ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References to the “Company,” “our,” “us” or “we” refer to Easterly Acquisition Corp. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the notes thereto contained elsewhere in this Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Special Note Regarding Forward-Looking Statements

All statements other than statements of historical fact included in this Form 10-Q including, without limitation, statements under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position and business strategy, and the plans and objectives of management for future operations, and the possible closing or abandonment of the business combination contemplated by the Investment Agreement, are forward-looking statements.“forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. When used in this Form 10-Q, words such as “anticipate,” “believe,” “estimate,” “expect,” “intend” and similar expressions, as they relate to us or the Company’s management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company’s management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in our filings with the Securities and Exchange Commission (“SEC”). All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company’s behalf are qualified in their entirety by this paragraph.

Overview

We are a blank check company incorporated on April 29, 2015 as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. WeSubject to the possibility of failing to consummate an initial business combination by June 30, 2018 as required by our amended and restated certificate of incorporation, we intend to effectuate our initial business combination using cash from the proceeds of our IPO and the sale of the private placement warrants that occurred simultaneously with the completion of our IPO, our capital stock, debt or a combination of cash, stock and debt.

As indicated in the accompanying financial statements, at SeptemberJune 30, 2017,2018, we had $5,079approximately $1,889 in cash. Further, we expect to continue to incur significant costs in the pursuit of our acquisition plans. WeSee Note 1 to the accompanying financial statements. Further, we cannot assure you that our plans to complete an initial business combination will be successful.

Results of Operations

For the three and nine months ended September 30, 2017, we had net income of $52,940 and net loss of $318,088, respectively, which consisted of general and administrative expenses, operating costs and the accounts receivable valuation allowance offset by interest income generated from the Trust Account. During these periods, the interest income generated from the Trust Account was $357,371 and $846,401, respectively, and the general and administrative, operating expenses and the accounts receivable valuation allowance were $304,431 and $1,164,489, respectively. We were incorporated in the State of Delaware and are required to pay franchise taxes to the State of Delaware. Franchise taxes for the three and nine months ended September 30, 2017 were accrued in the amount of $45,000 and $136,118.

This compares with a net loss of $563,115 and $818,725 for the three and nine months ended September 30, 2016, respectively, which consisted of $620,828 and $940,933 general and administrative expenses and operating costs offset by interest income generated from the Trust Account of $102,959 and $259,647. Franchise taxes for the three and nine months ended September 30, 2016 were accrued in the amount of $45,246 and $137,439.

On June 28, 2016, we entered into an Agreement and Plan of Merger (as amended, the “Sungevity Merger Agreement”), by and among us, Solaris Merger Sub Inc., Sungevity, Inc. (“Sungevity”), and Shareholder Representative Services LLC, to effect a business combination with Sungevity. On December 31, 2016, the Company terminated the Sungevity Merger Agreement.

Pursuant to a letter of intent (the “LOI”), dated April 20, 2016, between Sungevity and us, Sungevity agreed to pay or reimburse us for all reasonable and documented out-of-pocket costs and expenses incurred between the date of the LOI and the date that the Merger Agreement was executed, including fees and expenses of third party advisors, due diligence-related expenses and such other necessary and related costs and expenses incurred in furtherance of the proposed business combination. For the year ended December 31, 2016, we recorded $909,787 in qualified reimbursable costs, of which $353,517 was reimbursed by Sungevity prior to December 31, 2016. We have initiated legal action against Sungevity to recover the remaining amount of $556,270 due to us under the LOI. On March 13, 2017, Sungevity filed for Chapter 11 Bankruptcy proceedings in U.S. Bankruptcy Court for the District of Delaware to pursue and consummate a sale of its business. Our legal action has been stayed pending resolution of the bankruptcy proceedings. As a result of the bankruptcy proceedings and the legal action initiated against Sungevity, we believe a loss is probable and have, accordingly, applied a valuation allowance of $556,270 which represents the full amount of qualified reimbursable costs. Of this valuation allowance, $278,135 is presented within Operating expenses in the Condensed Consolidated Statement of Operations for the nine months ending September 30, 2017. The remainder of the allowance was first expensed during the year ending December 31, 2016. Our estimate for this loss requires a number of assumptions available to us as of the date the condensed consolidated financial statements are issued, about matters that are uncertain and, accordingly, the actual realized amount paid to us from the bankruptcy proceedings may be more than $0.

