ISUN, INC. - Quarter Report: 2018 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to              

Commission File No. 001-37707

Jensyn Acquisition Corp.

(Exact name of registrant as specified in its charter)

(888) 536-7965

(Registrant’s telephone number)

N/A

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days. YES [X] NO [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES [X] NO [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES [X] NO [  ]

The number of shares of the registrant’s common stock outstanding as of August 20, 2018 was 2,099,767.

JENSYN ACQUISITION CORP.

Form 10-Q

Part 1. Financial Information

Item 1. Financial Statements

Jensyn Acquisition Corp.

Condensed Balance Sheets

See accompanying notes to condensed financial statements

Jensyn Acquisition Corp.

Condensed Statements of Operations

See accompanying notes to condensed financial statements

Jensyn Acquisition Corp.

Condensed Statement of Changes in Stockholders’ Equity

For the six months ended June 30, 2018

(unaudited)

See accompanying notes to condensed financial statements

Jensyn Acquisition Corp.

Condensed Statements of Cash Flows

See accompanying notes to condensed financial statements

Jensyn Acquisition Corp.

Notes to Condensed Financial Statements

Note 1 — Organization and Significant Accounting Policies

Jensyn Acquisition Corp. (the “Company”) was incorporated in Delaware on October 8, 2014 as a “blank check” company whose objective is to acquire, through a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination, one or more operating businesses (a “Business Combination”).

At June 30, 2018, the Company had not yet commenced any meaningful operations. All activity through June 30, 2018 relates to the Company’s formation, the initial public offering (“Public Offering”) described below (See Note 2), general corporate matters and identifying and evaluating prospective acquisition candidates. The Company has selected December 31 as its fiscal year-end.

The registration statement for the Company’s Public Offering was declared effective by the United States Securities and Exchange Commission (the “SEC”) on March 2, 2016 (the “Registration Statement”). The Company intends to finance a Business Combination with proceeds from the $39,000,000 Public Offering and a $2,945,000 private placement (See Note 2). Upon the closing of the Public Offering and the private placement, $40,365,000 was held in a trust account with Continental Stock Transfer & Trust Company acting as trustee (the “Trust Account”) as discussed below.

$40,365,000 was initially placed in the Trust Account in the United States at JP Morgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, as trustee. The funds held in the Trust Account will be invested only in United States government treasury bills, bonds or notes having a maturity of 180 days or less, or in money market funds meeting the applicable conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940 and that invest solely in U.S. treasuries, so that the Company is not deemed to be an investment company under the Investment Company Act. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay income or other tax obligations, the proceeds will not be released from the Trust Account until the earlier of the completion of the initial Business Combination or the redemption of 100% of the outstanding public shares if the Company has not completed a Business Combination in the required time period. The proceeds held in the Trust Account may be used as consideration to pay the sellers of a target business with which the Company completes the initial Business Combination to the extent not used to pay converting stockholders. Any amounts not paid as consideration to the sellers of the target business may be used to finance operations of the target business. At June 30, 2018, the Trust Account consists of investments in money market funds in one financial institution.

Under the terms of the Company’s Amended and Restated Certificate of Incorporation, the Company had until 18 months from the closing of the Public Offering to consummate the initial Business Combination, subject to its right to extend such period up to two times, each by an additional three months (for a total of up to 24 months to complete a Business Combination). The Company’s ability to extend the time available to consummate the initial Business Combination was conditioned upon the deposit by the initial stockholders or their affiliates or designees into the Trust Account of $200,000 prior to the applicable deadline for each three-month extension. On September 6, 2017, the Company extended the time to complete its initial business combination by three months and an additional $200,000 was deposited into the Trust Account. On December 6, 2017, the Company extended the time to complete its initial business combination by three months and an additional $200,000 was deposited into the Trust Account.

On March 5, 2018, the Company held a special meeting of stockholders at which the Company’s stockholders approved an amendment to the Company’s amended and restated certificate of incorporation which extended the date by which the Company must complete its initial business combination from March 7, 2018 to June 5, 2018 and an additional $186,704 was deposited into the Trust Account.

On June 4, 2018, the Company held a special meeting of stockholders at which the Company’s stockholders approved an amendment to the Company’s amended and restated certificate of incorporation which extended the date by which the Company must complete its initial business combination from June 5, 2018 to September 3, 2018.

If the Company is unable to consummate the initial Business Combination within the required time period, as the same may be extended, the Company will either seek a further extension or, as promptly as possible but not more than ten business days thereafter, redeem 100% of its outstanding public shares for a pro rata portion of the funds held in the Trust Account, including 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. However, the Company may not be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of its public stockholders. In the event of the Company’s dissolution and liquidation, the public warrants and public rights (see Note 2) will expire and will be worthless.

The Company will consummate the initial Business Combination only if public stockholders do not exercise conversion rights in an amount that would cause net tangible assets to be less than $5,000,001. The Company will either (1) seek stockholder approval of the initial Business Combination at a meeting called for such purpose at which stockholders may seek to convert their shares, regardless of whether they vote for or against the proposed Business Combination, into their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), or (2) provide Company stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount equal to their pro rata share of the aggregate amount then on deposit in the Trust Account (net of taxes payable), in each case subject to the limitations described herein. The decision as to whether the Company will seek stockholder approval of the proposed Business Combination or allow stockholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require seeking stockholder approval. Unlike other blank check companies which require stockholder votes and conduct proxy solicitations in conjunction with their initial Business Combinations and related conversions of public shares for cash upon consummation of such initial Business Combinations even when a vote is not required by law, the Company will have the flexibility to avoid such stockholder vote and allow stockholders to sell their shares pursuant to the tender offer rules of the SEC. In that case, the Company will file tender offer documents with the SEC that will contain substantially the same financial and other information about the initial Business Combination as is required under the SEC’s proxy rules.

