximately $312,000 was removed from the Trust Account
to fund conversions of ordinary shares, and the Company has deposited an aggregate of $65,000 to the Trust Account subsequent
to February 28, 2018 to increase the conversion amount per share in any subsequent Business Combination or liquidation.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering and the Private Placement, although substantially all of the net proceeds are intended to be applied to consummating
a Business Combination.
On
June 10, 2016, the Company held an extraordinary general meeting of shareholders (the “June Meeting”). At the June
Meeting, the shareholders approved each of the following items: (i) an amendment to the Company’s Amended and Restated Memorandum
and Articles of Association (the “Charter”) to extend the date by which the Company has to consummate a business combination
(“Liquidation Date”) from June 12, 2016 to December 12, 2016 (the “Initial Extension”), (ii) an amendment
to the Charter to allow the holders of the Company’s ordinary shares issued in the Company’s Initial Public Offering
to elect to convert their Public Shares (as defined below) into their pro rata portion of the funds held in the Trust Account,
and (iii) to change the Company’s name from “CB Pharma Acquisition Corp.” to “Origo Acquisition Corporation”.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
In
connection with the Initial Extension, effective as of June 10, 2016, (i) each of Lindsay A. Rosenwald, Michael Weiss, George
Avgerinos, Adam J. Chill, Arthur A. Kornbluth and Neil Herskowitz resigned from his position as an officer and/or director of
the Company and (ii) Edward J. Fred and Jose M. Aldeanueva were appointed as Chief Executive Officer and President and Chief Financial
Officer, Secretary and Treasurer, respectively, of the Company and Edward J. Fred, Jose M. Aldeanueva, Stephen Pudles, Jeffrey
J. Gutovich and Barry Rodgers became directors of the Company. On May 20, 2016, the Initial Shares (as defined below) were transferred
to the new management in connection with the resignation of the then-officers and directors of the Company upon the consummation
of the Initial Extension.
At
the June Meeting, shareholders holding 1,054,401 Public Shares exercised their right to convert such Public Shares into a pro
rata portion of the funds in the Trust Account. As a result, an aggregate of approximately $10.76 million (or approximately $10.20
per share) was removed from the Trust Account to pay such holders. In connection with the Initial Extension, the new management
of the Company provided a loan to the Company of $0.20 for each Public Share that was not converted, for an aggregate amount of
approximately $629,000, which was deposited in the Trust Account.
On
December 12, 2016, the Company held its annual general meeting of shareholders (the “December Meeting”). At the December
Meeting, the shareholders approved an amendment to extend the Liquidation Date from December 12, 2016 to March 12, 2017 (the
“Second Extension”). At the meeting, shareholders holding 36,594 Public Shares exercised their right to convert such
shares into a pro rata portion of the funds in the Trust Account. As a result, an aggregate of approximately $380,600 (or approximately
$10.40 per share) was removed from the Trust Account in December 2016 to pay such shareholders. In connection with the Second
Extension, the Company’s management provided a loan to the Company for an aggregate amount of $320,000, of which an aggregate
of approximately $311,000, or $0.10 for each Public Share that was not converted, was deposited in the Trust Account to increase
the conversion amount per share in any subsequent Business Combination or liquidation to approximately $10.50 per share.
On
March 10, 2017, the Company held another extraordinary general meeting of shareholders (the “March Meeting”) and requested
shareholders’ approval to extend the Liquidation Date from March 12, 2017 to September 12, 2017 (the “Third Extension”).
At the March Meeting, shareholders holding 1,123,568 Public Shares exercised their right to convert such shares into a pro rata
portion of the funds in the Trust Account. As a result, an aggregate of approximately $11.8 million (or approximately $10.50 per
share) was removed from the Trust Account in March 2017 to pay such shareholders. In connection with the Third Extension, the
Company’s management agreed to provide a loan to the Company for $0.025 for each Public Share that was not converted, or
approximately $50,000, for each calendar month (commencing on March 12, 2017 and on the 12th day of each subsequent month), or
portion thereof, to be deposited in the Company’s Trust Account. As of September 12, 2017, the conversion amount per share
at the meeting for such Business Combination or the Company’s subsequent liquidation was approximately $10.65 per share.
The loan did not bear interest and will be repayable by the Company to the lenders upon consummation of an initial Business Combination.
On
September 11, 2017, the Company held another extraordinary general meeting of shareholders (the “September Meeting”)
and requested shareholders’ approval to extend the Liquidation Date from September 12, 2017 to March 12, 2018 (the “Fourth
Extension”). At the September Meeting, shareholders holding 343,806 Public Shares exercised their right to convert such
shares into a pro rata portion of the funds in the Trust Account. As a result, an aggregate of approximately $3.7 million (or
approximately $10.65 per share) was removed from the Trust Account in September 2017 to pay such shareholders. In connection with
the Fourth Extension, the Company’s management agreed to provide a loan to the Company for $0.025 for each Public Share
that was not converted for each calendar month (commencing on September 12, 2017 and on the 12th day of each subsequent month),
or portion thereof, to be deposited in the Company’s Trust Account. If the Company takes the full time through March 12,
2018 to complete the initial Business Combination, the conversion amount per share at the meeting for such Business Combination
or the Company’s subsequent liquidation will be approximately $10.80 per share. The loan will not bear interest and will
be repayable by the Company to the lenders upon consummation of an initial Business Combination.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
On
March 12, 2018, the Company held another extraordinary general meeting of shareholders (the “March 2018 Meeting”)
and requested shareholders’ approval to extend the Liquidation Date from March 12, 2018 to June 12, 2018 (the “Fifth
Extension”). Under Cayman Islands law, all amendments to the Charter take effect upon their approvals. Accordingly, the
Company has until June 12, 2018 to consummate an initial Business Combination. At the March 2018 Meeting, shareholders holding
28,801 Public Shares exercised their right to convert such shares into a pro rata portion of the funds in the Trust Account. As
a result, an aggregate of approximately $312,000 (or approximately $10.80 per share) was removed from the Trust Account subsequently
to pay such shareholders. In connection with the Fifth Extension, the Company’s management agreed to provide a loan to the
Company for $0.04 for each Public Share that was not converted for each calendar month (commencing on March 12, 2018 and on the
12th day of each subsequent month), or portion thereof, to be deposited in the Company’s Trust Account. If the Company takes
the full time through June 12, 2018 to complete the initial Business Combination, the conversion amount per share at the meeting
for such Business Combination or the Company’s subsequent liquidation will be approximately $10.92 per share. The loan will
not bear interest and will be repayable by the Company to the lenders upon consummation of an initial Business Combination.
