NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Chardan
Healthcare Acquisition 2 Corp. (formerly known as Chardan Healthcare Acquisition III Corp.) (the “Company”) is a blank
check company incorporated in Delaware on December 19, 2018. The Company was formed for the purpose of entering into a merger,
share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business transaction with
one or more businesses or entities that the Company has not yet identified (a “Business Combination”). Although the
Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the
Company intends to focus on businesses operating in North America in the healthcare industry. On March 3, 2020, the Company changed
its name to Chardan Healthcare Acquisition 2 Corp.
The
Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with
early stage and emerging growth companies.
As
of March 31, 2020, the Company had not commenced any operations. All activity for the period from December 19, 2018 (inception)
through March 31, 2020 relates to the Company’s formation and the initial public offering (“Initial Public Offering”),
which is described below. The Company will not generate any operating revenues until after the completion of its initial Business
Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds
derived from the Initial Public Offering.
Initial
Public Offering
The
registration statement for the Company’s Initial Public Offering was declared effective on April 23, 2020. On April 28,
2020, the Company consummated the Initial Public Offering of 8,500,000 units (the “Units” and, with respect to the
shares of common stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds
of $85,000,000, which is described in Note 3.
Simultaneously
with the closing of the Initial Public Offering, the Company consummated the sale of 3,500,000 warrants (the “Private Placement
Warrants”) at a price of $0.40 per Private Placement Warrant in a private placement to Chardan Investments 2, LLC (the “Sponsor”),
generating gross proceeds of $1,400,000, which is described in Note 4.
Transaction
costs amounted to $762,477, consisting of $500,000 of underwriting fees and $262,477 of other offering costs. In addition, $1,128,077
of cash was held outside of the Trust Account (as defined below) and is available for working capital purposes. As of March 31, 2020 the Company recorded $50,300 in offering costs.
Following
the closing of the Initial Public Offering on April 28, 2020, an amount of $85,000,000 ($10.00 per Unit) from the net proceeds
of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account
(the “Trust Account”) located in the United States and invested in U.S. government securities, within the meaning
set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”),
with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund
meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i)
the consummation of a Business Combination or (ii) the distribution of the funds in the Trust Account, as described below.
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied
generally toward consummating a Business Combination. The Company’s initial Business Combination must be with one or more
target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (net of taxes
payable) at the time of the signing an agreement to enter into a Business Combination. The Company will only complete a Business
Combination if the post-Business Combination Company owns or acquires 50% or more of the outstanding voting securities of the
target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment
company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business
Combination.
The
Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion
of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii)
by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or
conduct a tender offer will be made by the Company, solely in its discretion. The stockholders will be entitled to redeem their
shares for a pro rata portion of the amount then on deposit in the Trust Account ($10.00 per share, plus any pro rata interest
earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will
be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
CHARDAN HEALTHCARE
ACQUISITION 2 CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
The
Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation
of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted
in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder
vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation,
conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and
file tender offer documents with the SEC prior to completing a Business Combination. If, however, a stockholder approval of the
transaction is required by law, or the Company decides to obtain stockholder approval for business or other legal reasons, the
Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the
tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor
and other initial stockholders (collectively, the “Initial Stockholders”) have agreed to (a) vote their Founder Shares
(as defined in Note 5) and any Public Shares held by them in favor of a Business Combination and (b) not to convert any shares
(including Founder Shares) in connection with a stockholder vote to approve a Business Combination or sell any such shares to
the Company in a tender offer in connection with a Business Combination. Additionally, each public stockholder may elect to redeem
their Public Shares irrespective of whether they vote for or against the proposed transaction.
Notwithstanding
the foregoing, if the Company seeks stockholder approval of a Business Combination and the Company does not conduct redemptions
pursuant to the tender offer rules, a stockholder, together with any affiliate of such stockholder or any other person with whom
such stockholder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming their shares with respect to more than
an aggregate of 20% of the Public Shares.
The
Company will have until April 28, 2022 to consummate a Business Combination (the “Combination Period”). If the Company
is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for
the purpose of winding up, (ii) as promptly as reasonably possible but no more than five business days thereafter, redeem 100%
of the outstanding Public Shares, at a per share price, payable in cash, equal to the aggregate amount then on deposit in the
Trust Account, including interest earned (net of taxes payable), divided by the number of then outstanding Public Shares, which
redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further
liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the remaining stockholders and the Company’s board of directors, proceed to commence a voluntary
liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for claims of
creditors and the requirements of applicable law. The proceeds deposited in the Trust Account could, however, become subject to
claims of creditors. Therefore, the actual per-share redemption amount could be less than $10.00.
