The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2018
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION
AND BUSINESS OPERATIONS
Longevity Acquisition Corporation (the
“Company”) is a blank check company incorporated in the British Virgin Islands on March 9, 2018. The Company was formed
for the purpose of acquiring, engaging in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially
all of the assets of, entering into contractual arrangements with, or engaging in any other similar business combination with one
or more businesses or entities (“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 that have
their primary operations located in China.
At August 31, 2018, the Company had not
yet commenced any operations. All activity through August 31, 2018 relates to the Company’s formation and its initial public
offering (“Initial Public Offering”), which is described below.
The registration statement for the
Initial Public Offering was declared effective on August 28, 2018. On August 31, 2018, the Company consummated the Initial Public
Offering of 4,000,000 units (“Units” and, with respect to the ordinary shares included in the Units sold, the “Public
Shares”), at $10.00 per Unit, generating gross proceeds of $40,000,000, which is described in Note 3.
Simultaneously with the closing of
the Initial Public Offering, the Company consummated the sale of 270,000 units (the “Private Units”) at a price
of $10.00 per Private Unit in a private placement to the Company’s sponsor, Whale Management Corporation (the
“Sponsor”), and the underwriter generating gross proceeds of $2,700,000, which is described in Note 4.
Following the closing of the Initial Public
Offering on August 31, 2018, an amount of $40,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial
Public Offering and the sale of the Private Units was placed in a trust account (“Trust Account”) which has been invested
in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended
(the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds
itself out as a money market fund 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
to the Company’s shareholders, as described below.
Transaction costs relating to the Initial
Public Offering amounted to $2,631,167, consisting of $1,200,000 of underwriting fees, $1,000,000 of deferred underwriting fees
and $431,167 of offering costs. In addition, $1,061,385 of cash was held outside of the Trust Account and is available for working
capital purposes.
The Company’s management has broad
discretion with respect to the specific application of the net proceeds of the Initial Public Offering and sale of the Private
Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.
NASDAQ rules provide that the 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 (less any deferred underwriting commissions and interest released
to pay taxes payable) at the time of the signing of 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 shareholders
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 shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection
with a proposed Business Combination, the Company may seek shareholder approval of a Business Combination at a meeting called for
such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against a Business Combination.
The Company will proceed with a Business Combination only 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 shareholder approval, a majority of the outstanding shares voted
are voted in favor of the Business Combination.
If the Company seeks shareholder approval
of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and
Restated Memorandum and Articles of Association provides that a public shareholder, together with any affiliate of such shareholder
or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption rights
with respect to 15% or more of the Public Shares without the Company’s prior written consent.
LONGEVITY ACQUISTION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2018
(Unaudited)
The shareholders will be entitled to redeem
their shares for a pro rata portion of the amount then in the Trust Account ($10.00 per share, subject to increase of up to an
additional $0.30 per share in the event that the Sponsor elects to extend the period of time to consummate a Business Combination
(see below), 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). The per-share amount to be distributed to shareholders who redeem their shares will not be reduced
by the deferred underwriting commissions the Company will pay to the underwriter (as discussed in Note 6). There will be no redemption
rights upon the completion of a Business Combination with respect to the Company’s warrants or rights.
If a shareholder vote is not required and
the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended
and Restated Memorandum and Articles of Association, offer such redemption pursuant to the tender offer rules of the Securities
and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would
be included in a proxy statement with the SEC prior to completing a Business Combination.
The Sponsor and the Company’s officers
and directors and the underwriter (the “initial shareholders”) have agreed (a) to vote their founder shares, the ordinary
shares included in the Private Units (the “Private Shares”) and any Public Shares purchased during or after the Initial
Public Offering in favor of a Business Combination, (b) not to propose 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 a Business Combination unless the Company provides public shareholders with the opportunity to redeem their Public
Shares in conjunction with any such amendment, (c) not to redeem any shares (including the founder shares) and Private Units (including
underlying securities) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a
Business Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company does not
seek shareholder approval in connection therewith) or a vote to amend the provisions of the Amended and Restated Memorandum and
Articles of Association relating to shareholders’ rights of pre-Business Combination activity and (d) that the founder shares
and Private Units (including underlying securities) shall not participate in any liquidating distributions upon winding up if a
Business Combination is not consummated. However, the initial shareholders will be entitled to liquidating distributions from the
Trust Account with respect to any Public Shares purchased during or after the Initial Public Offering if the Company fails to complete
its Business Combination.