Proposed JH Capital Business Combination

On June 28, 2017, the Company entered into an Investment Agreement (as amended, the “Investment Agreement”) by and among JH Capital Group Holdings, LLC (“JH Capital”), Jacobsen Credit Holdings, LLC (“Jacobsen Holdings”), NJK Holding LLC (“NJK Holding”), Kravetz Capital Funding LLC (“KCF” and, together with NJK Holding and Jacobsen Holdings, the “Founding Members”) and the Company, to effect a business combination with JH Capital. On May 31, 2018, the Company, JH Capital a leading specialty finance company inand the debt recovery industry. Any description in this Quarterly Report on Form 10-Q of theFounding Members entered into an Investment Agreement is qualified in all respects by reference to the complete text of the Investment Agreement, which was filed with the SEC on June 30, 2017 as Exhibit 2.1 to our Current Report on Form 8-K. See Note 6 — Proposed Business Combination with JH Capital for a discussion of the Transaction and the Investment Agreement. The descriptions of the Transaction and the Investment Agreement in this Report are qualified in all respects by reference to the more detailed description in the complete text of the Investment Agreement. On November 8, 2017, the Company entered into Amendment No. 1 (“Amendment No. 1”) to the Investment Agreement. Amendment No. 1 amended the Investment Agreement to (i) extend the date by which the Investment Agreement could be terminated by the Company or JH Capital if the closing of the transactions contemplated by the Investment Agreement has not occurred by such date from December 15, 2017 to March 31, 2018; (ii) permit the Company to hold a Special Meeting of its stockholders for the purposes of obtaining approval to amend its Amended and Restated Certificate of Incorporation and the TrustTermination Agreement (the “Trust“JH Capital Termination Agreement”), dated as of October 13, 2015May 31, 2018. The JH Capital Termination Agreement terminated the Investment Agreement by mutual agreement.

On June 23, 2018, the Company entered into an Agreement and as amended,Plan of Merger (the “Merger Agreement”) by and betweenamong Sirius International Insurance Group, Ltd. (“Sirius”), the Company and Continental Stock Transfer & TrustSirius Acquisitions Holding Company III, a wholly owned subsidiary of Sirius (“Continental”Merger Sub”), to extendproviding for the date by whichmerger (the “Merger”) of Merger Sub with and into the Company, is required to commence liquidating the trust account established in connection with the Company’s initial public offering inCompany surviving the event the Company has not consummatedMerger as a business combination from December 15, 2017 to a date to be determined by the Company in consultation with JH Capital; and (iii) provide JH Capital certain waiverswholly owned subsidiary of termsSirius (the “Business Combination”).

Results of the Investment Agreement.

Operations

Annual MeetingFor the three and Extension Amendments

On August 1, 2017, at the Annualsix months ended June 30, 2018, we had net income of Stockholders$2,836,576 and $2,899,755, respectively, which consisted of the Company (the “Annual Meeting”), the Company’s stockholders approved the following items: (i) an amendment (the “Extension Amendment”) to the Company’s amendedgeneral and restated certificate of incorporation to extend the dateadministrative expenses and operating costs offset by which the Company has to consummate a Business Combination (the “Extension”) for an additional 133 days,interest income generated from August 4, 2017 to December 15, 2017 (the “Extended Date”); and (ii) an amendment (the “Trust Amendment”) to the Trust Agreement to extend the date on which to commence liquidating the Trust Account as well as gain on forgiveness of debt. During these periods, the interest income generated from the Trust Account was $599,249 and $1,067,787, respectively, the general and administrative and operating expenses were $640,856 and $976,215, respectively. We were incorporated in the eventState of Delaware and are required to pay franchise taxes to the State of Delaware. Franchise taxes for the three and six months ended June 30, 2018 were accrued in the amount of $50,488 and $120,488. As further discussed in Note 1 of the financial statements, the Company has not consummatedrecognized a Business Combination$2,928,671 gain on forgiveness of debt resulting from the JH Capital Termination Agreement in the three months ended June 30, 2018.