The initial per public share redemption or conversion price was $10.35 per share. However, the Company may not be able to distribute such amounts as a result of claims of creditors which may take priority over the claims of its public stockholders. At September 30, 2017, the per public share redemption or conversion price increased to $10.45 per share as a result of the $200,000 deposit into the Trust Account relating to the three-month extension of time to complete the initial business combination and interest earned on the Trust Account, net of taxes. At December 6, 2017, the per public share redemption or conversion price increased to $10.52 per share as a result of the $200,000 deposit into the Trust Account relating to the three-month extension of time to complete the initial business combination and interest earned on the Trust Account, net of taxes. At March 5, 2018, the per public share redemption or conversion price increased to $10.63 per share as a result of the $186,704 deposit into the Trust Account relating to the three-month extension of time to complete the initial business combination and interest earned on the Trust Account, net of taxes. At June 30, 2018, the per public share redemption or conversion price was $10.66 per share. In connection with the stockholder vote to extend the date by which the Company must complete its initial business combination from June 5, 2018 to September 3, 2018, Jensyn Capital, LLC agreed to deposit $.042 per share into the Trust Account for each thirty (30) day period that the date by which the Company must complete its business combination was extended.

Liquidity and Going Concern

At June 30, 2018, the Company had $14,568 in cash outside of the Trust Account and a working capital deficiency of $2,875,521. Further, the Company has incurred and expects to continue to incur significant costs in pursuit of its financing and acquisition plans.

Management has evaluated the relevant conditions and events to determine if it is probable that the Company would be able to meet its obligations as they become due one year from the issuance of these financial statements and as a result, continue as a going concern. At a special meeting of stockholders held on June 4, 2018, the Company’s stockholders approved an extension of the date by which the Company must complete its initial business combination from June 5, 2018 to September 3, 2018. If a business combination is not completed by September 3, 2018, the Company will either seek an additional extension of time to complete the initial Business Combination or be dissolved and liquidated. As a result, management believes this raises substantial doubt about the Company’s ability to continue as a going concern.

Basis of Presentation

In the opinion of management, the accompanying unaudited condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present the Company’s financial position, results of operations and cash flows for the periods presented. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts therein. Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from those estimates.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The balance sheet at December 31, 2017 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements should be read in conjunction with the Company’s financial statements and notes thereto for the year ended December 31, 2017. The results of operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year.

Fair Value of Financial Instruments

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under Financial Accounting Standards Board (FASB) ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts reflected in the balance sheets given their short-term nature.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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. Actual results could differ from those estimates.

Securities Held in Trust Account

At June 30, 2018 and December 31, 2017, the assets held in the Trust Account were valued at $8,852,391 and $41,019,387, respectively. During the six months ended June 30, 2018 and at June 30, 2018, the assets held in the Trust Account were invested in money market funds held in one financial institution. Due to the short-term nature of this investment, the fair value approximates the carrying amounts reflected in the balance sheets.

Offering Costs

The Company complies with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A—“Expenses of Offering.” Offering costs of approximately $2,696,501, consisting principally of underwriter discounts of $1,950,000 (including approximately $780,000 of which payment is deferred) and approximately $746,501 of private placement fees and professional, printing, filing, regulatory and other costs have been charged to additional paid-in capital upon completion of the Public Offering.

Income Taxes

The Company accounts for income taxes under ASC 740 “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized.

ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material change to its financial position.

The Company’s policy for recording interest and penalties associated with uncertain tax positions is to record such expense as a component of income tax expense. There were no amounts accrued for penalties or interest as of June 30, 2018 or December 31, 2017. At June 30, 2018 and December 31, 2017, there are no uncertain tax positions.

Recently Adopted Accounting Standards

In November 2016 the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (ASU 2016-18), which clarifies the presentation of restricted cash and restricted cash equivalents in the statements of cash flows. Under ASU 2016-18 restricted cash and restricted cash equivalents are included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statements of cash flows. We adopted ASU 2016-18 during the six months ended June 30, 2018 on a retrospective basis. As a result, net cash used in operating activities increased by $37,040 for the six months ended June 30, 2017. Net cash provided by investing activities increased by $28 for the six months ended June 30, 2017 and beginning-of-period cash and restricted cash increased by $41,019,387 and $40,473,422 in the six months ended June 30, 2018 and 2017, respectively.

Common Stock Subject to Possible Redemption

The Company accounts for its common stock subject to possible conversion or redemption in accordance with ASC 480 “Distinguishing Liabilities from Equity”. Conditionally convertible common stock (including common stock that features conversion rights that are either within the control of the holder or subject to conversion upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity.

All of the common shares sold as part of a Unit in the Public Offering (the “Public Shares”) contain a redemption feature which allows for the redemption of common shares under the Company’s Liquidation or Tender Offer/Stockholder Approval provisions. As of June 30, 2018, there were 830,267 Public Shares outstanding. In accordance with ASC 480, redemption provisions not solely within the control of the Company require the security to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Although the Company did not specify a maximum redemption threshold, its certificate of incorporation provides that in no event will it redeem its Public Shares in an amount that would cause its net tangible assets (stockholders’ equity) to be less than $5,000,001.

