UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(Amendment No. 1)
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
☐ TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________to ______________
Commission File Number 001-39760
FINTECH ACQUISITION
CORP. V
(Exact Name of Registrant as Specified in Its Charter)
|
Delaware |
|
84-4794021 |
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(I.R.S. Employer
Identification Number)
|
|
2929
Arch Street, Suite 1703, Philadelphia, PA |
|
19104 |
| (Address
of Principal Executive Offices) |
|
(Zip
Code) |
(215) 701-9555
(Registrant’s Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
|
Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
| Class
A Common Stock, par value $0.0001 per share |
|
FTCV |
|
Nasdaq
Capital Market |
| Warrants,
each to purchase one share of Class A Common Stock |
|
FTCVW |
|
Nasdaq
Capital Market |
| Units,
each consisting of one share of Class A Common Stock and one-third
of one Warrant |
|
FTCVU |
|
Nasdaq
Capital Market |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act. Yes
☐ No ☒
Indicate by check mark if the registrant is not required to file
reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes
☐ No ☒
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Exchange
Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and
(2) has been subject to such filing requirement for the past 90
days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted
electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T during the preceding 12
months (or for such shorter period that the registrant was required
to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, a
smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company,” and “emerging growth company” in Rule
12b-2 of the Exchange Act.
| Large
accelerated filer |
☐ |
Accelerated
filer |
☐ |
| Non-accelerated
filer |
☒ |
Smaller
reporting company |
☒ |
| |
Emerging
growth company |
☒ |
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Indicate by check mark whether the registrant has filed a report on
and attestation to its management’s assessment of the effectiveness
of its internal controls over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the
registered public accounting firm that prepared or issued its audit
report. ☐
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes ☒ No
☐
As of June 30, 2021, the last business day of the registrant’s most
recently completed second fiscal quarter, the aggregate market
value of the registrant’s voting securities held by non-affiliates
was approximately $304.75 million, based on the number of shares
held by non-affiliates and the last reported sales price of the
registrant’s Class A common stock as of that date.
As of February 18, 2022, there were 25,640,000 shares of Class A
common stock and 8,546,667 shares of Class B common stock of the
registrant issued and outstanding.
Documents Incorporated by Reference: None.
TABLE OF CONTENTS
EXPLANATORY NOTE
References throughout this Amendment No. 1 to the Annual Report
on Form 10-K to “we,” “us,” the “Company” or “our company” are to
Fintech Acquisition Corp. V, unless the context otherwise
indicates.
This Amendment No. 1 (“Amendment No. 1”) to the Annual Report on
Form 10-K amends the Annual Report on Form 10-K of the Company as
of and for the period ended December 31, 2021, as filed with the
Securities and Exchange Commission (“SEC”) on February 18,
2022.
After further review of the Company’s warrant valuation as of
December 31, 2021, it was determined an adjustment was required to
the financial statements as of and for the period ended December
31, 2021 (the “Original Financial Statements”) related to the
Company’s accounting for complex financial instruments,
specifically warrant liabilities.
As a result, on May 2, 2022, the Company’s management and the Audit
Committee of the Company’s board of directors (the “Audit
Committee”), after consultation with management, concluded that the
Original Financial Statements should no longer be relied upon and
are to be restated in order to make the required
adjustment. The restatement does not have an impact on its
cash position and cash held in the trust account established in
connection with the Initial Public Offering (the “Trust
Account”).
The Company’s management has concluded that material weaknesses
remain in the Company’s internal control over financial reporting
and that the Company’s disclosure controls and procedures were not
effective. The Company’s remediation plan with respect to such
material weaknesses is described in more detail in Part II, Item
9A. Controls and Procedures.
We are filing this Amendment No. 1 to amend and restate the
original filing with modification as necessary to reflect the
restatement. The following items have been amended to reflect the
restatement:
Part I, Item 1A. Risk Factors
Part II, Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Part II, Item 8. Financial Statements and Supplementary Data
Part II, Item 9A. Controls and Procedures
Part IV – Item 15. Exhibits, Financial Statement Schedules
The restatement is more fully described in Note 2 of the notes to
the financial statements included herein.
In addition, the Company’s Chief Executive Officer and Chief
Financial Officer have provided new certifications dated as of the
date of this Amendment No. 1.
GLOSSARY OF TERMS
Unless otherwise provided in this Annual Report on Form
10-K:
| |
● |
references
to “we,” “us,” “company” or “our company” refer to FinTech
Acquisition Corp. V; |
| |
● |
references
to our “sponsor” refer collectively to FinTech Investor Holdings V,
LLC, a Delaware limited liability company, and FinTech Masala
Advisors V, LLC, a Delaware limited liability company. The manager
of each entity is Cohen Sponsor Interests V, LLC, a Delaware
limited liability company; |
| |
● |
references
to “initial holders” or “initial stockholders” are to our sponsor
and any other holders of our founder shares immediately prior to
our initial public offering; |
| |
● |
references
to “founder shares” are to 8,546,667 shares of our Class B common
stock issued by us to our initial stockholders; |
| |
● |
references
to our “initial public offering” means the initial public offering
of 25,000,000 of our units, each unit consisting of one share of
our Class A common stock and one-third of one warrant, where each
whole warrant entitles the holder to purchase one share of our
Class A common stock, which was consummated on December 8,
2020. |
| |
● |
references
to our “management” or our “management team” refer to our officers
and certain of our directors; |
| |
● |
references
to our “public shares” are to shares of our Class A common stock
sold as part of the units in our initial public offering (whether
they were purchased in the initial public offering or thereafter in
the open market); |
| |
● |
references
to “public stockholders” refer to the holders of our public shares,
which may include our initial holders and members of our management
team if and to the extent they have purchased public shares,
provided that any such holder’s status as a “public stockholder”
shall only exist with respect to such public
shares; |
| |
● |
references
to “private placement” refer to the private placement of 640,000
units purchased by our sponsor, which was consummated
simultaneously with the completion of our initial public offering,
at a purchase price of $10.00 per unit for a total purchase price
of $6.4 million; |
| |
● |
references
to “placement units” are to the 640,000 units purchased by our
sponsor in the private placement, each placement unit consisting of
one placement share and one-third of one placement
warrant; |
| |
● |
references
to “placement shares” are to an aggregate of 640,000 shares of our
Class A common stock included within the placement units purchased
by our sponsor in the private placement; |
| |
● |
references
to “placement warrants” are to warrants to purchase an aggregate of
213,333 shares of our Class A common stock included within the
placement units purchased by our sponsor in the private placement;
and |
| |
● |
references
to “trust account” are to the trust account into which $250,000,000
of the net proceeds of the initial public offering and private
placement were deposited for the benefit of the public
stockholders. |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this Annual Report, which reflect
our current views with respect to future events and financial
performance, and any other statements of a future or
forward-looking nature, constitute “forward-looking statements” for
the purposes of federal securities laws. Our forward-looking
statements include, but are not limited to, statements regarding
our or our management’s expectations, hopes, beliefs, intentions or
strategies regarding the future. In addition, any statements that
refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying
assumptions, are forward-looking statements. The words
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intends,” “may,” “might,” “plan,” “possible,” “potential,”
“predict,” “project,” “should,” “would” and similar expressions may
identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking.
Forward-looking statements in this Annual Report may include, for
example, statements about:
| |
● |
the
ability of our officers and directors to generate potential
investment opportunities; |
| |
|
|
| |
● |
our
ability to complete our initial business combination; |
| |
● |
our
success in retaining or recruiting, or changes required in, our
officers, key employees or directors following our initial business
combination; |
| |
● |
the
allocation by our officers and directors of their time to other
businesses and their potential conflicts of interest with our
business or in approving our initial business
combination; |
| |
● |
our
potential ability to obtain additional financing to complete our
initial business combination; |
| |
● |
our
pool of prospective target businesses; |
| |
● |
failure
to maintain the listing on, or the delisting of our securities
from, Nasdaq or an inability to have our securities listed on
Nasdaq or another national securities exchange following our
initial business combination; |
| |
● |
potential
changes in control if we acquire one or more target businesses for
stock; |
| |
● |
our
public securities’ potential liquidity and trading; |
| |
● |
the
lack of a market for our securities; |
| |
● |
the
use of proceeds not held in the trust account or available to us
from interest income on the trust account balance; or |
| |
● |
our
financial performance. |
The forward-looking statements contained in this Annual Report are
based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no
assurance that future developments affecting us will be those that
we have anticipated. These forward-looking statements involve a
number of risks, uncertainties (some of which are beyond our
control) or other assumptions that may cause actual results or
performance to be materially different from those expressed or
implied by these forward-looking statements. These risks and
uncertainties include, but are not limited to, those factors
described under the heading “Risk Factors”. Should one or more of
these risks or uncertainties materialize, or should any of our
assumptions prove incorrect, actual results may vary in material
respects from those projected in these forward-looking statements.
We undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as may be required under applicable securities
laws.
Risk Factor Summary
Our business is subject to numerous risks and uncertainties,
including those highlighted in the section title “Risk Factors,”
that represent challenges that we face in connection with the
successful implementation of our strategy. The occurrence of one or
more of the events or circumstances described in the section titled
“Risk Factors,” alone or in combination with other events or
circumstances, may adversely affect our ability to effect a
business combination, and may have an adverse effect on our
business, cash flows, financial condition and results of
operations. Such risks include, but are not limited to:
| |
● |
We
are a company with no operating history and no revenues, and you
have no basis on which to evaluate our ability to achieve our
business objective. |
| |
● |
Our
public stockholders may not be afforded an opportunity to vote on
our proposed business combination, which means we may complete our
initial business combination even though a majority of our public
stockholders do not support such a combination. |
| |
● |
The
ability of our public stockholders to exercise redemption rights
with respect to a large number of our shares could increase the
probability that our initial business combination would be
unsuccessful and that you would have to wait for liquidation in
order to redeem your stock. |
| |
● |
We
may not be able to complete our initial business combination within
the prescribed time frame, in which case we would cease all
operations except for the purpose of winding up and we would redeem
our public shares and liquidate, in which case our public
stockholders may receive only $10.00 per share, or less than such
amount in certain circumstances, and our warrants will expire
worthless. |
| |
● |
If we
seek stockholder approval of our initial business combination, our
sponsor, directors, officers, advisors and their affiliates may
elect to purchase shares from public stockholders, which may
influence a vote on a proposed business combination and reduce the
public “float” of our Class A common stock. |
| |
● |
NASDAQ
may delist our securities from trading on its exchange, which could
limit investors’ ability to make transactions in our securities and
subject us to additional trading restrictions. |
| |
● |
Our
search for a business combination, and any target business with
which we ultimately consummate a business combination, may be
materially adversely affected by the recent coronavirus (COVID-19)
outbreak and the status of debt and equity markets. |
| |
● |
You
are not entitled to protections normally afforded to investors of
many other blank check companies. |
| |
● |
If
the net proceeds of the initial public offering and the sale of the
placement units not being held in the trust account are
insufficient to allow us to operate until December 8, 2022, we may
be unable to complete our initial business combination, in which
case our public stockholders may only receive $10.00 per share, or
less than such amount in certain circumstances, and our warrants
will expire worthless. |
| |
● |
If
third parties bring claims against us, the proceeds held in the
trust account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per
share. |
| |
● |
We
may not hold an annual meeting of stockholders until after the
consummation of our initial business combination, which could delay
the opportunity for our stockholders to elect
directors. |
| |
● |
The
grant of registration rights to our initial stockholders and
purchasers of the placement units may make it more difficult to
complete our initial business combination, and the future exercise
of such rights may adversely affect the market price of our
Class A common stock. |
| |
● |
Past
performance by our management team may not be indicative of future
performance of an investment in us. |
| |
● |
We
may enter into our initial business combination with a target that
does not meet such criteria and guidelines, and as a result, the
target business with which we enter into our initial business
combination may not have attributes entirely consistent with our
general criteria and guidelines. |
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|
|
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● |
Our
warrants are accounted for as liabilities and the changes in value
of our warrants could have a material effect on our financial
results. |
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● |
We
have identified material weaknesses in our internal control over
financial reporting. |
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|
|
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● |
Certain
of our officers and directors are now, and all of them may in the
future become, affiliated with entities engaged in business
activities similar to those intended to be conducted by us and,
accordingly, may have conflicts of interest in allocating their
time and determining to which entity a particular business
opportunity should be presented. |
| |
● |
Since
our sponsor, officers and directors will lose their entire
investment in us if our business combination is not completed, a
conflict of interest may arise in determining whether a particular
business combination target is appropriate for our initial business
combination. |
| |
● |
We
may attempt to complete our initial business combination with a
private company about which little information is available, which
may result in a business combination with a company that is not as
profitable as we suspected, if at all. |
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● |
We do
not have a specified maximum redemption threshold. The absence of
such a redemption threshold may make it possible for us to complete
a business combination with which a substantial majority of our
stockholders do not agree. |
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● |
We
may be unable to obtain additional financing to complete our
initial business combination or to fund the operations and growth
of a target business, which could compel us to restructure or
abandon a particular business combination. |
| |
● |
Our
initial stockholders will control the election of our board of
directors until consummation of our initial business combination
and will hold a substantial interest in us. As a result, they will
elect all of our directors prior to the consummation of our initial
business combination. |
| |
● |
Our
initial stockholders may exert a substantial influence on actions
requiring a stockholder vote, potentially in a manner that you do
not support. |
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● |
A
market for our securities may not develop, which would adversely
affect the liquidity and price of our securities. |
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● |
Our
amended and restated certificate of incorporation requires, to the
fullest extent permitted by law, that derivative actions brought in
our name, actions against our directors, officers, other employees
or stockholders for breach of fiduciary duty and other similar
actions may be brought only in the Court of Chancery in the State
of Delaware and, if brought outside of Delaware, the stockholder
bringing the suit will be deemed to have consented to service of
process on such stockholder’s counsel, which may have the effect of
discouraging lawsuits against our directors, officers, other
employees or stockholders. |
PART I
Item
1. BUSINESS
Overview
We are a blank check company incorporated 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. We have
generated no operating revenues to date, and we do not expect that
we will generate operating revenues until we consummate our initial
business combination.
We have concentrated our efforts in identifying businesses which
provide technological services to the financial services industry,
with particular emphasis on businesses that provide data
processing, storage and transmission services, data bases and
payment processing services. We have sought to acquire established
businesses that we believe are fundamentally sound but potentially
in need of financial, operational, strategic or managerial
redirection to maximize value. We do not intend to acquire start-up
companies, companies with speculative business plans or companies
that are excessively leveraged.
At December 31, 2021, we had not yet commenced operations. All
activity through December 31, 2021 relates to the Company’s
formation and its initial public offering, and identifying a target
company for our initial business combination.
The registration statement for our initial public offering was
declared effective on December 3, 2020. On December 8, 2020, we
consummated the initial public offering of 25,000,000 units
generating gross proceeds of $250,000,000.
Simultaneously with the closing of the initial public offering, we
consummated the sale of 640,000 placement units at a price of
$10.00 per unit in a private placement to our sponsor, generating
gross proceeds of $6,400,000.
Following the closing of the initial public offering on December 8,
2020, an amount of $250,000,000 ($10.00 per unit) from the net
proceeds of the sale of the units in the initial public offering
and the placement units was placed in a trust account and invested
in U.S. government securities, within the meaning set forth in
Section 2(a)(16) of the Investment Company Act of 1940, as amended
(the “Investment Company Act”), with a maturity of 185 days or less
or in money market funds meeting certain conditions under Rule 2a-7
under the Investment Company Act which invest only in direct U.S.
government treasury obligations, as determined by the Company,
until the earlier of: (i) the consummation of a business
combination, (ii) the redemption of any public shares in connection
with a stockholder vote to amend our amended and restated
certificate of incorporation to modify the substance or timing of
our obligation to redeem 100% of our public shares if we do not
complete a business combination within 24 months from the
consummation of the initial public offering; or (iii) the
distribution of the trust account, if we are unable to complete a
business combination within the combination period or upon any
earlier liquidation of us.
The Merger Agreement
On March 16, 2021, the Company entered into an Agreement and Plan
of Merger (the “Merger Agreement”) among eToro Group Ltd., a
company organized under the laws of the British Virgin Islands
(“eToro”), Buttonwood Merger Sub Corp., a Delaware corporation and
a direct, wholly-owned subsidiary of eToro (“Merger Sub”), and the
Company, which provides for, among other things, the merger of
Merger Sub with and into the Company (the “Merger”), with the
Company surviving as a wholly-owned subsidiary of eToro (the
“Business Combination”). At the closing of the Business Combination
and the effective time of the Merger (the “Effective Time”), the
stockholders of the Company will receive certain of the common
shares, no par value, of eToro (“eToro Common Shares”), and eToro
will list as a publicly traded company on NASDAQ and will continue
to conduct the social trading platform business conducted by eToro
prior to the Business Combination. Concurrently with the execution
and delivery of the Merger Agreement, eToro entered into
subscription agreements (the “PIPE Subscription Agreements”) with
certain investors (the “PIPE Investors”), including an affiliate of
our sponsor, pursuant to which the PIPE Investors have committed to
subscribe for and purchase up to 65,000,000 shares of eToro Common
Shares at a purchase price per share of $10.00, for an aggregate
purchase price of $650,000,000 (the “PIPE Investment”).
Under the Merger Agreement, each of eToro and the Company had the
right to terminate the Merger Agreement if the closing of the
Business Combination did not occur by December 31, 2021. In
addition, the PIPE Subscription Agreements were scheduled to
terminate automatically in accordance with their terms on that same
date. On December 30, 2021, eToro and the Company entered into an
amendment to the Merger Agreement (the “Merger Agreement
Amendment”), pursuant to which the parties thereto agreed, among
other things, to extend the Outside Date (as defined in the Merger
Agreement) from December 31, 2021 to June 30, 2022, and to change
the pre-money valuation of eToro from $9.301 billion to $7.906
billion. In addition, the number of Price Adjustment Rights (as
defined in the Merger Agreement and further described below) that
correspond to the $17.50 price trigger issuable to eToro
shareholders was reduced on a one-for-one basis for every warrant
to be issued to the investors under the PIPE Subscription
Agreements at the closing of the Business Combination. References
to the Merger Agreement mean the Merger Agreement as amended by the
Merger Agreement Amendment (unless otherwise indicated by the
context in which such reference is used).
Concurrently with entering into the Merger Agreement Amendment,
eToro entered into amendments to certain of its Subscription
Agreements (collectively, the “Subscription Agreement Amendments”).
Under the Amended Subscription Agreements, the relevant parties
agreed, among other things, to extend the date on which the
Subscription Agreements would have otherwise automatically
terminated from December 31, 2021 to June 30, 2022. Additionally,
the investors party to the Amended Subscription Agreements will
receive warrants to purchase common shares of eToro if, following
the closing, the eToro closing stock price is equal to or greater
than $17.50 over a specified period, which warrants have
substantially similar terms to the terms of the Price Adjustment
Rights. Under the Amended Subscription Agreements, as of the date
of this communication, eToro has received commitments under Amended
Subscription Agreements for $441 million in the aggregate. eToro
has the right, under the Merger Agreement Amendment, to enter into
additional subscription agreements prior to the closing of the
Business Combination on the same terms as the Amended Subscription
Agreements so long as the total amount subscribed for under all
such subscription agreements does not exceed $650 million.
References to the PIPE Subscription Agreements mean the PIPE
Subscription Agreements as amended by the Subscription Agreement
Amendments (unless otherwise indicated by the context in which such
reference is used).
The Merger Agreement contemplates an estimated implied post-money
equity value of eToro of approximately $8.8 billion ( assuming,
among other things, that no public shares are redeemed in
connection with the Business Combination and that the funding under
the PIPE Subscription Agreements totals $441 million). Except with
respect to the Price Adjustment Rights, no purchase price
adjustments will be made in connection with the closing of the
transactions contemplated by the Merger Agreement. Assuming no
public shares are redeemed in connection with the Business
Combination, immediately following the Effective Time, the
Company’s public stockholders will own approximately
% of the eToro Common Shares;
our sponsor will own approximately
% of the eToro Common Shares;
the shareholders of eToro as of immediately prior to the Business
Combination (the “Legacy eToro Shareholders”) will own
approximately % of the eToro
Common Shares; and the PIPE Investors (as defined below) will own
approximately % of the eToro
Common Shares. The pro forma ownership percentages described in the
foregoing sentence exclude the Company’s public warrants and the
eToro Common Shares underlying the Price Adjustment Rights. As
further described under “Sponsor Surrender and Restriction
Agreement” and “Lock-Up Agreement” below, all of the eToro Common
Shares to be issued to our sponsor in the Business Combination will
be subject to contractual restrictions on transfer and only
released upon the occurrence of certain time-based, stock-price
performance or other events.
