Jensyn Acquisition Corp. Just Filed Its Quarterly Report: Note 8 — Subsequent...

Note 8 — Subsequent Events

 

The Company has scheduled a special meeting of stockholders for August 29, 2018. At the special meeting, stockholders will be asked to approve an extension of the date by which the Company must complete its initial Business Combination from September 3, 2018 to January 3, 2019. If the extension is not approved, it is anticipated that the Company will redeem 100% of its outstanding public shares for a pro rata portion of the funds held in the Trust Account, i ncluding a pro rata portion of any interest earned on the funds held in the Trust Account and not previously released to the Company to pay taxes, and then seek to dissolve and liquidate.

 

Subsequent to June 30, 2018, the Company received $36,000 of loans from Principal Shareholders that were used to fund the operations of the Company.

 

On August 15, 2018, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) with Oneness Global, a Cayman Islands company, and its stockholders, HF Bio Holding Ltd., WBW Holding Ltd. and HF Tech Holding, Ltd. (collectively, the “Stockholders”).

 

Oneness Global is an e-commerce company based in China that operates under the name HEFA Global.

 

The material terms of the Exchange Agreement are summarized below.

 

Exchange and Issuance of Shares. Upon the closing (the “Closing”) of the transactions contemplated by the Exchange Agreement, the Stockholders of Oneness Global (hereinafter referred to as “HEFA Global”) will exchange their shares of capital stock in HEFA Global for 46,746,104 shares of the Company’s common stock (the “Share Exchange”) representing approximately 85% of Jensyn’s outstanding shares after giving effect to the business combination, subject to adjustment as provided below. As a result of the Share Exchange, HEFA Global will become a wholly owned subsidiary of the Company.

 

Certain of the initial stockholders of and special advisors to the Company (the “Sponsors”) will receive an aggregate of 6,560,363 shares of the Company’s common stock upon the Closing, subject to adjustment as provided below. These shares, together with other shares of Jensyn common stock outstanding prior to the completion of the Share Exchange (exclusive of shares issued in Jensyn’s initial public offering) and shares issued upon the conversion of Jensyn’s outstanding rights, will represent fifteen percent (15%) of Jensyn’s outstanding shares of common stock following the completion of the Share Exchange, subject to adjustment as provided below.

 

Adjustments of Share Ownership. The number of shares of the Company’s common stock issuable to the Stockholders will be adjusted if the amount that HEFA Global’s Net Cash (as defined in the Exchange Agreement) at Closing is greater or less than zero. If Net Cash is greater than zero, the number of shares of common stock issuable to the Stockholders will be increased by an amount equal to the amount determined by dividing the amount by which Net Cash exceeds zero by the conversion price per share payable to Jensyn stockholders who elect to convert their shares into cash in connection with the Share Exchange (the “Conversion Amount”). If Net Cash at Closing is less than zero, then the number of shares issuable to the Stockholders shall be decreased by an amount equal to the amount determined by dividing the amount by which Net Cash is less than zero by the Conversion Amount.

 

If HEFA Global’s Closing Net Working Capital (as defined in the Exchange Agreement and exclusive of cash) exceeds $2,000,000, the number of shares of the Company’s common stock issuable to the Stockholders shall be increased by a number of shares determined by dividing the amount by which Closing Net Working Capital exceeds $2,000,000 by the Conversion Amount. If HEFA Global’s Closing Net Working Capital is less than $2,000,000, the number of shares of the Company’s common stock issuable to the Stockholders shall be reduced by a number of shares determined by dividing the amount by which Closing Net Working Capital is less than $2,000,000 by the Conversion Amount.

 

If any funds in the Trust Account established for the benefit of stockholders who purchased shares of common stock in the Company’s initial public offering are used to satisfy liabilities of the Company (other than franchise taxes), then the number of shares of the Company’s common stock issuable to the Sponsors shall be reduced by the number of shares determined by dividing the amount of cash released from the Trust Account to pay Company liabilities by the Conversion Amount, and the number of shares issuable to the Stockholders shall be correspondingly increased.

 

If any of the Company’s obligations outstanding prior to Closing are converted into shares of the Company’s common stock, the number of shares of Company common stock issuable to the Sponsors shall be reduced by the number of shares issued upon such conversions.

 

If the Company issues any shares of the Company’s common stock in a private placement prior to the Closing and utilizes the proceeds thereof to satisfy pre-Closing obligations of the Company, the number of shares of the Company’s common stock issuable to the Sponsors shall be decreased by the number of shares issued in the private placement, the proceeds of which are used to satisfy the Company obligations.

 

The number of shares of Company common stock issuable to the Stockholders will be increased if, as agreed, HEFA Global funds operating expenses of the Company prior to Closing by dividing the amount so funded by the Conversion Amount, and the number of shares of Company common stock issuable to the Sponsors shall be correspondingly reduced.