The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock shall be affected by charges against retained earnings.

Accordingly, at June 30, 2018, 18,465 of the 2,099,767 common shares outstanding were classified outside of permanent equity at their redemption value. At December 31, 2017, there were 3,149,524 of the 5,169,500 common shares outstanding classified outside of permanent equity at their redemption value.

Note 2 — The Offering

The Public Offering called for the Company to offer for public sale up to 4,485,000 Units at a proposed offering price of $10.00 per unit. Each unit had a price of $10.00 and consisted of one share of common stock, one right to receive one-tenth (1/10) of a share of common stock automatically on the consummation of a Business Combination, and one warrant (a “Unit”). Each warrant entitles the holder thereof to purchase one-half of one share of common stock at a price of $11.50 per full share, subject to certain adjustments. The warrants will become exercisable on the later of 30 days after the completion of the Business Combination and 12 months from closing of the Public Offering and will expire five years after the completion of the Business Combination or earlier upon redemption or liquidation.

On March 7, 2016, the Company closed on the Public Offering and sale of 3,900,000 Units to the public (the “Public Stockholders”) at a price of $10.00 per Unit.

Simultaneous with the closing of the Public Offering, the Company closed on the private placement of 294,500 private units (inclusive of the Public Offering, the “Total Offering”). The private placement included a sale of 275,000 private units to Jensyn Capital, LLC, an entity controlled by insiders, and 19,500 private units to Chardan Capital Markets, LLC (the “Private Units”) (and/or their respective designees) at $10.00 per unit for a total purchase price of $2,945,000. Jensyn Capital, LLC and Chardan Capital Markets, LLC also agreed that if the over-allotment option was exercised by the underwriters in full or in part, they or their designee would purchase from the Company at a price of $10.00 per unit the number of private units (up to a maximum of 38,025 private units) necessary to maintain in the Trust Account described below an amount equal to $10.35 per share of common stock sold to the public in the Public Offering. In April 2016, the underwriter elected not to exercise the over-allotment option.

The Private Units are identical to the Units sold in the Public Offering. However, Jensyn Capital, LLC and its transferees agreed (A) to vote their private shares and any public shares acquired in or after the Public Offering in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the Company’s 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 the initial Business Combination within 18 months from the closing of the Public Offering (or 24 months, as applicable), unless the Company provides its public stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to pay franchise and income taxes, divided by the number of then outstanding public shares, (C) not to convert any shares (including the private shares) into the right to receive cash from the Trust Account in connection with a stockholder vote to approve the Company’s proposed initial Business Combination (or sell any shares they hold to the Company in a tender offer in connection with a proposed initial Business Combination) or a vote to amend the provisions of the Company’s certificate of incorporation relating to the substance or timing of the Company’s obligation to redeem 100% of its public shares if the Company does not complete the initial Business Combination within the requisite time period and (D) that the private shares shall not be entitled to be redeemed for a pro rata portion of the funds held in the Trust Account if a Business Combination is not consummated. Additionally, the Company’s insiders (and/or their designees) have agreed not to transfer, assign or sell any of the Private Units or underlying securities (except to the same permitted transferees as the Insider Shares described in Note 3 and provided the transferees agree to the same terms and restrictions as the permitted transferees of the Insider Shares must agree to, each as described above) until the completion of the initial Business Combination.

The Company also granted Chardan Capital Markets, LLC, the representative of the underwriters (the “Representative”), a 45-day option to purchase up to 585,000 Units (over and above the 3,900,000 Units referred to above) solely to cover over-allotments, if any. In April 2016, the Representative elected to not exercise this option.

If the Company is unable to consummate a Business Combination within the time required by its Amended and Restated Certificate of Incorporation (now September 3, 2018) it will redeem 100% of the shares held by Public Stockholders using the funds in the Trust Account described above. In such event, the rights and warrants held by Public Stockholders will expire and be worthless.

The Company paid an underwriting discount of 3.0% of the per Unit offering price to the underwriters at the closing of the Public Offering (approximately $1,170,000), with an additional fee (the “Deferred Discount”) of 2.0% of the gross offering proceeds payable upon the Company’s completion of a Business Combination (approximately $780,000). The Deferred Discount will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes its initial Business Combination.

At the closing of the Public Offering, the Company issued a unit purchase option (“UPO”), for $100, to the Representative to purchase 390,000 Units. The UPO will be exercisable at any time, in whole or in part, during the period commencing on the closing of Business Combination and terminating on the fifth anniversary of the effective date of the Public Offering registration statement at a price per Unit equal to 120% of the offering price of the Units.

The Company accounted for the fair value of the UPO as an expense of the Public Offering resulting in a charge directly to stockholders’ equity. The Company estimated that the fair value of the UPO was approximately $1,033,500 (or $2.65 per unit) using the Black-Scholes option-pricing model. The fair value of the UPO was estimated as of the date of grant using the following assumptions: (1) expected volatility of 35%, (2) risk-free interest rate of 1.42%, (3) expected life of five years and (4) zero dividends. The purchase option may be exercised for cash or on a cashless basis, at the holder’s option, and expires five years from the effective date of the registration statement. The option and the 390,000 units, as well as the 429,000 shares of common stock and 390,000 warrants, and 180,000 shares underlying such warrants, that may be issued upon exercise of the option, have been deemed compensation by FINRA and were therefore subject to a 180-day lock-up (subject to specified exceptions) pursuant to Rule 5110(g)(1) of FINRA’s Rules, during which time the option could not be sold, transferred, assigned, pledged or hypothecated, or be subject of any hedging, short sale, derivative or put or call transaction that would result in the economic disposition of the securities. Additionally, the option was not transferable during the one-year period (including the foregoing 180-day period) following the effective date of the registration statement except to any underwriter and selected dealer participating in the offering and their bona fide officers or partners. The option grants to holders one demand right 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, recapitalization, reorganization, merger or consolidation. However, the option will not be adjusted for issuances of common stock at a price below its exercise price.