During
the three months ended February 28, 2018, the Company issued promissory notes to the new management and EBC for an aggregate of
$70,590 and $61,590, respectively, and deposited approximately $123,000 into the Trust Account. The loans are unsecured and non-interest
bearing and are due upon consummation of a Business Combination.
The
Company’s current Chief Executive Officer has agreed that he will be personally liable under certain circumstances to ensure
that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are
owed money by the Company for service rendered, contracted for or products sold to the Company. However, such officer may not
be able to satisfy those obligations should they arise. The remaining net proceeds (not held in the Trust Account) may be used
to pay for business, legal and accounting due diligence on prospective acquisitions and continuing general and administrative
expenses. In addition, interest income earned on the funds in the Trust Account may be released to the Company to pay its income
or other tax obligations, and working capital requirements. With these exceptions, expenses incurred by the Company may be paid
prior to a Business Combination only from the net proceeds of the Initial Public Offering not held in the Trust Account; provided,
however, that in order to meet its working capital needs following the consummation of the Initial Public Offering, the Company’s
shareholders prior to the Initial Public Offering, including their subsequent transferees (collectively the “Initial Shareholders”),
officers and directors or their affiliates (including Fortress) 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. Each loan would be evidenced by a promissory
note. The notes would either be paid upon consummation of the Company’s initial Business Combination, without interest,
unless otherwise provided, or, at the lender’s discretion, converted upon consummation of the Company’s Business Combination
into additional Private Placement Units at a price of $10.00 per Unit. If the Company does not complete a Business Combination,
the loans would not be repaid.
The
Company will either seek shareholder approval of any Business Combination at a meeting called for such purpose at which holders
of the outstanding Ordinary Shares sold in the Initial Public Offering (“Public Shareholders”) may seek to convert
such shares (“Public Shares”) into their pro rata share of the aggregate amount then on deposit in the Trust Account,
less any taxes then due but not yet paid, or provide Public Shareholders with the opportunity to sell their Public Shares to the
Company by means of a tender offer for an amount equal to their pro rata share of the aggregate amount then on deposit in the
Trust Account, less any taxes then due but not yet paid. The Company will proceed with a Business Combination only if it will
have net tangible assets of at least $5,000,001 upon consummation of the Business Combination and, solely if shareholder approval
is sought, a majority of the outstanding Ordinary Shares of the Company voted, are voted in favor of the Business Combination.
Notwithstanding the foregoing, a Public Shareholder, together with any affiliate of his or any other person with whom he is acting
in concert or as a “group” (as defined in Section 13(d) (3) of the Exchange Act) will be restricted from seeking conversion
rights with respect to 30% or more of the Ordinary Shares sold in the Initial Public Offering. Accordingly, all shares purchased
by a holder in excess of 30% of the shares sold in the Initial Public Offering will not be converted to cash. In connection with
any shareholder vote required to approve any Business Combination, the Initial Shareholders have agreed (i) to vote any of their
respective shares, including the 1,050,000 Ordinary Shares issued in connection with the organization of the Company (the “Initial
Shares”), in favor of the initial Business Combination and (ii) not to convert such respective shares into a pro rata portion
of the Trust Account or seek to sell their shares in connection with any tender offer the Company engages in.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
If
the Company has not completed a Business Combination by June 12, 2018, pursuant to the amended Charter, it will trigger the automatic
liquidation of the Trust Account and the voluntary liquidation of the Company. If the Company is required to liquidate, Public
Shareholders are entitled to share ratably in the Trust Account, including any interest, and any net assets remaining available
for distribution to them after payment of liabilities. The Initial Shareholders have agreed to waive their rights to share in
any distribution with respect to their Initial Shares.
On
December 19, 2016, the Company entered into a Merger Agreement (the “Merger Agreement”) with Aina Le’a Inc.,
a Delaware corporation (“Aina Le’a”), Aina Le’a Merger Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of Aina Le’a (“Merger Sub”), and Jose Aldeanueva, in the capacity as the representative for the stockholders
of the Company and their successors and assign (the “OAC Representative”).
On
February 17, 2017, the Company sent a letter (the “Termination Letter”) to Aina Le’a to terminate the Merger
Agreement (1) pursuant to Sections 8.1(e) of the Merger Agreement because Aina Le’a breached the non-solicitation covenant
contained in Section 5.7 of the Merger Agreement and (2) pursuant to Section 8.1(f) because there has been a Material Adverse
Effect on Aina Le’a which is uncured and continuing. In addition, the Company provided notice of additional breaches by
Aina Le’a of the Merger Agreement based on information available to the Company as of the date of the Termination Letter,
including, among others, breaches of the following provisions: Section 5.1(a) (by failing to give the Company and its representatives
access to requested information about Aina Le’a and its operations, including without limitation Aina Le’a’s
ongoing financing activities), Section 5.8(iv) (failure to provide prompt notice of the filing of a foreclosure action on a parcel
of land material to the initial phase of Aina Le’a’s development project), Section 5.8(v) (failure to provide prompt
notice of the filing of a foreclosure action on a parcel of land material to the initial phase of Aina Le’a’s development
project), Sections 5.9 and 5.11 (Aina Le’a’s failure to use commercially reasonable efforts and to cooperate fully
with the Company and its representatives to prepare and file the Registration Statement). The Termination Letter served as a notice
to cure with respect to these provision to the extent required by Section 8.1(e) of the Merger Agreement. However, the Company
did not believe these breaches were curable and therefore the Termination Letter terminated the Merger Agreement immediately as
of February 17, 2017.