Immediately prior to the Effective Time, subject to the receipt of
applicable approvals of eToro shareholders, (i) each outstanding
preferred share of eToro (“eToro Preferred Shares”) will be
converted into eToro Common Shares in accordance with, and based on
the applicable conversion ratio set forth in, the memorandum and
articles of association of eToro (the “Conversion”), (ii)
immediately following the Conversion, all outstanding eToro Common
Shares, and all eToro Common Shares underlying vested options to
acquire eToro Common Shares (“Vested Options”), will be
reclassified into (together, the “Reclassification”) (x) eToro
Common Shares and (y) certain rights to receive, without any
further action required by the holders of such rights, in the
aggregate, up to an additional 40,000,000 eToro Common Shares (less
the number of shares subject to warrants issued pursuant to the
Subscription Agreement Amendments), 50% of which will automatically
vest and be exercised if, at any time on or prior to the last day
of the 30th month following the Closing Date (as defined below),
the stock price of the eToro Common Shares is greater than or equal
to $15.00 over any 20 trading days within any 30 trading day
period, and 50% which will automatically vest and be exercised if,
at any time on or prior to the last day of the 60th month following
the Closing Date, the stock price of the eToro Common Shares is
greater than or equal to $17.50 over any 20 trading days within any
30 trading day period, subject in either case to the earlier
automatic vesting and exercise immediately prior to the occurrence
of a liquidation, merger, capital stock exchange, or other similar
transaction that results in all of eToro’s shareholders having the
right to exchange their eToro Common Shares for cash, securities or
other property (the “Price Adjustment Rights”), and (iii)
immediately following the Reclassification, eToro will effect a
stock split of each then-outstanding eToro Common Share and each
eToro Common Share underlying any outstanding options to acquire
eToro Common Shares, whether vested or unvested (“eToro Options”),
into such number of eToro Common Shares determined by multiplying
such eToro Common Shares by a “Split Factor” that is equal to the
result of (A) $7,096,000,000 divided by (B) the total number of
issued and outstanding eToro Common Shares, plus the total number
of eToro Common Shares underlying any outstanding eToro options to
acquire eToro Common Shares, with the result of such calculation
divided by (C) $10.00, all as further described in and as
calculated in accordance with the Merger Agreement (the “Stock
Split” and, together with the Conversion and the Reclassification,
the “Capital Restructuring”). As part of the Business Combination
and on the terms and subject to the conditions set forth in the
Merger Agreement, eToro effected a self-tender offer (“Self-Tender
Offer”) to purchase up to $300,000,000 in eToro Common Shares from
the Legacy eToro Shareholders, such purchase in such Self-Tender
Offer to be consummated immediately prior to the closing of the
Business Combination in such amount (up to $300,000,000) as is
elected by eToro.
At the Effective Time, (i) each share of Company Class A common
stock issued and outstanding immediately prior to the Effective
Time (after giving effect to any redemptions by the Company’s
public stockholders), by virtue of the Merger and upon the terms
and subject to the conditions set forth in the Merger Agreement,
will be converted into and will for all purposes represent only the
right to receive one eToro Common Share (the “Per Share Merger
Consideration”), (ii) after giving effect to the Sponsor Forfeiture
(as defined below), each share of Company Class B common stock
issued and outstanding immediately prior to the Effective Time, by
virtue of the Merger and upon the terms and subject to the
conditions set forth in the Agreement, will be converted into and
will for all purposes represent only the right to receive the Per
Share Merger Consideration (the aggregate number of eToro Common
Shares into which shares of Company Class A common stock and
Company Class B common stock are converted into pursuant to the
Merger Agreement, the “Merger Consideration”) and (iii) all of
the shares of Company Class A common stock and Company Class B
common stock converted into the right to receive the Merger
Consideration will no longer be outstanding and will cease to
exist, and each holder of any shares of Company Class A common
stock or Company Class B common stock will thereafter cease to have
any rights with respect to such securities, except the right to
receive the applicable portion of the Merger Consideration. The
Merger Consideration does not include any, or any rights to receive
any consideration in respect of, the Price Adjustment Rights.
After giving effect to the Sponsor Forfeiture, the Company’s
outstanding warrants to purchase one share of Company Class A
common stock shall be converted into the right to receive an equal
number of warrants to purchase one eToro Common Share (“eToro
Warrants”).
The Merger Agreement provides that in connection with the
consummation of the Business Combination, eToro will adopt a 2021
Share Incentive Plan (the “Plan”), pursuant to which service
providers will be provided incentive equity opportunities in
support of eToro’s business following the closing of the Business
Combination. The number of eToro Common Shares to be reserved for
issuance under the Plan will be equal to (i) 3% of the total
outstanding number of eToro Common Share as of immediately after
the consummation of the Business Combination, calculated on a
fully-diluted basis including all equity awards, warrants and other
convertible securities outstanding as of such time, and the
aggregate maximum number of eToro Common Shares underlying
outstanding Price Adjustment Rights, plus (ii) an annual increase
equal to the lesser of 3% of the aggregate number of eToro Common
Shares outstanding and the number of eToro Common Shares determined
for such purpose by the board of directors of eToro.
Consummation of the transactions contemplated by the Merger
Agreement is subject to customary mutual conditions of the
respective parties, including the effectiveness of eToro’s
registration statement on Form F-4 relating to the Business
Combination and receipt of the requisite approvals of the eToro
shareholders and the Company stockholders. The Merger Agreement may
be terminated at any time prior to the consummation of the Business
Combination by mutual written consent of the Company and eToro and
in certain other limited circumstances, including if the closing of
the transactions contemplated in the Merger Agreement has not
occurred by June 30, 2022. The Merger Agreement has been approved
by the Company’s board of directors, and the board has recommended
that the Company’s stockholders adopt the Merger Agreement and
approve the Business Combination.
Sponsor Commitment Letter
Concurrently with the execution and delivery of the Merger
Agreement, in support of the Business Combination, our sponsor and
Cohen Sponsor Interests V, LLC, a Delaware limited liability
company (together, the “Sponsor Group”), entered into and delivered
to eToro a letter agreement (the “Sponsor Commitment Letter”) by
which (i) the Sponsor Group and eToro acknowledge that the Sponsor
Group may, directly or through affiliates, make open market
purchases of Company Class A common stock prior to the Effective
Time in an amount of up to $27,500,000, and (ii) the Sponsor Group
will, directly or through affiliates, and contingent upon the
satisfaction of the conditions precedent to the Business
Combination set forth in the Merger Agreement, purchase, or cause
the purchase of, eToro Common Shares at $10.00 per share and at an
aggregate cash purchase price equal to the amount paid, or required
to be paid, by the Company to redeem any Company Class A common
stock in excess of 1,250,000 shares of Company Class A common
stock, with such purchases to occur at the time of the closing of
the Business Combination (after the Capital Restructuring) (the
“Sponsor Commitment”); provided that the amount paid by
the Sponsor Group to acquire eToro Common Shares under the
transaction described in clause (ii) shall be reduced by the
aggregate amount of documented open market purchases of Company
Class A common stock prior to the Effective Time effected by
Sponsor Group directly or through affiliates.
Voting Agreements
Concurrently with the execution and delivery of the Merger
Agreement, in support of the Business Combination, our sponsor
(each, a “Voting Party” and together, the “Voting Parties”) entered
into a Voting Agreement with eToro (the “FTV Voting Agreement”),
pursuant to which each Voting Party agreed to (i) (whether at a
special meeting of the Company’s stockholders or by action by
written consent), among other things, vote all of their shares of
Company common stock beneficially owned or held by such Voting
Party (together, the “Voting Shares”) in favor of the Merger
Agreement, the Merger and related transactions, and (ii) vote
against any action or proposal (a) concerning any other business
combination involving the Company (other than by eToro or its
affiliates), (b) that could reasonably be expected to result in a
breach of any covenant or obligation of the Company in the Merger
Agreement or in any representation or warranty of the Company set
forth therein becoming inaccurate, and (c) that could reasonably be
expected to impede, interfere with, delay, discourage, adversely
affect or inhibit the timely consummation of the Merger or the
fulfillment of the Company’s conditions under the Merger Agreement
or change in any manner the voting rights of any class of the
Company’s shares. In addition, the FTV Voting Agreement requires
each Voting Party to refrain from taking actions that would
adversely affect such Voting Party’s ability to perform its
obligations under such agreement, and provides a proxy to certain
officers of the Company to vote such Voting Party’s Voting Shares
(or act by written consent in respect of such shares) accordingly.
The FTV Voting Agreement also requires the Voting Parties to (i)
take such actions as are necessary to terminate that certain
Registration Rights Agreement dated as of December 3, 2020, by and
among the Company and the Voting Parties, (ii) waive any
dissenters’ or appraisal rights, (iii) not participate in any claim
against the Company relating in any manner to the Merger Agreement
or the Merger, and (iv) refrain from exercising any redemption
rights in respect of the Voting Shares or making any public
statements with the intent to encourage any Company stockholder to
exercise any such rights. In addition, each of the Voting Parties
agreed not to transfer, directly or indirectly, any of their Voting
Shares until the earlier of the Effective Time and the date on
which the Merger Agreement is terminated in accordance with its
terms, subject to certain exceptions described in the FTV Voting
Agreement.
Concurrently with the execution and delivery of the Merger
Agreement, certain directors and officers and all 5% shareholders
of eToro (each, an “eToro Voting Party” and together, the “eToro
Voting Parties”) entered into a voting agreement with the Company
(the “eToro Voting Agreement”). Under the eToro Voting Agreement,
each eToro Voting Party agreed to (i) (whether at a special meeting
of eToro’s shareholders or by action by written consent), among
other things, vote all of their shares of eToro capital stock
beneficially owned or held by such eToro Voting Party (as
applicable, and together, the “eToro Voting Shares”) in favor of
the Merger Agreement, the Merger and related transactions
(including the Capital Restructuring and the Self-Tender Offer),
and (ii) vote against any action or proposal (a) concerning any
other business combination involving eToro (other than by the
Company or its affiliates), (b) that could reasonably be expected
to result in a breach of any covenant or obligation of eToro in the
Merger Agreement or in any representation or warranty of eToro set
forth therein becoming inaccurate, and (c) that could reasonably be
expected to impede, interfere with, delay, discourage, adversely
affect or inhibit the timely consummation of the Merger or the
fulfillment of eToro’s conditions under the Merger Agreement or
change in any manner the voting rights of any class of eToro’s
shares. In addition, the eToro Voting Agreement requires each eToro
Voting Party to refrain from taking actions that would adversely
affect such eToro Voting Party’s ability to perform its obligations
under such agreement, and provides a proxy to certain officers of
eToro to vote such eToro Voting Party’s eToro Voting Shares (or act
by written consent in respect of such shares) accordingly. The
eToro Voting Agreement also requires the eToro Voting Parties to
(i) waive any dissenters’ or appraisal rights, (ii) not participate
in any claim against eToro relating in any manner to the Merger
Agreement, the Merger, the Capital Restructuring or Self-Tender
Offer and (iii) refrain from exercising any registration or other
rights in respect of the eToro Voting Shares. In addition, each of
the eToro Voting Parties agreed not to transfer, directly or
indirectly, any of their eToro Voting Shares until the earlier of
the Effective Time and the date on which the Merger Agreement is
terminated in accordance with its terms, subject to certain
exceptions described in the eToro Voting Agreement.
Lock-Up Agreement
Concurrently with the execution and delivery of the Merger
Agreement, in support of the Business Combination, eToro, certain
of the officers and directors of eToro (the “eToro Management
Holders”), and our sponsor entered into and delivered a Lock-Up
Agreement (the “Lock-Up Agreement”), pursuant to which (i) the
eToro Management Holders have agreed not to transfer any eToro
Common Shares held by them (“Management Holders Lock-Up Shares”)
until 180 days following the Closing Date, subject to early release
if the stock price of the eToro Common Shares exceeds $12.50 for
any 20 trading days within any 30 consecutive trading day period,
and (ii) our sponsor has agreed not to transfer any eToro Common
Shares acquired by it as Merger Consideration (“Sponsor Lock-Up
Shares”, and together with the Management Holders Lock-Up Shares,
the “Lock-Up Shares”) until the date of the first to occur of one
(1) year following the Closing Date, subject to early release if
the stock price of the eToro Common Shares exceeds $12.50 for any
20 trading days within any 30 consecutive trading day period (as
further described therein, but in any event not prior to the date
that is one hundred and eighty (180) days after the Closing Date),
in each case subject to certain permitted transfers (provided that
such permitted transferees agree to be bound by the same transfer
restrictions set forth in the Lock-Up Agreement). The foregoing
restrictions on transfer of the Lock-up Shares will terminate and
no longer be applicable on the first to occur of (x) the five (5)
year anniversary of the Closing Date, (y) the date on which eToro
completes a liquidation, merger, capital stock exchange, or other
similar transaction that results in all of eToro’s shareholders
having the right to exchange their eToro Common Shares for cash,
securities or other property, and (z) the date all of the Lock-Up
Shares are no longer subject to the transfer restrictions set forth
in the Lock-Up Agreement. On or prior to (June 30, 2022, the
Sponsor may cause a portion of the Sponsor Lock-Up Shares be
released from foregoing restrictions on transfer of the Sponsor’s
Lock-up Shares (such portion, the “Early Release Shares”) by
delivering to eToro a written notice requesting such release for a
legitimate business purpose in connection with the Merger in
respect of such release.
The eToro Common Shares held by all other significant eToro
stockholders that are not a party to the Lock-Up Agreement will be
subject to the same transfer restrictions applicable to the
Management Holders Lock-Up Shares pursuant to amendments to
existing stockholder agreements to which those stockholders are a
party that were executed concurrently with the Merger Agreement and
a formal resolution by the eToro board of directors interpreting
the terms of eToro’s 2007 employee stock ownership plan.
Sponsor Surrender and Restriction Agreement
Concurrently with the execution and delivery of the Merger
Agreement, in support of the Business Combination, our sponsor, the
Company, eToro and the other persons party to that certain letter
agreement dated December 3, 2020, with the Company (the “Insider
Letter”), have entered into and delivered a Sponsor Share Surrender
and Share Restriction Agreement (the “Sponsor Surrender and
Restriction Agreement”), which provides that (i) our sponsor will
upon the Effective Time, immediately prior to the consummation of
the Business Combination, surrender to the Company, for no
consideration, (a) 15% of the shares of Company Class B common
stock held by our sponsor (the “Surrendered Shares”) and (b) 100%
of the private placement warrants to purchase an aggregate of
213,333 shares of our common stock held by our sponsor (the
“Surrendered Warrants”), and such Surrendered Shares and
Surrendered Warrants shall be canceled and no longer outstanding
(the “Sponsor Forfeiture”), (ii) if more than 20% of the Company
Class A common stock (the “Redemption Floor”) is submitted for
redemption, then our sponsor will upon the Effective Time,
immediately prior to the consummation of the Business Combination,
surrender to the Company, for no consideration, a number of shares
of Company Class B common stock as is equal to one percent (1%) of
the number of shares of Company Class B common stock outstanding on
the date of signing of the Merger Agreement for every additional
one percent (1%) of the number of shares of Company Class A common
stock being redeemed in excess of the Redemption Floor, and (iii)
75% of the number of eToro Common Shares held by our sponsor
immediately after giving effect to the Business Combination will be
subject to transfer restrictions (in addition, and subject, to
those provided by the Lock-Up Agreement) based on certain closing
share price thresholds of the eToro Common Shares for 20 out of any
30 consecutive trading days, subject to certain permitted transfers
(provided that such permitted transferees agree to be bound by the
same transfer restrictions set forth in the Sponsor Surrender and
Restriction Agreement) and early release of the Early Release
Shares, in each case as described therein.
Registration Rights Agreement
The Merger Agreement contemplates that, at the Effective Time,
eToro, the Company, our sponsor and certain Legacy eToro
Shareholders will enter into a Registration Rights Agreement (the
“Registration Rights Agreement”), pursuant to which eToro will
agree to file a shelf registration statement, by no later than five
(5) business days following the Closing Date, to register the
resale of the eToro Common Shares and eToro Warrants held by our
sponsor and the Legacy eToro Shareholders party thereto as of the
Closing Date. The Registration Rights Agreement also provides our
sponsor with one (1) demand right to conduct an underwritten
offering of the Early Release Shares, subject to certain
limitations set forth in the Registration Rights Agreement. From
time to time, the Company may admit additional parties to the
Registration Rights Agreement and register their securities on a
shelf registration statement. In addition, in connection with the
execution of the Registration Rights Agreement, the existing
registration rights agreement of the Company, dated December 3,
2020 will automatically terminate and be of no further force and
effect. The Registration Rights Agreement also provides that eToro
will pay certain expenses relating to such registrations and
indemnify the securityholders party thereto against certain
liabilities.
PIPE Subscription Agreements
As noted above, concurrently with the execution and delivery of the
Merger Agreement, eToro entered into the PIPE Subscription
Agreements with the PIPE Investors, which were then amended
pursuant to the Subscription Agreement Amendments. Under the PIPE
Subscription Agreements, the PIPE Investors have committed to
subscribe for and purchase up to 44,100,000 shares of eToro Common
Shares at a purchase price per share of $10.00, for an aggregate
purchase price of $441,000,000 (the “PIPE Investment”).
Additionally, PIPE Investors will receive warrants to purchase
common shares of eToro if, following the closing, the eToro closing
stock price is equal to or greater than $17.50 over a specified
period, which warrants have substantially similar terms to the
terms of the Price Adjustment Rights (and which correspondingly
reduce the number of Price Adjustment Rights to be issued under the
Merger Agreement). eToro has the right, under the Merger Agreement
Amendment, to enter into additional subscription agreements prior
to the closing of the Business Combination on the same terms as the
Amended Subscription Agreements so long as the total amount
subscribed for under all such subscription agreements does not
exceed $650 million.
The PIPE Subscription Agreements provide for certain registration
rights. In particular, eToro is required to, as soon as practicable
but no later than 30 days following the Closing Date, submit to or
file with the SEC a registration statement registering the resale
of such shares. Additionally, eToro is required to use its
commercially reasonable efforts to have the registration statement
declared effective as soon as practicable after the filing thereof,
but no later than the earlier of (i) the 60th calendar day
following the filing date thereof, (ii) the first anniversary of
the date of the PIPE Subscription Agreements and (iii) the 5th
business day after the date eToro is notified (orally or in
writing, whichever is earlier) by the SEC that the registration
statement will not be “reviewed” or will not be subject to further
review. eToro must use commercially reasonable efforts to keep the
registration statement effective until the earliest of: (x) the
date the PIPE Investors no longer hold any registrable shares, (y)
the date all registrable shares held by the PIPE Investors may be
sold without restriction under Rule 144 under the Securities Act
and (z) three (3) years from the date of effectiveness of such
registration statement.
Business Combination Structure
We anticipate structuring our initial business combination to
acquire 100% of the equity interest or assets of the target
business or businesses.
NASDAQ rules require that our initial business combination must be
with one or more target businesses that together have a fair market
value equal to at least 80% of the balance in the trust account
(less any deferred underwriting commissions and taxes payable on
interest earned) at the time of our signing a definitive agreement
in connection with our initial business combination. The fair
market value of the target or targets will be determined by our
board of directors. If our board of directors is not able to
independently determine the fair market value of our initial
business combination, we will obtain an opinion from an independent
investment banking firm or another independent entity that commonly
renders valuation opinions with respect to the satisfaction of such
criteria.
Business Strategy
We will seek to capitalize on the significant financial services,
financial technology and banking experience and contacts of Daniel
G. Cohen, our Chief Executive Officer, Betsy Z. Cohen, the Chairman
of our Board of Directors, James J. McEntee, III, our President,
and our board of directors to identify, evaluate, acquire and
operate a financial technology business. If we elect to pursue an
investment outside of the financial technology industry, our
management’s expertise related to that industry may not be directly
applicable to its evaluation or operation, and the information
regarding that industry might not be relevant to an understanding
of the business that we elect to acquire.
Members of our management team served as executive officers and/or
directors of FinTech Acquisition Corp., or FinTech I, a former
blank check company which raised $100.0 million in its initial
public offering in February 2015 and completed its initial
business combination when it acquired FTS Holding Corporation in
July 2016, which we refer to as the FinTech I
Acquisition, in connection with which FinTech I changed its name to
CardConnect Corp. The common stock of CardConnect Corp. was traded
on NASDAQ under the symbol “CCN” until CardConnect Corp. was
acquired by First Data Corporation in July 2017. Members of
our management team also served as executive officers and/or
directors of FinTech Acquisition Corp. II, or FinTech II, a blank
check company which raised $175.0 million in its initial
public offering in January 2017 and completed its initial
business combination when it acquired Intermex Holdings II in
July 2018, which we refer to as the FinTech II Acquisition, in
connection with which FinTech II changed its name to International
Money Express, Inc. Members of our management team served as
executive officers and/or directors of FinTech Acquisition
Corp. III, or FinTech III, a blank check company which raised
$345.0 million in its initial public offering in November 2018
and completed its initial business combination with Paya, Inc. in
October 2020, which we refer to as the FinTech III
Acquisition. Members of our management team have also served as
executive officers and/or directors of FinTech Acquisition
Corp. IV, or FinTech IV, a blank check company which
raised $230.0 million in its initial public offering in
September 2020 and completed its initial business combination
with PWP Holdings LP, in June 2021, which we refer to as the
FinTech IV Acquisition. Members of our management team also
served as executive officers and/or directors of FTAC Olympus
Acquisition Corp., or FTAC Olympus, a blank check company which
raised $754.7 million in its initial public offering in
August 2020 and completed its initial business combination
with Payoneer Inc. in June 2021, which we refer to as the FTAC
Olympus Acquisition. Additionally, members of our board of
directors and management team also currently serve as executive
officers, directors and/or advisors of: FTAC Athena Acquisition
Corp. (NASDAQ: FTAA), or FTAC Athena, a blank check company which
raised $250.0 million in its initial public offering in
February 2021; FTAC Hera Acquisition Corp. (NASDAQ: HERA), or FTAC
Hera, a blank check company which raised approximately
$850 million in its initial public offering in March 2021;
FTAC Parnassus Acquisition Corp. (NASDAQ: FTPA), or FTAC Parnassus,
a blank check company which raised $250.0 million in its
initial public offering in March 2021; FinTech Acquisition
Corp. VI (NASDAQ: FTVI), or FinTech VI, a blank check company which
raised $250.0 million in its initial public offering in
June 2021; INSU Acquisition Corp. IV, or INSU IV, a blank
check company currently in registration with the SEC; FTAC Zeus
Acquisition Corp. (NASDAQ: ZING), or FTAC Zeus, a blank check
company which raised $402.5 million in its initial public
offering in November 2021; and FTAC Emerald Acquisition Corp.
(NASDAQ: EMLD), or FTAC Emerald, a blank check company which raised
$220 million in its initial public offering in December 2021.
We believe that potential sellers of target businesses will view
the fact that members of our board of directors and management team
have successfully closed multiple business combinations with
vehicles similar to our company as a positive factor in considering
whether or not to enter into a business combination with us.
However, past performance is not a guarantee of success with
respect to any business combination we may consummate.
Daniel G. Cohen, our Chief Executive Officer, Betsy Z. Cohen, our
Chairman of the Board, and James J. McEntee, III, our President,
have extensive experience in the financial services industry
generally, and the financial technology industry in particular, as
well as extensive experience in operating financial services
companies in a public company environment.
Mr. Cohen, with over 22 years of experience in financial services
and financial technology, is the Chairman of the Board of Directors
and of the Board of Managers of Cohen & Company, LLC, and
serves as the President and Chief Executive of the European
Business of Cohen & Company Inc. (NYSE American: COHN), a
financial services company with approximately $2.24 billion in
assets under management as of September 30, 2021, and as President,
a director and the Chief Investment Officer of Cohen & Company
Inc.’s indirect majority owned subsidiary, Cohen & Company
Financial Limited (formerly known as EuroDekania Management
Limited), a Financial Conduct Authority regulated investment
advisor and broker dealer focusing on the European capital markets
(“CCFL”). Mr. Cohen previously served as Vice Chairman of the Board
of Directors and of the Board of Managers of Cohen & Company,
LLC. Mr. Cohen served as the Chief Executive Officer and Chief
Investment Officer of Cohen & Company Inc. from December 16,
2009 to September 16, 2013 and as the Chairman of the Board of
Directors from October 6, 2006 to September 16, 2013. Mr. Cohen
served as the executive Chairman of Cohen & Company Inc. from
October 18, 2006 to December 16, 2009. In addition, Mr. Cohen
served as the Chairman of the Board of Managers of Cohen &
Company, LLC from 2001 to September 16, 2013, as the Chief
Investment Officer of Cohen & Company, LLC from October 2008 to
September 16, 2013, and as Chief Executive Officer of Cohen &
Company, LLC from December 16, 2009 to September 16, 2013. Mr.
Cohen served as the Chairman and Chief Executive Officer of J.V.B.
Financial Group, LLC (formerly C&Co/PrinceRidge Partners LLC),
the Company’s indirect broker dealer subsidiary (“JVB”), from July
19, 2012 to September 16, 2013. Mr. Cohen is also a founder, the
former Chief Executive Officer and the former Chairman of The
Bancorp, Inc. (NASDAQ: TBBK), which we refer to as Bancorp, a
financial holding company with over $6.3 billion of total assets as
of September 30, 2021, whose principal subsidiary is The Bancorp
Bank, that provides a wide range of commercial and retail banking
products and services to both regional and national markets.
Mr. Cohen currently serves as the Chief Executive Officer of
FinTech VI and serves as Chairman of the Board of INSU Acquisition
Corp. III (NASDAQ: IIII), or INSU III, a blank check company which
raised $250 million in its initial public offering in December
2020. Mr. Cohen served as Chairman of the Board of Insurance
Acquisition Corp., or INSU I, a former blank check company which
raised $150.7 million in its initial public offering in
March 2019 and completed its initial business combination when
it merged with affiliates of Shift Technologies, Inc. in
October 2020, which we refer to as the INSU I Acquisition. Mr.
Cohen also served as Chairman of the Board of Insurance Acquisition
Corp. II, or INSU II, a former blank check company which raised
$230.0 million in its initial public offering in September
2020 and completed its initial business combination when it merged
with MetroMile, Inc. in February 2021, which we refer to as
the INSU II Acquisition. Further, Mr. Cohen served as Chief
Executive Officer, President and a director of FinTech I until the
FinTech I Acquisition, as Chief Executive Officer and a director of
FinTech II until the FinTech II Acquisition, as Chief Executive
Officer of FinTech III until the FinTech III Acquisition and as
Chief Executive Officer of FinTech IV until the FinTech IV
Acquisition. Mr. Cohen also recently joined FTAC Parnassus as
its Chairman, FTAC Hera as its President and Chief Executive
Officer, FTAC Zeus as its Chairman, and INSU IV as its Chairman. He
is also a past Chief Executive Officer of RAIT Financial Trust,
which we refer to as RAIT, formerly a publicly traded real estate
finance company focused on the commercial real estate industry,
from December 2006 when it merged with Taberna Realty Finance
Trust, to February 2009, and served as a trustee from the date RAIT
acquired Taberna in February 2009 until his resignation from that
position in February 2010. From 1998 to 2000, Mr. Cohen served as
the Chief Operation Officer of Resource America, Inc., formerly a
publicly traded asset management company with interests in energy,
real estate and financial services. Mr. Cohen was also a past
director of Jefferson Bank of Pennsylvania, a commercial bank and
subsidiary of JeffBanks, Inc., a publicly traded bank holding
company, which we refer to as JeffBanks, acquired by Hudson United
Bancorp in 1999.
Ms. Cohen, with over 42 years of experience, was a
founder of Bancorp and served as Bancorp’s Chief Executive Officer
from September 2000 through December 2014. Ms. Cohen
served as Chairman of the board of directors of FinTech IV until
the FinTech IV Acquisition, as Chairman of the Board of Directors
of FTAC Olympus until the FTAC Olympus Acquisition, as Chairman of
the board of directors of FinTech III until the FinTech III
Acquisition, as Chairman of the board of directors of
FinTech II until the FinTech II Acquisition, and also
served as the Chairman of the board of directors of FinTech I
until the Fintech I Acquisition and, following the
FinTech I Acquisition, served on the
post-business combination board of directors until
May 2017. She is currently the Chairman of the Board of
FinTech VI, FTAC Athena, FTAC Hera and FTAC Emerald. Ms. Cohen
is also a founder of RAIT and was its Chairman until
December 2010 and its Chief Executive Officer until
December 2006. She was also the founder and Chief Executive
Officer of JeffBanks and its subsidiary banks from 1974 until the
merger of JeffBanks into Hudson United Bancorp in 1999.
Mr. McEntee, with over 22 years of experience, is the Chairman
of the board of directors of Bancorp and The Bancorp Bank, was
previously the Chief Executive Officer of Alesco Financial, an
investment firm specializing in credit related fixed income
investment, until it merged with Cohen & Company and was
the Chief Operating Officer of Cohen & Company. Mr.
McEntee served as President of FinTech IV until the FinTech IV
Acquisition, President and Chief Financial Officer of FinTech III
until the FinTech III Acquisition, Chief Financial Officer of
FinTech II until the FinTech II Acquisition, and also
served as Chief Financial Officer and Chief Operating Officer of
FinTech I until the Fintech I Acquisition. He is
currently President and Secretary of FinTech VI.
We have identified the following criteria that we intend to use in
evaluating business transaction opportunities. We expect that no
individual criterion will entirely determine a decision to pursue a
particular opportunity. Further, any particular business
transaction opportunity which we ultimately determine to pursue may
not meet one or more of these criteria:
| |
● |
History of free cash flow generation. We have sought to
acquire one or more businesses or assets that have a history of, or
potential for, strong, stable free cash flow generation, with
predictable and recurring revenue streams. |
| |
|
|
| |
● |
Strong management team. We have sought to acquire one or
more businesses or assets that have strong, experienced management
teams or those that provide a platform for us to assemble an
effective and experienced management team. We have focused on
management teams with a proven track record of driving revenue
growth, enhancing profitability and creating value for their
stockholders. |
| |
|
|
| |
● |
Opportunities for add-on acquisitions. We have sought to
acquire one or more businesses or assets that we can grow both
organically and through acquisitions. In addition, we believe that
our ability to source proprietary opportunities and execute
transactions will help the business we acquire grow through
acquisition, and thus serve as a platform for further add-on
acquisitions. |
| |
|
|
| |
● |
Defensible business niche. We have sought to acquire on one
or more businesses or assets that have a leading or niche market
position and that demonstrate advantages when compared to their
competitors, which may help to create barriers to entry against new
competitors. We anticipate that these barriers to entry will
enhance the ability of these businesses or assets to generate
strong profitability and free cash flow. |
| |
|
|
| |
● |
Diversified customer and supplier base. We have sought to
acquire one or more businesses or assets that have a diversified
customer and supplier base, which are generally better able to
endure economic downturns, industry consolidation, changing
business preferences and other factors that may negatively impact
their customers, suppliers and competitors. |
Competitive Strengths
We believe we have the following competitive strengths:
| |
● |
Management Operating and Investing Experience. Our
directors and executive officers have significant experience in the
financial services and financial technology industries. Daniel G.
Cohen, with over 22 years’ experience in the financial services
industry, is a founder of Bancorp, the Chairman and Chief
Investment Officer of an investment bank and is an affiliate of a
broker-dealer subsidiary of the investment bank. Betsy Z. Cohen has
over 42 years’ experience in the financial services industry and is
a founder of and, until her retirement in December 2014, served as
chief executive officer of, The Bancorp, Inc., a financial holding
company whose banking subsidiary, The Bancorp Bank, provides
banking services principally through the internet. James J.
McEntee, III, with over 22 years of experience in the financial
services industry, is Chairman of the board of directors of The
Bancorp, Inc. and The Bancorp Bank, was previously the Chief
Executive Officer of an investment firm specializing in credit
related fixed income investment, a managing director of COHN and
the Vice-Chairman and Co-Chief Operating Officer of JVB Financial.
Additionally, each of Mr. Cohen, Ms. Cohen and Mr. McEntee served
as an executive officer and/or director of FinTech I, FinTech II,
FinTech III and FinTech IV and currently serves as an executive
officer and/or director of FinTech VI. We believe that this breadth
of experience provides us with a competitive advantage in
evaluating businesses and acquisition opportunities in our target
industry. |
| |
● |
Established Deal Sourcing Network. As a result of their
extensive experience in the financial services industry, our
management team members have developed a broad array of contacts in
the industry. We believe that these contacts will be important in
generating acquisition opportunities for us. |
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|
|
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● |
Strong Financial Position and Flexibility. With a trust
account initially in the amount of $250,000,000 and a public market
for our common stock, we offer a target business a variety of
options to facilitate a future business transaction and fund the
growth and expansion of business operations. Because we are able to
consummate an initial business transaction using our capital stock,
debt, cash or a combination of the foregoing, we have the
flexibility to design an acquisition structure to address the needs
of the parties. We have not, however, taken any steps to secure
third party financing and would only do so simultaneously with the
consummation of our initial business transaction. Accordingly, our
flexibility in structuring an initial business transaction may be
constrained by our ability to arrange third-party financing, if
required. |
| |
|
|
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● |
Status as a Public Company. We believe our structure makes
us an attractive business transaction partner to prospective target
businesses. As an existing public company, we offer a target
business an alternative to the traditional initial public offering
through a merger or other business transaction with us. In this
situation, the owners of the target business would exchange their
shares of stock in the target business for shares of our stock.
Once public, we believe the target business would have greater
access to capital and additional means of creating management
incentives that are better aligned with stockholders’ interests
than it would as a private company. We believe that being a public
company can also augment a company’s profile among potential new
customers and vendors and aid it in attracting and retaining
talented employees. |
Effecting Our Initial Business Combination
General
We are not presently engaged in, and we will not engage in, any
operations until our initial business combination. We intend to
effectuate our initial business combination using cash from the
proceeds of the initial public offering and the private placement,
our capital stock, debt or a combination of these as the
consideration to be paid in our initial business combination.
If we pay for our initial business combination using stock or debt
securities, or we do not use all of the funds released from the
trust account for payment of the purchase price in connection with
our business combination or for redemptions or purchases of our
common stock, we may apply the balance of the cash released to us
from the trust account for general corporate purposes, including
for maintenance or expansion of operations of acquired businesses,
the payment of principal or interest due on indebtedness incurred
in consummating our initial business combination, to fund the
purchase of other companies or for working capital.
While we have not contacted any of the prospective target
businesses that FinTech I, FinTech II, FinTech III or FinTech IV
had considered and rejected while searching for target businesses
to acquire, we may do so in the future if we become aware that the
valuations, operations, profits or prospects of such target
business, or the benefits of any potential transaction with such
target business, would be attractive. Accordingly, there is no
current basis for stockholders to evaluate the possible merits or
risks of the target business with which we may ultimately complete
our initial business combination. Although our management will
assess the risks inherent in a particular target business with
which we may combine, we cannot assure you that this assessment
will result in our identifying all risks that a target business may
encounter. Furthermore, some of those risks may be outside of our
control, meaning that we can do nothing to control or reduce the
chances that those risks will adversely impact a target
business.
NASDAQ rules require that our initial business combination be with
one or more target businesses that together have a fair market
value equal to at least 80% of the balance in the trust account
(less any deferred underwriting commissions and taxes payable on
interest earned) at the time of our signing a definitive agreement
in connection with our initial business combination. However, if
our securities are not listed on NASDAQ or another securities
exchange, we will no longer be subject to that requirement.
We may seek to raise additional funds through a private offering of
debt or equity securities to finance our initial business
combination, and we may effectuate an initial business combination
using the proceeds of such offering rather than using the amounts
held in the trust account. Subject to compliance with applicable
securities laws, we would consummate such financing only
simultaneously with the consummation of our business combination.
In the case of an initial business combination funded with assets
other than the trust account assets, our tender offer documents or
proxy materials disclosing the business combination would disclose
the terms of the financing and, only if required by law or NASDAQ,
we would seek stockholder approval of such financing. There are no
prohibitions on our ability to raise funds privately or through
loans in connection with our initial business combination.
Sources of Acquisition Candidates
We anticipate that target business candidates will be brought to
our attention from various unaffiliated sources, including
investment bankers, attorneys, accountants, venture capital funds,
private equity funds, leveraged buyout funds, management buyout
funds, brokers and other members of the financial community and
corporate executives. These target candidates may present solicited
or unsolicited proposals. Such sources became aware that we were
seeking a business combination candidate by a variety of means,
including publicly available information relating to the initial
public offering, public relations and marketing efforts or direct
contact by management following the completion of the initial
public offering.
Our officers and directors, as well as their affiliates, may also
bring to our attention target business candidates of which they
become aware through their contacts. While we do not presently
anticipate engaging the services of professional firms or other
individuals that specialize in business acquisitions on any formal
basis, we may engage these firms or other individuals in the
future, in which event we may pay a finder’s fee, consulting fee or
other compensation to be determined in an arm’s length negotiation
based on the terms of the transaction. We will engage a finder only
if our management determines that the use of a finder may bring
opportunities to us that may not otherwise be available to us or if
finders approach us on an unsolicited basis with a potential
transaction that our management determines is in our best interest
to pursue. Payment of finder’s fees is customarily tied to
completion of a transaction, in which case any such fee will be
paid out of the funds held in the trust account. In no event,
however, will our sponsor or any of our officers or directors, or
any entity with which they are affiliated, be paid any finder’s
fee, consulting fee or other compensation prior to, or for any
services they render in order to effectuate, the consummation of
our initial business combination (regardless of the type of
transaction that it is), other than (i) repayment of loans made to
us prior to the date of the initial public offering by our sponsor
to cover offering-relating and organization expenses, (ii)
repayment of loans that our sponsor, members of our
management team or any of their respective affiliates or other
third parties may make to finance transaction costs in connection
with an intended initial business combination (provided that if we
do not consummate an initial business combination, we may use
working capital held outside the trust account to repay such loaned
amounts, but no proceeds from our trust account would be used for
such repayment), (iii) payments to our sponsor or its affiliate of
a total of $20,000 per month for office space, utilities, and
shared personnel services, (iv) at the closing of our initial
business combination, a customary advisory fee to an affiliate of
our sponsor, in an amount that constitutes a market standard
advisory fee for comparable transactions and services provided, and
(v) to reimburse our sponsor for any out-of-pocket expenses related
to identifying, investigation and completing an initial business
combination. None of the initial holders, our officers, our
directors or any entity with which they are affiliated will be
allowed to receive any compensation, finder’s fees or consulting
fees from a prospective acquisition target in connection with a
contemplated acquisition of such target by us. Although some
of our officers and directors may enter into employment or
consulting agreements with the acquired business following our
initial business combination, the presence or absence of any such
arrangements will not be used as a criterion in our selection
process of an acquisition candidate.
We are not prohibited from pursuing an initial business combination
with a company that is affiliated with our sponsor, officers,
directors or their affiliates. Additionally, we are not prohibited
from partnering, submitting joint bids, or entering into any
similar transaction with such persons in the pursuit of an initial
business combination. If we seek to complete an initial business
combination with such a company or we partner with such persons in
our pursuit of an initial business combination, we, or a committee
of independent directors, would obtain an opinion from an
independent investment banking firm that is a member of FINRA or an
independent accounting firm that such an initial business
combination is fair to our stockholders from a financial point of
view. Generally, such opinion is rendered to a company’s board of
directors and investment banking firms may take the view that
stockholders may not rely on the opinion. Such view will not impact
our decision on which investment banking firm to hire.
Unless we consummate our initial business combination with an
affiliated entity, we are not required to obtain a financial
fairness opinion from an independent investment banking firm. If we
do not obtain such an opinion, our stockholders will be relying on
the judgment of our board of directors, who will determine fair
market value and fairness based on standards generally accepted by
the financial community. The application of such standards would
involve a comparison, from a valuation standpoint, of our business
combination target to comparable public companies, as applicable,
and a comparison of our contemplated transaction with such business
combination target to other then-recently announced comparable
private and public company transactions, as applicable. The
application of such standards and the basis of our board of
directors’ determination will be discussed and disclosed in our
tender offer or proxy solicitation materials, as applicable,
related to our initial business combination.
Selection of a target business and structuring of our initial
business combination
NASDAQ rules require that we must complete one or more business
combinations having an aggregate fair market value of at least 80%
of the value of the assets held in the trust account (excluding the
deferred underwriting commissions and taxes payable on the interest
earned on the trust account) at the time of our signing a
definitive agreement in connection with our initial business
combination. The fair market value of our initial business
combination will be determined by our board of directors based upon
one or more standards generally accepted by the financial
community, such as discounted cash flow valuation, a valuation
based on trading multiples of comparable public businesses or a
valuation based on the financial metrics of M&A transactions of
comparable businesses. If our board of directors is not able to
independently determine the fair market value of our initial
business combination, we will obtain an opinion from an independent
investment banking firm or another independent entity that commonly
renders valuation opinions with respect to the satisfaction of such
criteria. While we consider it unlikely that our board of directors
will not be able to make an independent determination of the fair
market value of our initial business combination, it may be unable
to do so if it is less familiar or experienced with the business of
a particular target or if there is a significant amount of
uncertainty as to the value of a target’s assets or prospects. We
do not intend to purchase multiple businesses in unrelated
industries in conjunction with our initial business combination.
Subject to this requirement, our management will have virtually
unrestricted flexibility in identifying and selecting one or more
prospective target businesses, although we will not be permitted to
effectuate our initial business combination with another blank
check company or a similar company with nominal operations.
In any case, we will only complete an initial business combination
in which we own or acquire 50% or more of the outstanding voting
securities of the target or otherwise acquire a controlling
interest in the target sufficient for it not to be required to
register as an investment company under the Investment Company Act.
If we own or acquire less than 100% of the equity interests or
assets of a target business or businesses, the portion of such
business or businesses that are owned or acquired by the
post-transaction company is what will be taken into account for
purposes of NASDAQ’s 80% fair market value test. There is no basis
for stockholders to evaluate the possible merits or risks of any
target business with which we may ultimately complete our initial
business combination.
To the extent we effect our initial business combination with a
company or business that may be financially unstable or in its
early stages of development or growth we may be affected by
numerous risks inherent in such company or business. Although our
management will endeavor to evaluate the risks inherent in a
particular target business, we cannot assure you that we will
properly ascertain or assess all significant risk factors.
In evaluating a prospective business target, we expect to conduct a
thorough due diligence review, which may encompass, among other
things, meetings with incumbent management and employees, document
reviews, interviews of customers and suppliers, inspection of
facilities, as well as a review of financial and other information
that will be made available to us.
The time required to select and evaluate a target business and to
structure and complete our initial business combination, and the
costs associated with this process, are not currently ascertainable
with any degree of certainty. Any costs incurred with respect to
the identification and evaluation of a prospective target business
with which our initial business combination is not ultimately
completed will result in our incurring losses and will reduce the
funds we can use to complete another business combination.
Lack of business diversification
For an indefinite period of time after consummation of our initial
business combination, the prospects for our success may depend
entirely on the future performance of a single business. Unlike
other entities that have the resources to complete business
combinations with multiple entities in one or several industries,
it is probable that we will not have the resources to diversify our
operations and mitigate the risks of being in a single line of
business. By consummating a business combination with only a single
entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments,
any or all of which may have a substantial adverse impact on the
particular industry in which we operate after our initial business
combination, and |
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cause
us to depend on the marketing and sale of a single product or
limited number of products or services. |
Limited ability to evaluate the target’s management team
Although we closely scrutinize the management of a prospective
target business when evaluating a target business, our assessment
of the target business’ management may not prove to be correct. In
addition, the future management may not have the necessary skills,
qualifications or abilities to manage a public company.
Furthermore, the future role of members of our management team or
of our board, if any, in the target business cannot presently be
stated with any certainty. While it is possible that one or more of
our directors will remain associated in some capacity with us
following our business combination, it is presently unknown if any
of them will devote their full efforts to our affairs subsequent to
our business combination. Moreover, we cannot assure you that
members of our management team will have significant experience or
knowledge relating to the operations of the particular target
business. The determination as to whether any members of our board
of directors will remain with the combined company will be made at
the time of our initial business combination.
Following a business combination, we may seek to recruit additional
managers to supplement the incumbent management team of the target
business. We cannot assure you that we will have the ability to
recruit additional managers, or that additional managers will have
the requisite skills, knowledge or experience necessary to enhance
the incumbent management.
Stockholders may not have the ability to approve a business
combination
We may conduct redemptions without a stockholder vote pursuant to
the tender offer rules of the SEC. However, we will seek
stockholder approval if it is required by law or NASDAQ, or we may
decide to seek stockholder approval for business or other legal
reasons. Presented in the table below is a graphic explanation of
the types of initial business combinations we may consider and
whether stockholder approval is currently required under Delaware
law for each such transaction.
|
Type
of Transaction |
|
Whether
Stockholder
Approval is
Required |
| Purchase
of assets |
|
No |
| Purchase
of stock of target not involving a merger with the
company |
|
No |
| Merger
of target into a subsidiary of the company |
|
No |
| Merger
of the company with a target |
|
Yes |
Under NASDAQ’s listing rules, stockholder approval would be
required for our initial business combination if, for example:
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we
issue shares of Class A common stock that will be equal to or in
excess of 20% of the number of shares of our Class A common stock
then outstanding; |
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● |
any
of our directors, officers or substantial stockholders (as defined
by NASDAQ rules) has a 5% or greater interest (or such persons
collectively have a 10% or greater interest), directly or
indirectly, in the target business or assets to be acquired or
otherwise and the present or potential issuance of common stock
could result in an increase in outstanding common shares or voting
power of 5% or more; or |
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the
issuance or potential issuance of common stock will result in our
undergoing a change of control. |
Permitted purchases of our securities
If we seek stockholder approval of our initial business combination
and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor,
directors, officers, advisors or their affiliates may purchase
shares in privately negotiated transactions or in the open market
either prior to or following the consummation of our initial
business combination, although as of the date of this Annual Report
they have no commitments, plans or intentions to engage in such
transactions. None of the funds in the trust account will be used
to purchase shares in such transactions. They will not make any
such purchases when they are in possession of any material
non-public information not disclosed to the seller or if such
purchases are prohibited by Regulation M under the Exchange Act.
Although they do not currently anticipate paying any premium
purchase price for such public shares, there is no limit on the
price they may pay. They may also enter into transactions to
provide such holders with incentives to acquire shares or vote
their shares in favor of an initial business combination.
Such a purchase may include a contractual acknowledgement that such
stockholder, although still the record holder of our shares is no
longer the beneficial owner thereof and therefore agrees not to
exercise its redemption rights. In the event that our sponsor,
directors, officers, advisors or their affiliates purchase shares
in privately negotiated transactions from public stockholders who
have already elected to exercise their redemption rights, such
selling stockholders would be required to revoke their prior
elections to redeem their shares. We do not currently anticipate
that such purchases, if any, would constitute a tender offer
subject to the tender offer rules under the Exchange Act or a
going-private transaction subject to the
going-private rules under the Exchange Act; however, if the
purchasers determine at the time of any such purchases that the
purchases are subject to such rules, the purchasers will comply
with such rules.
The purpose of such purchases would be to (i) vote such shares in
favor of the business combination and thereby increase the
likelihood of obtaining stockholder approval of the business
combination or (ii) to satisfy a closing condition in an agreement
with a target that requires us to have a minimum net worth or a
certain amount of cash at the closing of the business combination,
where it appears that such requirement would otherwise not be met.
This may result in the consummation of a business combination that
may not otherwise have been possible.
As a consequence of any such purchases, the public “float” of our
common stock may be reduced and the number of beneficial holders of
our securities may be reduced, which may make it difficult to
obtain the continued listing of our securities on NASDAQ or another
national securities exchange in connection with our initial
business combination.
Our sponsor, officers, directors and/or their affiliates anticipate
that they may identify the stockholders with whom they may pursue
privately negotiated purchases by either the stockholders
contacting us directly or by our receipt of redemption requests
submitted by stockholders following our mailing of tender offer or
proxy materials in connection with our initial business
combination. To the extent that our sponsor, officers, directors,
advisors or their affiliates enter into a private purchase, they
would identify and contact only potential selling stockholders who
have expressed their election to redeem their shares for a pro rata
share of the trust account or vote against the business
combination. Our sponsor, officers, directors, advisors or their
affiliates will only purchase shares if such purchases comply with
Regulation M under the Exchange Act and other federal securities
laws.
Any purchases by our sponsor, officers, directors and/or their
affiliates who are affiliated purchasers under
Rule 10b-18 under the Exchange Act will only be made to
the extent such purchases are able to be made in compliance with
Rule 10b-18, which is a safe harbor from liability for manipulation
under Section 9(a)(2) and Rule 10b-5 of the Exchange Act.
Rule 10b-18 has certain technical requirements that must be
complied with in order for the safe harbor to be available to the
purchaser. Our sponsor, officers, directors and/or their affiliates
will not make purchases of common stock if the purchases would
violate Section 9(a)(2) or Rule 10b-5 of the Exchange Act.
Redemption rights for public stockholders upon consummation of
our initial business combination
We will provide our stockholders with the opportunity to redeem all
or a portion of their shares of Class A common stock upon the
consummation of our initial business combination at a per-share
price, payable in cash, equal to the aggregate amount then on
deposit in the trust account as of two business days prior to the
consummation of the initial business combination, including any
amounts representing deferred underwriting commissions and interest
earned on the trust account not previously released to us to pay
our franchise and income taxes, divided by the number of then
outstanding public shares, subject to the limitations described
herein. The amount in the trust account is approximately $10.00 per
public share (based on the trust account balance as of December 31,
2021). There will be no redemption rights upon the consummation of
our initial business combination with respect to our warrants. The
initial holders, our officers and directors have agreed to waive
their redemption rights with respect to their founder shares and
placement shares, as applicable, (i) in connection with the
consummation of a business combination, (ii) in connection with a
stockholder vote to amend our amended and restated certificate of
incorporation to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our
initial business combination by December 8, 2022 and (iii) if we
fail to consummate a business combination by December 8, 2022 or if
we liquidate prior to December 8, 2022. The initial holders and our
directors and officers have also agreed to waive their redemption
rights with respect to public shares in connection with the
consummation of a business combination and in connection with a
stockholder vote to amend our amended and restated certificate of
incorporation to modify the substance or timing of our obligation
to redeem 100% of our public shares if we do not complete our
initial business combination by December 8, 2022. However, the
initial holders and our directors and officers will be entitled to
redemption rights with respect to any public shares held by them if
we fail to consummate a business combination or liquidate by
December 8, 2022.
Manner of Conducting Redemptions
We will provide our public stockholders with the opportunity to
redeem all or a portion of their shares of Class A common
stock upon the completion of our initial business combination
either (i) in connection with a stockholder meeting called to
approve the business combination or (ii) by means of a tender
offer. The decision as to whether we will seek stockholder approval
of a proposed business combination or conduct a tender offer will
be made by us, solely in our discretion, and will be based on a
variety of factors such as the timing of the transaction and
whether the terms of the transaction would require us to seek
stockholder approval under the law or stock exchange listing
requirement. Asset acquisitions and stock purchases would not
typically require stockholder approval while direct mergers with
our company where we do not survive and any transactions where we
issue more than 20% of our outstanding common stock or seek to
amend our amended and restated certificate of incorporation would
require stockholder approval. If we structure a business
combination transaction with a target company in a manner that
requires stockholder approval, we will not have discretion as to
whether to seek a stockholder vote to approve the proposed business
combination. We intend to conduct redemptions without a stockholder
vote pursuant to the tender offer rules of the SEC unless
stockholder approval is required by law or stock exchange listing
requirements or we choose to seek stockholder approval for business
or other legal reasons. So long as we obtain and maintain a listing
for our securities on NASDAQ, we will be required to comply with
such rules.
If a stockholder vote is not required and we do not decide to hold
a stockholder vote for business or other legal reasons, we will,
pursuant to our amended and restated certificate of
incorporation:
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● |
conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the
Exchange Act, which regulate issuer tender offers, and |
| |
● |
file
tender offer documents with the SEC prior to consummating our
initial business combination that will contain substantially the
same financial and other information about the initial business
combination and the redemption rights as is required under
Regulation 14A of the Exchange Act, which regulates the
solicitation of proxies. |
Upon the public announcement of our initial business combination,
we and our sponsor will terminate any plan established in
accordance with Rule 10b5-1 to purchase shares of our Class A
common stock in the open market if we elect to redeem our public
shares through a tender offer, to comply with Rule 14e-5 under the
Exchange Act.
In the event we conduct redemptions pursuant to the tender offer
rules, our offer to redeem will remain open for at least 20
business days, in accordance with Rule 14e-1(a) under the Exchange
Act, and we will not be permitted to consummate our initial
business combination until the expiration of the tender offer
period. In addition, the tender offer will be conditioned on public
stockholders not tendering more than a specified number of public
shares, which number will be based on the requirement that we may
not redeem public shares in an amount that would cause our net
tangible assets, to be less than $5,000,001 upon completion of our
initial business combination (so that we are not subject to the
SEC’s “penny stock” rules), or any greater net tangible asset or
cash requirement which may be contained in the agreement relating
to our initial business combination. If public stockholders tender
more shares than we have offered to purchase, we will withdraw the
tender offer and not complete our initial business combination.
If, however, stockholder approval of the transaction is required by
law or NASDAQ, or we decide to obtain stockholder approval for
business or other legal reasons, we will, pursuant to our amended
and restated certificate of incorporation:
| |
● |
conduct
the redemptions in conjunction with a proxy solicitation pursuant
to Regulation 14A of the Exchange Act, which regulates the
solicitation of proxies, and not pursuant to the tender offer
rules, and |
| |
● |
file
proxy materials with the SEC. |
In the event that we seek stockholder approval of our initial
business combination, we will distribute proxy materials and, in
connection therewith, provide our public stockholders with the
redemption rights described above upon completion of the initial
business combination.
If we seek stockholder approval, we will complete our initial
business combination only if a majority of the outstanding shares
of common stock voted are voted in favor of the business
combination. A quorum for such meeting will consist of the holders
present in person or by proxy of shares of outstanding capital
stock of the company representing a majority of the voting power of
all outstanding shares of capital stock of the company entitled to
vote at such meeting. Our sponsor, officers and directors will
count toward this quorum and have agreed to vote their founder
shares, private placement shares and any public shares held by them
in favor of our initial business combination. We expect that at the
time of any stockholder vote relating to our initial business
combination, our initial stockholders and their permitted
transferees will own at least 26.9% of our outstanding shares of
common stock entitled to vote thereon. These quorum and voting
thresholds and agreements may make it more likely that we will
consummate our initial business combination. Each public
stockholder may elect to redeem its public shares irrespective of
whether they vote for or against the proposed transaction.
Our amended and restated certificate of incorporation provides that
in no event will we redeem our public shares in an amount that
would cause our net tangible assets to be less than $5,000,001 upon
consummation of our initial business combination and, in any event,
the terms of the proposed business combination may require our net
tangible assets to be greater than $5,000,001. For example, the
proposed business combination may require: (i) cash consideration
to be paid to the target or its owners, (ii) cash to be transferred
to the target for working capital or other general corporate
purposes or (iii) the retention of cash to satisfy other conditions
in accordance with the terms of the proposed business combination.
If the aggregate cash consideration we would be required to pay for
all shares of Class A common stock that are validly tendered for
redemption plus the amount of any cash payments required pursuant
to the terms of the proposed business combination exceeds the
aggregate amount of cash available to us, we will not consummate
the business combination or redeem any shares and all shares of
Class A common stock submitted for redemption will be returned to
the holders thereof.
Limitation on redemption upon consummation of our initial
business combination if we seek stockholder approval
Notwithstanding the foregoing, if we seek stockholder approval of
our initial business combination and we do not conduct redemptions
in connection with our business combination pursuant to the tender
offer rules, our amended and restated certificate of incorporation
provides that a public stockholder, together with any affiliate of
such stockholder or any other person with whom such stockholder is
acting in concert or as a “group” (as defined under Section 13 of
the Exchange Act), will be restricted from seeking redemption
rights with respect to an more than aggregate of 15.0% of the
shares sold in the initial public offering without our prior
consent. We believe the restriction described above will discourage
stockholders from accumulating large blocks of shares, and
subsequent attempts by such holders to use their ability to
exercise their redemption rights as a means to force us or
management to purchase their shares at a significant premium to the
then-current market price or on other undesirable terms. Absent
this provision, a public stockholder holding more than an aggregate
of 15.0% or more of the shares sold in the initial public offering
could threaten to exercise its redemption rights against a business
combination if such holder’s shares are not purchased by us or
management at a premium to the then-current market price or on
other undesirable terms. By limiting our stockholders’ ability to
redeem no more than 15.0% of the shares sold in the initial public
offering, we believe we will limit the ability of a small number of
stockholders to unreasonably attempt to block our ability to
complete our initial business combination, particularly in
connection with a business combination with a target that requires
as a closing condition that we have a minimum net worth or a
certain amount of cash. However, our amended and restated
certificate of incorporation does not restrict our stockholders’
ability to vote all of their shares (including all shares held by
those stockholders that hold more than 15.0% of the shares sold in
the initial public offering) for or against our business
combination.
Tendering stock certificates in connection with redemption
rights
We may require our public stockholders seeking to exercise their
redemption rights, whether they are record holders or hold their
shares in “street name,” to either tender their certificates to our
transfer agent prior to the date set forth in the tender offer
documents mailed to such holders, or up to two business days prior
to the vote on the proposal to approve our initial business
combination in the event we distribute proxy materials, or to
deliver their shares to the transfer agent electronically using The
Depository Trust Company’s DWAC (Deposit/Withdrawal At Custodian)
System, at the holder’s option. The tender offer or proxy
materials, as applicable, that we will furnish to holders of our
public shares in connection with our initial business combination
will indicate whether we are requiring public stockholders to
satisfy such delivery requirements. Accordingly, a public
stockholder would have from the time we send out our tender offer
materials until the close of the tender offer period, or up to two
days prior to the vote on the business combination if we distribute
proxy materials, as applicable, to tender its shares if it wishes
to seek to exercise its redemption rights.
There is a nominal cost associated with the above-referenced
tendering process and the act of certificating the shares or
delivering them through the DWAC System. The transfer agent will
typically charge the tendering broker $100.00 and it would be up to
the broker whether or not to pass this cost on to the redeeming
holder. However, this fee would be incurred regardless of whether
or not we require holders seeking to exercise redemption rights to
tender their shares. The need to deliver shares is a requirement of
exercising redemption rights regardless of the timing of when such
delivery must be effectuated.
The foregoing is different from the procedures used by many blank
check companies. In order to perfect redemption rights in
connection with their business combinations, many blank check
companies would distribute proxy materials for the stockholders’
vote on an initial business combination, and a holder could simply
vote against a proposed business combination and check a box on the
proxy card indicating such holder was seeking to exercise his
redemption rights. After the business combination was approved, the
company would contact such stockholder to arrange for him to
deliver his certificate to verify ownership. As a result, the
stockholder then had an “option window” after the consummation of
the business combination during which he could monitor the price of
the company’s stock in the market. If the price rose above the
redemption price, he could sell his shares in the open market
before actually delivering his shares to the company for
cancellation. As a result, the redemption rights, to which
stockholders were aware they needed to commit before the
stockholder meeting, would become “option” rights surviving past
the consummation of the business combination until the redeeming
holder delivered its certificate. The requirement for physical or
electronic delivery prior to the meeting ensures that a redeeming
holder’s election to redeem is irrevocable once the business
combination is approved.
Any request to redeem such shares, once made, may be withdrawn at
any time up to the date set forth in the tender offer materials or
the date of the stockholder meeting set forth in our proxy
materials, as applicable. Furthermore, if a holder of a public
share delivers its certificate in connection with an election of
redemption rights and subsequently decides prior to the applicable
date not to elect to exercise such rights, such holder may simply
request that the transfer agent return the certificate (physically
or electronically). It is anticipated that the funds to be
distributed to holders of our public shares electing to redeem
their shares will be distributed promptly after the completion of
our business combination.
If the initial business combination is not approved or completed
for any reason, then our public stockholders who elected to
exercise their redemption rights would not be entitled to redeem
their shares for the applicable pro rata share of the trust
account. In such case, we will promptly return any certificates
delivered by public holders who elected to redeem their shares.
If our initial business combination is not consummated, we may
continue to try to consummate a business combination with a
different target until December 8, 2022.
Redemption of public shares and liquidation if no initial
business combination
Our amended and restated certificate of incorporation provides that
we will have only until December 8, 2022 to complete our initial
business combination. If we are unable to consummate our initial
business combination by December 8, 2022, we will: (i) cease all
operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days
thereafter, redeem the public shares, at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust
account, including any amounts representing interest earned on the
trust account not previously released to us to pay our franchise
and income taxes and up to $100,000 of interest to pay dissolution
expenses, divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders’
rights as stockholders (including the right to receive further
liquidating distributions, if any), subject to applicable law, and
(iii) as promptly as reasonably possible following such redemption,
subject to the approval of our remaining stockholders and our board
of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors
and the requirements of other applicable law. There will be no
redemption rights or liquidating distributions with respect to our
warrants, which will expire worthless if we fail to complete our
initial business combination within such completion window.
Our sponsor, officers and directors have waived their rights to
liquidating distributions from the trust account with respect to
any founder shares and placement shares held by them if we fail to
complete our initial business combination by December 8, 2022.
However, if our sponsor, officers or directors acquire public
shares in or after the initial public offering, they will be
entitled to liquidating distributions from the trust account with
respect to such public shares if we fail to complete our initial
business combination by December 8, 2022.
Our sponsor, executive officers and directors have agreed, pursuant
to a letter agreement with us, that they will not propose any
amendment to our amended and restated certificate of incorporation
that (i) would modify the substance or timing of our obligation to
redeem 100% of our public shares if we do not complete our initial
business combination by December 8, 2022 or (ii) with respect to
any other provisions relating to stockholders’ rights or
pre-initial business combination activity, unless we provide
our public stockholders with the opportunity to redeem their shares
of Class A common stock upon approval of any such amendment at a
per-share price, payable in cash, equal to the aggregate amount
then on deposit in the trust account, including interest earned on
the funds held in the trust account and not previously released to
us to pay our franchise and income taxes, divided by the number of
then outstanding public shares. However, we may not redeem our
public shares in an amount that would cause our net tangible assets
to be less than $5,000,001 upon completion of our initial business
combination (so that we are not subject to the SEC’s “penny stock”
rules). If this optional redemption right is exercised with respect
to an excessive number of public shares such that we cannot satisfy
the net tangible asset requirement (described above) we would not
proceed with the amendment or the related redemption of our public
shares.
We expect that all costs and expenses associated with implementing
our plan of dissolution, as well as payments to any creditors, will
be funded from amounts remaining held outside the trust account,
although we cannot assure you that there will be sufficient funds
for such purpose. However, if those funds are not sufficient to
cover the costs and expenses associated with implementing our plan
of dissolution, to the extent that there is any interest accrued in
the trust account not required to pay taxes on interest income
earned on the trust account balance, we may request the trustee to
release to us an additional amount of up to $100,000 of such
accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds of the initial public
offering and the sale of the placement units, other than the
proceeds deposited in the trust account, and without taking into
account interest, if any, earned on the trust account, the
per-share redemption amount received by stockholders upon our
dissolution would be approximately $10.00. The proceeds
deposited in the trust account could, however, become subject to
the claims of our creditors which would have higher priority than
the claims of our public stockholders. We cannot assure you that
the actual per-share redemption amount received by stockholders
will not be substantially less than the $10.00. Under Section
281(b) of the DGCL, our plan of dissolution must provide for all
claims against us to be paid in full or make provision for payments
to be made in full, as applicable, if there are sufficient assets.
These claims must be paid or provided for before we make any
distribution of our remaining assets to our stockholders. While we
intend to pay such amounts, if any, we cannot assure you that we
will have funds sufficient to pay or provide for all creditors’
claims.
Although we will seek to have all vendors, service providers
(except our independent registered public accounting firm),
prospective target businesses or other entities with which we do
business execute agreements with us waiving any right, title,
interest and claim of any kind in or to any monies held in the
trust account for the benefit of our public stockholders, there is
no guarantee that they will execute such agreements or even if they
execute such agreements that they would be prevented from bringing
claims against the trust account including but not limited to
fraudulent inducement, breach of fiduciary responsibility or other
similar claims, as well as claims challenging the enforceability of
the waiver, in each case in order to gain an advantage with respect
to a claim against our assets, including the funds held in the
trust account. If any third party refuses to execute an agreement
waiving such claims to the monies held in the trust account, our
management will perform an analysis of the alternatives available
to it and will only enter into an agreement with a third party that
has not executed a waiver if management believes that such third
party’s engagement would be significantly more beneficial to us
than any alternative. Examples of possible instances where we may
engage a third party that refuses to execute a waiver include the
engagement of a third party consultant whose particular expertise
or skills are believed by management to be significantly superior
to those of other consultants that would agree to execute a waiver
or in cases where management is unable to find a service provider
willing to execute a waiver. WithumSmith+Brown, PC, our independent
registered public accounting firm, will not execute agreements with
us waiving such claims to the monies held in the trust account.
In addition, there is no guarantee that such entities will agree to
waive any claims they may have in the future as a result of, or
arising out of, any negotiations, contracts or agreements with us
and will not seek recourse against the trust account for any
reason. FinTech Investor Holdings V, LLC has agreed that it will be
liable to us if and to the extent any claims by a third party
(other than our independent registered public accountants) for
services rendered or products sold to us, or a prospective target
business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the trust account to below
(i) $10.00 per public share or (ii) such lesser amount per public
share held in the trust account as of the date of the liquidation
of the trust account, due to reductions in value of the trust
assets, in each case net of the amount of interest which may be
withdrawn to pay taxes, except as to any claims by a third party
who executed a waiver of any and all rights to seek access to the
trust account and except as to any claims under our indemnity of
the underwriters of the initial public offering against certain
liabilities, including liabilities under the Securities Act. In the
event that an executed waiver is deemed to be unenforceable against
a third party, then FinTech Investor Holdings V, LLC will not be
responsible to the extent of any liability for such third party
claims We have not independently verified whether FinTech Investor
Holdings V, LLC has sufficient funds to satisfy its indemnity
obligations and believe that FinTech Investor Holdings V, LLC’s
only assets are securities of our company. We have not asked
FinTech Investor Holdings V, LLC to reserve for such
indemnification obligations. Therefore, we cannot assure you that
FinTech Investor Holdings V, LLC would be able to satisfy those
obligations. As a result, if any such claims were successfully made
against the trust account, the funds available for our initial
business combination and redemptions could be reduced to less than
$10.00 per public share. In such event, we may not be able to
complete our initial business combination, and you would receive
such lesser amount per share in connection with any redemption of
your public shares. None of our officers will indemnify us for
claims by third parties including, without limitation, claims by
vendors and prospective target businesses.
In the event that the proceeds in the trust account are reduced
below (i) $10.00 per public share or (ii) such lesser amount per
public share held in the trust account as of the date of the
liquidation of the trust account, due to reductions in value of the
trust assets, in each case net of the amount of interest which may
be withdrawn to pay taxes, and FinTech Investor Holdings V, LLC
asserts that it is unable to satisfy its indemnification
obligations or that it has no indemnification obligations related
to a particular claim, our independent directors would determine
whether to take legal action against FinTech Investor Holdings V,
LLC to enforce its indemnification obligations. While we currently
expect that our independent directors would take legal action on
our behalf against FinTech Investor Holdings V, LLC to enforce its
indemnification obligations to us, it is possible that our
independent directors in exercising their business judgment may
choose not to do so if, for example, the cost of such legal action
is deemed by the independent directors to be too high relative to
the amount recoverable or if the independent directors determine
that a favorable outcome is not likely. We have not asked FinTech
Investor Holdings V, LLC to reserve for such indemnification
obligations and we cannot assure you that FinTech Investor Holdings
V, LLC would be able to satisfy those obligations. Accordingly, we
cannot assure you that due to claims of creditors the actual value
of the per-share redemption price will not be less than $10.00
per public share.
We will seek to reduce the possibility that FinTech Investor
Holdings V, LLC will have to indemnify the trust account due to
claims of creditors by endeavoring to have all vendors, service
providers, prospective target businesses or other entities with
which we do business execute agreements with us waiving any right,
title, interest or claim of any kind in or to monies held in the
trust account. We have access to working capital loans with which
to pay any such potential claims (including costs and expenses
incurred in connection with our liquidation). In the event that we
liquidate and it is subsequently determined that the reserve for
claims and liabilities is insufficient, stockholders who received
funds from our trust account could be liable for claims made by
creditors.
Under the DGCL, stockholders may be held liable for claims by third
parties against a corporation to the extent of distributions
received by them in a dissolution. The pro rata portion of our
trust account distributed to our public stockholders upon the
redemption of our public shares if we do not consummate our initial
business combination by December 8, 2022 may be considered a
liquidating distribution under Delaware law. If the corporation
complies with certain procedures set forth in Section 280 of the
DGCL intended to ensure that it makes reasonable provision for all
claims against it, including a 60-day notice period during which
any third-party claims can be brought against the corporation, a
90-day period during which the corporation may reject any claims
brought, and an additional 150-day waiting period before any
liquidating distributions are made to stockholders, any liability
of stockholders with respect to a liquidating distribution is
limited to the lesser of such stockholder’s pro rata share of the
claim or the amount distributed to the stockholder, and any
liability of the stockholder would be barred after the third
anniversary of the dissolution.
Furthermore, if the pro rata portion of our trust account
distributed to our public stockholders upon the redemption of our
public shares in the event we do not consummate our initial
business combination by December 8, 2022 is not considered a
liquidating distribution under Delaware law and such redemption
distribution is deemed to be unlawful, then pursuant to Section 174
of the DGCL, the statute of limitations for claims of creditors
could then be six years after the unlawful redemption distribution,
instead of three years, as in the case of a liquidation
distribution. If we have not consummated our business combination
by December 8, 2022, or earlier at the discretion of our board, we
will: (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter, redeem the public shares, at a per-share
price, payable in cash, equal to the aggregate amount then on
deposit in the trust account, including any amounts representing
interest earned on the trust account, less any interest released to
us to pay our franchise and income taxes and up to $100,000 of
interest to pay dissolution expenses, divided by the number of then
outstanding public shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any),
subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and
liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of
other applicable law. Accordingly, it is our intention to redeem
our public shares as soon as reasonably possible following December
8, 2022 and, therefore, we do not intend to comply with those
procedures. As such, our stockholders could potentially be liable
for any claims to the extent of distributions received by them (but
no more) and any liability of our stockholders may extend well
beyond the third anniversary of such date.
Because we will not be complying with Section 280, Section 281(b)
of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and
pending claims or claims that may be potentially brought against us
within the subsequent 10 years. However, because we are a blank
check company, rather than an operating company, and our operations
will be limited to searching for prospective target businesses to
acquire, the only likely claims to arise would be from our vendors
(such as lawyers, investment bankers, etc.) or prospective target
businesses. As described above, pursuant to the obligation
contained in our underwriting agreement, we will seek to have all
vendors, service providers, prospective target businesses or other
entities with which we do business execute agreements with us
waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account.
As a result of this obligation, the claims that could be made
against us are significantly limited and the likelihood that any
claim that would result in any liability extending to the trust
account is remote. Further, FinTech Investor Holdings V, LLC may be
liable only to the extent necessary to ensure that the amounts in
the trust account are not reduced below (i) $10.00 per public share
or (ii) such lesser amount per public share held in the trust
account as of the date of the liquidation of the trust account, due
to reductions in value of the trust assets, in each case net of the
amount of interest withdrawn to pay taxes and will not be liable as
to any claims under our indemnity of the underwriters of the
initial public offering against certain liabilities, including
liabilities under the Securities Act. In the event that an executed
waiver is deemed to be unenforceable against a third party, FinTech
Investor Holdings V, LLC will not be responsible to the extent of
any liability for such third-party claims.
If we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the proceeds
held in the trust account could be subject to applicable bankruptcy
law, and may be included in our bankruptcy estate and subject to
the claims of third parties with priority over the claims of our
stockholders. To the extent any bankruptcy claims deplete the trust
account, we cannot assure you we will be able to return $10.00 per
share to our public stockholders. Additionally, if we file a
bankruptcy petition or an involuntary bankruptcy petition is filed
against us that is not dismissed, any distributions received by
stockholders could be viewed under applicable debtor/creditor
and/or bankruptcy laws as either a “preferential transfer” or a
“fraudulent conveyance.” As a result, a bankruptcy court could seek
to recover some or all amounts received by our stockholders.
Furthermore, our board may be viewed as having breached its
fiduciary duty to our creditors and/or may have acted in bad faith,
thereby exposing itself and our company to claims of punitive
damages, by paying public stockholders from the trust account prior
to addressing the claims of creditors.
We cannot assure you that claims will not be brought against us for
these reasons.
Our public stockholders will be entitled to receive funds from the
trust account only (i) in the event of the redemption of our public
shares if we do not complete our business combination by December
8, 2022, subject to applicable law, (ii) in connection with a
stockholder vote to approve an amendment to our amended and
restated certificate of incorporation (a) to modify the substance
or timing of our obligation to redeem 100% of our public shares if
we have not consummated an initial business combination by December
8, 2022 or (b) with respect to any other provisions relating to
stockholders’ rights or pre-initial business combination
activity or (iii) our completion of an initial business
combination, and then only in connection with those shares of our
common stock that such stockholder properly elected to redeem,
subject to the limitations described in this annual report. In no
other circumstances will a stockholder have any right or interest
of any kind to or in the trust account. In the event we seek
stockholder approval in connection with our initial business
combination, a stockholder’s voting in connection with the business
combination alone will not result in a stockholder’s redeeming its
shares to us for an applicable pro rata share of the trust account.
Such stockholder must have also exercised its redemption rights as
described above.
Competition
In identifying, evaluating and selecting a target business for our
business combination, we encounter intense competition from other
entities having a business objective similar to ours, including
other blank check companies, private equity groups and leveraged
buyout funds and operating businesses seeking strategic
acquisitions. Many of these entities are well established and have
extensive experience identifying and effecting business
combinations directly or through affiliates. Moreover, many of
these competitors possess greater financial, technical, human and
other resources than we do. Our ability to acquire larger target
businesses will be limited by our available financial resources.
This inherent limitation gives others an advantage in pursuing the
acquisition of a target business. Furthermore, our obligation to
pay cash to our public stockholders who exercise their redemption
rights will reduce the resources available to us for an initial
business combination and our outstanding warrants, and the future
dilution they potentially represent, may not be viewed favorably by
certain target businesses. Either of these factors may place us at
a competitive disadvantage in successfully negotiating an initial
business combination.
Facilities
We currently maintain our executive offices at 2929 Arch Street,
Suite 1703, Philadelphia, PA 19104-2870. The cost for our use of
this space is included in the $20,000 per month fee we pay to our
sponsor or its affiliate for office space, utilities, and shared
personnel services. We consider our current office space adequate
for our current operations.
Employees
We currently have three executive officers. These individuals are
not obligated to devote any specific number of hours to our matters
but they devote as much of their time as they deem necessary to our
affairs until we have completed our initial business combination.
The amount of time they devote in any time period varies based on
whether a target business has been selected for our initial
business combination and the stage of the initial business
combination process we are in. We do not intend to have any full
time employees prior to the consummation of our initial business
combination.
Periodic Reporting and Financial Information
We have registered our units, Class A common stock and warrants
under the Exchange Act and have reporting obligations, including
the requirement that we file annual, quarterly and current reports
with the SEC. In accordance with the requirements of the Exchange
Act, our annual reports contain financial statements audited and
reported on by our independent registered public accountants. The
SEC maintains an Internet site that contains reports, proxy and
information statements, and other information regarding issuers
that file electronically with the SEC at http://www.sec.gov.
We will provide stockholders with audited financial statements of
the prospective target business as part of the tender offer
materials or proxy solicitation materials sent to stockholders to
assist them in assessing the target business. In all likelihood,
these financial statements will need to be prepared in accordance
with GAAP. We cannot assure you that any particular target business
selected by us as a potential acquisition candidate will have
financial statements prepared in accordance with GAAP or that the
potential target business will be able to prepare its financial
statements in accordance with GAAP. To the extent that this
requirement cannot be met, we may not be able to acquire the
proposed target business. While this may limit the pool of
potential acquisition candidates, we do not believe that this
limitation will be material.
We are required to evaluate our internal control procedures as
required by the Sarbanes-Oxley Act. Only in the event we are deemed
to be a large accelerated filer or an accelerated filer will we be
required to have our internal control procedures audited. A target
company may not be in compliance with the provisions of the
Sarbanes-Oxley Act regarding adequacy of their internal controls.
The development of the internal controls of any such entity to
achieve compliance with the Sarbanes-Oxley Act may increase the
time and costs necessary to complete any such acquisition.
We are an “emerging growth company,” as defined in Section 2(a) of
the Securities Act, as modified by the JOBS Act. As such, we are
eligible to take advantage of certain exemptions from various
reporting requirements that are applicable to other public
companies that are not “emerging growth companies” including, but
not limited to, not being required to comply with the auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act,
reduced disclosure obligations regarding executive compensation in
our periodic reports and proxy statements, and exemptions from the
requirements of holding a non-binding advisory vote on executive
compensation and stockholder approval of any golden parachute
payments not previously approved. If some stockholders find our
securities less attractive as a result, there may be a less active
trading market for our securities and the prices of our securities
may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an
“emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities
Act for complying with new or revised accounting standards. In
other words, an “emerging growth company” can delay the adoption of
certain accounting standards until those standards would otherwise
apply to private companies. We intend to take advantage of the
benefits of this extended transition period.
We will remain an emerging growth company until the earlier of (1)
the last day of the fiscal year (a) following the fifth anniversary
of the completion of the initial public offering, (b) in which we
have total annual gross revenue of at least $1.07 billion, or (c)
in which we are deemed to be a large accelerated filer, which means
the market value of our Class A common stock that is held by
non-affiliates equals or exceeds $700 million as of the prior June
30th, and (2) the date on which we have issued more than
$1.0 billion in non-convertible debt securities during the prior
three-year period. References herein to “emerging growth company”
shall have the meaning associated with it in the JOBS Act.
Item
1A. RISK FACTORS
You should consider carefully all of the risks described below,
which we believe are the principal risks that we face and of which
we are currently aware, and all of the other information contained
in this report. If any of the events or developments described
below occur, our business, financial condition or results of
operations could be negatively affected. The risks described below
do not include risks relating to our proposed Business Combination
with eToro.
Risks Relating to our Search for, Consummation of, or Inability
to Consummate, a Business Combination
and Post-Business Combination Risks
Our public stockholders may not be afforded an opportunity to
vote on our proposed business combination, which means we may
consummate our initial business combination even though a majority
of our public stockholders do not support such a
combination.
We may not hold a stockholder vote to approve our initial business
combination unless the business combination would require
stockholder approval under applicable law or the rules of NASDAQ or
if we decide to hold a stockholder vote for business or other legal
reasons. Except as required by law, the decision as to whether we
will seek stockholder approval of a proposed business combination
or will allow stockholders to sell their shares to us in a tender
offer will be made by us, solely in our discretion, and will be
based on a variety of factors, such as the timing of the
transaction and whether the terms of the transaction would
otherwise require us to seek stockholder approval. Accordingly, we
may consummate our initial business combination even if holders of
a majority of the public shares do not approve of the business
combination we consummate.
If we seek stockholder approval of our initial business
combination, our sponsor, directors and officers have agreed to
vote in favor of such initial business combination, regardless of
how our public stockholders vote.
Unlike many other blank check companies in which the initial
stockholders agree to vote their founder shares in accordance with
the majority of the votes cast by the public stockholders in
connection with an initial business combination, our sponsor,
officers and directors have agreed to vote their founder shares and
any placement shares, as well as any public shares purchased during
or after the initial public offering, in favor of our initial
business combination. Our initial stockholders own shares
representing 26.9% of our outstanding shares of common stock,
including placement shares. Accordingly, if we seek stockholder
approval of our initial business combination, it is more likely
that the necessary stockholder approval will be received than would
be the case if our sponsor, officers and directors agreed to vote
their founder shares, placement shares and public shares in
accordance with the majority of the votes cast by our public
stockholders.
Your only opportunity to affect the investment decision
regarding a potential business combination will be limited to the
exercise of your right to redeem your shares from us for cash,
unless we seek stockholder approval of the business
combination.
At the time of your investment in us, you will not be provided with
an opportunity to evaluate the specific merits or risks of one or
more target businesses. Since our board of directors may consummate
a business combination without seeking stockholder approval, public
stockholders may not have the right or opportunity to vote on the
business combination, unless we seek such stockholder vote.
Accordingly, if we do not seek stockholder approval, your only
opportunity to affect the investment decision regarding a potential
business combination will be limited to exercising your redemption
rights within the period of time (which will be at least 20
business days) set forth in our tender offer documents mailed to
our public stockholders in which we describe our initial business
combination.
The ability of our public stockholders to redeem their shares
for cash may make our financial condition unattractive to potential
business combination targets, which may make it difficult for us to
enter into a business combination with a target.
We may seek to enter into a business combination transaction
agreement with a prospective target that requires as a closing
condition that we have a minimum net worth or a certain amount of
cash. If too many public stockholders exercise their redemption
rights, we would not be able to meet such closing condition and, as
a result, would not be able to proceed with the business
combination. Furthermore, in no event will we redeem our public
shares in an amount that would cause our net tangible assets to be
less than $5,000,001 upon completion of our initial business
combination (so that we are not subject to the SEC’s “penny stock”
rules) or any greater net tangible asset or cash requirement which
may be contained in the agreement relating to our initial business
combination. Consequently, if accepting all properly submitted
redemption requests would cause our net tangible assets to be less
than $5,000,001 upon completion of our initial business combination
or such greater amount necessary to satisfy a closing condition as
described above, we would not proceed with such redemption and the
related business combination and may instead search for an
alternate business combination. Prospective targets will be aware
of these risks and, thus, may be reluctant to enter into a business
combination transaction with us.
The ability of our public stockholders to exercise redemption
rights with respect to a large amount of our shares may not allow
us to consummate the most desirable business combination or
optimize our capital structure.
At the time we enter into an agreement for our initial business
combination, we will not know how many stockholders may exercise
their redemption rights, and therefore will need to structure the
transaction based on our expectations as to the number of shares
that will be submitted for redemption. If our business combination
agreement requires us to use a portion of the cash in the trust
account to pay the purchase price, or requires us to have a minimum
amount of cash at closing, we will need to reserve a portion of the
cash in the trust account to meet such requirements, or arrange for
third party financing. In addition, if a larger number of shares
are submitted for redemption than we initially expected, we may
need to restructure the transaction to reserve a greater portion of
the cash in the trust account or arrange for third party financing.
Raising additional third party financing may involve dilutive
equity issuances or the incurrence of indebtedness at higher than
desirable levels. The above considerations may limit our ability to
complete the most desirable business combination available to us or
optimize our capital structure. The amount of the deferred
underwriting commissions payable to the representatives will not be
adjusted for any shares that are redeemed in connection with a
business combination. The per-share amount we will distribute
to stockholders who properly exercise their redemption rights will
not be reduced by the deferred underwriting commission and after
such redemptions, the per-share value of shares held by
non-redeeming stockholders will reflect our obligation to pay
the deferred underwriting commissions.
The ability of our public stockholders to exercise redemption
rights with respect to a large number of our shares could increase
the probability that our initial business combination would be
unsuccessful and that you would have to wait for liquidation in
order to redeem your stock.
If our business combination agreement requires us to use a portion
of the cash in the trust account to pay the purchase price, or
requires us to have a minimum amount of cash at closing, the
probability that our initial business combination would be
unsuccessful is increased. If our initial business combination is
unsuccessful, you would not receive your pro rata portion of the
trust account until we liquidate the trust account. If you are in
need of immediate liquidity, you could attempt to sell your stock
in the open market; however, at such time our stock may trade at a
discount to the pro rata amount per share in the trust account. In
either situation, you may suffer a material loss on your investment
or lose the benefit of funds expected in connection with our
redemption until we liquidate or you are able to sell your stock in
the open market.
The requirement that we consummate a business combination by
December 8, 2022 may give potential target businesses leverage over
us in negotiating a business combination and may decrease our
ability to conduct due diligence on potential business combination
targets as we approach our dissolution deadline, which could
undermine our ability to consummate a business combination on terms
that would produce value for our stockholders.
Any potential target business with which we enter into negotiations
concerning a business combination will be aware that we must
consummate our initial business combination by December 8, 2022.
Consequently, such target business may obtain leverage over us in
negotiating a business combination, knowing that if we do not
complete our initial business combination with that particular
target business, we may be unable to complete our initial business
combination with any target business. This risk will increase as we
get closer to December 8, 2022. In addition, we may have limited
time to conduct due diligence and may enter into our initial
business combination on terms that we would have rejected upon a
more comprehensive investigation.
If the net proceeds of the initial public offering and the
sale of the placement units not being held in the trust account are
insufficient to allow us to operate until at least December 8,
2022, we may be unable to complete our initial business
combination, in which case our public stockholders may only receive
$10.00 per share, or less than such amount in certain
circumstances, and our warrants will expire worthless.
The funds available to us outside of the trust account may not be
sufficient to allow us to operate until at least December 8, 2022,
assuming that our initial business combination is not completed by
that date. We believe that the funds available to us outside of the
trust account will be sufficient to allow us to operate until at
least December 8, 2022; however, we cannot assure you that our
estimate is accurate. Of the funds available to us, we could use a
portion of the funds available to us to pay fees to consultants to
assist us with our search for a target business. We could also use
a portion of the funds as a down payment or to fund a “no-shop”
provision (a provision in letters of intent or merger agreements
designed to keep target businesses from “shopping” around for
transactions with other companies on terms more favorable to such
target businesses) with respect to a particular proposed business
combination, although we do not have any current intention to do
so. If we entered into a letter of intent or merger agreement where
we paid for the right to receive exclusivity from a target business
and were subsequently required to forfeit such funds (whether as a
result of our breach or otherwise), we might not have sufficient
funds to continue searching for, or conduct due diligence with
respect to, a target business. If we are unable to complete our
initial business combination, our public stockholders may receive
only $10.00 per share on the liquidation of our trust account and
our warrants will expire worthless. In certain circumstances, our
public stockholders may receive less than $10.00 per share upon our
liquidation.
If the net proceeds from the initial public offering and the
sale of the placement units not being held in the trust account are
insufficient, it could limit the amount available to fund our
search for a target business or businesses and complete our initial
business combination and we will depend on loans from our sponsor
or management team to fund our search for a business combination,
to pay our taxes and to complete our initial business combination.
If we are unable to obtain these loans, we may be unable to
complete our initial business combination.
As of December 31, 2021, only $36,042 was available to us outside
the trust account to fund our working capital requirements. If we
are required to seek additional capital, we would need to borrow
funds from our sponsor, management team or other third parties to
operate, or we may be forced to liquidate. None of our sponsor,
members of our management team nor any of their affiliates is under
any obligation to advance funds to us in such circumstances. Any
such advances would be repaid only from funds held outside the
trust account or from funds released to us upon completion of our
initial business combination. We do not expect to seek loans from
parties other than our sponsor or an affiliate of our sponsor 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. If we are unable to obtain these loans, we
may be unable to complete our initial business combination. If
we are unable to complete our initial business combination because
we do not have sufficient funds available to us, we will be forced
to cease operations and liquidate the trust account. Consequently,
our public stockholders may receive only $10.00 per share on our
redemption of our public shares, and our warrants will expire
worthless. In certain circumstances, our public stockholders may
receive less than $10.00 per share on the redemption of their
shares. Please see “— If third parties bring claims against us, the
proceeds held in the trust account could be reduced and the
per-share redemption amount received by stockholders may be less
than $10.00 per share” and other risk factors in this section.
Our search for a business combination, and any target
business with which we ultimately consummate a business
combination, may be materially adversely affected by the recent
coronavirus (COVID-19) outbreak and the status of debt and equity
markets.
The COVID-19 outbreak has and a significant outbreak of other
infectious diseases could result in a widespread health crisis that
could adversely affect the economies and financial markets
worldwide, and the business of any potential target business with
which we consummate a business combination could be materially and
adversely affected. Furthermore, we may be unable to complete a
business combination if continued concerns relating to
COVID-19 continue to restrict travel, limit the ability to
have meetings with potential investors or the target company’s
personnel, vendors and services providers are unavailable to
negotiate and consummate a transaction in a timely manner. The
extent to which COVID-19 impacts our search for a business
combination will depend on future developments, which are highly
uncertain and cannot be predicted, including new information which
may emerge concerning the severity of COVID-19 and the actions
to contain COVID-19 or treat its impact, among others. If the
disruptions posed by COVID-19 or other matters of global
concern continue for an extensive period of time, our ability to
consummate a business combination, or the operations of a target
business with which we ultimately consummate a business
combination, may be materially adversely affected. In addition, our
ability to consummate a transaction may be dependent on the ability
to raise equity and debt financing which may be impacted by
COVID-19 and other events, including as a result of increased
market volatility, decreased market liquidity and
third-party financing being unavailable on terms acceptable to
us or at all.
We may not be able to consummate our initial business
combination by December 8, 2022, in which case we would cease all
operations except for the purpose of winding up and we would redeem
our public shares and liquidate, in which case our public
stockholders may only receive $10.00 per share, or less than such
amount in certain circumstances, and our warrants will expire
worthless.
Our amended and restated certificate of incorporation provides that
we must complete our initial business combination by December 8,
2022. We may not be able to find a suitable target business and
complete our initial business combination by that date. Our ability
to complete our initial business combination may be negatively
impacted by general market conditions, volatility in the capital
and debt markets and the other risks described herein. If we have
not completed our initial business combination by December 8, 2022,
we will: (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter, redeem the public shares, at a
per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest
earned on the funds held in the trust account and not previously
released to us to pay our taxes (less up to $100,000 of interest to
pay dissolution expenses), divided by the number of then
outstanding public shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any),
subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and
liquidate, subject in each case to our obligations under Delaware
law to provide for claims of creditors and the requirements of
other applicable law. In such case, our public stockholders may
only receive $10.00 per share, and our warrants will expire
worthless. In certain circumstances, our public stockholders may
receive less than $10.00 per share on the redemption of their
shares.
If we seek stockholder approval of our initial business
combination, our sponsor, directors, officers, advisors and their
affiliates may elect to purchase shares from public stockholders,
which may influence a vote on a proposed business combination and
reduce the public “float” f our Class A common stock.
If we seek stockholder approval of our initial business combination
and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our sponsor,
directors, officers, advisors or their affiliates may purchase
shares in the open market or in privately negotiated transactions
either prior to or following the consummation of our initial
business combination, although they are under no obligation to do
so. Such a purchase may include a contractual acknowledgement that
such stockholder, although still the record holder of our shares is
no longer the beneficial owner thereof and therefore agrees not to
exercise its redemption rights. In the event that our sponsor,
directors, officers, advisors or their affiliates purchase shares
in privately negotiated transactions from public stockholders who
have already elected to exercise their redemption rights, such
selling stockholders would be required to revoke their prior
elections to redeem their shares. The purpose of such purchases
could be to vote such shares in favor of the business combination
and thereby increase the likelihood of obtaining stockholder
approval of the business combination, or to satisfy a closing
condition in an agreement with a target that requires us to have a
minimum net worth or a certain amount of cash at the closing of our
business combination, where it appears that such requirement would
otherwise not be met. This may result in the completion of our
business combination that may not otherwise have been possible.
In addition, if such purchases are made, the public “float” of our
Class A common stock and the number of beneficial holders of our
securities may be reduced, possibly making it difficult to obtain
or maintain the quotation, listing or trading of our securities on
NASDAQ.
If a stockholder fails to receive notice of our offer to
redeem our public shares in connection with our initial business
combination, or fails to comply with the procedures for tendering
its shares, such shares may not be redeemed.
We will comply with the tender offer rules or proxy rules, as
applicable, when conducting redemptions in connection with our
initial business combination. Despite our compliance with these
rules, if a stockholder fails to receive our tender offer or proxy
materials, as applicable, such stockholder may not become aware of
the opportunity to redeem its shares. In addition, the tender offer
documents or proxy materials, as applicable, that we will furnish
to holders of our public shares in connection with our initial
business combination will describe the various procedures that must
be complied with in order to validly tender or redeem public
shares. For example, we may require our public stockholders seeking
to exercise their redemption rights, whether they are record
holders or hold their shares in “street name,” to either tender
their certificates to our transfer agent prior to the date set
forth in the tender offer materials mailed to such holders, or up
to two business days prior to the vote on the proposal to approve
the initial business combination in the event we distribute proxy
materials, or to deliver their shares to the transfer agent
electronically. In the event that a stockholder fails to comply
with these or any other procedures, its shares may not be redeemed.
Please see “Business — Tendering stock certificates in connection
with redemption rights.”
You will not have any rights or interests in funds from the
trust account, except under certain limited circumstances. To
liquidate your investment, therefore, you may be forced to sell
your public shares or warrants, potentially at a loss.
Our public stockholders will be entitled to receive funds from the
trust account only upon the earliest to occur of: (i) our
completion of an initial business combination, and then only in
connection with those shares of our Class A common stock that such
stockholder properly elected to redeem, subject to the limitations
described in this report, (ii) the redemption of any public shares
properly submitted in connection with a stockholder vote to amend
our amended and restated certificate of incorporation (a) to modify
the substance or timing of our obligation to redeem 100% of our
public shares if we do not complete our initial business
combination by December 8, 2022 or (b) with respect to any other
provision relating to stockholders’ rights or
pre-initial business combination activity and (iii) the
redemption of our public shares if we are unable to complete an
initial business combination by December 8, 2022, subject to
applicable law and as further described herein. In addition, if we
are unable to consummate an initial business combination by
December 8, 2022, compliance with Delaware law may require that we
submit a plan of dissolution to our then-existing stockholders for
approval prior to the distribution of the proceeds held in our
trust account. In that case, public stockholders may be forced to
wait beyond December 8, 2022 before they receive funds from our
trust account. In no other circumstances will a public stockholder
have any right or interest of any kind in the trust account.
Accordingly, to liquidate your investment, you may be forced to
sell your public shares or warrants, potentially at a loss.
You will not be entitled to protections normally afforded to
investors of many other blank check companies.
Since the net proceeds of the initial public offering and the sale
of the placement units are intended to be used to complete an
initial business combination with a target business that has not
been selected, we may be deemed to be a “blank check” company under
the United States securities laws. However, because we had net
tangible assets in excess of $5.0 million upon the completion of
the initial public offering and the sale of the placement units and
we filed a Current Report on Form 8-K, including an audited balance
sheet demonstrating this fact, we are exempt from rules promulgated
by the SEC to protect investors in blank check companies, such as
Rule 419 under the Securities Act. Accordingly, investors will not
be afforded the benefits or protections of those rules. Among other
things, this means our units were immediately tradable and we have
a longer period of time to complete a business combination than
would companies subject to Rule 419. Moreover, if the initial
public offering was subject to Rule 419, that rule would prohibit
the release of any interest earned on funds held in the trust
account to us unless and until the funds in the trust account were
released to us in connection with our consummation of an initial
business combination.
Because of our limited resources and the significant
competition for business combination opportunities, it may be more
difficult for us to complete our initial business combination. If
we are unable to complete our initial business combination, our
public stockholders may receive only $10.00 per share on our
redemption of our public shares, or less than such amount in
certain circumstances, and our warrants will expire
worthless.
We expect to encounter intense competition from other entities
having a business objective similar to ours, including private
investors (which may be individuals or investment partnerships),
other blank check companies and other entities, domestic and
international, competing for the types of businesses we intend to
acquire. Many of these individuals and entities are
well-established and have extensive experience in identifying and
effecting, directly or indirectly, acquisitions of companies
operating in or providing services to various industries. Many of
these competitors possess greater technical, human and other
resources, or more local industry knowledge than we do and our
financial resources will be relatively limited when contrasted with
those of many of these competitors. While we believe there are
numerous target businesses we could potentially acquire, our
ability to compete with respect to the acquisition of certain
target businesses that are sizable will be limited by our available
financial resources. This inherent competitive limitation gives
others an advantage in pursuing the acquisition of certain target
businesses.
Furthermore, because we are obligated to pay cash for the shares of
Class A common stock which our public stockholders redeem in
connection with our initial business combination, target companies
will be aware that this may reduce the resources available to us
for our initial business combination. This may place us at a
competitive disadvantage in successfully negotiating a business
combination. If we are unable to complete our initial business
combination, our public stockholders may receive only $10.00 per
share (based on the trust account balance as of December 31, 2021)
on the liquidation of our trust account and our warrants will
expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 per share upon our liquidation.
Subsequent to the consummation of our initial business
combination, we may be required to take write-downs or write-offs,
restructuring and impairment or other charges that could have a
significant negative effect on our financial condition, results of
operations and our stock price, which could cause you to lose some
or all of your investment.
Even if we conduct extensive due diligence on a target business
with which we combine, we cannot assure you that this diligence
will surface all material issues that may be present inside a
particular target business, that it would be possible to uncover
all material issues through a customary amount of due diligence, or
that factors outside of the target business and outside of our
control will not later arise. As a result of these factors, we may
be forced to later write-down or write-off assets,
restructure our operations, or incur impairment or other charges
that could result in our reporting losses. Even if our due
diligence successfully identifies certain risks, unexpected risks
may arise and previously known risks may materialize in a manner
not consistent with our preliminary risk analysis. Even though
these charges may be non-cash items and not have an immediate
impact on our liquidity, the fact that we report charges of this
nature could contribute to negative market perceptions about us or
our securities. In addition, charges of this nature may cause us to
violate net worth or other covenants to which we may be subject as
a result of assuming pre-existing debt held by a target
business or by virtue of our obtaining post-combination debt
financing. Accordingly, any stockholders who choose to remain
stockholders following the business combination could suffer a
reduction in the value of their shares. Such stockholders are
unlikely to have a remedy for such reduction in value.
If third parties bring claims against us, the proceeds held
in the trust account could be reduced and the per-share redemption
amount received by stockholders may be less than $10.00 per
share.
Our placing of funds in the trust account may not protect those
funds from third party claims against us. Although we seek to have
all vendors, service providers, prospective target businesses or
other entities with which we do business execute agreements with us
waiving any right, title, interest or claim of any kind in or to
any monies held in the trust account for the benefit of our public
stockholders, such parties may not execute such agreements, or even
if they execute such agreements, they may not be prevented from
bringing claims against the trust account, including, but not
limited to, fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims
challenging the enforceability of the waiver, in each case in order
to gain advantage with respect to a claim against our assets,
including the funds held in the trust account. If any third party
refuses to execute an agreement waiving such claims to the monies
held in the trust account, our management will perform an analysis
of the alternatives available to it and will only enter into an
agreement with a third party that has not executed a waiver if
management believes that such third party’s engagement would be
significantly more beneficial to us than any alternative. Making
such a request of potential target businesses may make our
acquisition proposal less attractive to them and, to the extent
prospective target businesses refuse to execute such a waiver, it
may limit the field of potential target businesses that we might
pursue. WithumSmith+Brown, PC, our independent registered public
accounting firm, will not execute agreements with us waiving such
claims to the monies held in the trust account.
Examples of possible instances where we may engage a third party
that refuses to execute a waiver include the engagement of a third
party consultant whose particular expertise or skills are believed
by management to be significantly superior to those of other
consultants that would agree to execute a waiver or in cases where
management is unable to find a service provider willing to execute
a waiver. In addition, there is no guarantee that such entities
will agree to waive any claims they may have in the future as a
result of, or arising out of, any negotiations, contracts or
agreements with us and will not seek recourse against the trust
account for any reason. Upon redemption of our public shares, if we
are unable to complete our business combination within the required
time frame, or upon the exercise of a redemption right in
connection with our business combination, we will be required to
provide for payment of claims of creditors that were not waived
that may be brought against us within the 10 years following
redemption. Accordingly, the per-share redemption amount received
by public stockholders could be less than the $10.00 per share
initially held in the trust account due to claims of such
creditors. FinTech Investor Holdings V, LLC has agreed that it will
be liable to us if and to the extent any claims by a vendor (other
than our independent registered public accounting firm) for
services rendered or products sold to us, or a prospective target
business with which we have discussed entering into a transaction
agreement, reduce the amount of funds in the trust account to below
(i) $10.00 per public share or (ii) such lesser amount per
public share held in the trust account as of the date of the
liquidation of the trust account due to reductions in the value of
the trust assets, in each case net of the interest which may be
withdrawn to pay taxes. This liability will not apply with respect
to any claims by a third party who executed a waiver of any and all
rights to seek access to the trust account and except as to any
claims under our indemnity of the underwriters of the initial
public offering against certain liabilities, including liabilities
under the Securities Act. Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third party, then
FinTech Investor Holdings V, LLC will not be responsible to the
extent of any liability for such third party claims. We have not
independently verified whether FinTech Investor Holdings V, LLC has
sufficient funds to satisfy its indemnity obligations and believe
that FinTech Investor Holdings V, LLC’s only assets are securities
of our company. We have not asked FinTech Investor Holdings V, LLC
to reserve for such indemnification obligations. Therefore, we
cannot assure you that FinTech Investor Holdings V, LLC would be
able to satisfy those obligations. As a result, if any such claims
were successfully made against the trust account, the funds
available for our initial business combination and redemptions
could be reduced to less than $10.00 per public share. In such
event, we may not be able to complete our initial business
combination, and you would receive such lesser amount per share in
connection with any redemption of your public shares. None of our
officers will indemnify us for claims by third parties including,
without limitation, claims by vendors and prospective target
businesses.
Our independent directors may decide not to enforce the
indemnification obligations of FinTech Investor Holdings V, LLC,
resulting in a reduction in the amount of funds in the trust
account available for distribution to our public
stockholders.
In the event that the proceeds in the trust account are reduced
below the lesser of (i) $10.00 per public share or (ii) such
lesser amount per public share held in the trust account as of the
date of the liquidation of the trust account due to reductions in
the value of the trust assets, in each case net of the interest
which may be withdrawn to pay taxes, and FinTech Investor Holdings
V, LLC asserts that it is unable to satisfy its obligations or that
it has no indemnification obligations related to a particular
claim, our independent directors would determine whether to take
legal action against FinTech Investor Holdings V, LLC to enforce
its indemnification obligations. While we currently expect that our
independent directors would take legal action on our behalf against
FinTech Investor Holdings V, LLC to enforce its indemnification
obligations to us, it is possible that our independent directors in
exercising their business judgment may choose not to do so if, for
example, the cost of such legal action is deemed by the independent
directors to be too high relative to the amount recoverable or if
the independent directors determine that a favorable outcome is not
likely. If our independent directors choose not to enforce these
indemnification obligations, the amount of funds in the trust
account available for distribution to our public stockholders may
be reduced below $10.00 per share.
We may not have sufficient funds to satisfy indemnification
claims of our directors and executive officers.
We have agreed to indemnify our officers and directors to the
fullest extent permitted by law. However, our officers and
directors have agreed to waive any right, title, interest or claim
of any kind in or to any monies in the trust account and to not
seek recourse against the trust account for any reason whatsoever.
Accordingly, any indemnification provided will be able to be
satisfied by us only if (i) we have sufficient funds outside of the
trust account or (ii) we consummate an initial business
combination. Our obligation to indemnify our officers and directors
may discourage stockholders from bringing a lawsuit against our
officers or directors for breach of their fiduciary duty. These
provisions also may have the effect of reducing the likelihood of
derivative litigation against our officers and directors, even
though such an action, if successful, might otherwise benefit us
and our stockholders. Furthermore, a stockholder’s investment may
be adversely affected to the extent we pay the costs of settlement
and damage awards against our officers and directors pursuant to
these indemnification provisions.
If, after we distribute the proceeds in the trust account to
our public stockholders, we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not
dismissed, a bankruptcy court may seek to recover such proceeds,
and we and our board may be exposed to claims of punitive
damages.
If, after we distribute the proceeds in the trust account to our
public stockholders, we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not
dismissed, any distributions received by stockholders could be
viewed under applicable debtor/creditor and/or bankruptcy laws as
either a “preferential transfer” or a “fraudulent conveyance.” As a
result, a bankruptcy court could seek to recover all amounts
received by our stockholders. In addition, our board of directors
may be viewed as having breached its fiduciary duty to our
creditors and/or having acted in bad faith, thereby exposing itself
and us to claims of punitive damages, by paying public stockholders
from the trust account prior to addressing the claims of
creditors.
If, before distributing the proceeds in the trust account to
our public stockholders, we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not
dismissed, the claims of creditors in such proceeding may have
priority over the claims of our stockholders and the per-share
amount that would otherwise be received by our stockholders in
connection with our liquidation may be reduced.
If, before distributing the proceeds in the trust account to our
public stockholders, we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not
dismissed, the proceeds held in the trust account could be subject
to applicable bankruptcy law, and may be included in our bankruptcy
estate and subject to the claims of third parties with priority
over the claims of our stockholders. To the extent any bankruptcy
claims deplete the trust account, the per-share amount that would
otherwise be received by our stockholders in connection with our
liquidation may be reduced.
Our stockholders may be held liable for claims by third
parties against us to the extent of distributions received by them
upon redemption of their shares.
Under the DGCL, stockholders may be held liable for claims by third
parties against a corporation to the extent of distributions
received by them in a dissolution. The pro rata portion of our
trust account distributed to our public stockholders upon the
redemption of our public shares in the event we do not consummate
our initial business combination by December 8, 2022 may be
considered a liquidating distribution under Delaware law. If a
corporation complies with certain procedures set forth in Section
280 of the DGCL intended to ensure that it makes reasonable
provision for all claims against it, including a 60-day notice
period during which any third-party claims can be brought against
the corporation, a 90-day period during which the corporation may
reject any claims brought, and an additional 150-day waiting period
before any liquidating distributions are made to stockholders, any
liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholder’s pro
rata share of the claim or the amount distributed to the
stockholder, and any liability of the stockholder would be barred
after the third anniversary of the dissolution. However, it is our
intention to redeem our public shares as soon as reasonably
possible following December 8, 2022 in the event we do not
consummate our initial business combination and, therefore, we do
not intend to comply with the foregoing procedures.
Because we will not be complying with Section 280, Section 281(b)
of the DGCL requires us to adopt a plan, based on facts known to us
at such time that will provide for our payment of all existing and
pending claims or claims that may be potentially brought against us
within the 10 years following our dissolution. However, because we
are a blank check company, rather than an operating company, and
our operations are limited to searching for prospective target
businesses to acquire, the only likely claims to arise would be
from our vendors (such as lawyers, investment bankers, etc.) or
prospective target businesses. If our plan of distribution complies
with Section 281(b) of the DGCL, any liability of stockholders with
respect to a liquidating distribution is limited to the lesser of
such stockholder’s pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the
stockholder would likely be barred after the third anniversary of
the dissolution. We cannot assure you that we will properly assess
all claims that may be potentially brought against us. As such, our
stockholders could potentially be liable for any claims to the
extent of distributions received by them (but no more) and any
liability of our stockholders may extend beyond the third
anniversary of such date. Furthermore, if the pro rata portion of
our trust account distributed to our public stockholders upon the
redemption of our public shares in the event we do not consummate
our initial business combination by December 8, 2022 is not
considered a liquidating distribution under Delaware law and such
redemption distribution is deemed to be unlawful, then pursuant to
Section 174 of the DGCL, the statute of limitations for claims of
creditors could then be six years after the unlawful redemption
distribution, instead of three years, as in the case of a
liquidating distribution.
We may not hold an annual meeting of stockholders until after
the consummation of our initial business combination, which could
delay the opportunity for our stockholders to elect
directors.
In accordance with NASDAQ corporate governance requirements, we are
not required to hold an annual meeting until no later than one year
after our first fiscal year end following our listing on NASDAQ.
Under Section 211(b) of the DGCL, we are, however, required to
hold an annual meeting of stockholders for the purposes of electing
directors in accordance with our bylaws unless such election is
made by written consent in lieu of such a meeting. We may not hold
an annual meeting of stockholders to elect new directors prior to
the consummation of our initial business combination, and thus we
may not be in compliance with Section 211(b) of the DGCL, which
requires an annual meeting. Therefore, if our stockholders want us
to hold an annual meeting prior to the consummation of our initial
business combination, they may attempt to force us to hold one by
submitting an application to the Delaware Court of Chancery in
accordance with Section 211(c) of the DGCL.
Because we are not limited to a particular industry sector or
any specific target businesses with which to pursue our initial
business combination, you will be unable to ascertain the merits or
risks of any particular target business’ operations.
Although we expect to focus our search for a target business in the
financial technology industry, we may seek to consummate a business
combination with an operating company in any industry or sector.
However, we will not, under our amended and restated certificate of
incorporation, be permitted to consummate our business combination
with another blank check company or similar company with nominal
operations. To the extent we consummate our initial business
combination, we may be affected by numerous risks inherent in the
business operations with which we combine. For example, if we
combine with a financially unstable business or an entity lacking
an established record of revenues or earnings, we may be affected
by the risks inherent in the business and operations of a
financially unstable or a development stage entity. Although our
officers and directors will endeavor to evaluate the risks inherent
in a particular target business, we cannot assure you that we will
properly ascertain or assess all of the significant risk factors or
that we will have adequate time to complete due diligence.
Furthermore, some of these risks may be outside of our control and
leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business. We also cannot
assure you that an investment in our securities will ultimately
prove to be more favorable to investors than a direct investment,
if such opportunity were available, in a business combination
target. Accordingly, any stockholders who choose to remain
stockholders following the business combination could suffer a
reduction in the value of their shares. Such stockholders are
unlikely to have a remedy for such reduction in value.
We may seek acquisition opportunities in industries or
sectors which may or may not be outside of our management’s area of
expertise.
We will consider a business combination outside of our management’s
area of expertise if a business combination candidate is presented
to us and we determine that such candidate offers an attractive
acquisition opportunity for our company. Although our management
will endeavor to evaluate the risks inherent in any particular
business combination candidate, we cannot assure you that we will
adequately ascertain or assess all the significant risk factors. We
also cannot assure you that an investment in our units will not
ultimately prove to be less favorable to investors than a direct
investment, if an opportunity were available, in a business
combination candidate. In the event we elect to pursue an
acquisition outside of the areas of our management’s expertise, our
management’s expertise may not be directly applicable to its
evaluation or operation, and the information contained in this
Annual Report regarding the areas of our management’s expertise
would not be relevant to an understanding of the business that we
elect to acquire. As a result, our management may not be able to
adequately ascertain or assess all the significant risk factors.
Accordingly, any stockholders who choose to remain stockholders
following our business combination could suffer a reduction in the
value of their shares. Such stockholders are unlikely to have a
remedy for such reduction in value.
Although we have identified general criteria and guidelines
that we believe are important in evaluating prospective target
businesses, we may enter into our initial business combination with
a target that does not meet such criteria and guidelines and, as a
result, the target business with which we enter into our initial
business combination may not have attributes entirely consistent
with our general criteria and guidelines.
Although we have identified general criteria and guidelines for
evaluating prospective target businesses, it is possible that a
target business with which we enter into our initial business
combination will not have all of these positive attributes. If we
consummate a business combination with a target that does not meet
some or all of these criteria and guidelines, such combination may
not be as successful as a combination with a business that does
meet all of our general criteria and guidelines. In addition, if we
announce a prospective business combination with a target that does
not meet our general criteria and guidelines, a greater number of
stockholders may exercise their redemption rights, which may make
it difficult for us to meet any closing condition with a target
business that requires us to have a minimum net worth or a certain
amount of cash. In addition, if stockholder approval of the
transaction is required by law or NASDAQ rules, or we decide to
obtain stockholder approval for business or other legal reasons, it
may be more difficult for us to obtain stockholder approval of our
initial business combination if the target business does not meet
our general criteria and guidelines. If we are unable to complete
our initial business combination, our public stockholders may
receive only $10.00 per share (based on the trust account balance
as of December 31, 2021), or less in certain circumstances, on the
liquidation of the trust account and our warrants will expire
worthless. In certain circumstances, our public stockholders may
receive less than $10.00 per share on the redemption of their
shares.
We may seek acquisition opportunities with an early stage
company, a financially unstable business or an entity lacking an
established record of revenue or earnings, which could subject us
to volatile revenues or earnings or difficulty in retaining key
personnel.
To the extent we complete our initial business combination with an
early stage company, a financially unstable business or an entity
lacking an established record of revenues or earnings, we may be
affected by numerous risks inherent in the operations of the
business with which we combine. These risks include investing in a
business without a proven business model and with limited
historical financial data, volatile revenues or earnings and
difficulties in obtaining and retaining key personnel. Although our
officers and directors will endeavor to evaluate the risks inherent
in a particular target business, we may not be able to properly
ascertain or assess all the significant risk factors and we may not
have adequate time to complete due diligence. Furthermore, some of
these risks may be outside of our control and leave us with no
ability to control or reduce the chances that those risks will
adversely impact a target business.
We are not required to obtain an opinion from an independent
investment banking firm or from an independent accounting firm, and
consequently, you may have no assurance from an independent source
that the price we are paying for the business is fair to our
company from a financial point of view.
Unless we consummate our initial business combination with an
affiliated entity or our board cannot independently determine the
fair market value of the target business or businesses, we are not
required to obtain an opinion from an independent investment
banking firm that is a member of FINRA or from an independent
accounting firm that the price we are paying is fair to our company
from a financial point of view. If no opinion is obtained, our
stockholders will be relying on the judgment of our board of
directors, who will determine fair market value based on standards
generally accepted by the financial community. Such standards used
will be disclosed in our tender offer or proxy solicitation
materials, as applicable, related to our initial business
combination.
Because we must furnish our stockholders with target business
financial statements, we may lose the ability to complete an
otherwise advantageous initial business combination with some
prospective target businesses.
The federal proxy rules require that a proxy statement with respect
to a vote on a business combination meeting certain financial
significance tests include target historical and/or pro forma
financial statement disclosure. We will include the same financial
statement disclosure in connection with our tender offer documents,
whether or not they are required under the tender offer rules.
These financial statements may be required to be prepared in
accordance with, or be reconciled to, accounting principles
generally accepted in the United States of America, or GAAP, or
international financial reporting standards as issued by the
International Accounting Standards Board, or IFRS, depending on the
circumstances and the historical financial statements may be
required to be audited in accordance with the standards of the
Public Company Accounting Oversight Board (United States), or
PCAOB. These financial statement requirements may limit the pool of
potential target businesses we may acquire because some targets may
be unable to provide such financial statements in time for us to
disclose such financial statements in accordance with federal proxy
rules and consummate our initial business combination by December
8, 2022.
Compliance obligations under the Sarbanes-Oxley Act may make
it more difficult for us to consummate our initial business
combination, require substantial financial and management
resources, and increase the time and costs of completing an
acquisition.
Section 404 of the Sarbanes-Oxley Act requires that we
evaluate and report on our system of internal controls. Only in the
event we are deemed to be a large accelerated filer or an
accelerated filer will we be required to comply with the
independent registered public accounting firm attestation
requirement on our internal controls over financial reporting.
Further, for as long as we remain an emerging growth company, we
will not be required to comply with the independent registered
public accounting firm attestation requirement on our internal
controls over financial reporting. The fact that we are a blank
check company makes compliance with the requirements of the
Sarbanes-Oxley Act particularly burdensome on us as compared
to other public companies because a target company with which we
seek to complete our business combination may not be in compliance
with the provisions of the Sarbanes-Oxley Act regarding
adequacy of its internal controls. The development of the internal
control of any such entity to achieve compliance with the
Sarbanes-Oxley Act may increase the time and costs necessary
to complete any such acquisition.
Our warrants are accounted for as liabilities and the changes
in value of our warrants could have a material effect on our
financial results.
The SEC Warrant Accounting Statement regarding the accounting and
reporting considerations for warrants issued by SPACs focused on
certain settlement terms and provisions related to certain tender
offers following a business combination. The terms described in the
SEC Warrant Accounting Statement are common in SPACs and are
similar to the terms contained in the warrant agreement governing
our warrants. In response to the SEC Warrant Accounting Statement,
we reevaluated the accounting treatment of our public warrants and
placement warrants, and determined to classify the warrants as
derivative liabilities measured at fair value, with changes in fair
value each period reported in earnings. As a result, included on
our balance sheet as of December 31, 2021 contained elsewhere in
this Annual Report are derivative liabilities related to embedded
features contained within our warrants. Accounting Standards
Codification 815, Derivatives and Hedging (“ASC 815”), provides for
the remeasurement of the fair value of such derivatives at each
balance sheet date, with a resulting non-cash gain or loss related
to the change in the fair value being recognized in earnings in the
statement of operations. As a result of the recurring fair value
measurement, our financial statements and results of operations may
fluctuate quarterly based on factors which are outside of our
control. Due to the recurring fair value measurement, we expect
that we will recognize non- cash gains or losses on our warrants
each reporting period and that the amount of such gains or losses
could be material.
We have identified material weaknesses in our internal
control over financial reporting. These material weaknesses could
continue to adversely affect our ability to report our results of
operations and financial condition accurately and in a timely
manner.
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting designed to
provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external
purposes in accordance with GAAP. Our management is likewise
required, on a quarterly basis, to evaluate the effectiveness of
our internal controls and to disclose any changes and material
weaknesses identified through such evaluation in those internal
controls. A material weakness is a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement
of our annual or interim financial statements will not be prevented
or detected on a timely basis.
As described elsewhere in this Annual Report, we identified
material weaknesses in our internal control over financial
reporting related to the accounting for complex financial
instruments, specifically warrant liabilities, our Class A common
stock subject to possible redemption at the closing of our initial
public offering and the restatement of our earnings per share
calculation. As a result of these material weaknesses, our
management concluded that our internal control over financial
reporting was not effective as of December 31, 2021.
To respond to these material weaknesses, we have devoted, and plan
to continue to devote, significant effort and resources to the
remediation and improvement of our internal control over financial
reporting. While we have processes to identify and appropriately
apply applicable accounting requirements, we plan to enhance these
processes to better evaluate our research and understanding of the
nuances of the complex accounting standards that apply to our
financial statements. Our plans at this time include providing
enhanced access to accounting literature, research materials and
documents and increased communication among our personnel and
third-party professionals with whom we consult regarding complex
accounting applications. The elements of our remediation plan can
only be accomplished over time, and we can offer no assurance that
these initiatives will ultimately have the intended effects. For a
discussion of management’s consideration of the material weaknesses
identified related to our accounting for complex financial
instruments, our Class A common stock subject to possible
redemption and the restatement of our earnings per share
calculation, see Part II, Item 9A: Controls and Procedures included
in this Annual Report.
Any failure to maintain such internal control could adversely
impact our ability to report our financial position and results
from operations on a timely and accurate basis. If our financial
statements are not accurate, investors may not have a complete
understanding of our operations. Likewise, if our financial
statements are not filed on a timely basis, we could be subject to
sanctions or investigations by the stock exchange on which our
common stock is listed, the SEC or other regulatory authorities. In
either case, there could result a material adverse effect on our
business. Ineffective internal controls could also cause investors
to lose confidence in our reported financial information, which
could have a negative effect on the trading price of our stock.
We can give no assurance that the measures we have taken and plan
to take in the future will remediate the material weaknesses
identified or that any additional material weaknesses or
restatements of financial results will not arise in the future due
to a failure to implement and maintain adequate internal control
over financial reporting or circumvention of these controls. In
addition, even if we are successful in strengthening our controls
and procedures, in the future those controls and procedures may not
be adequate to prevent or identify irregularities or errors or to
facilitate the fair presentation of our financial statements.
We do not have a specified maximum redemption threshold. The
absence of such a redemption threshold may make it possible for us
to consummate a business combination with which a substantial
majority of our stockholders do not agree.
Our amended and restated certificate of incorporation does not
provide a specified maximum redemption threshold, except that in no
event will we redeem our public shares in an amount that would
cause our net tangible assets to be less than $5,000,001 upon
completion of our initial business combination (such that we are
not subject to the SEC’s “penny stock” rules). As a result, we may
be able to complete our business combination even though a
substantial majority of our public stockholders do not agree with
the transaction and have redeemed their shares or, if we seek
stockholder approval of our initial business combination and do not
conduct redemptions in connection with our business combination
pursuant to the tender offer rules, have entered into privately
negotiated agreements to sell their shares to our sponsor,
officers, directors, advisors or their affiliates. In the event the
aggregate cash consideration we would be required to pay for all
shares of Class A common stock that are validly submitted for
redemption plus any amount required to satisfy cash conditions
pursuant to the terms of the proposed business combination exceed
the aggregate amount of cash available to us, we will not complete
the business combination or redeem any shares, all shares of Class
A common stock submitted for redemption will be returned to the
holders thereof, and we instead may search for an alternate
business combination.
In order to complete our initial business combination, we may
seek to amend our amended and restated certificate of incorporation
or other governing instruments, including our warrant agreement, in
a manner that will make it easier for us to complete our initial
business combination but that our stockholders or warrant holders
may not support.
In order to complete a business combination, blank check companies
have, in the recent past, amended various provisions of their
charters and governing instruments, including their warrant
agreement. For example, blank check companies have amended the
definition of business combination, increased redemption
thresholds, changed industry focus and, with respect to their
warrants, amended their warrant agreements to require the warrants
to be exchanged for cash and/or other securities. We cannot assure
you that we will not seek to amend our charter or other governing
instruments or change our industry focus in order to complete our
initial business combination.
The provisions of our amended and restated certificate of
incorporation that relate to our pre-business combination activity
(and corresponding provisions of the agreement governing the
release of funds from our trust account) may be amended with the
approval of holders of 65% of our common stock, which is a lower
amendment threshold than that of some other blank check companies.
It may be easier for us, therefore, to amend our amended and
restated certificate of incorporation and the trust agreement to
facilitate the consummation of an initial business combination that
some of our stockholders may not support.
Our amended and restated certificate of incorporation provides that
any of its provisions related to pre-business combination
activity (including the requirement to deposit proceeds of the
initial public offering and the private placement into the trust
account and not release such amounts except in specified
circumstances, and to provide redemption rights to public
stockholders) may be amended if approved by holders of 65% of our
common stock entitled to vote thereon, and corresponding provisions
of the trust agreement governing the release of funds from our
trust account may be amended if approved by holders of 65% of our
common stock entitled to vote thereon. In all other instances, our
amended and restated certificate of incorporation may be amended by
holders of a majority of our outstanding common stock entitled to
vote thereon, subject to applicable provisions of the DGCL or
applicable stock exchange rules. We may not issue additional
securities that can vote on amendments to our amended and restated
certificate of incorporation or in our initial business
combination. Our initial stockholders, who collectively
beneficially own 26.9% of our common stock, will participate in any
vote to amend our amended and restated certificate of incorporation
and/or trust agreement and will have the discretion to vote in any
manner they choose. As a result, we may be able to amend the
provisions of our amended and restated certificate of incorporation
which govern our pre-business combination behavior more easily
than some other blank check companies, and this may increase our
ability to complete a business combination with which you do not
agree. Our stockholders may pursue remedies against us for any
breach of our amended and restated certificate of
incorporation.