The Company will have until August 31,
2019 to consummate a Business Combination. However, if the Company anticipates that it may not be able to consummate a Business
Combination by August 31, 2019, the Company may extend the period of time to consummate a Business Combination up to three times,
each by an additional three months (for a total of 21 months to complete a Business Combination (the “Combination Period”)).
In order to extend the time available for the Company to consummate a Business Combination, the Sponsor or its affiliate or designees
must deposit into the Trust Account $400,000, or $460,000 if the underwriters’ over-allotment option is exercised in full
($0.10 per Unit in either case), on or prior to the date of the applicable deadline, for each three month extension up to an aggregate of $1,200,000 (or $1,380,000 if the underwriters’ over-allotment option
is exercised in full), or $0.30 per Unit.
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 and less interest to pay dissolution expenses up to $50,000), divided by the number of then outstanding
Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (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 shareholders 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 underwriter has agreed to waive its rights to the deferred
underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within the
Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available
to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the
assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
The Sponsor has agreed that it will 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 amounts in the
Trust Account to below $10.00 per share (whether or not the underwriters’ over-allotment option is exercised in full), except
as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as
to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). 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.
LONGEVITY ACQUISTION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2018
(Unaudited)
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. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting
of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash
flows for the periods presented.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the
SEC on August 29, 2018, as well as the Company’s Current Report Form 8-K, as filed with the SEC on August 31, 2018. The interim
results for the period from March 9, 2018 (inception) through August 31, 2018 are not necessarily indicative of the results to
be expected for the period from March 9, 2018 (inception) through February 28, 2019 or for any future periods.
Emerging growth company
The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with
the auditor 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 shareholder 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 statements 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 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 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 August 31, 2018.
Cash held in Trust Account
At August 31, 2018, the assets held
in the Trust Account were held in cash.
LONGEVITY ACQUISTION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2018
(Unaudited)
Ordinary shares subject to possible redemption
The Company accounts for its ordinary shares
subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480
“Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as a liability
instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption
rights that are either within the control of the holder or subject to redemption 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 feature certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, at August 31, 2018, ordinary shares subject to possible
redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of the Company’s
balance sheet.
Income taxes
The Company complies with the accounting
and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial
accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the
financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on
enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC Topic 740 prescribes a recognition
threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon
examination by taxing authorities. The Company’s management determined that the British Virgin Islands is the Company’s
major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as
income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of August 31,
2018. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position.
The Company may be subject to potential
examination by foreign taxing authorities in the area of income taxes. These potential examinations may include questioning the
timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with foreign tax laws. The
Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next
twelve months.
The Company’s tax provision is zero
because the Company is organized in the British Virgin Islands with no connection to any other taxable jurisdiction. As such, the
Company has no deferred tax assets. The Company is considered to be an exempted British Virgin Islands Company, and is presently
not subject to income taxes or income tax filing requirements in the British Virgin Islands or the United States.
Net Loss Per Ordinary Share
Net loss per ordinary share is computed
by dividing net loss by the weighted average number of ordinary shares outstanding for the period. The Company applies the two-class
method in calculating earnings per share. Ordinary shares subject to possible redemption at August 31, 2018, which are not currently
redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per ordinary share since
such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered
the effect of (1) warrants sold in the Initial Public Offering and private placement to purchase 2,135,000 ordinary shares, (2)
rights sold in the Initial Public Offering and private placement that convert into 427,000 ordinary shares, and (3) a unit purchase
option sold to the underwriter that converts into 240,000 ordinary shares, warrants to purchase 120,000 ordinary shares and rights
that convert into 24,000 ordinary shares, in the calculation of diluted loss per share, since the exercise of the warrants and
the conversion of the rights into ordinary shares are contingent upon the occurrence of future events. As a result, diluted net
loss per ordinary share is the same as basic net loss per ordinary share for the periods.