 

Funding of Company Expenses. HEFA Global has agreed to fund (i) up to $600,000 of the Company’s operating expenses through the date of Closing, (ii) up to $100,000 of expenses incurred by the Company in obtaining an extension of the date by which the Company must complete its initial business combination to January 3, 2019 and (iii) up to $300,000 of expenses incurred after January 3, 2019 if the date by which the Company must complete its initial business combination beyond January 3, 2019, if necessary; provided, however, that the total amount of expenses that HEFA Global has agreed to fund is subject to an $800,000 limit. The Company received $350,000 of loans from HEFA Global to fund the operations of the Company as per the Exchange Agreement in August 2018.

 

Stockholder Conversion Rights. At the time that the Company seeks approval of the Share Exchange from its stockholders, the Company will offer its public shareholders the opportunity to convert their shares for cash upon the closing of the Share Exchange in an amount equal to their pro rata share of the funds held in the Trust Account that holds the proceeds of Jensyn’s initial public offering as provided by its amended and restated certificate of incorporation. In connection with the stockholder vote to extend the date by which the Company must complete its initial business combination to September 3, 2018, Jensyn Capital, LLC, a company controlled by the Company’s initial stockholders, agreed to deposit $.042 per share for each 30 day period that the date by which the Company must complete its initial business combination was extended. The deposit of the additional $104,614 that Jensyn Capital is required to deposit in connection with the extension will increase the funds available in the Trust Account from $10.66 per share as of June 30, 2018 to approximately $10.89 per share.

 

Conditions to Closing. The closing of the Share Exchange is subject to a number of conditions, including the approval of the Share Exchange by the Company’s stockholders, the receipt by the Company of an opinion from an investment banking firm that the transaction is fair, from a financial point of view, to the Company’s stockholders and the approval by the Company’s stockholders of an extension of the date by which the Company must complete its initial business combination to January 3, 2019. In addition, each of the Company and HEFA Global must have at least $5,000,001 of net tangible assets after the Closing.

 

Post-Closing Management. The senior management of HEFA Global will replace Jensyn’s existing management team following the closing of the Share Exchange. In addition, it is anticipated that at the time that Jensyn seeks approval of the Share Exchange by its stockholders, Jensyn’s stockholders will be asked to elect a new Board of Directors. The nominees will be four individuals designated by HEFA Global and one individual designated by the Company.

 

Representations and Warranties. Under the Exchange Agreement, each of the Company, on the one hand, and HEFA Global and the Stockholders, on the other hand, made customary representations and warranties for transactions of this nature.

 

Indemnification. Under the Exchange Agreement, the Stockholders have agreed to indemnify the Company and its officers, directors and affiliates and representatives against losses and liabilities resulting from any breach of the representations and warranties of HEFA Global or the Stockholders contained in the Exchange Agreement or any breach of the covenants of HEFA Global and the Stockholders contained in the Exchange Agreement.

 

The Company has agreed to indemnify the Stockholders and their affiliates and representatives against losses and liabilities resulting from any breach of the representations or warranties of the Company set forth in the Exchange Agreement or any breach of the covenants of the Company contained in the Exchange Agreement.

 

Termination. The Exchange Agreement may be terminated under certain limited circumstances at any time prior to the consummation of the business combination (whether before or after the required stockholder vote of the Company has been obtained). If the Exchange Agreement is terminated pursuant to the provisions of the Exchange Agreement, all further obligations of the parties thereunder will terminate without any liability of any party thereto, other than any obligation or liability arising from any prior willful and material breach by such party and as described under the caption “Termination Payment” below.

 

Termination Payment. HEFA Global is required to pay the Company a $2,500,000 termination fee in the event that the Exchange Agreement is terminated (i) by the Company by reason of the breach by HEFA or the Stockholders of their representations and warranties set forth in the Purchase Agreement or (ii) by the Company or HEFA Global as a result of the Closing not having occurred by March 7, 2019 solely by reason of a delay caused solely by HEFA Global.

 

The Company is required to pay HEFA Global a $2,500,000 termination fee in the event that HEFA terminates the Exchange Agreement by reason of the breach by the Company of its representations and warranties set forth in the Exchange Agreement or if the Exchange Agreement is terminated by the Company or HEFA Global as a result of the Closing not having occurred by March 7, 2019 as a result of a delay solely caused by the Company. The Company is also required to pay HEFA Global a $2,500,000 termination fee if the Exchange Agreement is terminated by the Company as a result of the Closing not having occurred by March 7, 2018 for a reason other than a delay caused solely by HEFA Global, and the Company initiates an alternate business combination within six months of such termination.

The above information was disclosed in a filing to the SEC. To see the filing, click here.

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Other recent filings from the company include the following:

Notification of inability to timely file Form 10-Q or 10-QSB - Nov. 13, 2018

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