The
Initial Stockholders have agreed to (i) waive their redemption rights with respect to Founder Shares and any Public Shares they
may acquire during or after the Initial Public Offering in connection with the consummation of a Business Combination, (ii) to
waive their rights to liquidating distributions from the Trust Account with respect to their Founder Shares if the Company fails
to consummate a Business Combination within the Combination Period and (iii) not to propose an amendment to the Company’s
Amended and Restated Certificate of Incorporation that would affect the substance or timing of the Company’s obligation
to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public
stockholders an opportunity to redeem their Public Shares in conjunction with any such amendment. However, the Initial Stockholders
will be entitled to liquidating distributions with respect to any Public Shares acquired if the Company fails to consummate a
Business Combination or liquidates within the Combination Period.
In
order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent
any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the
Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below $10.00 per
share, except as to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or
to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial
Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will
not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility
that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service
providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company
waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The accompanying
unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form
10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim
financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation
of financial position, results of operations, or cash flows. The accompanying unaudited condensed financial statements include
all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position,
operating results and cash flows for the periods presented.
CHARDAN HEALTHCARE
ACQUISITION 2 CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
The
accompanying unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its
Initial Public Offering as filed with the SEC on April 28, 2020, as well as the Company’s Current Report on Form 8-K, as
filed with the SEC on April 29, 2020 and May 4, 2020. The interim results for the three months ended March 31, 2020 are not necessarily
indicative of the results to be expected for the year ending December 31, 2020 or for any future periods.
The
Company had no activity for the three months ended March 31, 2019. Accordingly, the condensed statement of operations, condensed
statement of cash flows and condensed statement of changes in stockholder’s equity for the comparative period for the three
months ended March 31, 2019 are not presented.
Emerging
Growth Company
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”),
and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies
that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered
public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding
a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and
comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The
Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and
it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the
new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s
financial statement with another public company which is neither an emerging growth company nor an emerging growth company which
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Use
of Estimates
The
preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reporting period.
Making
estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect
of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual
results could differ significantly from those estimates.
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company did not have any cash equivalents as of March 31, 2020 and December 31, 2019.
Deferred
Offering Costs
Offering
costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly
related to the Initial Public Offering. Offering costs amounting to $762,477 were charged to stockholders’ equity upon the
completion of the Initial Public Offering.
CHARDAN HEALTHCARE
ACQUISITION 2 CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
Income
Taxes
The Company complies
with the accounting and reporting requirements of Accounting Standards Codification (“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
provision for income taxes was deemed to be de minimis for the three months ended March 31, 2020.
On March 27, 2020, President
Trump signed the Coronavirus Aid, Relief, and Economic Security “CARES” Act into law. The CARES Act includes several
significant business tax provisions that, among other things, would eliminate the taxable income limit for certain net operating
losses (“NOL) and allow businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five prior years, suspend the
excess business loss rules, accelerate refunds of previously generated corporate alternative minimum tax credits, generally loosen
the business interest limitation under IRC section 163(j) from 30 percent to 50 percent among other technical corrections included
in the Tax Cuts and Jobs Act tax provisions. The Company does not believe that the CARES Act will have a significant impact on
Company's financial position or statement of operations.
Net
Loss per Common Share
Net
loss per common share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during
the period, excluding shares of common stock subject to forfeiture. Weighted average shares were reduced for the effect of an
aggregate of 318,750 shares of common stock, that are subject to forfeiture if the over-allotment option is not exercised by the
underwriters (see Note 7). At March 31, 2020, the Company did not have any dilutive securities and other contracts that could,
potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a result,
diluted loss per common share is the same as basic loss per share for the period presented.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution
which, at times may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this
account and management believes the Company is not exposed to significant risks on such account.
Fair
Value of Financial Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair
Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily
due to their short-term nature.
Recently
issued accounting standards
Management
does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have
a material effect on the accompanying condensed financial statements.