On
February 22, 2017, the Company sent to Aina Le’a a supplement to the Termination Letter (the “Supplement”).
The Supplement noted that Aina Le’a’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2016 (“From
10-Q”), which was filed on February 21, 2017, inaccurately described the Termination Letter. Furthermore, the Supplement
indicated that the Form10-Q contained further information that the Company believes demonstrated that a Material Adverse Effect
had occurred on Aina Le’a’s business and was continuing. The Supplement further reiterated that the termination of
the Merger Agreement was effective as of the date of the Termination Letter.
On
July 24, 2017, the Company entered into a merger agreement, which was later amended on September 27, 2017 and February 28, 2018
(the “HTH Merger Agreement”), with Hightimes Holding Corp., a Delaware corporation (“HTH”), HTHC Merger
Sub, Inc., a Delaware corporation and a newly-formed wholly - owned subsidiary of Origo (“Merger Sub”). Pursuant to
the HTH Merger Agreement, subject to the terms and conditions set forth therein, at the closing of the transactions contemplated
by the HTH Merger Agreement (the “Closing”), the Company will merge with and into Merger Sub, with Merger Sub continuing
as the surviving entity (the “Merger”). Upon the consummation of the Merger, the Company will cease to exist and the
holders of the Company’s equity securities and warrants, options and rights to acquire or convert into the Company’s
equity securities will convert into the successor’s equity securities and warrants, options and rights to acquire or convert
into the successor’s equity securities (see Note 8). The Company’s board of directors has approved the HTH Merger
Agreement.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
Going
Concern
The
accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates,
among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of February
28, 2018, the Company had approximately $3,000 in cash and cash equivalents, approximately $18,000 in interest income available
to the Company for working capital purposes from the Company's investments in the Trust account, and a working capital deficit
of approximately $3.1 million. Further, the Company has incurred and expects to continue to incur significant costs in pursuit
of its acquisition plans. Based on the foregoing, the Company may have insufficient funds available to operate its business through
the earlier of consummation of a Business Combination or June 12, 2018. Following the initial Business Combination, if cash on
hand is insufficient, the Company may need to obtain additional financing in order to meet its obligations. The Company
cannot be certain that additional funding will be available on acceptable terms, or at all. The Company’s plans to raise
capital or to consummate the initial Business Combination may not be successful. These matters, among others, raise substantial
doubt about the Company’s ability to continue as a going concern.
The
accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue
as a going concern.
Note
2 - Significant Accounting Policies
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally
accepted accounting principles (“U.S. GAAP”) for interim financial information and pursuant to rules and regulations
of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by U.S.
GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal accruals) considered
for a fair presentation have been included. Operating results for the three months ended February 28, 2018 are not necessarily
indicative of the results that may be expected for the year ending November 30, 2018. For further information refer to the financial
statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended November 30, 2017,
filed with Securities and Exchange Commission on February 5, 2018.
Emerging
Growth Company
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 of 1933, as amended (“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 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.
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.
Cash
and Marketable Securities Held in Trust Account
The
amounts held in the Trust Account represent substantially all of the net proceeds of the Initial Public Offering, net of amounts
removed from the Trust Account for conversions (see Note 1) and are classified as restricted assets since such amounts can only
be used by the Company in connection with the consummation of a Business Combination. As of February 28, 2018, cash and marketable
securities, which are classified as trading securities, held in the Trust Account consisted solely of funds held in U.S. Treasury
Bills.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
Ordinary
Shares Subject to Possible Conversion
The
Company accounts for its Ordinary Shares subject to possible conversion in accordance with the guidance in Accounting Standards
Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary Shares subject to mandatory
conversion (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable Ordinary
Shares (including Ordinary Shares that features conversion rights that are either within the control of the holder or subject
to conversion upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary
equity. At all other times, Ordinary Shares are classified as shareholders’ equity. The Company’s Ordinary Shares
features certain conversion rights that are considered to be outside of the Company’s control and subject to occurrence
of uncertain future events. Accordingly, Ordinary Shares subject to possible conversion at conversion value are presented as temporary
equity, outside of the shareholders’ equity section of the Company’s balance sheet.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution
which, at times may exceed the Federal depository insurance coverage of $250,000. At February 28, 2018, the Company had 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 Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheet, primarily
due to their short-term nature.
Net
Loss per Share
Loss
per share is computed by dividing net loss by the weighted-average number of Ordinary Shares outstanding during the period. An
aggregate of 896,311 and 2,444,498 Ordinary Shares subject to possible conversion at February 28, 2018 and 2017, respectively,
have been excluded from the calculation of basic loss per Ordinary Share since such Ordinary Shares, if redeemed, only participate
in their pro rata share of the earnings in the Trust Account. The Company has not considered the effect of (i) warrants sold in
the Public Offering and Private Placement to purchase 2,243,000 Ordinary Shares of the Company, (ii) rights to acquire 448,600
Ordinary Shares of the Company and (iii) 400,000 Ordinary Shares, warrants to purchase 200,000 Ordinary Shares and rights to acquire
40,000 Ordinary Shares included in the unit purchase option sold to the underwriter, in the calculation of diluted loss per share,
since the exercise of the unit purchase option and warrants as well as the conversion of rights is contingent on the occurrence
of future events.
Use
of Estimates
The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
Recent
Accounting Pronouncements
Management
does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a
material effect on the accompanying financial statements.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
Note
3 - Initial Public Offering
In
December 2014, the Company consummated the Initial Public Offering and the Over-allotment of 4,200,000 Units. Each Unit consists
of one ordinary share, $.0001 par value per share (“Ordinary Share”), one right (“Right”) to receive one-tenth
of one Ordinary Share upon consummation of the Company’s initial Business Combination and one warrant entitling the holder
to purchase one-half of one Ordinary Share (“Warrant”). The Units were sold at an offering price of $10.00 per Unit,
generating gross proceeds of $42,000,000. Each Warrant entitles the holder to purchase one-half of one Ordinary Share at a price
of $11.50 per full Ordinary Share commencing upon the Company’s completion of its initial Business Combination, and expiring
five years from the completion of the Company’s initial Business Combination. The Company will not issue fractional shares.