This compares with a net loss of $23,999 and $371,028 for the three and six months ended June 30, 2017, respectively, which consisted of $302,110 and $768,940 general and administrative expenses and operating costs offset by the Extended Date. The affirmative vote of at least 65% of the Company’s shares attending the Annual Meeting in person or by proxy and voting on the Extension Amendment andinterest income generated from the Trust AmendmentAccount of $323,111 and $489,030. Franchise taxes for the three and six months ended June 30, 2017 were accrued in the amount of $45,000 and $91,118.

A valuation allowance of $278,135 was requiredrecorded in the six months ended June 30, 2017. The valuation allowance was related to approve the Extension Amendment and the Trust Amendment. The purposea receivable from Sungevity, Inc. pursuant to a letter of the Extension isintent (the “Sungevity LOI”) dated April 20, 2016, where Sungevity agreed to allowpay or reimburse the Company more timefor certain reasonable and documented out-of-pocket costs and expenses incurred. On March 13, 2017, Sungevity filed for Chapter 11 Bankruptcy proceedings in U.S. Bankruptcy Court for the District of Delaware to completepursue and consummate a sale of its business and on November 2017 the proposed business combination with JH Capital pursuantproceedings were dismissed without any recovery to the Investment Agreement.us. As a result of the Extension, on August 1,November 2017 4,289,791 ofdismissal, the Company’s public sharesentire receivable and corresponding allowance were redeemed by the electing stockholders at a value of approximately $10.02 per share, for an aggregate redemption of $42,983,454 from the Trust Account.written off.

On August 1, 2017, the Company filed the Extension Amendment with the Secretary of State of the State of Delaware and the Company and Continental entered into the Trust Amendment.

Liquidity and Capital Resources

Prior to our IPO, on May 4, 2015, our sponsor purchased an aggregate of 4,312,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.006 per share. On July 29, 2015, our board of directors effected a stock dividend of 0.2 shares for each outstanding share of common stock, resulting in 5,175,000 founder shares outstanding. On July 29, 2015, the underwriters exercised part of their over-allotment option resulting in 20,000,000 units issued as a result of our IPO at a price of $10.00 per unit generating gross proceeds of $200,000,000 before underwriting discounts and expenses. As a result of the expiration of the underwriters’ option to exercise the remaining portion of the over-allotment, our initial stockholders forfeited an aggregate of 175,000 founder shares. TheOn August 1, 2017, December 14, 2017, March 29, 2018 and June 28, 2018, stockholders representing 4,289,791, 687,597, 7,035 and 807,170 shares, respectively, elected to redeem their shares, resulting in redemption amounts of $42,983,883, $6,915,728, $71,614 and $8,329,744, respectively. Prior to this, the sponsor, our original independent directors and their permitted transferees ownowned 20% of our issued and outstanding shares.shares but now the sponsor and the current independent directors own approximately 25.8%. The sponsor purchased from us an aggregate of 6,750,000 private placement warrants, each exercisable to purchase one share of our common stock at $11.50 per share, at a price of $1.00 per private placement warrant in a private placement that occurred simultaneously with our IPO generating proceeds, before expenses, of $6,750,000. We received net proceeds from the IPO and the sale of the private placement warrants of approximately $201,750,000, net of the non-deferred portion of the underwriting commissions of $5,000,000. The amount of proceeds not deposited in the Trust Accounttrust account were $1,750,000 at closing of the IPO and such proceeds, together with $25,000 from the sale of common stock to our sponsor, were used to pay $517,145 for costs and expenses related to the IPO and $2,910 for formation, general and administrative expenses. In addition, interest income on the funds held in the Trust Accounttrust account may be released to us to pay our franchise and income tax obligations. For a description of the proceeds generated in our IPO and a discussion of the use of such proceeds, we refer you to Notes 3 and 4 of the financial statements included in Item 1 of this Report.