Note 3 — Related Party Transactions

At December 31, 2015 the four principal stockholders (the “Principal Shareholders”) of the Company and Jensyn Capital, LLC, an affiliate owned by the Principal Shareholders (collectively, the “Insider Shareholders”), held an aggregate of 1,150,000 shares of common stock (the “Insider Shares”) acquired for an aggregate purchase price of $25,029 or approximately $0.02 per share. During the period from January 1, 2016 to March 31, 2016, the Principal Shareholders forfeited 28,750 shares of common stock and agreed to transfer an aggregate of 136,864 shares to Directors, Jensyn Capital, LLC (an entity owned by the Principal Shareholders) and other transferees (all Permitted Transferees as defined in the Registration Statement). In addition, the Insider Shareholders forfeited an additional 146,250 shares in April 2016, since the underwriter’s over-allotment option was not exercised, and transferred an aggregate of 4,000 shares to a Director in December 2016.

The Insider Shares are identical to the shares of common stock included in the Units sold in the Public Offering. However, the Insider Shareholders and their transferees have agreed (A) to vote their Insider Shares and any public shares acquired in or after the Public Offering in favor of any proposed Business Combination, (B) not to propose, or vote in favor of, an amendment to the Certificate of Incorporation that would affect the substance or timing of Company’s obligation to redeem 100% of its shares held by Public Stockholders if the Company does not complete the initial Business Combination within the requisite time period, unless it provides Public Stockholders with the opportunity to redeem their shares of common stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to pay franchise and income taxes, divided by the number of then outstanding public shares, (C) not to convert any shares (including the Insider Shares) into the right to receive cash from the Trust Account in connection with a stockholder vote to approve the proposed initial Business Combination or a vote to amend the provisions of the Certificate of Incorporation relating to the substance or timing of Company’s obligation to redeem 100% of its shares held by Public Shareholders if the Company does not complete the initial Business Combination within the requisite time period and (D) that the Insider Shares shall not be entitled to be redeemed for a pro rata portion of the funds held in the Trust Account if a Business Combination is not consummated. Additionally, the Insider Shareholders have agreed not to transfer, assign or sell any of the Insider Shares (except to certain permitted transferees) until, with respect to 50% of the Insider Shares, the earlier of six months after the date of the consummation of the initial Business Combination and the date on which the closing price of the Company’s common stock equals or exceeds $12.50 per share for any 20 trading days within a 30-trading day period following the consummation of the initial Business Combination and, with respect to the remaining 50% of the Insider Shares, six months after the date of the consummation of the initial Business Combination.

The Company issued unsecured promissory notes to the Principal Shareholders for amounts lent or to be lent to the Company up to $425,000 each. The notes are non-interest bearing and payable no later than the date of the consummation of an initial Business Combination. It is not practicable to disclose the fair value of the Notes because they are with related parties. A total of $1,269,220 and $1,048,420 was outstanding to the Principal Shareholders at June 30, 2018 and December 31, 2017, respectively. The Company owed $760,000, and $550,000 to Jensyn Capital, LLC, an affiliated company owned by the same stockholders at June 30, 2018 and December 31, 2017, respectively. The Company also owed $1,000 advanced by an affiliated company owned by the same stockholders at June 30, 2018 and December 31, 2017.

In March 2017, each of the Principal Shareholders executed a guaranty of funding pursuant to which the Principal Shareholders agreed to fund requests for funding approved by the Company’s Board of Directors under the promissory notes issued to the Principal Shareholders, subject to a maximum amount of $325,000 through October 1, 2017, $375,000 from October 2, 2017 through January 1, 2018 and $425,000 from January 2, 2018 through April 1, 2018. In September 2017, the Company released Rebecca Irish, a Principal Shareholder, from her guaranty in connection with her resignation as Chief Financial Officer and Treasurer of the Company and her agreement to transfer shares of the Company’s Common Stock to two individuals. These individuals have executed guarantees of funding to replace the guaranty previously executed by Ms. Irish.

The Company has entered into an agreement with an entity owned by the Company’s Principal Shareholders, Jensyn Integration Services, LLC, for office space, utilities and certain office and administrative services. This agreement commenced on the date that the Company’s securities were first listed on the Nasdaq Capital Market, and expires when the Company consummates a Business Combination. Such office space, as well as utilities and administrative services, will be made available to the Company as may be required by the Company from time to time. The Company has agreed to pay an aggregate of $10,000 per month for such services. The Company may delay payment of such monthly fee upon a determination by its Audit Committee that it lacks sufficient funds held outside of the Trust Account to pay actual or anticipated expenses in connection with the Company’s initial Business Combination. The Audit Committee has determined to defer the payment of the $10,000 monthly fee. As of June 30, 2018 and December 31, 2017, the Company has accrued, but not paid, $280,000 and $220,000 relating to this agreement, respectively.