As a result, investors must exercise Warrants in multiples of two Warrants in whole and not in part, at a price of $11.50 per
full share, subject to adjustment, to validly exercise the Warrants. The Company may redeem the Warrants at a price of $0.01 per
Warrant upon 30 days’ notice, only in the event that the last sale price of the Ordinary Shares is at least $24.00 per share
for any 20 trading days within a 30-trading day period (“30-Day Trading Period”) ending on the third day prior to
the date on which notice of redemption is given, provided there is a current registration statement in effect with respect to
the Ordinary Shares underlying such Warrants commencing five business days prior to the 30-Day Trading Period and continuing each
day thereafter until the date of redemption. If the Company redeems the Warrants as described above, management will have the
option to require all holders that wish to exercise Warrants to do so on a “cashless basis.” In accordance with the
warrant agreement relating to the Warrants issued in the Initial Public Offering the Company is only required to use its best
efforts to maintain the effectiveness of the registration statement covering the Warrants. If a registration statement is not
effective within 90 days following 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 Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act
of 1933, as amended. In the event that a registration statement is not effective at the time of exercise or no exemption is available
for a cashless exercise, the holder of such Warrant shall not be entitled to exercise such Warrant for cash and in no event (whether
in the case of a registration statement being effective or otherwise) will the Company be required to net cash settle the Warrant
exercise. Additionally, in no event will the Company be required to net cash settle the Rights. If an initial Business Combination
is not consummated, the Rights and Warrants will expire and will be worthless.
Note
4 - Private Placement
Simultaneously
with the consummation of the Initial Public Offering and the Over-allotment, the Company consummated the Private Placement of
286,000 Private Placement Units at a price of $10.00 per Private Placement Unit, generating total proceeds of $2.86 million. Of
the Private Placement Units, 265,000 were purchased by an Initial Shareholder that was an affiliate of the Company’s former
executive officers and 21,000 were purchased by EBC, the representative of the underwriters of the Initial Public Offering. The
Private Placement Units are identical to the Units sold in the Initial Public Offering, except the warrants included in the Private
Placement Units will be non-redeemable, may be exercised on a cashless basis and may be exercisable for unregistered Ordinary
Shares if the prospectus relating to the Ordinary Shares issuable upon exercise of the Warrants is not current and effective,
in each case so long as they continue to be held by the initial purchasers or their permitted transferees. The holders of the
Private Placement Units have agreed (A) to vote the Ordinary Shares included in the Private Placement Units (“Private Shares”)
in favor of any initial Business Combination, (B) not to propose, or vote in favor of, an amendment to the Company’s amended
and restated memorandum and articles of association with respect to the Company’s pre-Business Combination activities prior
to the consummation of such a Business Combination unless the Company provides dissenting Public Shareholders with the opportunity
to convert their Public Shares into the right to receive cash from the Company’s Trust Account in connection with any such
vote, (C) not to convert any Private Shares into the right to receive cash from the Trust Account in connection with a shareholder
vote to approve the Company’s initial Business Combination or a vote to amend the provisions of the Company’s amended
and restated memorandum and articles of association relating to shareholders’ rights or pre-Business Combination activity
and (D) that such Private Shares shall not participate in any liquidating distribution upon winding up if a Business Combination
is not consummated within the required time period. Additionally, the purchasers have agreed not to transfer, assign or sell any
of the Private Placement Units (except to certain permitted transferees) until the completion of the Company’s initial Business
Combination. The holders have agreed not to sell their shares to the Company in any tender offer in connection with the initial
Business Combination.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
Note
5 - Related Party Transactions
Initial
Shares
In
August 2014, the Company issued 1,150,000 Initial Shares to the Initial Shareholders for an aggregate purchase price of $25,000.
The Initial Shares included an aggregate of up to 150,000 shares subject to compulsory repurchase for an aggregate purchase price
of $0.01 to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the Initial
Shareholders would collectively own 20.0% of issued and outstanding shares after the Initial Public Offering (excluding the sale
of the Private Placement Units). On December 18, 2014, EBC notified the Company that it had elected to exercise a portion of the
over-allotment option for 200,000 additional units at $10.00 per unit for an additional $2,000,000, The partial exercise resulted
in a reduction of 50,000 Ordinary Shares subject to compulsory repurchase resulting in a total of 100,000 Ordinary Shares being
repurchased for an aggregate amount of $0.01 on January 5, 2015. On May 20, 2016, the Initial Shares were transferred to the new
management in connection with the resignation of the then-officers and directors of the Company upon the consummation of the Initial
Extension.
The
Initial Shares are identical to the Ordinary Shares included in the Units sold in the Initial Public Offering. However, the holders
of the Initial Shares have agreed (A) to vote their Initial Shares (as well as any shares acquired after the Initial Public Offering)
in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the amended and restated
memorandum and articles of association with respect to pre-Business Combination activities prior to the consummation of such a
Business Combination unless the Company provides dissenting Public Shareholders with the opportunity to convert their Public Shares
into the right to receive cash from the Trust Account in connection with any such vote, (C) not to convert any Initial Shares
(as well as any other shares acquired after the Initial Public Offering) into the right to receive cash from the Trust Account
in connection with a shareholder vote to approve a proposed initial Business Combination (or sell any shares they hold to the
Company in a tender offer in connection with a proposed initial Business Combination) or a vote to amend the provisions of the
amended and restated memorandum and articles of association relating to shareholders’ rights or pre-Business Combination
activity and (D) that the Initial Shares shall not participate in any liquidating distribution upon winding up if a Business Combination
is not consummated. Additionally, the Initial Shareholders have agreed not to transfer, assign or sell any of the Initial Shares
(except to certain permitted transferees) until (1) with respect to 50% of the Initial Shares, the earlier of one year after the
date of the consummation of initial Business Combination and the date on which the closing price of Ordinary Shares equals or
exceeds $12.50 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading
days within any 30-trading day period commencing after initial Business Combination and (2) with respect to the remaining 50%
of the Initial Shares, one year after the date of the consummation of initial Business Combination, or earlier, in either case,
if, subsequent to initial Business Combination, the Company consummates a liquidation, merger, stock exchange or other similar
transaction which results in all of shareholders having the right to exchange their Ordinary Shares for cash, securities or other
property.
