Item 15. Recent Sales of Unregistered Securities.
Founder Shares and Subscription Agreements
In connection with our initial formation in 2012, a wholly-owned subsidiary of B. Riley Financial which is the parent of our Sponsor was issued
all of our outstanding equity. On November 19, 2018, prior to the consummation of the IPO, we conducted a 1:3,593,750 stock split and reclassification of our common stock, resulting in our sole stockholder owning 3,593,750 founder shares. On
March 12, 2019, 20,000 founder shares were transferred to each of Patrick J. Bartels, Jr., James L. Kempner, Timothy M. Presutti and Robert Suss, our then-independent directors, at their par value, and on April 4, 2019, the remaining
3,513,750 founder shares were contributed to our Sponsor. The number of founder shares outstanding was determined based on the expectation that the founder shares would represent 20% of the outstanding shares after the IPO. Up to 468,750 founder
shares were subject to forfeiture by our sponsor depending on the extent to which the underwriters over-allotment option was exercised so that our initial stockholders would maintain ownership of founder shares representing 20% of our common
stock after the IPO excluding the private placement shares underlying the private placement units. As the underwriters exercised their over-allotment option in full, such shares were not forfeited.
The initial stockholders have agreed not to transfer, assign or sell any of the founder shares (except to certain permitted transferees) until
the earlier of one year after the completion of a business combination or earlier if, subsequent to a business combination, (i) the last reported closing price of our common stock equals or exceeds $12.00 per share (as adjusted for stock
splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a business combination, or (ii) the date on which we complete a
liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property, subject to certain limited exceptions.
In connection with our entry into the subscription agreements with the PIPE investors, the Sponsor forfeited 178,947 founder shares to us for
cancellation upon consummation of the business combination. Upon the consummation of the business combination, the Sponsor forfeited an additional 1,470,855 founder shares to us for cancellation.
Two affiliates of B. Riley Financial, BRCPOF and BRPI, are PIPE investors and purchased $6,850,000 and $1,000,000, respectively, of our shares
of common stock at a price of $10.00 per share, or 685,000 and 100,000 shares, respectively. BRPI did not receive any incentive shares or warrants in respect of its subscription.
Forward Purchase Agreement
At the time
of our IPO, we entered into the forward purchase agreement which provided for the purchase, immediately prior to the closing of the business combination, by BRPI, an affiliate of the Sponsor, or its designees of $25,000,000 of our units at a price
of $10.00 per unit, or an aggregate of 2,500,000 units, each comprised of one forward purchase share and one-half of one forward purchase warrant. In connection with the closing of the business combination and the subscription agreements with the
PIPE investors, BRPI or its designees transferred 1,275,000 forward purchase warrants to us for no consideration.
Howell Acquisition
We issued 507,143 shares of our common stock to the selling securityholders in connection with the closing of the Howell Acquisition. The
shares were issued in reliance on Section 4(a)(2) of the Securities Act.
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