We presently have no revenue, have had losses since inception and have no operations other than the active identification of a target business with which to complete an initial business combination. As of SeptemberJune 30, 2017,2018, we have cash of $5,079$1,889 held outside the Trust Accounttrust account and $157,774,314 in$146,665,970 cash equivalents held in the Trust Account,trust account, including interest. As further described above, on August 1, 2017, 4,289,791 of our public shares were redeemed by the electing stockholders at a value of approximately $10.02 per share, for an aggregate redemption of $42,983,454 from the Trust Account.

We will have available to us the $5,079$1,889 of proceeds held outside the Trust Accounttrust account (as of SeptemberJune 30, 2017)2018) to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination. We will also have available to us interest earned on the funds held in our Trust Accounttrust account to pay franchise and income taxes.

At SeptemberJune 30, 2017,2018, we had a working capital deficit of $2,599,163$2,898,123 (total current assets minus total current liabilities). We expect to continue incurring expenses related to professional services including, but not limited to, engaging legal counsel, consultants, advisors and accountants, as well as other operating expenses such as insurance and fees under the Administrative Services Agreement.

We entered into an agreement with our sponsor (“Liabilities Assumption Agreement”) whereby our sponsor assumed and agreed to pay our liabilities to third-party service providers liabilities (the “Assumed Liabilities”). No such payments were made by our sponsor for the six months ended June 30, 2018. Pursuant to the Liabilities Assumption Agreement, our sponsor contributed equity of $200,000 and $600,000 on July 5, 2018 and July 10, 2018, respectively, directly into us.

On March 17, 2016, we issued a convertible promissory note to our sponsor that provides for our sponsor to loan us up to $1,000,000 for ongoing expenses. On March 17, 2016, February 2, 2017, June 29, 2017, July 12, 2017, October 1, 2017, December 4, 2017, February 1, 2018 and October 2, 2017, weApril 6, 2018, the Company borrowed $15,000, $250,000, $75,000, $150,000, $30,000, $75,000, $100,000 and $30,000,$200,000, respectively, pursuant to the convertible promissory note. Our sponsor is not obligated to loan us additional amounts pursuant to the convertible promissory note. The convertible promissory note is interest bearing at 5% per annum and is due and payable on December 15, 2017.November 30, 2018. As of SeptemberJune 30, 2017,2018, the interest accrued is $12,274.$39,330. At the option of our sponsor, any amounts outstanding under the convertible note may be converted into warrants to purchase shares of common stock at any time on or prior to the maturity date at a conversion price of $1.00 per warrant. Each warrant will entitle our sponsor to purchase one share of our common stock at an exercise price of $11.50 per share. Each warrant will contain other terms identical to the terms contained in the private placement warrants.

If the funds available to us outside of our Trust Account andtrust account, any loans under the March 17, 2016 convertible promissory note and payments of Assumed Liabilities by our sponsor are insufficient to fund our ongoing expenses, we may need to raise additional capital through additional loans or additional investments from our sponsor, an affiliate of our sponsor or certain of our officers and directors. None of our sponsor, any affiliate of our sponsor, or our officers and directors are under any obligation to loan us funds. The uncertainty regarding the lack of resources to pay the above noted expenses raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be unable to continue operations.

If we complete our initial business combination, we would repay such loaned amounts to the extent it was not converted into warrants. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the Trust Accounttrust account to repay such loaned amounts but no proceeds from our Trust Accounttrust account would be used for such repayment. Up to $1,000,000 of such loans, inclusive of any loans under the March 17, 2016 convertible promissory note, may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants issued to our sponsor. We do not expect to seek loans from parties other than our sponsor, an affiliate of our sponsor, or our officers and directors as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account.trust account.