NOTE
3. PUBLIC OFFERING
Pursuant
to the Initial Public Offering, the Company sold 8,500,000 Units, at a purchase price of $10.00 per Unit. Each Unit consists of
one share of common stock and one warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase
one-half of one share of common stock at an exercise price of $11.50 per share (see Note 7).
NOTE
4. PRIVATE PLACEMENT
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 3,500,000 Private Placement Warrants at
a price of $0.40 per Private Placement Warrant, for an aggregate purchase price of $1,400,000. Each Private Placement Warrant
is exercisable to purchase one share of common stock at an exercise price of $11.50. If the Company does not complete a Business
Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants will be used to fund the
redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire
worthless. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Private
Placement Warrants.
CHARDAN HEALTHCARE
ACQUISITION 2 CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
NOTE
5. RELATED PARTY TRANSACTIONS
Founder
Shares
In
December 2018, the Company issued an aggregate of 5,000,000 shares of common stock to the Sponsor for an aggregate purchase price
of $25,000. On April 28, 2020, the Sponsor cancelled 2,556,250 of its shares, resulting in 2,443,750 remaining shares owned by
the Sponsor (“Founder Shares”). The Founder Shares include an aggregate of up to 318,750 shares subject to forfeiture
by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the Sponsor
will own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor did
not purchase any Public Shares in the Initial Public Offering).
The
Initial Stockholders have agreed that, subject to certain limited exceptions, 50% of the Founder Shares will not be transferred,
assigned, sold or released from escrow until the earlier of (i) six months after the date of the consummation of a Business Combination
or (ii) the date on which the closing price of the Company’s shares of common stock equals or exceeds $12.50 per share (as
adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 10 trading days within any 30-trading
day period commencing after a Business Combination and the remaining 50% of the Founder Shares will not be transferred, assigned,
sold or released from escrow until six months after the date of the consummation of a Business Combination, or earlier, in either
case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other
similar transaction which results in all of the stockholders having the right to exchange their shares of common stock for cash,
securities or other property.
Promissory
Note — Related Party
On
January 14, 2020, the Company issued an unsecured promissory note (the “Promissory Note”) to the Sponsor, pursuant
to which the Company may borrow up to an aggregate principal amount of $500,000. As of March 31, 2020, there was $30,000 outstanding
under the Promissory Note. The Promissory Note was repaid on April 29, 2020.
On
April 28, 2020, the Company issued a $500,000 promissory note to the Sponsor (the “Sponsor Promissory Note”) in exchange
for $500,000 in cash that was used to pay the underwriting discount at the consummation of the Initial Public Offering. The Sponsor
Promissory Note is non-interest bearing, unsecured and due upon the consummation of a Business Combination.
Related
Party Loans
In
order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the
Company’s officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time,
as may be required (“Working Capital Loans”). Each Working Capital Loan would be evidenced by a promissory note. The
Working Capital Loans would be paid upon consummation of a Business Combination, without interest.
Administrative
Support Agreement
The
Company entered into an agreement whereby, commencing on April 28, 2020, the Company will pay an affiliate of the Sponsor up to
$10,000 per month for general and administrative services including office space, utilities and secretarial support. Upon completion
of a Business Combination or its liquidation, the Company will cease paying these monthly fees.
NOTE
6. COMMITMENTS
Registration
Rights
Pursuant
to a registration rights agreement entered into on April 23, 2020, the holders of the Founder Shares, Private Placement Warrants
(and their underlying securities) are entitled to registration rights. The holders of a majority of these securities will be entitled
to make up to two demands that the Company register such securities. The holders of the majority of the Founder Shares can elect
to exercise these registration rights at any time commencing three months prior to the date on which these shares of common stock
are to be released from escrow. The holders of a majority of the Private Placement Warrants (and their underlying securities)
can elect to exercise these registration rights at any time after the Company consummates a Business Combination. In addition,
the holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent
to the completion of a Business Combination. The Company will bear the expenses incurred in connection with the filing of any
such registration statements. Chardan Capital Markets, LLC and its related persons may not, with respect to the Private Placement
Warrants purchased by the Sponsor, (i) have more than one demand registration right at the Company’s expense, (ii) exercise
their demand registration rights more than five (5) years from the effective date of the Initial Public Offering, and (iii) exercise
their “piggy-back” registration rights more than seven (7) years from the effective date of the Initial Public Offering,
as long as Chardan Capital Markets, LLC or any of its related persons are beneficial owners of Private Placement Warrants.
