10. COMMITMENTS AND CONTINGENCIES (AS RESTATED)

Risks and Uncertainties

Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company's financial position, results of its operations and/or completion of the Business Combination, the specific impact is not readily determinable as of the date of these condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Registration Rights

The holders of the Founder Shares and Private Units and warrants that may be issued upon conversion of Working Capital Loans (and any shares of the Company's common stock issuable upon the exercise of the Private Units and warrants that may be issued upon conversion of Working Capital Loans) are entitled to registration rights pursuant to a registration rights agreement signed on the effective date of the Initial Public Offering. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain "piggy-back" registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable Lock-Up Period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

Underwriting Agreement

The Company granted the underwriters a 45-day option to purchase up to 1,500,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On June 23, 2017, the underwriters elected to exercise their over-allotment option to purchase 1,500,000 Units at a purchase price of $10.00 per Unit.

In connection with the closing of the Initial Public Offering and the over-allotment option, the underwriters were paid a cash underwriting discount of $2,875,000. In addition, the underwriters deferred their fee of up to $4,025,000 until the completion of the initial Business Combination (the "Deferred Fee"). In June 2020, the underwriters waived their right to receive the $4,025,000 deferred fee which had been held in the Trust Account. The Company recorded the waiver of the Deferred Fee as a credit to additional paid in capital in the accompanying statement of stockholders' equity.

Concurrently with the closing of the Initial Public Offering, the underwriters purchased an aggregate of 125,000 Private Units at $10.00 per Private Unit.

In conjunction with their investment in the Private Units, the underwriters or their designees also purchased membership interests in the Sponsor, through which the underwriters or their designees collectively have a pecuniary interest in 230,000 Founder Shares, pursuant to a separate private placement that closed simultaneously with the closing of the Initial Public Offering and the Private Placement.

Business Combination (as restated)

On April 10, 2019, the Company entered into a non-binding term sheet (the "Term Sheet") for a Business Combination transaction (the "Transaction") with 180. In connection with the Term Sheet, 180, Katexco, CBR Pharma and 180 LP agreed to loan $400,000 to the Company to be used to fund the Company's operating expenses, deal transaction expenses and any financing expenses for the Transaction (the "Operating Expenses"), and up to an additional $300,000 to be used by the Company in connection with any future extensions of the deadline for the Company to consummate a Business Combination (the "Extension Expenses").

The loans are interest-free and can be pre-paid at any time without penalty, but are required to be paid back (subject to a customary waiver against the Company's Trust Account) upon the earlier of (i) the closing of the Transaction, (ii) the consummation by the Company of a transaction with a third party constituting the Company's initial Business Combination, or (iii) the liquidation of the Company if it does not consummate an initial Business Combination prior to its deadline to do so (a "Liquidation"). Promptly after signing the Term Sheet, the Company received the loan of $400,000 to fund the Operating Expenses.

In connection with the Term Sheet, 180 paid, on the Company's behalf, $650,000 to the Sponsor to purchase $650,000 of the obligations owed to the Sponsor under the March Promissory Note (the "Tyche Note"), but Tyche waived any rights under the assigned portion of the March Promissory Note to convert the obligations under the assigned portion of the March Promissory Note into units of the post-Business Combination entity. Pursuant to the Term Sheet, Tyche also agreed to provide equity financing for the Transaction to ensure that the Company has sufficient cash at the closing of the Transaction to meet its $5,000,001 net tangible assets test. In December 2019, the $650,000 Tyche Note was transferred to 180.

On July 25, 2019, the Company entered into the Business Combination Agreement with 180, the 180 Subsidiaries, Merger Sub, and the Stockholder Representative, pursuant to which, among other matters, and subject to the satisfaction or waiver of the conditions set forth in the Business Combination Agreement, Merger Sub will merge with and into 180, with 180 continuing as the Company's wholly owned subsidiary at the closing.

Subject to the terms and conditions of the Business Combination Agreement, at the Closing, (a) each outstanding share of 180 common stock will be converted into the right to receive a number of shares of the Company's common stock equal to the exchange ratio described below; (b) each outstanding share of 180 preferred stock will be converted into the right to receive a number of shares of the Company's preferred stock on a one-for-one basis; and (c) each outstanding exchangeable share of 180 or any of the 180 Subsidiaries, as the case may be, will be converted into the right to receive a number of exchangeable shares equal to the exchange ratio described below. Each exchangeable share will be an exchangeable share in a Canadian subsidiary of the Company that will be exchangeable for common stock.

Subject to the terms and conditions of the Business Combination Agreement, at the Closing, the Company will acquire 100% of the outstanding equity and equity equivalents of 180 (including options, warrants or other securities that have the right to acquire or convert into equity securities of the Company) in exchange for 17,500,000 shares of KBL Common Stock (the "Transaction Shares"), subject to adjustment. The total consideration will be reduced by the amount of any liabilities of 180 in excess of $5 million at the Closing.

The 180 Business Combination will be consummated subject to the deliverables and provisions as further described in the Business Combination Agreement.

During the year ended December 31, 2019, the Company received additional advances in the aggregate amount of $1,049,825 from the 180 Parties to fund Operating Expenses and Extension Expenses. During the six months ended June 30, 2020, the Company repaid advances in the amount of $330,000. As of June 30, 2020 and December 31, 2019, a total of $1,379,815 and $1,699,825, respectively, is due under the advances from the 180 Parties.

See Note 14 – Subsequent Events for additional information.

