Business Context and Reporting Period
The source filing is a Form 10-Q for the quarter ended March 31, 2018, filed May 15, 2018. Although the request metadata identifies NRX Pharmaceuticals, Inc., the filing identifies the registrant as Big Rock Partners Acquisition Corp. (Commission File No. 001-38302).
Big Rock was a newly organized blank-check company with no operating business or revenue. It was seeking a business combination, initially focusing on the U.S. senior housing and care industry. The financial statements are unaudited and prepared under U.S. GAAP interim-reporting requirements.
Financial Performance, Cash Flow, and Liquidity
| Metric | Three months ended March 31, 2018 | December 31, 2017 or other reference |
|---|---|---|
| Revenue | No operating revenue | Not applicable |
| Operating costs | $192,374 | Comparable prior-quarter amount not provided |
| Interest income | $213,569 | Comparable prior-quarter amount not provided |
| Unrealized loss on Trust Account securities | $1,599 | Comparable prior-quarter amount not provided |
| Net income | $15,481 | Comparable prior-quarter amount not provided |
| Adjusted net loss attributable to non-redeemable common shares | $169,575 | Comparable prior-quarter amount not provided |
| Basic and diluted net loss per share | $0.07 loss | Comparable prior-quarter amount not provided |
| Net cash used in operating activities | $197,817 | Comparable prior-quarter amount not provided |
| Cash outside Trust Account | $267,191 | $449,374 at December 31, 2017 |
| Marketable securities in Trust Account | $69,218,279 | $69,029,443 at December 31, 2017 |
| Total assets | $69,553,248 | $69,565,819 at December 31, 2017 |
| Common stock subject to possible redemption | $64,488,124 | $64,472,647 at December 31, 2017 |
| Total current liabilities | $65,119 | $93,171 at December 31, 2017 |
The Company had no long-term debt, capital lease obligations, operating lease obligations, or other long-term liabilities. It had no off-balance-sheet arrangements and no outstanding working-capital loans.
Cash decreased by $182,183 during the quarter, comprising $197,817 used in operations, $23,134 provided by withdrawals from the Trust Account to pay franchise taxes, and $7,500 used for offering costs. The Trust Account held U.S. Treasury bills and generated approximately $218,000 of net interest income during the quarter.
Material Changes Versus the Prior Comparable Period
- The filing does not provide a prior-year comparable-quarter income statement or cash-flow statement, so year-over-year changes cannot be determined from the filing text.
- Compared with December 31, 2017, cash outside the Trust Account declined by $182,183, or approximately 41%, from $449,374 to $267,191.
- Trust Account securities increased by $188,836, primarily reflecting interest earned, partially offset by the $23,134 tax withdrawal and an unrealized loss.
- Common stock subject to possible redemption increased by $15,477 to $64.5 million, while current liabilities declined by $28,052.
- The Company issued no additional securities and reported no unregistered equity sales during the quarter.
Outlook, Risks, Contingencies, and Unusual Items
- Management expected no operating revenue until completion of an initial business combination and anticipated continuing public-company, due-diligence, and transaction expenses.
- The Company was required to complete a business combination within 12 months of the November 2017 IPO, with up to two three-month extensions available if the Sponsor or its designees deposited $690,000 per extension into the Trust Account.
- If no business combination is completed within the permitted period, the Company must cease operations, redeem the public shares using the Trust Account, and liquidate. Public rights and warrants may expire worthless.
- Public stockholders may redeem shares in connection with a business combination. The Company must maintain at least $5,000,001 of net tangible assets at the time of consummation.
- A related party administrative-services agreement required payments of $10,000 per month to the Sponsor; $30,000 was incurred during the quarter, with $5,000 included in accounts payable and accrued expenses at March 31, 2018.
- A/Z Property Partners, an entity majority-owned and controlled by the Chairman, President, and Chief Executive Officer, agreed to indemnify the Trust Account against certain creditor claims that could reduce its value below $10 per public share, subject to stated exceptions.
- The Sponsor, affiliates, officers, and directors were not obligated to provide working-capital loans. The Company acknowledged that additional financing might be necessary if transaction costs or redemption obligations exceeded available funds.
- Management reported effective disclosure controls as of March 31, 2018 and no material changes in internal control over financial reporting. No legal proceedings or material changes to previously disclosed risk factors were reported.
Most Important Facts to Verify
- Confirm the correct registrant: the supplied filing is for Big Rock Partners Acquisition Corp., not NRX Pharmaceuticals, Inc.
- Verify the business-combination deadline, any extension deposits, and whether a target transaction was subsequently announced or completed.
- Assess the sufficiency of the $267,191 of unrestricted cash relative to ongoing monthly fees, public-company expenses, and transaction costs.
- Review redemption, liquidation, rights, warrants, and Sponsor-indemnification terms because they materially affect public-stockholder outcomes.
- Reconcile the reported $15,481 net income with the $169,575 allocation to redeemable shares and the reported $0.07 loss per non-redeemable common share.
- Review the Company’s subsequent filings and the referenced 2017 Form 10-K for risk factors, target-business developments, and any changes after March 31, 2018.