WeIf we consummate an initial business combination, we intend to use substantially all of the funds held in our Trust Account,trust account, including interest (which interest shall be net of taxes payable) to consummate oursuch initial business combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to consummate our initial business combination, the remaining proceeds held in our Trust Accounttrust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.

On August 1, 2017, we held our annual meeting of stockholders and 23,415,152 of the outstanding 25,000,000 shares were voted in favor of the proposal to amend our amended and restated certificate of incorporation to extend the date by which we had to consummate a business combination until December 15, 2017, to change the term of our directors from two years to one year, and to change the provision with respect to removal of directors to permit removal with or without cause by the affirmative vote of a majority of our stockholders and the proposal to amend the agreement with respect to the trust account to provide for the extension until December 15, 2017. In addition, our board of directors was reelected. The holders of 4,289,791 public shares of our common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.02 per share.

On March 29, 2018, we held a special meeting of stockholders and 19,081,332 of the outstanding 20,022,612 shares were voted in favor of the proposal to amend our amended and restated certificate of incorporation to extend the date by which the us had to consummate a business combination until June 30, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until June 30, 2018. The holders of 7,035 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.18 per share.

On June 28, 2018, we held a special meeting of stockholders and 18,704,270 of the outstanding 20,015,577 shares were voted in favor of the proposal to amend our amended and restated certificate of incorporation to extend the date by which we had to consummate a business combination until November 30, 2018, and the proposal to amend the agreement with respect to the Trust Account to provide for the extension until November 30, 2018. The holders of 807,170 public shares of Easterly common stock properly exercised their right to convert their shares into cash at a conversion price of approximately $10.32 per share.

Off-balance sheet financing arrangements

We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements.

We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or entered into any non-financial agreements involving assets.

Contractual obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities other than an administrative agreement to pay our sponsor a monthly fee of $10,000. This amount covers office space, utilities, secretarial support and administrative services provided to members of our management team by our sponsor, members of our sponsor, and our management team or their affiliates. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees.

The underwriters are entitled to underwriting commissions of 6.0%, of which 2.5% ($5,000,000) was paid at the closing of our initial public offering, and 3.5% ($7,000,000) is deferred. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete our initial business combination, subject to the terms of the underwriting agreement. The underwriters are not entitled to any interest accrued on the deferred underwriting discounts and commissions.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following as our critical accounting policies:

Redeemable common stock

We account for our common stock subject to possible redemption in accordance with the guidance in Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 480,Distinguishing “Distinguishing Liabilities from Equity.Equity.” Common stock subject to mandatory redemption is classified as a liability instrument and measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of our condensed consolidated balance sheet.

Recent accounting pronouncements

Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Market risk is a broad term for the risk of economic loss due to adverse changes in the fair value of a financial instrument. These changes may be the result of various factors, including interest rates, foreign exchange rates, commodity prices and/or equity prices. As of SeptemberJune 30, 2017, $150,774,3142018, $139,665,970 (excluding approximately $7,000,000 of deferred underwriting discounts) was held in trust for the purposes of consummating an initial business combination. The proceeds held in the Trust Accounttrust account (including the deferred underwriting discounts) are held in a money market fund that invests solely in United States Treasuries compliant with Rule 2a-7 under the Investment Company Act of 1940.

We have not engaged in any hedging activities since our inception on April 29, 2015. We do not expect to engage in any hedging activities with respect to the market risk to which we are exposed.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of SeptemberJune 30, 2017.2018. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were effective.

During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

None.

ITEM 1A. RISK FACTORS

Factors that could cause our actual results to differ materially from those in this report are any of the risks described in our Annual Report on Form 10-K filed with the SEC. 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 report, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K filed with the SEC, except we may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.

Nasdaq may delist Easterly’s securities from trading on its exchange, which could limit investors’ ability to make transactions in Easterly’s securities and subject it to additional trading restrictions.