Founder Shares Escrow (as restated)

In connection with the Business Combination Agreement, the Sponsor deposited in escrow with a third-party escrow agent 1,406,250 of its Founder Shares that it acquired prior to the Company's Initial Public Offering (the "Escrowed Shares"). Contingent upon fulfillment of Tyche's obligations under the Tyche Backstop agreement, the Escrowed Shares are to be transferred to Tyche, less any portion used for financing for the Transaction, upon the earlier of (i) the closing of the Transaction or (ii) a Liquidation; provided, that if the Company consummates its initial Business Combination with a third party other than 180 or its affiliates, upon the consummation of such Business Combination, in addition to paying the loans described above, the Sponsor will transfer to Tyche a number of Escrowed Shares equal in value to three times the amount of the loans, with each Escrowed Share valued at the price paid to each public stockholder that redeems its shares in connection with such initial Business Combination. See Note 8 – Resignation Agreement for additional information related to the Escrowed Shares.

Additional information on the Business Combination is available in the Company's Form S-4 filed by us with the SEC on November 12, 2019 and amended on February 10, 2020.

Convertible Preferred Stock (as restated)

On June 26, 2020, the Company entered into a Securities Purchase Agreement (the "SPA") dated June 12, 2020, whereby upon the second closing pursuant to the SPA, upon the registration statement becoming effective, as well as certain other conditions being satisfied, the Company shall have the right to have a certain investor purchase all of the authorized Series A Convertible Preferred Stock (1,000,000 shares) of the Company for an aggregate purchase price of $3,000,000. The Preferred Stock shall be convertible into common stock at a conversion price of $5.28 per share at the election of the holder at any time following issuance, subject to adjustment. At any time following the three-month anniversary of the Business Combination, the holder of the Preferred Stock has the right to force the Company to redeem all or any portion of the Preferred Stock then owned by the holder in cash. From and after the first date of issuance of the Series A Convertible Preferred Stock, each holder shall be entitled to receive dividends, which shall be paid by the Company, of 10% compounded daily. In the event of a liquidation event, the holders shall be entitled to receive in cash out of the assets of the Company, whether from capital or from earnings available for distribution. Holders of the Series A Convertible Preferred Stock shall have no voting rights. The Series A Convertible Preferred Stock are anti-dilutive, therefore upon the consummation of each dilutive issuance, the conversion price shall be reduced and only reduced to equal the lower of (i) the base share price and (ii) the lowest volume weighted average price in the five (5) days immediately following. Such adjustment shall be made whenever such shares of common stock or common stock equivalents are issued. On June 29, 2020, the Company filed a Certificate of Designation designating the terms of the Series A Convertible Preferred Stock.

Mintz Legal Fees (as restated)

On April 18, 2019, the Company engaged Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C. ("Mintz") as legal counsel to assist the Company with the acquisition of 180 and other related matters. Pursuant to this engagement, Mintz obtained an advance of $200,000 and agreed to charge the Company for their services on a time and disbursement basis. Besides the advance that was paid to Mintz, the remaining unbilled amounts were not due and payable unless, and until, a business combination occurred, upon which Mintz will be due a 30% premium in addition to its unpaid fees. Upon the closing of a business combination, the Company will be invoiced by Mintz for $1,472,070, which includes the premium.

 EarlyBird Finder's Fee (as restated)

On October 17, 2018, the Company entered into an agreement with EarlyBirdCapital, Inc. ("EarlyBird"), whereby EarlyBird would introduce potential targets to the Company on a non-exclusive basis for the purpose of consummating a merger, capital stock exchange, asset acquisition, or other similar business combination. Upon the closing of a transaction, the Company agreed to pay EarlyBird a finder's fee, payable in cash, of 1% of the value of the transaction, minus any liabilities at closing in excess of $5,000,000, as defined in the Business Combination Agreement.

Cantor Fitzgerald Fees (as restated)

On February 17, 2018, the Company entered into an agreement with Cantor Fitzgerald & Co. ("Cantor"), whereby Cantor would act as the Company's financial advisor with any transaction or any potential target entity. Pursuant to the agreement, transaction refers to a transaction or series of related transactions, whereby, directly or indirectly, control of, or a significant interest in, any acquiree's or any acquiree's business or assets is transferred to the Company for consideration, including, without limitation, a sale, acquisition of exchange of stock, etc., in any case that qualifies as a business combination. The Company agreed to pay Cantor based on the following terms, but not to exceed $4,000,000:

On November 6, 2020, the Company and Cantor entered into a settlement and release agreement, whereby the Company agreed to issue Cantor 150,000 fully paid shares of restricted common stock upon the closing of the Business Combination, in full satisfaction of the obligations outlined in the original agreement dated February 17, 2018 (see Note 14).

Ladenburg Fees (as restated)

The Company entered into a verbal agreement with Ladenburg & Thalmann and Co. Inc. ("Ladenburg"), whereby Ladenburg would act as the Company's financial advisor with any transaction or any potential target entity and the Company would pay Ladenburg for their services.

On November 3, 2020, the Company and Ladenburg entered into a settlement and release agreement, whereby the Company agreed to issue Ladenburg 100,000 fully paid shares of restricted common stock, in full satisfaction of any and all obligations upon the closing of the Business Combination (see Note 14).

Resignation Agreement (as restated)

Pursuant to the Resignation Agreement discussed in Note 8, the Company committed to issue 25,568 shares of common stock to 180 in exchange for $135,000 of cash, which has not closed as of June 30, 2020.