Concentration of credit risk
Financial instruments that potentially
subject the Company to concentration 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. At August 31, 2018, the Company had 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 Measurements and Disclosures,”
approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
LONGEVITY ACQUISTION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2018
(Unaudited)
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 Company’s
financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering,
the Company sold 4,000,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one ordinary share, one right (“Public
Right”) and one redeemable warrant (“Public Warrant”). Each Public Right will convert into one-tenth (1/10) of
one ordinary share at the closing of a Business Combination (see Note 7). Each Public Warrant entitles the holder to purchase one-half
(1/2) of one ordinary share at an exercise price of $11.50 per full share (see Note 7).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the Initial Public
Offering, the Sponsor and the underwriter (and their designees) purchased an aggregate of 270,000 Private Units at a price of $10.00
per Private Unit, of which 250,000 Private Units were purchased by the Sponsor and 20,000 Private Units were purchased by the underwriter
($2,700,000 in the aggregate). The Private Units are identical to the Units sold in the Initial Public Offering, except for the
private warrants (“Private Warrants”), as described in Note 7. The proceeds from the sale of the Private Units were
added to the net proceeds from the Initial Public Offering held in the Trust Account. The Sponsor and the underwriter have committed
to purchase up to an aggregate additional amount of 18,000 Private Units if the underwriters’ over-allotment is exercised
in full. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the
Private Units will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the
Private Warrants and Private Rights will expire worthless.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In June 2018, the Company issued an aggregate
of 1,150,000 founder shares to the Sponsor for an aggregate purchase price of $25,000 in cash. The founder shares include an aggregate
of up to 150,000 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 collectively own 20% of the Company’s issued and outstanding shares after the
Initial Public Offering (assuming the initial shareholders did not purchase any Public Shares in the Initial Public Offering and
excluding the Private Units and underlying securities).
The initial shareholders have agreed not
to transfer, assign or sell any of the founder shares (except to certain permitted transferees) until the earlier of (i) one year
after the date of the consummation of a Business Combination, or (ii) the date on which the closing price of the Company’s
ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations)
for any 20 trading days within any 30-trading day period commencing after a Business Combination, or earlier 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 Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other
property.
Promissory Note – Related Party
On May 31, 2018, the Company issued an
unsecured promissory note to the Sponsor, pursuant to which the Company borrowed an aggregate principal amount of $202,415. The
note was non-interest bearing and payable on the earlier of (i) December 31, 2018 or (ii) the consummation of the Initial Public
Offering. The Promissory Note was repaid upon the consummation of the Initial Public Offering on August 31, 2018.
Administrative Services Arrangement
An affiliate of a member of the Company’s
Sponsor entered into an agreement commencing on August 28, 2018 through the earlier of the Company’s consummation of a Business
Combination and its liquidation, to make available to the Company certain general and administrative services, including office
space, utilities and administrative services, as the Company may require from time to time. The Company has agreed to pay such
entity $10,000 per month for these services.
LONGEVITY ACQUISTION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2018
(Unaudited)
Related Party Loans
In order to finance transaction costs in
connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or the Company’s officers
and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such
Working Capital Loans would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business
Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon consummation
of a Business Combination into additional Private Units at a price of $10.00 per Unit. In the event that a Business Combination
does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but
no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
Related Party Extension Loans
As discussed in Note 1, the Company
may extend the period of time to consummate a Business Combination up to three times, each by an additional three months (for
a total of 21 months to complete a Business Combination). In order to extend the time available for the Company to consummate
a Business Combination, the Sponsor or its affiliates or designees must deposit into the Trust Account $400,000 or $460,000
if the underwriters’ over-allotment option is exercised in full ($0.10 per Unit in either case), on or prior to the
date of the applicable deadline, for each three month extension up to an aggregate of $1,200,000 (or $1,380,000 if
the underwriters’ over-allotment option is exercised in full), or $0.30 per Unit. Any such payments would be made in the form of a loan. The
terms of the promissory note to be issued in connection with any such loans have not yet been negotiated. If the Company
completes a Business Combination, the Company would repay such loaned amounts out of the proceeds of the Trust Account
released to the Company. If the Company does not complete a Business Combination, the Company will not repay such loans.