The holders of the Company’s Insider Shares issued and outstanding, as well as the holders of the private units (and underlying securities) and any shares the Company’s insiders, officers, directors or their affiliates that may be issued in payment of working capital loans made to the Company, are entitled to registration rights. The holders of a majority of these securities are entitled to make up to two demands that the Company register such securities. The holders of the majority of the Insider 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 units or shares issued in payment of working capital loans made to the Company can elect to exercise these registration rights at any time after consummation of a Business Combination. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of the Company’s initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

During the year ended December 31, 2016, the Principal Shareholders agreed to transfer 37,000 shares of the Company’s common stock owned by them to directors and others in lieu of payment for services. As a result, for the years ended December 31, 2017 and 2016, the Company recognized an expense of $31,288 and $36,600, respectively.

Jensyn Capital, LLC purchased an aggregate of 275,000 Private Units, at $10.00 per unit for a total purchase price of $2,750,000 on March 7, 2016 (see Note 2).

In September 2017, Jensyn Capital LLC deposited $200,000 into the Trust Account to fund the three-month extension of the period during which the Company is required to complete its initial business combination. In connection with this transaction, the Company issued to Jensyn Capital, LLC an unsecured note in the principal amount of $200,000 which bears interest at a rate of eight percent (8%) per annum and is due upon completion of the Company’s initial Business Combination.

In December 2017, Jensyn Capital LLC deposited $200,000 into the Trust Account to fund an additional three-month extension of the period during which the Company is required to complete its initial business combination and advanced an additional $150,000 to fund Jensyn expenses. In connection with these transactions, the Company issued to Jensyn Capital, LLC an unsecured note in the principal amount of $350,000 which bears interest at a rate of eight percent (8%) per annum and is due upon completion of the Company’s initial Business Combination.

In March 2018, Jensyn Capital LLC deposited $180,000 into the Trust Account to fund the three-month extension of the period during which the Company is required to complete its initial business combination. In connection with this transaction, the Company issued to Jensyn Capital, LLC an unsecured note in the principal amount of $180,000 which bears interest at a rate of eight percent (8%) per annum and is due upon completion of the Company’s initial Business Combination.

In December 2017, the Company agreed to reimburse Jensyn Capital, LLC for up to approximately $90,000 of its out of pocket costs incurred in connection with securing additional financing necessary to fund the amounts to be deposited into the Trust Account for the three-month extensions. For the September 2017 and December 2017 loans, these costs were $41,502 and $48,370, respectively. The Company paid $4,000 of these costs during the six months ended June 30, 2018 and $59,872 and $63,872 was included in accounts payable at June 30, 2018 and December 31, 2017, respectively.

During the year ended December 31, 2017, certain Principal Shareholders agreed to transfer 1,913 shares of the Company’s common stock owned by them to a lender to Jensyn Capital in exchange for facilitating a loan to the Company. As a result, for the year ended December 31, 2017, the Company recognized $19,130 as a charge to deferred financing costs and additional paid-in capital.

Jensyn Capital, LLC purchased an aggregate of 275,000 Private Units, at $10.00 per unit for a total purchase price of $2,750,000 on March 7, 2016 (see Note 2).

In June 2018, in connection with the stockholder vote to extend the date by which the Company must complete its initial business combination from June 5, 2018 to September 3, 2018, Jensyn Capital, LLC agreed to deposit into the Trust Account $.042 per share for each thirty (30) day period that the date by which the Company must complete its business combination was extended.

In June 2018, Jensyn Capital, LLC loaned the Company $30,000. The loan is represented by a non-interest bearing promissory note that becomes due upon the completion of the Company’s initial business combination.

Note 4 – Accounts Payable and Accrued Expenses

At June 30, 2018 and December 31, 2017, the Company’s accounts payable and accrued expenses consisted of the following:

Note 5 — Notes and Advances Payable

At June 30, 2018 and December 31, 2017, the Company’s notes and advances payable consisted of $2,030,220 and $1,536,549, respectively. The following notes are non-interest bearing (unless otherwise specified) and are due at the completion of the initial business combination.

In September 2017, December 2017, March 2018 and June 2018, the Company issued promissory notes for $200,000, $350,000 $180,000, and $30,000, respectively, to a related party owned by certain Principal Shareholders, Jensyn Capital LLC. Each of these notes carry an interest rate of 8% with interest and principal due upon completion of the initial Business Combination except for the note issued in June 2018, which is non-interest bearing. The Company also agreed to reimburse Jensyn Capital LLC for its out of pocket costs in connection with the notes. These costs totaled $41,502 and $48,370 for the September and December 2017 loans, respectively, and $0 for the March 2018 loan. In addition, the Principal Shareholders agreed to transfer 1,913 shares of the Company’s common stock owned by them to a Jensyn Capital LLC lender in connection with obtaining the December 2017 financing. The out of pocket costs and the $19,130 value attributable to the shares transferred by the Principal Shareholders are considered deferred financing costs.

Note 6 — Commitments and Contingencies

The Company has entered into an agreement with an entity owned by certain of the Company’s Principal Shareholders for office space, utilities and certain office and administrative services. This agreement commenced on the date that the Company’s securities were first listed on the Nasdaq Capital Market (March 2, 2016) and expires when the Company consummates a Business Combination. Such office space, as well as utilities and administrative services, will be made available to the Company as may be required by the Company from time to time. The Company has agreed to pay an aggregate of $10,000 per month for such services. The Company may delay payment of such monthly fee upon a determination by its Audit Committee that it lacks sufficient funds held outside of the Trust Account to pay actual or anticipated expenses in connection with the Company’s initial Business Combination.