CHARDAN HEALTHCARE
ACQUISITION 2 CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
Underwriting
Agreement
The
Company granted the underwriters a 45-day option to purchase up to 1,275,000 additional Units to cover over-allotments at the
Initial Public Offering price, less the underwriting discounts and commissions.
NOTE
7. STOCKHOLDER’S EQUITY
Preferred
Stock — On April 23, 2020, the Company amended its Certificate of Incorporation such that the Company is authorized
to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share 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.
Common
Stock — On April 23, 2020, the Company amended its Certificate of Incorporation such that the Company is authorized
to issue 30,000,000 shares of common stock with a par value of $0.0001 per share. Holders of the Company’s common
stock are entitled to one vote for each share. At March 31, 2020 and December 31, 2019, there were 5,000,000 shares of common
stock issued and outstanding. The Founder Shares include up to an aggregate of 318,750 shares subject to forfeiture to the extent
that the underwriter’s over-allotment option is not exercised in full so that the Company’s Initial Stockholders will
own 20% of the issued and outstanding shares after the Initial Public Offering (assuming the Initial Stockholders did not purchase
any Public Shares in the Initial Public Offering).
Warrants
— No fractional shares will be issued upon exercise of the Public Warrants. Therefore, Public Warrants must
be exercised in multiples of two warrants. The Public Warrants will become exercisable on the consummation of a Business Combination;
provided in that the Company has an effective and current registration statement covering the shares of common stock issuable
upon the exercise of the Public Warrants and a current prospectus relating to such shares of common stock. The Company has agreed
that as soon as practicable, the Company will use its best efforts to file with the SEC a registration statement for the registration,
under the Securities Act, of the shares of common stock issuable upon exercise of the Public Warrants. The Company will use its
best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current
prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement.
Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise of the Public
Warrants is not effective within 120 days from the closing 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. If an exemption from registration is not available, holders will not be able to exercise their warrants on a cashless basis.
The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The
Company may redeem the Public Warrants:
|
●
|
in
whole and not in part;
|
|
●
|
at
a price of $0.01 per warrant;
|
|
●
|
at
any time during the exercise period;
|
|
●
|
upon
a minimum of 30 days’ prior written notice of redemption
|
|
●
|
if,
and only if, the last sale price of the Company’s common stock equals or exceeds $16.00 per share for any 10 trading days
within a 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption
to the warrant holders; and
|
|
●
|
if,
and only if, there is a current registration statement in effect with respect to the shares of common stock underlying such warrants
at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until
the date of redemption.
|
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
CHARDAN HEALTHCARE
ACQUISITION 2 CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2020
(Unaudited)
In
addition, if (x) the Company issues additional shares of common stock or equity-linked securities for capital raising purposes
in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share
of 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 the funding of a Business Combination on the date of the completion of a Business Combination (net of redemptions), and (z)
the volume weighted average trading price of the Company’s shares of common stock during the 20 trading day period starting
on the trading day prior to the day on which the Company consummates a Business Combination (such price, 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 $16.00 per share redemption trigger prices will be adjusted (to
the nearest cent) to be equal to 160% of the higher of the Market Value and the Newly Issued Price.
The
exercise price and number of shares of common stock issuable upon exercise of the warrants may be adjusted in certain circumstances
including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants
will not be adjusted for issuance of common stock at a price below its exercise price. Additionally, in no event will the Company
be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination
Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds
with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust
Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering except
that the Private Placement Warrants will be exercisable for cash (even if a registration statement covering the shares of common
stock issuable upon exercise of such warrants is not effective) or on a cashless basis, at the holder’s option, and will
not be non-redeemable by the Company, in each case, so long as they are held by the initial purchasers or their permitted transferees.
If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private
Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
The Private Placement Warrants purchased by the Sponsor will not be exercisable more than five years from the effective date of
the Initial Public Offering, in accordance with FINRA Rule 5110(f)(2)(G)(i), as long as Chardan Capital Markets, LLC or any of
its related persons beneficially own these Private Placement Warrants.
NOTE
8. SUBSEQUENT EVENTS
The
Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial
statements were issued. Other than as described in these financial statements, the Company did not identify any subsequent events
that would have required adjustment or disclosure in the financial statements.