Furthermore, the letter agreement with the initial shareholders contains a provision pursuant to which the Sponsor has agreed
to waive its right to be repaid for such loans in the event that the Company does not complete a Business Combination. The
Sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time for the Company to
complete a Business Combination.
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement
entered into on August 28, 2018, the holders of the founder shares, Private Units (and their underlying securities) and any Units
that may be issued upon conversion of the Working Capital Loans (and underlying securities) are entitled to registration rights.
The holders of 25% of these securities are entitled to make up to three demands, excluding short form demands, that the Company
register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration
statements filed subsequent to the consummation of a Business Combination. Notwithstanding the foregoing, the underwriter may not
exercise its demand and “piggyback” registration rights after five (5) and seven (7) years after the effective date
of the registration statement and may not exercise its demand rights on more than one occasion. The Company will bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a
45-day option to purchase up to 600,000 additional Units to cover over-allotments at the Initial Public Offering price, less the
underwriting discounts and commissions.
The underwriters are entitled to a deferred
fee of two and one-half percent (2.5%) of the gross proceeds of the Initial Public Offering, or $1,000,000 (or up to $1,150,000
if the underwriters’ over- allotment is exercised in full). Pursuant to the Company's agreement with the underwriter, the
Company will have the right to pay up to 40% of such amount to other advisors retained by the Company to assist the Company in
connection with a Business Combination; provided, however, that the Company may, in its sole discretion, apply such 1.0% fee to
other deal expenses instead.
NOTE 7. SHAREHOLDERS’ EQUITY
Preferred Shares
— The
Company is authorized to issue an unlimited number of no par value preferred shares, divided into five classes, Class A through
Class E, each with such designation, rights and preferences as may be determined by a resolution of the Company’s board of
directors to amend the Amended and Restated Memorandum and Articles of Association to create such designations, rights and preferences.
The Company has five classes of preferred shares to give the Company flexibility as to the terms on which each Class is issued.
All shares of a single class must be issued with the same rights and obligations. Accordingly, starting with five classes of preferred
shares will allow the Company to issue shares at different times on different terms. At August 31, 2018, there are no preferred
shares designated, issued or outstanding.
LONGEVITY ACQUISTION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2018
(Unaudited)
Ordinary Shares
— The
Company is authorized to issue an unlimited number of no par value ordinary shares. Holders of the Company’s ordinary shares
are entitled to one vote for each share. At August 31, 2018, there were 1,911,302 ordinary shares issued and outstanding, excluding
3,508,698 ordinary shares subject to possible redemption, of which 150,000 are subject to forfeiture to the extent that the underwriters’
over-allotment option is not exercised in full, so that the initial shareholders will own 20% of the issued and outstanding shares
after the Initial Public Offering (excluding the sale of the Private Units and assuming the initial shareholders did not purchase
any Units in the Initial Public Offering).
Rights
— Each
holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even if
the holder of such right redeemed all Public Shares held by it in connection with a Business Combination. No fractional
shares will be issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of
rights in order to receive its additional shares upon consummation of a Business Combination as the consideration related
thereto has been included in the Unit purchase price paid for by investors in the Initial Public Offering. If the Company
enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the
definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the
ordinary shares will receive in the transaction on an as-converted into ordinary share basis and each holder of a right will
be required to affirmatively convert its rights in order to receive the 1/10 share underlying each right (without paying
additional consideration). The shares issuable upon exchange of the rights will be freely tradable (except to the extent held
by affiliates of the Company).