Loans
from Related Party
Convertible
Notes
As
of February 28, 2018 and November 30, 2017, the Company had an aggregate of $325,000 in convertible promissory notes to Fortress
outstanding. The loans are unsecured and non-interest bearing and are due upon consummation of a Business Combination. The holder
has agreed to convert the principal balance of $325,000 in convertible promissory notes into 32,500 Units at a price of $10.00
per Unit upon consummation of a Business Combination. The terms of the units into which the convertible promissory note will convert
will be identical to the Private Placement Units.
As
of November 30, 2016, the Company had an aggregate of $967,665 in convertible promissory notes to the new management outstanding.
In December 2016 and January 2017, the new management loaned the Company an addition of $320,000 and $125,000, respectively, and
amended the note in December 2016 and January 2017, pursuant to which: (i) the principal balance of the note was increased to
$1,412,665, and (ii) the note will accrue interest, retroactively from its date of issuance in June 2016, at a rate of 13% per
annum up to a maximum of $87,335 in interest, which interest will be payable on the due date for payment of the principal of the
Note. As of February 28, 2018, the amount of accrued interest that was owed under the Note was $87,335.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
The
note was unsecured and payable at the consummation of a Business Combination. Upon consummation of a Business Combination, up
to $175,000 of the principal balance of such note may be converted, at the holders’ option, into Units at a price of $10.00
per Unit. The terms of the units into which the convertible promissory note will convert will be identical to the Private Placement
Units. If new management converts the entire $175,000 of the principal balance of the note, they would receive 17,500 Units.
Notes
Payable
As of February 28, 2018 and November 30, 2017, the Company had an aggregate of $361,590 and $211,575 outstanding in notes payable
from the management and EBC, respectively.
During
the three months ended February 28, 2018, the new management and EBC loaned the Company an aggregate of $70,590 and $61,590, respectively
(totaling $132,180). The loans are unsecured and non-interest bearing and are due upon consummation of a Business Combination.
If
a Business Combination is not consummated, the convertible notes and notes payable owed to Fortress, the new management and EBC
will not be repaid by the Company and all amounts owed thereunder by the Company will be forgiven, except to the extent that the
Company had funds available to it outside of the Trust Account.
Note
6 - Commitments and Contingencies
Underwriting
Agreement
On
December 12, 2014, the Company entered into an agreement with EBC (“Underwriting Agreement”). The Underwriting Agreement
required the Company to pay an underwriting discount of 3.25% of the gross proceeds of the Initial Public Offering as an underwriting
discount. The Company has further engaged EBC to assist the Company with its initial Business Combination. Pursuant to this arrangement,
the Company anticipates that the underwriter will assist the Company in holding meetings with shareholders to discuss the potential
Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested
in purchasing the Company’s securities, assist the Company in obtaining shareholder approval for the Business Combination
and assist the Company with its press releases and public filings in connection with the Business Combination. The Company agreed
to pay EBC a cash fee of 4% of the gross proceeds of the Initial Public Offering (or $1.68 million) for such services upon the
consummation of its initial Business Combination (exclusive of any applicable finders’ fees which might become payable).
The Company is not obligated to pay the 4% fee if no business combination is consummated. The 4% fee is an unrecognized contingent
liability, as closing of a potential business combination was not considered probable as of February 28, 2018.
Other
agreements
In
August 2016, the Company entered into an agreement with a legal firm to assist the Company with a potential business combination
and related securities and corporate work. The agreement called for a retainer of $37,500 and the Company has agreed to pay a
portion of the invoices and the remaining amount will be deferred until the consummation of the Business Combination.
In
December 2016, the Company entered into an agreement with a consultant for investor relations services. The agreement called for
an initial payment of $13,000, and a deferred monthly fee of $8,000 until the consummation of the Business Combination. The Company
agreed to pay the consultant all of the deferred fees plus a contingency fee of $20,000 upon consummation of the Business Combination.
As
of February 28, 2018, the aggregate amount deferred for the legal firm and the consultant was approximately $1.5 million. The
deferred amount is an unrecognized contingent liability, as closing of a potential business combination was not considered probable
as of February 28, 2018.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
Purchase
Option
In
December 2014, the Company sold to EBC, for $100, a unit purchase option to purchase up to a total of 400,000 units exercisable
at $11.00 per unit (or an aggregate exercise price of $4,400,000) commencing on the consummation of a Business Combination. The
unit purchase option expires on December 12, 2019. The units issuable upon exercise of this option are identical to the Units
being offered in the Initial Public Offering. Accordingly, after the Business Combination, the purchase option will be to purchase
440,000 Ordinary Shares (which include 40,000 Ordinary Shares to be issued for the rights included in the units) and 400,000 Warrants
to purchase 200,000 Ordinary Shares. The Company has agreed to grant to the holders of the unit purchase option, demand and “piggy
back” registration rights for periods of five and seven years, respectively, from the effective date of the Initial Public
Offering, including securities directly and indirectly issuable upon exercise of the unit purchase option.