On February 2, 2018, a shareholder class action was filed in the Superior Court of New Jersey, Monmouth County, on behalf of the holders of public shares against the Company and its Board of Directors. The complaint alleged, among other things, that the Company’s directors breached their fiduciary duties to the Company’s public shareholders by acting to cause or facilitate the Purchase Agreement because the Purchase Agreement was not in the best interest of the public shareholders.

On May 23, 2018, this shareholder class action suit was dismissed without prejudice or costs by agreement between the parties.

Note 7 — Stockholders’ Equity

Preferred Stock

The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s board of directors. At June 30, 2018 and December 31, 2017, there are no shares of preferred stock issued or outstanding.

Common Stock

The Company is authorized to issue 15,000,000 shares of common stock with a par value of $0.0001 per share. As of June 30, 2018 and December 31, 2017, 2,099,767 and 5,169,500 shares of common stock were issued and outstanding including 18,465 and 3,149,524 shares subject to redemption, respectively.

In April 2018, a third party (former merger partner) paid $42,000 of expenses on behalf of the Company. As a result, additional paid in capital was increased and accounts payable was decreased by $42,000.

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, including 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.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

We are a “blank check” company in the development stage, formed on October 8, 2014 for the purpose of entering into a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar Business Combination with one or more operating businesses. At June 30, 2018, we had not yet commenced any meaningful operations nor generated any revenues to date. All activity through June 30, 2018 relates to our formation, our initial public offering (“Public Offering”) described below, general corporate matters, and identifying and evaluating prospective acquisition candidates. On August 15, 2018, we signed definitive agreement to enter into a Business Combination with Oneness Global (dba HEFA Global) as described below under “Proposed Business Combination.”

We consummated the Public Offering of 3,900,000 units (“Units”) in March 2016, generating gross proceeds of $39,000,000, which is described in Note 2 to the Financial Statements. Simultaneously with the closing of the Public Offering, we also consummated a private placement of 294,500 units (“Private Units”) at $10 per unit generating additional gross proceeds of $2,945,000 (inclusive of the Public Offering, the “Total Offering”).

We intend to utilize the cash derived from the proceeds of the Public Offering and the private placement of the Private Units, our securities, debt or a combination of cash, securities and debt, in effecting our initial Business Combination. The issuance of additional shares of common stock or preferred stock in our initial Business Combination:

● may significantly dilute the equity interest of our investors in the Total Offering who would not have pre-emption rights in respect of any such issuance;

● may subordinate the rights of holders of shares of common stock if we issue shares of preferred stock with rights senior to those afforded to our shares of common stock;

● will likely cause a change in control if a substantial number of our shares of common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of some or all of our present officers and directors; and

● may adversely affect prevailing market prices for our securities.

Similarly, if we issue debt securities, it could result in:

● default and foreclosure on our assets if our operating revenues after our initial Business Combination are insufficient to pay our debt obligations;

● acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant;

● our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

● our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding; and

● limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

Results of Operations

Our entire activity since inception up to the closing of our Public Offering on March 7, 2016 was in preparation for the Public Offering. Since the Public Offering, our activity has been limited to the evaluation of the Business Combination candidates, and we will not be generating any operating revenue until the closing and completion of our initial Business Combination. We have generated a small amount of non-operating income in the form of interest income on the funds invested in the Trust Account. Interest income is not expected to be significant in view of current low interest rates on risk-free investments (treasury securities). Our expenses have increased as a result of being a public company (for financial reporting, accounting and auditing compliance) and the office and administrative services fee charged to us by a related party. We expect to incur increased expenses in the future as we pursue a Business Combination.

For the three months ended March 31, 2018 and 2017, following are the amounts and changes in operating expenses, interest income and interest expense.

For the three months ended March 31, 2018 as compared to the three months ended March 31, 2017:

For the six months ended June 30, 2018 and 2017, following are the amounts and changes in operating expenses, interest income and interest expense.

For the six months ended June 30, 2018 as compared to the six months ended June 30, 2017:

Liquidity and Capital Resources

Our cash balance as of June 30, 2018 was $14,568. Our liquidity needs have been satisfied to date through receipt of $25,029 from the sale of the Insider Shares, loans and advances from our principal shareholders (the “Principal Shareholders”) and two affiliates in an aggregate amount of $2,030,220, each as described in Notes 3 and 6, and $85,000 from funds raised in the Public Offering and private placement of securities that are not required to be held in trust. We incurred approximately $2,696,501 in total offering related costs, including a $1,170,000 underwriting discount paid to underwriters and $780,000 deferred underwriting commission.

If we are successful in completing a Business Combination, we intend to use substantially all of the remaining net proceeds of the Total Offering, including the funds held in the Trust Account, in connection with our initial Business Combination and to pay our expenses relating thereto. The expenses include a fee payable to Chardan Capital Markets, LLC in an amount equal to 2.0% ($780,000) of the total gross proceeds raised in the Public Offering upon consummation of our initial Business Combination. To the extent that our capital stock is used in whole or in part as consideration to effect our initial Business Combination, the remaining proceeds held in the Trust Account as well as any other net proceeds not expended will be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing and research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred prior to the completion of our initial Business Combination if the funds available to us outside of the Trust Account were insufficient to cover such expenses.