Easterly cannot assure you that Easterly’s securities will continue to be listed on Nasdaq in the future. In order to continue listing Easterly’s securities on Nasdaq, Easterly must maintain certain financial, distribution and stock price levels. Generally, Easterly must maintain a minimum amount in stockholders’ equity (generally $2,500,000) and a minimum number of holders of its securities (generally 300 round-lot holders). Additionally, Nasdaq listing rules require that a special purpose acquisition company like Easterly complete its initial business combination within 36 months of the effectiveness of its IPO registration statement. Easterly’s IPO registration statement was declared effective on July 29, 2015 and, therefore, Easterly is subject to delisting as a result of the failure to complete an initial business combination prior to July 29, 2018. Easterly has received formal notification from the Listing Qualifications Department of The Nasdaq Stock Market regarding the failure to meet such requirement on August 7, 2018.

In addition, on April 2, 2018, Easterly received a notification letter from the staff of the Listing Qualifications Department of The Nasdaq Stock Market notifying it that it no longer complies with Nasdaq Listing Rule 5550(a)(3) for continued listing due to its failure to maintain a minimum of 300 public holders of Easterly common stock. On May 21, 2018, Easterly submitted to Nasdaq a plan to regain compliance. On May 31, 2018, Nasdaq granted Easterly an extension until July 29, 2018 to regain compliance. As of July 29, 2018, Easterly had not regained compliance with such requirement. On August 7, 2018 Easterly received formal notification from the Listing Qualifications Department regarding the failure to meet such requirement by the extended deadline, and Easterly has engaged in preliminary discussions with Nasdaq regarding the merits of maintaining the listing, in light of the pendency of the Merger, there can be no assurance that its securities will remain listed on Nasdaq through the consummation of the Merger in light of the failure to maintain a minimum of 300 public holders of Easterly common stock.

Easterly has the opportunity to appeal Nasdaq’s decision regarding the above failures to a Nasdaq Listing Qualifications Panel, which Easterly intends to do prior to the deadline to appeal. If Easterly appeals in a timely manner, its securities would remain listed pending such decision. However, there can be no assurance that, if Easterly does appeal, such appeal would be successful.

If Nasdaq delists Easterly’s securities from trading on its exchange and Easterly is not able to list its securities on another national securities exchange, Easterly expects its securities could be quoted on an over-the-counter market. If this were to occur, Easterly could face significant material adverse consequences, including:

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because Easterly’s units, common stock and warrants are currently listed on Nasdaq, its units, common stock and warrants are covered securities. Although the states are preempted from regulating the sale of Easterly’s securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While Easterly is not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the state of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if Easterly were no longer listed on Nasdaq, its securities would not be covered securities and Easterly would be subject to regulation in each state in which it offers its securities.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 17, 2016, we issued a convertible promissory note to our sponsor that provides for our sponsor to loan us up to $1,000,000 for ongoing expenses. On March 17, 2016, February 2, 2017, June 29, 2017, July 12, 2017, October 1, 2017, December 4, 2017, February 1, 2018 and October 2, 2017, weApril 6, 2018, the Company borrowed $15,000, $250,000, $75,000, $150,000, $30,000, $75,000, $100,000 and $30,000,$200,000, respectively, pursuant to the convertible promissory note. Our sponsor is not obligated to loan us additional amounts pursuant to the convertible promissory note. The convertible promissory note is interest bearing at 5% per annum and is due and payable on December 15, 2017.November 30, 2018. At the option of our sponsor, any amounts outstanding under the convertible promissory note may be converted into warrants to purchase shares of our common stock at any time on or prior to the maturity date at a conversion price of $1.00 per warrant. Each warrant will entitle our sponsor to purchase one share of common stock at an exercise price of $11.50 per share. Each warrant will contain other terms identical to the terms contained in the private placement warrants. As of SeptemberJune 30, 2017,2018, the outstanding principal balance of this convertible promissory note is $490,000$895,000 and the interest accrued is $12,274.$39,330.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

SIGNATURES

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