NRX Pharmaceuticals, Inc. quarterly report, Q2 FY2019

Business Context and Reporting Period

This Form 10-Q was filed by Big Rock Partners Acquisition Corp. for the quarter and six months ended June 30, 2019. The request metadata identifies NRX Pharmaceuticals, Inc., but the filing text identifies Big Rock Partners Acquisition Corp. as the registrant. The company was a blank-check acquisition company focused primarily on senior housing and care businesses in the United States and had not completed a business combination.

All activity consisted of formation, the November 2017 initial public offering and private placement, maintaining the trust account, and searching for a target business. The financial statements are unaudited.

Key Financial Metrics

Metric	Three Months Ended June 30, 2019	Six Months Ended June 30, 2019
Revenue	No operating revenue	No operating revenue
Operating expenses	$175,742	$338,923
Interest income	$392,439	$775,301
Net income	$176,021	$363,986
Adjusted loss attributable to nonredeemable common shares	$83,706	$154,938
Basic and diluted loss per share	$0.03 loss	$0.06 loss
Net cash used in operating activities	Not separately provided	$478,343

The reported net income was generated by interest earned on trust-account investments and does not represent operating profitability. After allocating trust-account earnings to shares subject to possible redemption, the company reported an adjusted loss applicable to its other common shares.

Cash outside the trust account was $1,394 at June 30, 2019, compared with $11,079 at December 31, 2018.
Cash and marketable securities in the trust account were $50.1 million, compared with $70.8 million at December 31, 2018.
Total assets were $50.1 million; total liabilities were $2.1 million; and stockholders’ equity was $5.0 million.
Current liabilities were $521,151, and the company reported a working-capital deficit of $371,171, excluding franchise and income taxes payable of $108,703.
Debt consisted principally of $1.38 million of unsecured promissory notes payable to the Investor and $206,865 owed to the Sponsor for non-business-combination expenses.
The company had no long-term debt, capital lease obligations, operating lease obligations, or off-balance-sheet arrangements.

Material Changes Versus Prior Comparable Period

Second-quarter net income improved to $176,021 from a net loss of $6,602 in the second quarter of 2018, primarily because interest income increased to $392,439 from $272,482 and operating expenses declined to $175,742 from $271,810.
Six-month net income increased to $363,986 from $8,879 in the prior-year period. Interest income increased to $775,301 from $486,051, while operating expenses declined to $338,923 from $464,184.
Operating cash use increased to $478,343 from $334,900 for the comparable six-month period, notwithstanding the higher reported net income, because trust-account interest is not an operating cash source available for general operations.
On May 21, 2019, stockholders approved an extension of the business-combination deadline to August 22, 2019. In connection with the extension, 2,119,772 shares were redeemed for $22.1 million, or approximately $10.43 per share.
Trust-account funds declined by approximately $20.7 million from year-end, primarily reflecting the redemptions, partially offset by additional deposits and interest.
Shares subject to possible redemption declined to 4,114,378 from 6,310,461 at December 31, 2018.

Guidance, Outlook, Risks, Contingencies, and Unusual Items

Management stated that the company would not generate operating revenue until it completed a business combination and intended to use substantially all trust-account proceeds for the acquisition and related expenses.
The company had until August 22, 2019 to complete a business combination. A special meeting was scheduled for August 21, 2019 to seek approval for a further extension to November 22, 2019. If approval was not obtained, the company would wind up and liquidate.
In July 2019, the company deposited $95,605 into the trust account for the final 30-day extension period and issued an additional $6,814 unsecured, non-interest-bearing promissory note to the Investor.
The Sponsor and Investor had agreed to fund certain operating and business-combination expenses, but additional financing was not otherwise guaranteed. Management cautioned that financing might not be available on acceptable terms.
On August 9, 2019, Nasdaq notified the company that it was not in compliance with the minimum 300-public-holder requirement under Listing Rule 5550(a)(3). The company had until September 23, 2019 to submit a compliance plan; the notice did not immediately affect trading or constitute an imminent delisting.
The company previously received a Nasdaq deficiency notice for failing to hold its annual meeting within the required period, but that matter was closed after the May 21, 2019 meeting.
If a business combination is not completed, certain Sponsor and Investor loans are subject to forgiveness, subject to specified recovery from funds held outside the trust account.
Management reported that disclosure controls and procedures were effective as of June 30, 2019 and that there were no material changes to internal control over financial reporting.

Facts an Investor Should Verify

Confirm the registrant identity: the supplied filing is for Big Rock Partners Acquisition Corp., not NRX Pharmaceuticals, Inc.
Verify whether the company completed a business combination, obtained the proposed extension to November 22, 2019, or liquidated after the August 22 deadline.
Review the final disposition of the $50.1 million trust account and the amount returned to public stockholders.
Confirm the status of the Nasdaq minimum-public-holder deficiency and any subsequent delisting or compliance action.
Reconcile the $1.38 million Investor notes, the $206,865 Sponsor balance, and the additional $6,814 note issued after quarter-end.
Assess the impact of the 2,119,772 share redemption on remaining public ownership, liquidity, and any eventual business-combination capitalization.