The
Company accounted for the fair value of the unit purchase option, inclusive of the receipt of a $100 cash payment, as an expense
of the Initial Public Offering resulting in a charge directly to shareholders’ equity. The Company estimated that the fair
value of this unit purchase option to be approximately $2.92 million (or $7.30 per unit) using the Black-Scholes option-pricing
model. The fair value of the unit purchase option granted to EBC was estimated as of the date of grant using the following assumptions:
(1) expected volatility of 99.10%, (2) risk-free interest rate of 1.53% and (3) expected life of five years. The unit purchase
option may be exercised for cash or on a “cashless” basis, at the holder’s option (except in the case of a forced
cashless exercise upon the Company’s redemption of the Warrants, as described in Note 3), such that the holder may use the
appreciated value of the unit purchase option (the difference between the exercise prices of the unit purchase option and the
underlying Warrants and the market price of the Units and underlying Ordinary Shares) to exercise the unit purchase option without
the payment of any cash. The Company will have no obligation to net cash settle the exercise of the unit purchase option or the
Warrants underlying the unit purchase option. The holder of the unit purchase option will not be entitled to exercise the unit
purchase option or the Warrants underlying the unit purchase option unless a registration statement covering the securities underlying
the unit purchase option is effective or an exemption from registration is available. If the holder is unable to exercise the
unit purchase option or underlying Warrants, the unit purchase option or Warrants, as applicable, will expire worthless.
Registration
Rights
The
Initial Shareholders are entitled to registration rights with respect to their initial shares (and any securities issued upon
conversion of working capital loans) and the purchasers of the Private Placement Units are entitled to registration rights with
respect to the Private Placement Units (and underlying securities), pursuant to an agreement dated December 12, 2014. The holders
of the majority of the initial shares are entitled to demand that the Company register these shares at any time commencing three
months prior to the first anniversary of the consummation of a Business Combination. The holders of the Private Placement Units
(or underlying securities) are entitled to demand that the Company register these securities at any time after the Company consummates
a Business Combination. In addition, the holders have certain “piggy-back” registration rights on registration statements
filed after the Company’s consummation of a Business Combination.
Nasdaq
Listing Rules
On
February 21, 2017, the Company received a written notice (the “Notice”) from the Listing Qualifications Department
of The Nasdaq Stock Market LLC (“Nasdaq”) indicating that the Company is not in compliance with Listing Rule 5550(a)(3)
(the “Minimum Public Holders Rule”), which requires the Company to have at least 300 public holders for continued
listing on the Nasdaq Capital Market. The Notice was only a notification of deficiency, not of imminent delisting, and had no
current effect on the listing or trading of the Company's securities on the Nasdaq Capital Market. In April 2017, the Company
submitted a plan to evidence compliance with the Minimum Public Holders Rule and Nasdaq granted the Company until August 21, 2017
to evidence compliance with the Minimum Public Holders Rule.
On
August 23, 2017, the Company received a written notice from Nasdaq stating that the Company had not regained compliance with the
Minimum Public Holders Rule for continued listing on Nasdaq. The notice further stated that, unless the Company requests an appeal
of Nasdaq’s determination, trading of the Company’s securities will be suspended at the open of business on September
1, 2017 and Nasdaq will file a Form 25 to remove the Company’s securities from listing and registration on Nasdaq. As permitted
under Nasdaq rules, the Company appealed the delisting determination.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
On
December 4, 2017, the Company received written notice from the Listing Qualifications Department of Nasdaq indicating that the
Company did not satisfy Nasdaq Listing Rule 5620(a) (the “Annual Meeting Requirement”) because the Company did not
timely hold an annual meeting for the fiscal year ended November 30, 2016 on or before November 30, 2017. The notice indicated
that the Company’s non-compliance with the Annual Meeting Requirement could serve as an additional basis for the delisting
of the Company’s securities from The Nasdaq Capital Market and, as such, the Company should present its plan to evidence
compliance with that requirement for review by the Nasdaq Hearings Panel (the “Panel”).
The
Company timely requested a hearing and presented its plan to evidence compliance with the Minimum Public Holders Rule for the
Panel’s consideration, subsequent to which the Panel granted the Company’s request for the continued listing of its
securities on The Nasdaq Capital Market subject to the Company evidencing compliance with all applicable requirements for listing
on Nasdaq by no later than February 19, 2018, including compliance with the applicable criteria for initial listing upon completion
of the Company’s proposed business combination with Hightimes Holding Corp.
On
February 20, 2018, the Company received written notice from Nasdaq indicating that the Panel determined to delist the Company’s
securities and as a result, trading of the Company’s securities on Nasdaq was suspended effective with the open of business
on Thursday, February 22, 2018, due to the Company’s non-compliance with certain requirements for continued listing on The
Nasdaq Capital Market and the Company’s failure to complete its proposed Business Combination with HTH and evidence compliance
with all applicable requirements for initial listing on Nasdaq on or before February 19, 2018, which was the deadline previously
set by the Panel.
On
March 27, 2018, the Company received written notice from Nasdaq indicating that it was not in compliance with Nasdaq Listing Rule
IM-5101-2, since the Company had not consummated its initial business combination within 36 months of the effectiveness of its
IPO registration statement, which occurred on December 12, 2014. The notice indicated that this matter serves as an additional
basis for delisting the Company’s securities from Nasdaq and that this matter will therefore be considered by the Listing
Council in connection with the Company’s appeal. The Company intends to address this matter in its appeal.
On
April 6, 2018, the Company received written notice from Nasdaq indicating that it was not in compliance with Nasdaq Listing Rule
5250(f) since the Company has not yet paid $42,000 in annual listing fees due to Nasdaq. The notice indicated that the Company
will be subject to delisting proceedings if it does not pay the outstanding balance in full. The notice also indicated that this
matter serves as an additional basis for delisting the Company’s securities from Nasdaq and that this matter will therefore
be considered by the Listing Council in connection with the Company’s appeal. The Company subsequently received an extension
from Nasdaq pursuant to which it has until April 20, 2018 to pay the outstanding balance, which the Company expects to pay in
a timely manner.
The Company subsequently requested a review of the Panel’s decision by the Nasdaq Listing and Hearing
Review Council (the “
Listing Council
”),
which request resulted in a stay of any formal delisting action by Nasdaq at least pending the ultimate outcome of the Listing
Council’s review and the expiration of all relevant review and appeal periods. The Company intends to continue to take such
action as necessary to maintain its Nasdaq listing (notwithstanding any suspension of trading on Nasdaq) and to obtain approval
for the listing of the combined entity on Nasdaq upon the consummation of the proposed business combination by and between the
Company and Hightimes. In that regard, at an extraordinary general meeting of shareholders held on March 12, 2018, the Company’s
shareholders approved extending the date by which the Company must consummate its initial business combination through June 12,
2018. Given the Nasdaq trading suspension, trading in the Company’s securities under the current trading symbols (OACQF,
OAQCF and OACCF) is taking place in the over-the-counter, OTC Markets system.