We believe that our cash balance as of June 30, 2018 not held in the Trust Account and additional investments from our Principal Shareholders and loans from our affiliates will be sufficient to allow us to operate through at least September 3, 2018, assuming that a Business Combination is not consummated during that time. Over this time period, we will be using these funds for pursuing an alternative Business Combination. We anticipate that we will incur approximately:

If our estimates of the costs for pursuing a potential Business Combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to an initial Business Combination. Moreover, we may need to obtain additional financing either to consummate our initial Business Combination or because we become obligated to convert a significant number of our public shares upon consummation of our initial Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only consummate such financing simultaneously with the consummation of our initial Business Combination. Following our initial Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

Off-Balance Sheet Arrangements; Commitments and Contractual Obligations

As of June 30, 2018, we did not have any off-balance sheet arrangements. At June 30, 2018, we have short-term debt due to related parties of $2,030,220, $1,269,220 of this debt is unsecured, non-interest bearing and payable no later than the date of the consummation of an initial Business Combination. In addition, we have short-term debt with Jensyn Capital, an affiliate, for $760,000. This debt is evidenced by four notes, three of which totaling $730,000 are unsecured, carry an 8% interest rate, and are due upon completion of the initial Business Combination. The fourth note is for $30,000 and is unsecured, non-interest bearing and payable no later than the date of the consummation of an initial Business Combination. We do not have any capital lease obligations, operating lease obligations or long-term liabilities other than an agreement to pay an affiliate of our Principal Shareholders a total of $10,000 per month for office space, utilities, secretarial support and administrative services.

Critical Accounting Policies & Estimates

Common Stock Subject to Possible Redemption

The Company accounts for its common stock subject to possible conversion or redemption in accordance with ASC 480 “Distinguishing Liabilities from Equity.” Conditionally convertible common stock (including common stock that features conversion rights that are either within the control of the holder or subject to conversion upon the occurrence of uncertain events not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered by the Company to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at June 30, 2018 the common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets.

Although the Company did not specify a maximum redemption threshold, its charter provides that in no event will it redeem its public shares in an amount that would cause its net tangible assets (stockholders’ equity) to be less than $5,000,001. 

The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying value of the security to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock shall be affected by charges against retained earnings.

Accordingly, at June 30, 2018, 18,465 of the 2,099,767 public shares outstanding, were classified outside of permanent equity at their redemption value. At December 31, 2017, 3,149,524 of the 5,169,500 public shares outstanding were classified outside of permanent equity at their redemption value.

Proposed Business Combination

On November 3, 2017, we entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with BAE Energy Management, LLC, a Delaware limited liability company (“BAE”) and its owners, Victor Ferreira and Karen Ferreira (the “Existing Members”).

On April 27, 2018, the Company announced that it had received a letter from BAE purporting to terminate the Purchase Agreement as a result of the transactions contemplated by the Purchase Agreement having not been completed by March 7, 2018. The Company has acknowledged receipt of the letter and advised BAE that it is reserving all rights with respect to the purported termination, including its rights to reject the termination and pursue remedies for breach of the Purchase Agreement by BAE and the Existing Members as a result of their failure to use reasonable efforts to take actions required to complete the Business Combination on a timely basis.

As a result of the action taken by BAE, Jensyn management is evaluating Jensyn’s alternatives, including the proposed Business Combination describe below, and has scheduled a special meeting of stockholders for August 29, 2018 at which stockholders will be asked to approve an amendment to the Company’s amended and restated certificate of incorporation to extend the date by which the Company must complete its initial business combination from September 3, 2018 to January 3, 2019.

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.

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.

Other. A copy of the Exchange Agreement is filed with this Quarterly Report on Form 10-Q as Exhibit 2.2 and is incorporated herein by reference. The foregoing description of the Exchange Agreement does not purport to be complete and is qualified in its entirety by reference thereto.

In connection with the proposed Share Exchange, the Company intends to file with the SEC a preliminary proxy statement. When completed, the Company will mail a definitive proxy statement and other relevant documents to its stockholders in connection with its solicitation of proxies for the special meeting of stockholders to be held to approve the proposed business combination and related transactions. This Quarterly Report on Form 10-Q does not contain all the information that should be considered concerning the proposed Share Exchange. It is not intended to provide the basis for any investment decision or any other decision in respect to the proposed Share Exchange. The Company’s stockholders and other interested persons are advised to read, when available, the preliminary proxy statement, the amendments thereto, and the definitive proxy statement in connection with the Company’s solicitation of proxies for the special meeting to be held to approve the proposed Share Exchange, as these materials will contain important information about HEFA Global, the Company and the proposed Share Exchange. The definitive proxy statement will be mailed to stockholders of Jensyn as of a record date to be established for voting on the business combination agreement and related transactions. Stockholders will also be able to obtain copies of the proxy statement, without charge, once available, at the SEC’s Internet site at http://www.sec.gov, or by directing a request to: Jensyn Acquisition Corp., 800 West Main Street, Suite 204, Freehold, New Jersey 07728, attention: Jeffrey J. Raymond, 1-888-536-7965.

