8. Related Party Transactions
|6 Months Ended|
Jun. 30, 2019
|Related Party Transactions [Abstract]|
|Related Party Transactions||
Note 8 – Related Party Transactions
On March 1, 2018, the Board of Directors (the “Board”) of the Company approved and adopted the Black Ridge Oil & Gas, Inc. 2018 Management Incentive Plan (the “Plan”) and the form of 2018 Management Incentive Plan Award Agreement (the “Award Agreement”).
In connection with the approval of the Plan and Award Agreement, the Board approved the issuance of awards (the “Awards”) to certain individuals including officers and directors (the “Grantees”), representing a percentage of the shares of BRAC held by the Company as of the date of closing of a business combination for the acquisition of a target business as described in the BRAC prospectus dated October 4, 2017, as follows:
As of June 30, 2019, the Company owned 3,895,000 shares of BRAC common stock and has rights to an additional 44,500 shares that would be issued on the date of the closing of a business combination. Additionally, as a result of convertible loans to BRAC (see below), the Company may receive up to 82,500 additional shares (75,000 units representing 75,000 shares of BRAC common stock and rights to 7,500 shares) upon conversion of the notes. The actual number of shares of BRAC stock granted to the Grantees will be determined on the date of closing of a business combination and will be issued one year from that date. As of June 30, 2019 the Company has recognized no expense related to the plan as the grant of shares is contingent on a future event. As described in Note 17 – Subsequent Events, following the Business Combination, the number of BRAC shares owed by the Company was reduced to 2,685,500. As a result, 537,100 of the 2,685,500 shares of BRAC common stock owned by the company are committed to employees and directors of the Company related to the Plan and Award Agreement discussed above.
BRAC Convertible Loans
In order to finance transaction costs in connection with an intended initial business combination, BROG, and its officers, directors or their affiliates may, but are not obligated to, loan BRAC funds as may be required. If BRAC consummates an initial business combination, BRAC would repay such loaned amounts. In the event that the initial business combination does not close, BRAC may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from BRAC’s trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units of the post business combination entity at a price of $10.00 per unit at the option of the lender. The units would be identical to the Placement Units.
As of June 30, 2019, BROG has loaned BRAC, in the form of a convertible promissory notes, an aggregate $750,000 to cover expenses related to a proposed business combination. The notes are unsecured, non-interest bearing and payable at the consummation by BRAC of a merger, share exchange, asset acquisition, or other similar business combination, with one or more businesses or entities (a “Business Combination”). Upon consummation of a Business Combination, the principal balance of the notes may be converted, at BROG’s option, to units at a price of $10.00 per unit. The terms of the units are identical to the units issued by BRAC in its IPO, except the warrants included in such units will be non-redeemable and may be exercised on a cashless basis, in each case so long as they continue to be held by BROG or its permitted transferees. If BROG converts the entire principal balance of the convertible promissory notes, it would receive 75,000 units. If a Business Combination is not consummated, the notes will not be repaid by BRAC and all amounts owed thereunder by BRAC will be forgiven except to the extent that BRAC has funds available to it outside of its trust account established in connection with the IPO. The issuance of the notes was exempt pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended. See Note 16.
The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef