NOTE 15

SUBSEQUENT EVENTS

The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date financial statements were issued. Other than as described herein, the Company did not identify any other subsequent events that would have required adjustment or disclosure in the financial statements.

From time to time, the Company is subject to legal proceedings in the ordinary course of business. While management presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm its financial position, cash flows, or overall trends in results of operations, legal proceedings are subject to inherent uncertainties, and unfavorable rulings or outcomes could occur that have, individually or in the aggregate, a material adverse effect on the Company’s business, financial condition, or operating results. The Company is not currently subject to any pending material legal proceedings except as described below.

Private Placement Offerings

On April 26, 2021, the Company and Lincoln Park executed a (i) a purchase agreement (the “Purchase Agreement”); and (ii) a registration rights agreement (the “Registration Rights Agreement”). Pursuant to the Purchase Agreement, the Company will have the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park will be obligated to purchase up to $20,000,000 in the aggregate of shares of common stock. Sales of common stock by the Company, if any, will be subject to certain limitations, and may occur from time to time, at the Company’s sole discretion. For entering into the Purchase Agreement, the Company issued to Lincoln Park 56,041 shares of common shares as consideration for Lincoln Park’s commitment to purchase up to $20,000,000 shares of common stock.

Following the Commencement Date, under the Purchase Agreement, on any business day selected by the Company, the Company may direct Lincoln Park to purchase up to 60,000 shares of common stock on such business day (each, a “Regular Purchase”), provided, however, that (i) the Regular Purchase may be increased to up to 80,000 shares, provided that the closing sale price of the common stock is not below $5.50 on the purchase date; and (ii) the Regular Purchase may be increased to up to 120,000 shares, provided that the closing sale price of the common stock is not below $7.00 on the purchase date. In each case, Lincoln Park’s maximum commitment in any single Regular Purchase may not exceed $1,000,000. The purchase price per share for each such Regular Purchase will be based off of prevailing market prices of common stock immediately preceding the time of sale. In addition to Regular Purchases, the Company may direct Lincoln Park to purchase other amounts as accelerated purchases or as additional accelerated purchases if the closing sale price of the common stock exceeds certain threshold prices as set forth in the Purchase Agreement.

The Purchase Agreement also prohibits the Company from directing Lincoln Park to purchase any shares of common stock if those shares, when aggregated with all other shares of common stock then beneficially owned by Lincoln Park and its affiliates, would result in Lincoln Park and its affiliates having beneficial ownership, at any single point in time, of more than 4.99% of the then total outstanding shares of common stock.

The Company has the right to terminate the Purchase Agreement at any time, at no cost or penalty.

Actual sales of shares of common stock to Lincoln Park under the Purchase Agreement will depend on a variety of factors to be determined by the Company from time to time, including, among others, market conditions, the trading price of the common stock and determinations by the Company as to the appropriate sources of funding for the Company and its operations. The Company expects that any net proceeds received by the Company from such sales to Lincoln Park will be used for research and development, working capital and general corporate purposes.

As of May 14, 2021, we had issued and sold an aggregate of 302,358 shares of common stock to Lincoln Park pursuant to the Purchase Agreement, resulting in gross proceeds of $6.3 million.

Issuance of Option Grants

Howard J. Federoff, M.D., Ph.D., was appointed as Chief Executive Officer, President and a director of the Company as of April 16, 2021. Upon the appointment of Dr. Federoff, he was granted a nonqualified stock option covering 2,627,915 shares of Brooklyn’s common stock (the “Time-Based Option”).

The Time-Based Option will have a per share exercise price equal to the closing price of a share of Brooklyn’s common stock on the NYSE American Stock Exchange on 16 April 2021. Of the shares covered by the Time-Based Option, 656,979 will vest on April 16, 2022, 54,748 will vest on the sixteenth day of each month from May 2022 through March 2025, and the remaining 54,756 will vest on April 16, 2025, in each case for so long as the Dr. Federoff provides continuous service to Brooklyn through the relevant vesting date.

Additionally, on 16 April 2021, Dr. Federoff was granted a nonqualified stock option covering 597,253 shares of Brooklyn’s common stock (the “Milestone Option”). The Milestone Option will have a per share exercise price equal to the closing price of a share of Brooklyn’s common stock on the NYSE American Stock Exchange on 16 April 2021. The Milestone Option will fully vest upon the first concurrence by the US Food and Drug Administration that a proposed investigation may proceed following review of a BTX filed investigational new drug application in connection with that certain license among Brooklyn, Factor Biosciences Therapeutics Limited and Novellus Therapeutics Limited. This milestone is subject to Dr. Federoff’s continuous service with Brooklyn through such vesting date.

The unvested portion of the Time-Based Option and the Milestone Option will terminate upon the termination of Dr. Federoff’s employment with Brooklyn for any reason, subject to certain vesting acceleration provisions upon a qualifying termination, as described in his employment agreement with Brooklyn. Unless earlier terminated in accordance with their terms, each of the Time-Based Option and the Milestone Option will otherwise expire on the 10th anniversary of their respective grant date and be subject to the terms and conditions of the respective option agreement approved by Brooklyn. Each of the Time-Based Option and the Milestone Option is intended to constitute an “employment inducement grant” in accordance with the employment inducement grant rules set forth in Section 711(a) of the NYSE American LLC Company Guide, and is offered as an inducement material to Dr. Federoff in connection with Brooklyn’s hiring of Dr. Federoff and will be granted outside of Brooklyn’s shareholder-approved equity compensation plans.