If the Company is unable to complete a
Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights
will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are
no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business Combination.
Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
Warrants —
The Public
Warrants will become exercisable on the later of (a) the consummation of a Business Combination or (b) 12 months from the effective
date of the registration statement relating to the Initial Public Offering. No Public Warrants will be exercisable for cash unless
the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the Public
Warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement
covering the ordinary shares issuable upon the exercise of the Public Warrants is not effective within 90 days from the consummation
of a Business Combination, the holders may, until such time as there is an effective registration statement and during any period
when the Company shall have failed to maintain an effective registration statement, exercise the Public Warrants on a cashless
basis pursuant to 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 Public Warrants on a cashless basis. The Public Warrants will expire five years from
the consummation of a Business Combination or earlier upon redemption or liquidation.
The Company may call the warrants for redemption
(excluding the Private Warrants), in whole and not in part, at a price of $0.01 per warrant:
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at
any time while the Public Warrants are exercisable,
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upon
not less than 30 days’ prior written notice of redemption to each Public Warrant holder,
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if,
and only if, the reported last sale price of the ordinary shares equals or exceeds $18.00 per share, for any 20 trading days within
a 30 trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders, and
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if,
and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants
at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until
the date of redemption.
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The Private Warrants are identical to the
Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants and the ordinary shares
issuable upon the exercise of the Private Warrants will not be transferable, assignable or salable until 30 days after the completion
of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants will be exercisable on a cashless
basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants
are held by someone other than the initial purchasers or their permitted transferees, the Private Warrants will be redeemable by
the Company and exercisable by such holders on the same basis as the Public Warrants.
If the Company calls the Public Warrants
for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a
“cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable
upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary
dividend or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances
of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle
the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates
the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor
will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants.
Accordingly, the warrants may expire worthless.
LONGEVITY ACQUISTION CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
AUGUST 31, 2018
(Unaudited)
Unit Purchase Option
On August 31, 2018, the Company sold to
the underwriter (and its designees), for $100, an option to purchase up to 240,000 Units exercisable at $11.50 per Unit (or an
aggregate exercise price of $2,760,000) commencing on the later of August 28, 2019 and the consummation of a Business Combination.
The unit purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires August 28,
2023. The Units issuable upon exercise of the option are identical to those offered in the Initial Public Offering. The Company
accounted for the unit purchase option, inclusive of the receipt of $100 cash payment, as an expense of the Initial Public Offering
resulting in a charge directly to shareholders’ equity. The Company estimated the fair value of the unit purchase option
to be approximately $728,000 (or $3.03 per Unit) using the Black-Scholes option-pricing model. The fair value of the unit purchase
option granted to the underwriters was estimated as of the date of grant using the following assumptions: (1) expected volatility
of 35%, (2) risk-free interest rate of 2.74% and (3) expected life of five years. The option and such units purchased pursuant
to the option, as well as the ordinary shares underlying such units, the rights included in such units, the ordinary shares that
are issuable for the rights included in such units, the warrants included in such units, and the shares underlying such warrants,
have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of FINRA’s
NASDAQ Conduct Rules. Additionally, the option may not be sold, transferred, assigned, pledged or hypothecated for a one-year period
(including the foregoing 180-day period) following the date of Initial Public Offering except to any underwriter and selected dealer
participating in the Initial Public Offering and their bona fide officers or partners. The option grants to holders demand and
“piggy back” rights for periods of five and seven years, respectively, from the effective date of the registration
statement with respect to the registration under the Securities Act of the securities directly and indirectly issuable upon exercise
of the option. The Company will bear all fees and expenses attendant to registering the securities, other than underwriting commissions
which will be paid for by the holders themselves. The exercise price and number of units issuable upon exercise of the option may
be adjusted in certain circumstances including in the event of a stock dividend, or the Company’s recapitalization, reorganization,
merger or consolidation. However, the option will not be adjusted for issuances of ordinary shares at a price below its exercise
price.
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. Based upon
this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial
statements.