Participants in Solicitation The Company and its directors and executive officers and HEFA Global and its stockholders, directors and executive officers may be deemed to be participants in the solicitation of proxies from the stockholders of the Company in connection with the proposed Share Exchange. Information regarding the special interests of these stockholders, directors, and executive officers in the Share Exchange will be included in the proxy statement referred to above. Additional information regarding the directors and executive officers of Jensyn is also included in the Annual Report on Form 10-K for the year ended December 31, 2017, which is available free of charge at the SEC web site (www.sec.gov) and at the address described above and will also be contained in the definitive proxy statement for the proposed business combination) when available.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

As of June 30, 2018, we are not subject to any material market or interest rate risk. The net proceeds of the Public Offering and the sale of the Private Units held in the Trust Account are invested in U.S. government treasury bills with a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act which invest only in direct U.S. government treasury obligations. Due to the short-term nature of these investments, we believe there is no associated material exposure to interest rate risk.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of June 30, 2018, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Management has determined there is a lack of supervisory review of the financial statement closing process due to limited resources. This control deficiency constitutes a material weakness in internal control over financial reporting. As a result, our principal executive officer and principal financial and accounting officer have concluded that during the period covered by this report, our disclosure controls and procedures were not effective. We plan to take steps to remedy this material weakness in conjunction with a business combination that will provide additional resources.

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act report is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the three months ended June 30, 2018, there were no changes in internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

On February 2, 2018, a shareholder class action was filed in the Superior Court of New Jersey, Monmouth County, on behalf of the holders of public shares against Jensyn and its Board of Directors. The complaint alleged, among other things, that the Jensyn directors breached their fiduciary duties to Jensyn’s public shareholders by acting to cause or facilitate the Purchase Agreement because the Purchase Agreement was not in the best interest of the public shareholders. On May 23, 2018, this shareholder class action suit was dismissed without prejudice or costs by agreement between the parties.

Item 1A. Risk Factors

Factors that could cause our actual results to differ materially from those in this Quarterly Report on Form 10-Q are any of the risks described in our Registration Statement. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report on Form 10-Q, there have been no material changes to the risk factors disclosed in our Registration Statement, except as set forth below. We may disclose other changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

On November 3, 2017, we entered into the Purchase Agreement with BAE and its owners with respect to a proposed Business Combination with BAE. On April 24, 2018, BAE sent us a notice purporting to terminate the Purchase Agreement as a result of the transactions contemplated by the Purchase Agreement having not been completed by March 7, 2018. We have advised BAE and its owners that we have reserved all rights with respect to this matter, including the right to reject the purported termination and to pursue remedies for breach of the Purchase Agreement by BAE and its owners.

As a result of the actions taken by BAE, our management is evaluating our alternatives, including the proposed business combination with HEFA Global. A special meeting of stockholders is scheduled for August 29, 2018 at which stockholders will be asked to approve an amendment to the Company’s amended and restated certificate of incorporation (the “Charter Amendment”) and its Investment Management Trust Agreement with Continental Stock Transfer & Trust Company (the “Trust Amendment”) to extend the date by which the Company must complete its initial business combination from September 3, 2018 to January 3, 2019. If the Charter Amendment and Trust Amendment proposals are not approved and we do not consummate a business combination by September 3, 2018, we will (a) cease all operations except for the purpose of winding up, (b) as promptly as reasonably possible but not more than ten business days thereafter, subject to lawfully available funds therefor, redeem 100% of the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest income, 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 (c) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The registration statement for our Public Offering was declared effective on March 2, 2016. We consummated the Public Offering of 3,900,000 units (“Units”) on March 7, 2016 generating gross proceeds of $39,000,000. We paid a total of $1,150,000 in underwriting discounts and commissions to the underwriters of the Public Offering. In addition, the underwriters agreed to defer $780,000 of additional underwriting discounts and commissions, which amount will be payable upon consummation of our initial Business Combination, if consummated. Simultaneously with the closing of the Public Offering, we also consummated a private placement of 294,500 Private Units at $10 per unit generating gross proceeds of $2,945,000. We paid the placement agent for the offering of the Private Units a $325,000 commission. We relied upon the exemption provided by Section 4(2) of the Securities Act of 1933, as amended, in connection with the sale of the Private Units.

After deducting the underwriting discounts, commissions (excluding the deferred portion of $780,000 in underwriting discounts and commissions, which amount will be payable upon consummation of our initial Business Combination, if consummated), the total net proceeds from the Total Offering and the private placement of the Private Units was $40,450,000, of which $40,365,000 was placed in the Trust Account. The remaining $85,000 was used to pay offering expenses. The proceeds held in the Trust Account may be invested by the trustee only in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in money market funds investing solely in U.S. Treasuries and meeting certain conditions under Rule 2a-7 under the Investment Company Act.

In connection with vote to extend the date by which we must complete a business combination from March 7, 2018 to June 5, 2018, holders of 1,825,506 of our public shares exercised conversion rights with respect to such shares and such shares were redeemed for approximately $10.53 per share. Approximately $19,222,900 was disbursed from the Trust Account to fund the redemptions.

In connection with vote to extend the date by which we must complete a business combination from June 5, 2018 to September 3, 2018, holders of 1,244,227 of our public shares exercised conversion rights with respect to such shares and such shares were redeemed for approximately $10.66 per share. Approximately $13,264,985 was disbursed from the Trust Account to fund the redemptions.

Item 3. Default Upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

On January 2, 2018, we received a written from the Listing Qualifications Department of The Nasdaq Stock Market (“Nasdaq”) indicating that we were not in compliance with Listing Rule 5620(a) (the “Annual Meeting Rule”) as a result of not having held an annual meeting of stockholders within twelve months of the end of the Company’s fiscal year. We held a special meeting in lieu of annual meeting of stockholders on June 4, 2018 and, on June 18, 2018, Nasdaq advised us that we had regained compliance with the Annual Meeting Rule and granted us continued listing.

Item 6. Exhibits

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on the 20^th day of August, 2018.