The
Company cannot assure that its securities will continue to be listed on Nasdaq in the future prior to an initial Business Combination.
Additionally, in connection with the initial Business Combination, it is likely that Nasdaq will require the Company to file a
new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing requirements.
The Company cannot assure that it will be able to meet those initial listing requirements at that time.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
Note
7 - Shareholder Equity
Preferred
Shares
The
Company is authorized to issue 1,000,000 preferred shares with a par value of $0.0001 per share with such designation, rights
and preferences as may be determined from time to time by the Company’s board of directors.
As
of February 28, 2018, there are no preferred shares issued or outstanding.
Ordinary
Shares
The
Company is authorized to issue 100,000,000 Ordinary Shares with a par value of $0.0001 per share.
Throughout
the meetings in connection with the First, Second, Third and Fourth Extension in 2016 and 2017, shareholders holding 2,558,369
Public Shares exercised their right to convert such Public Shares into a pro rata portion of the Trust Account (see Note 1). As
a result, the Company has an aggregate of 2,977,631 Ordinary Shares outstanding as of February 28, 2018 and November 30, 2017.
Of these, an aggregate of 896,311 and 922,276 Ordinary Shares subject to possible conversion were classified as temporary equity
in the accompanying Balance Sheet as of February 28, 2018 and November 30, 2017, respectively.
Note
8 - Merger Agreement
Merger
Agreement
On
July 24, 2017, the Company entered into a Merger Agreement with HTH, which was later amended on September 27, 2017 (“Amended
Merger Agreement”). Pursuant to the terms of the Amended Merger Agreement, the Merger Sub will merge with and into HTH,
with HTH continuing as the surviving entity (the “Merger”) and all holders of HTH equity securities and warrants,
options and rights to acquire or securities that convert into HTH equity securities (collectively, “HTH Securities”)
will convert into Origo common shares and, with respect to options, options to acquire Origo common shares. More specifically
at the effective time of the Merger (the “Effective Time”):
●
|
All
holders of HTH Securities (excluding HTH options, as described below) shall be entitled
to receive in the Merger an aggregate of 23,474,178 common shares of Origo (the “Merger
Consideration”), which is equal to $250 million divided by the agreed upon value
of the Origo common shares to be issued as Merger Consideration of $10.65 per share.
In the event HTH receives in excess of $5,000,001 in net proceeds from one or more separate
sales of common or preferred stock prior to the Closing, then the amount in excess of
$5,000,001 shall increase the HTH’s valuation on a dollar-for-dollar basis and
increase the number of Origo common shares representing the Merger Consideration by dividing
the increased HTH valuation by the agreed upon value of the Origo common shares to be
issued as Merger Consideration.
|
●
|
Each
holder of capital stock of HTH shall receive for each share of capital stock of HTH its
pro rata share of the Merger Consideration, treating any outstanding shares of HTH’s
preferred stock on an as-converted to Class A common stock basis (and after deducting
from the Merger Consideration payable to such holders of capital stock, the Origo common
shares issuable to the holders of HTH’s 8% senior secured convertible promissory
notes in an initial aggregate principal amount of $30 million (“HTH Purchase Notes”)).
|
●
|
Any
warrants and other rights to acquire equity securities of HTH, and all other securities
that are convertible into or exchangeable for equity securities of HTH, (A) if exercised
or converted prior to the Effective Time, shall have the resulting shares of capital
stock of HTH issued upon such exercise treated as outstanding shares of capital stock
of HTH, and (B) if not exercised or converted prior to the Effective Time will be terminated
and extinguished at the Effective Time (except for the HTH Purchase Notes and ExWorks
Convertible Not, which shall be converted as described below, and the outstanding HTH
options, which shall be assumed by Origo as described below).
|
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
●
|
HTH
shall be permitted to increase the principal amount of HTH’s existing secured loan
from ExWorks Capital Fund I, L.P (“ExWorks”) to up to $11.5 million from
$7.5 million. Additionally, Origo acknowledged that any shares of HTH Class A common
stock issued to ExWorks pursuant to the convertible note evidencing the ExWorks loan
(the “ExWorks Convertible Note”) shall be converted into Origo common shares
at a conversion price equal to 90% of the per share value of the Merger Consideration
(i.e., $10.65, or an ExWorks conversion price of $9.585). Origo further agreed that all
Origo common shares issued upon conversion of the ExWorks Convertible Note shall not
be deemed to be part of the Merger Consideration and shall dilute all holders of Origo
common shares on an equitable pro-rata basis. Origo also acknowledged that HTH and ExWorks
entered into an amendment, pursuant to which ExWorks granted HTH an option, exercisable
at any time on or before January 29, 2018, to extend the maturity date of the ExWorks
loan to August 28, 2018. If HTH elects to exercise the option, it will be obligated to
pay ExWorks an additional fee of $600,000 and issue an additional warrant to ExWorks
to purchase shares of HTH Class A common stock. HTH agreed that prior to the Closing
Date of the Merger, HTH shall either refinance its indebtedness to ExWorks or exercise
the foregoing option to extend the terminate date of the ExWorks loan to August 28, 2018.
|
●
|
The
HTH Purchase Notes that are outstanding as of the Closing shall automatically be converted
in a number of Origo common shares calculated by dividing the outstanding principal and
interest of all such HTH Purchase Notes and dividing such amount by the closing price
of Origo’s common shares on the date of the Closing.
|
●
|
All
outstanding HTH options will be assumed by Origo and be converted into an option to purchase
Origo common shares (each, an “Origo Assumed Option”). Origo Assumed Options
shall be in addition to the Merger Consideration and will dilute all holders of Origo
securities.
|
●
|
If,
prior to the Closing Date (i) Origo has less than $5,000,001 in net tangible assets (excluding
the net tangible assets of HTH) and (ii) HTH shall consummate a HTH Public Offering,
then (A) on the Closing Date, HTH will utilize up to ten percent (10%) of the gross proceeds
of such HTH Public Offering (up to $20 million of such gross proceeds) to pay for all
or a portion of Origo deferred expenses as directed by Origo and (B) if the gross proceeds
of a HTH Public Offering exceeds $20 million, HTH will utilize up to $5.0 million of
the gross proceeds of such HTH Public Offering to pay for all or a portion of Origo deferred
expenses as directed by Origo.
|
The
Merger Agreement also provides that, immediately prior to the Effective Time, Origo will reincorporate under the laws of the State
of Nevada, whether by reincorporation, statutory conversion or otherwise.
The
obligations of each party to consummate the Merger are subject to the satisfaction or waiver of customary conditions and Closing
deliverables, including (1) the Registration Statement having been declared and remain effective, (2) Origo’s shareholders
having approved the Merger Agreement and the related transactions at the extraordinary general meeting of Origo shareholders,
(3) any required governmental and third party approvals having been obtained, (4) the consents required to be obtained or made
from any third party (other than a governmental authority) in order to consummate the transactions contemplated by the Merger
Agreement shall have been obtained or made; (5) no governmental authority having enacted any law which has the effect of making
the transactions or agreements contemplated by the Merger Agreement illegal or which otherwise prevents or prohibits consummation
of the transactions contemplated by the Merger Agreement, (6) there shall be no pending action brought by a third party non-affiliate
to enjoin or otherwise restrict the consummation of the Closing, (7) upon the Closing, after giving effect to the completion of
Origo’s redemption of its public stockholders in connection with the Merger and the payment of all accrued and unpaid expenses,
Origo shall have net tangible assets of at least $5,000,001 (which shall include the consolidated net tangible assets of HTH and
its subsidiaries), (8) HTH shall have received its required stockholder approval, (9) the parties’ respective representations
and warranties shall be true and correct as of the Closing Date (subject to certain materiality qualifiers), (10) each of the
parties shall have performed in all material respects all of its obligations and complied in all material respects with all of
its agreements and covenants under the Merger Agreement to be performed or complied with by it on or prior to the Closing Date,
and (11) no event having occurred since the date of the Merger Agreement resulting in a material adverse effect upon the business,
assets, liabilities, results of operations, prospects or condition of the other party and its subsidiaries, taken as a whole,
or the other party’s ability to consummate the transactions contemplated by the Merger Agreement and ancillary documents
on a timely basis (subject in each case to customary exceptions) (a “Material Adverse Effect”), which is continuing
and uncured. The obligation of Origo and Merger Sub to consummate the Merger is also subject to the satisfaction or waiver or
certain additional conditions.
Origo Acquisition Corporation
Notes to Unaudited Condensed Consolidated
Financial Statements
February 28, 2018
Consulting
Services Agreement
At
the Closing, the successor will enter into a consulting services agreement with Oreva Capital Corp., a Delaware corporation, pursuant
to which the consultant is to perform certain services for the successor, including administrative services, dealing with investment
bankers, investor relations consultants and other members of the investment community (as authorized from time to time by the
Board of Directors), and assisting in connection with proposed acquisitions, dispositions and financings. In consideration for
such services, the successor will pay the consultant a monthly consulting fee of $35,000. Commencing in 2018, the consultant may
elect to have all or any portion of the consulting fee deferred and paid in shares of the successor’s common stock, at a
per share price equal to 100% of the closing price of the stock of the successor. Adam Levin, the Chief Executive Officer and
a director of HTH, is the Managing Director of Oreva Capital Corp.
Note
9 - Subsequent Events
Subsequent to February
28, 2018, the new management and HTH agreed to loan the Company an aggregate of $100,000 and $32,000, respectively, of which an
aggregate proceeds of $93,000 was already received. The loans are unsecured, non-interest bearing and are due upon consummation
of a Business Combination. The Company then deposited an aggregate of $65,000 into the Trust Account from the proceeds from these
loans and amounts held outside the Trust Account. The remaining amounts in the amount of $34,000 of the proceeds received from
the loans were deposited into the operating account and have not been transferred to the Trust Account as of the date of this
filing.
On
March 12, 2018, the Company held another extraordinary general meeting of shareholders at which the shareholders approved an extension
of the Liquidation Date from March 12, 2018 to June 12, 2018. Under Cayman Islands law, all amendments to the Charter take effect
upon their approvals. Accordingly, the Company has until June 12, 2018 to consummate an initial Business Combination. At the March
2018 Meeting, shareholders holding 28,801 Public Shares exercised their right to convert such shares into a pro rata portion of
the funds in the Trust Account. As a result, an aggregate of approximately $312,000 (or approximately $10.80 per share) was removed
from the Trust Account subsequently to pay such shareholders. In connection with the Fifth Extension, the Company’s management
agreed to provide a loan to the Company for $0.04 for each Public Share that was not converted for each calendar month (commencing
on March 12, 2018 and on the 12th day of each subsequent month), or portion thereof, to be deposited in the Company’s Trust
Account. If the Company takes the full time through June 12, 2018 to complete the initial Business Combination, the conversion
amount per share at the meeting for such Business Combination or the Company’s subsequent liquidation will be approximately
$10.92 per share. The loan will not bear interest and will be repayable by the Company to the lenders upon consummation of an
initial Business Combination.
On
April 6, 2018, the Company received written notice from Nasdaq indicating that it was not in compliance with Nasdaq Listing Rule
5250(f) since the Company has not yet paid $42,000 in annual listing fees due to Nasdaq. The notice indicated that the Company
will be subject to delisting proceedings if it does not pay the outstanding balance in full. The notice also indicated that this
matter serves as an additional basis for delisting the Company’s securities from Nasdaq and that this matter will therefore
be considered by the Listing Council in connection with the Company’s appeal. The Company subsequently received an extension
from Nasdaq pursuant to which it has until April 20, 2018 to pay the outstanding balance, which the Company expects to pay in
a timely manner.