Our sponsor, officers and directors have agreed, pursuant to a
letter agreement with us, that they will not propose any amendment
to our amended and restated certificate of incorporation that would
affect the substance or timing of our obligation to redeem 100% of
our public shares if we do not complete our initial business
combination by December 8, 2022, unless we provide our public
stockholders with the opportunity to redeem their shares of Class A
common stock upon approval of any such amendment at a
per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest
(which interest shall be net of taxes payable), divided by the
number of then outstanding public shares. Our stockholders are not
parties to, or third-party beneficiaries of, these agreements
and, as a result, do not have the ability to pursue remedies
against our sponsor, officers or directors for any breach of these
agreements. As a result, in the event of a breach, our stockholders
would need to pursue a stockholder derivative action, subject to
applicable law.
We may be unable to obtain additional financing to complete
our initial business combination or to fund the operations and
growth of a target business, which could compel us to restructure
or abandon a particular business combination.
We believe that the net proceeds of the initial public offering and
the sale of the placement units will be sufficient to allow us to
complete our initial business combination. If the net proceeds of
the initial public offering and the sale of the placement units
prove to be insufficient, either because of the size of our initial
business combination, the depletion of the available net proceeds
in search of a target business, the obligation to repurchase for
cash a significant number of shares from stockholders who elect
redemption in connection with our initial business combination or
the terms of negotiated transactions to purchase shares in
connection with our initial business combination, we may be
required to seek additional financing or to abandon the proposed
business combination. We cannot assure you that such financing will
be available on acceptable terms, if at all. To the extent that
additional financing proves to be unavailable when needed to
complete our initial business combination, we would be compelled to
either restructure the transaction or abandon that particular
business combination and seek an alternative target business
candidate. If we are unable to complete our initial business
combination, our public stockholders may receive only $10.00 per
share plus any pro rata interest earned on the funds held in the
trust account (and not previously released to us to pay our taxes)
on the liquidation of our trust account and our warrants will
expire worthless. In addition, even if we do not need additional
financing to complete our business combination, we may require such
financing to fund the operations or growth of the target business.
The failure to secure additional financing could have a material
adverse effect on the continued development or growth of the target
business. None of our officers, directors or stockholders is
required to provide any financing to us in connection with or after
our initial business combination. If we are unable to complete our
initial business combination, our public stockholders may only
receive $10.00 per share on the liquidation of our trust account,
and our warrants will expire worthless. In certain circumstances,
our public stockholders may receive less than $10.00 per share on
the redemption of their shares.
Our initial stockholders will control the election of our
board of directors until consummation of our initial business
combination and will hold a substantial interest in us. As a
result, they will elect all of our directors prior to the
consummation of our initial business combination and may exert a
substantial influence on actions requiring a stockholder vote,
potentially in a manner that you do not support.
Our initial stockholders own approximately 26.9% of our outstanding
common stock, including placement shares. In addition, the founder
shares, all of which are held by our initial stockholders, entitle
the holders to elect all of our directors prior to the consummation
of our initial business combination. Holders of our public shares
have no right to vote on the election of directors during such
time. These provisions of our amended and restated certificate of
incorporation may only be amended by a majority of at least 90% of
our common stock voting at a stockholder meeting. As a result, you
will not have any influence over the election of directors prior to
our initial business combination.
Neither our initial stockholders nor, to our knowledge, any of our
officers or directors, have any current intention to purchase
additional securities. Factors that would be considered in making
such additional purchases would include consideration of the
current trading price of our Class A common stock. In addition, as
a result of their substantial ownership in our company, our initial
stockholders may exert a substantial influence on other actions
requiring a stockholder vote, potentially in a manner that you do
not support, including amendments to our amended and restated
certificate of incorporation and approval of major corporate
transactions. If our initial stockholders purchase any additional
shares of common stock in the aftermarket or in privately
negotiated transactions, this would increase their influence over
these actions. Accordingly, our initial stockholders will exert
significant influence over actions requiring a stockholder
vote.
Our initial stockholders may exert a substantial influence on
actions requiring a stockholder vote, potentially in a manner that
you do not support.
Our initial stockholders own shares representing 26.9% of our
issued and outstanding shares of common stock, including placement
shares. Accordingly, they may exert a substantial influence on
actions requiring a stockholder vote, potentially in a manner that
you do not support, including amendments to our amended and
restated certificate of incorporation and approval of major
corporate transactions. If our initial stockholders purchase any
additional shares of common stock in the aftermarket or in
privately negotiated transactions, this would increase their
control. Factors that would be considered in making such additional
purchases would include consideration of the current trading price
of our Class A common stock. In addition, our board of directors,
whose members were elected by certain of our initial stockholders,
is divided into two classes, each of which will generally serve for
a term of two years with only one class of directors being elected
in each year. We may not hold an annual meeting of stockholders to
elect new directors prior to the completion of our business
combination, in which case all of the current directors will
continue in office until at least the completion of the business
combination. If there is an annual meeting, as a consequence of our
“staggered” board of directors, only a minority of the board of
directors will be considered for election and our initial
stockholders, because of their ownership position, will have
considerable influence regarding the outcome. Accordingly, our
initial stockholders will continue to exert control at least until
the completion of our business combination.
Resources could be wasted in researching acquisitions that
are not consummated, which could materially adversely affect
subsequent attempts to locate and acquire or merge with another
business. If we are unable to complete our initial business
combination, our public stockholders may receive only $10.00 per
share, or less in certain circumstances, on the liquidation of our
trust account and our warrants will expire worthless.
We anticipate that the investigation of each specific target
business and the negotiation, drafting, and execution of relevant
agreements, disclosure documents, and other instruments will
require substantial management time and attention and substantial
costs for accountants, attorneys and others. If we decide not to
complete a specific initial business combination, the costs
incurred up to that point for the proposed transaction likely would
not be recoverable. Furthermore, if we reach an agreement relating
to a specific target business, we may fail to consummate our
initial business combination for any number of reasons including
those beyond our control. Any such event will result in a loss to
us of the related costs incurred, which could materially adversely
affect subsequent attempts to locate and acquire or merge with
another business. If we are unable to complete our initial business
combination, our public stockholders may receive only $10.00 per
share (based on the trust account balance as of December 31, 2021)
on the liquidation of our trust account and our warrants will
expire worthless. In certain circumstances, our public stockholders
may receive less than $10.00 per share on the redemption of their
shares.
We may attempt to simultaneously consummate business
combinations with multiple prospective targets, which may hinder
our ability to consummate our initial business combination and give
rise to increased costs and risks that could negatively impact our
operations and profitability.
If we determine to simultaneously acquire several businesses that
are owned by different sellers, we will need for each of such
sellers to agree that our purchase of its business is contingent on
the simultaneous closings of the other business combinations, which
may make it more difficult for us, and delay our ability, to
complete our initial business combination. With multiple business
combinations, we could also face additional risks, including
additional burdens and costs with respect to possible multiple
negotiations and due diligence investigations (if there are
multiple sellers) and the additional risks associated with the
subsequent assimilation of the operations and services or products
of the acquired companies in a single operating business. If we are
unable to adequately address these risks, it could negatively
impact our profitability and results of operations.
We may attempt to consummate our initial business combination
with a private company about which little information is available,
which may result in a business combination with a company that is
not as profitable as we suspected, if at all.
In pursuing our acquisition strategy, we may seek to consummate our
initial business combination with a privately held company. Very
little public information generally exists about private companies,
and we could be required to make our decision on whether to pursue
a potential initial business combination on the basis of limited
information, which may result in a business combination with a
company that is not as profitable as we suspected, if at all.
Furthermore, the relative lack of information about a private
company may hinder our ability to properly assess the value of such
a company which could result in our overpaying for that
company.
If we effect our initial business combination with a business
located outside of the United States, the laws applicable to such
business will likely govern all of our material agreements and we
may not be able to enforce our legal rights.
If we effect our initial business combination with a business
located outside of the United States, the laws of the country in
which such business operates will govern almost all of the material
agreements relating to its operations. The target business may not
be able to enforce any of its material agreements or enforce
remedies for breaches of those agreements in that jurisdiction. The
system of laws and the enforcement of existing laws in such
jurisdiction may not be as certain in implementation and
interpretation as in the United States. The inability to enforce or
obtain a remedy under any of our future agreements could result in
a significant loss of business, business opportunities or capital.
Additionally, if we acquire a business located outside of the
United States, it is likely that substantially all of our assets
would be located outside of the United States and some of our
officers and directors might reside outside of the United States.
As a result, it may not be possible for investors in the United
States to enforce their legal rights, to effect service of process
upon our directors or officers or to enforce judgments of
United States courts predicated upon civil liabilities and
criminal penalties of our directors and officers under federal
securities laws.
If we consummate our initial business combination with a
company with operations or opportunities outside of the United
States, we would be subject to a variety of additional risks that
may negatively impact our operations.
If we consummate our initial business combination with a company
with operations or opportunities outside of the United States, we
would be subject to any special considerations or risks associated
with companies operating in an international setting, including any
of the following:
|
|
● |
higher
costs and difficulties inherent in managing cross-border business
operations and complying with different commercial and legal
requirements of overseas markets; |
| |
● |
rules
and regulations regarding currency redemption; |
| |
● |
complex
corporate withholding taxes on individuals; |
| |
● |
laws
governing the manner in which future business combinations may be
effected; |
| |
● |
tariffs
and trade barriers; |
| |
● |
regulations
related to customs and import/export matters; |
| |
● |
longer
payment cycles and challenges in collecting accounts
receivable; |
| |
● |
tax
issues, such as tax law changes and variations in tax laws as
compared to the United States; |
| |
● |
currency
fluctuations and exchange controls; |
| |
● |
cultural
and language differences; |
| |
● |
employment
regulations; |
| |
● |
crime,
strikes, riots, civil disturbances, terrorist attacks, natural
disasters and wars; |
| |
● |
deterioration
of political relations with the United States; and |
| |
● |
government
appropriation of assets. |
We may not be able to adequately address these additional risks. If
we were unable to do so, our operations might suffer, which may
adversely impact our results of operations and financial
condition.
Our management may not be able to maintain control of a
target business after our initial business combination. We cannot
provide assurance that, upon loss of control of a target business,
new management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We may structure our initial business combination so that the
post-transaction company in which our public stockholders own
shares will own less than 100% of the equity interests or assets of
a target business, but we will only complete such business
combination if the post-transaction company owns or acquires 50% or
more of the outstanding voting securities of the target or
otherwise acquires an interest in the target sufficient for the
post-transaction company not to be required to register as an
investment company under the Investment Company Act. We will not
consider any transaction that does not meet such criteria. Even if
the post-transaction company owns 50% or more of the voting
securities of the target, our stockholders prior to the business
combination may collectively own a minority interest in the post
business combination company, depending on valuations ascribed to
the target and us in the business combination transaction. For
example, we could pursue a transaction in which we issue a
substantial number of new shares of Class A common stock in
exchange for all of the outstanding capital stock of a target. In
this case, we would acquire a 100% interest in the target. However,
as a result of the issuance of a substantial number of new shares
of common stock, our stockholders immediately prior to such
transaction could own less than a majority of our outstanding
shares of common stock subsequent to such transaction. In addition,
other minority stockholders may subsequently combine their holdings
resulting in a single person or group obtaining a larger share of
the company’s stock than we initially acquired. Accordingly, this
may make it more likely that our management will not be able to
maintain control of the target business. We cannot provide
assurance that, upon loss of control of a target business, new
management will possess the skills, qualifications or abilities
necessary to profitably operate such business.
We may issue notes or other debt securities, or otherwise
incur substantial debt, to complete a business combination, which
may adversely affect our leverage and financial condition and thus
negatively impact the value of our stockholders’ investment
in us.
We may choose to incur substantial debt to complete our initial
business combination. We have agreed that we will not incur any
indebtedness unless we have obtained from the lender a waiver of
any right, title, interest or claim of any kind in or to the monies
held in the trust account. As such, no issuance of debt will affect
the per-share amount available for redemption from the trust
account. Nevertheless, the incurrence of debt could have a variety
of negative effects, including:
| |
● |
default
and foreclosure on our assets if our operating revenues after an
initial business combination are insufficient to repay our debt
obligations; |
| |
● |
acceleration
of our obligations to repay the indebtedness, even if we make all
principal and interest payments when due, if we breach certain
covenants that require the maintenance of certain financial ratios
or reserves without a waiver or renegotiation of that
covenant; |
| |
● |
our
immediate payment of all principal and accrued interest, if any, if
the debt security is payable on demand; |
| |
● |
our
inability to obtain necessary additional financing if the debt
security contains covenants restricting our ability to obtain such
financing while the debt security is outstanding; |
| |
● |
our
inability to pay dividends on our common stock; |
| |
● |
using
a substantial portion of our cash flow to pay principal and
interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, our ability to pay
expenses, make capital expenditures and acquisitions, and fund
other general corporate purposes; |
| |
● |
limitations
on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate; |
| |
● |
increased
vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government
regulation; |
| |
● |
limitations on our ability to borrow additional amounts for
expenses, capital expenditures, acquisitions, debt service
requirements, and execution of our strategy; and
other disadvantages compared to our competitors who have less
debt.
|
We may only be able to complete one business combination with
the proceeds of the initial public offering and the sale of the
placement units, which will cause us to be solely dependent on a
single business which may have a limited number of products or
services. This lack of diversification may negatively impact our
operations and profitability.
Of the net proceeds from the initial public offering and the sale
of the placement units, $250,000,000 is available to complete our
business combination and pay related fees and expenses (which
includes up to $10,640,000 for the payment of deferred underwriting
commissions).
We may complete our initial business combination with a single
target business or multiple target businesses simultaneously or
within a short period of time. However, we may not be able to
complete a business combination with more than one target business
because of various factors, including the existence of complex
accounting issues and the requirement that we prepare and file pro
forma financial statements with the SEC that present operating
results and the financial condition of several target businesses as
if they had been operated on a combined basis. By consummating an
initial business combination with only a single entity, our lack of
diversification may subject us to numerous economic, competitive
and regulatory developments. Further, we would not be able to
diversify our operations or benefit from the possible spreading of
risks or offsetting of losses, unlike other entities which may have
the resources to complete several business combinations in
different industries or different areas of a single industry. In
addition, we intend to focus our search for an initial business
combination in a single industry. Accordingly, the prospects for
our success may be:
| |
● |
solely
dependent upon the performance of a single business, property or
asset, or |
| |
● |
dependent
upon the development or market acceptance of a single or limited
number of products, processes or services. |
This lack of diversification may subject us to numerous economic,
competitive and regulatory developments, any or all of which may
have a substantial adverse impact upon the particular industry in
which we may operate subsequent to our business combination.
Risks Relating to our Sponsor and Management Team
Our ability to successfully complete our initial business
combination and to be successful thereafter will be totally
dependent upon the efforts of members of our management team, some
of whom may join us following our initial business combination. The
loss of such people could negatively impact the operations and
profitability of our post-combination business.
Our ability to successfully complete our business combination is
dependent upon the efforts of members of our management team. The
role of members of our management team in the target business,
however, cannot presently be ascertained. Although some members of
our management team may remain with the target business in senior
management or advisory positions following our business
combination, it is likely that some or all of the management of the
target business will remain in place. While we intend to closely
scrutinize any individuals we engage after our initial business
combination, we cannot assure you that our assessment of these
individuals will prove to be correct. These individuals may be
unfamiliar with the requirements of operating a company regulated
by the SEC, which could cause us to have to expend time and
resources helping them become familiar with such requirements.
In addition, the officers and directors of an acquisition candidate
may resign upon completion of our initial business combination. The
departure of a business combination target’s key personnel could
negatively impact the operations and profitability of our
post-combination business. The role of an acquisition
candidate’s key personnel upon the completion of our initial
business combination cannot be ascertained at this time. Although
we contemplate that certain members of an acquisition candidate’s
management team will remain associated with the acquisition
candidate following our initial business combination, it is
possible that members of the management of an acquisition candidate
will not wish to remain in place. The loss of key personnel could
negatively impact the operations and profitability of our
post-combination business.
Members of our management team may negotiate employment or
consulting agreements with a target business in connection with a
particular initial business combination. These agreements may
provide for them to receive compensation following our initial
business combination and as a result, may cause them to have
conflicts of interest in determining whether a particular business
combination is the most advantageous.
Members of our management team may be able to remain with the
company after the consummation of our initial business combination
only if they are able to negotiate employment or consulting
agreements in connection with the business combination. Such
negotiations would take place simultaneously with the negotiation
of the business combination and could provide for such individuals
to receive compensation in the form of cash payments and/or our
securities for services they would render to us after the
consummation of our initial business combination. The personal and
financial interests of such individuals may influence their
motivation in identifying and selecting a target business. However,
we believe the ability of such individuals to remain with us after
the consummation of our initial business combination will not be
the determining factor in our decision as to whether or not we will
proceed with any potential business combination. There is no
certainty, however, that any members of our management team will
remain with us after the consummation of our initial business
combination. We cannot assure you that any members of our
management team will remain in senior management or advisory
positions with us. The determination as to whether any members of
our management team will remain with us will be made at the time of
our initial business combination.
Certain of our officers and directors are now, and all of
them may in the future become, affiliated with entities engaged in
business activities similar to those intended to be conducted by us
and, accordingly, may have conflicts of interest in allocating
their time and determining to which entity a particular business
opportunity should be presented.
Until we consummate our initial business combination, we will
engage in the business of identifying and combining with one or
more businesses. Our sponsor and our officers and directors are and
may in the future become, affiliated with entities (such as
operating companies or investment vehicles) that are engaged in a
similar business.
Our officers and directors also may become aware of business
opportunities which may be appropriate for presentation to us and
the other entities to which they owe certain fiduciary or
contractual duties. Accordingly, they may have conflicts of
interest in determining to which entity a particular business
opportunity should be presented. These conflicts may not be
resolved in our favor and a potential target business may be
presented to another entity prior to its presentation to us. Our
amended and restated certificate of incorporation contains a waiver
of the corporate opportunity doctrine, which provides that we
renounce our interest in any corporate opportunity offered to any
director or officer unless (i) such opportunity is expressly
offered to such person solely in his or her capacity as a director
or officer of our company (ii) such opportunity is one we are
legally and contractually permitted to undertake and would
otherwise be reasonable for us to pursue and (iii) the director or
officer is permitted to refer the opportunity to us without
violating another legal obligation. The purpose for the surrender
of corporate opportunities is to allow officers, directors or other
representatives with multiple business affiliations to continue to
serve as an officer of our company or on our board of directors.
Our officers and directors may from time to time be presented with
opportunities that could benefit both another business affiliation
and us. In the absence of the “corporate opportunity” waiver in our
charter, certain candidates would not be able to serve as an
officer or director. We believe we substantially benefit from
having representatives, who bring significant, relevant and
valuable experience to our management, and, as a result, the
inclusion of the “corporate opportunity” waiver in our amended and
restated certificate of incorporation provides us with greater
flexibility to attract and retain the officers and directors that
we feel are the best candidates.
However, the personal and financial interests of our directors and
officers may influence their motivation in timely identifying and
selecting a target business and completing a business combination.
The different timelines of competing business combinations could
cause our directors and officers to prioritize a different business
combination over finding a suitable acquisition target for our
business combination. Consequently, our directors’ and officers’
discretion in identifying and selecting a suitable target business
may result in a conflict of interest when determining whether the
terms, conditions and timing of a particular business combination
are appropriate and in our stockholders’ best interest, which could
negatively impact the timing for a business combination.
We may engage in a business combination with one or more
target businesses that have relationships with entities that may be
affiliated with our sponsor, officers, directors or existing
stockholders, which may raise potential conflicts of
interest.
In light of the involvement of our sponsor, officers and directors
with other entities, we may decide to acquire one or more
businesses affiliated with our sponsor, officers or directors. Our
directors also serve as officers and board members for other
entities. Such entities may compete with us for business
combination opportunities. Our sponsor, officers and directors are
not currently aware of any specific opportunities for us to
complete our business combination with any entities with which they
are affiliated, and there have been no preliminary discussions
concerning a business combination with any such entity or entities.
Although we will not be specifically focusing on, or targeting, any
transaction with any affiliated entities, we would pursue such a
transaction if we determined that such affiliated entity met our
criteria for a business combination as set forth in “Business —
Effecting Our Initial Business Combination — Selection of a Target
Business and Structuring of our Initial Business Combination” and
such transaction was approved by a majority of our disinterested
directors. Despite our agreement to obtain an opinion from an
independent investment banking firm that is a member of FINRA, or
from an independent accounting firm, regarding the fairness to our
company from a financial point of view of a business combination
with one or more domestic or international businesses affiliated
with our officers, directors or existing stockholders, potential
conflicts of interest still may exist and, as a result, the terms
of the business combination may not be as advantageous to our
public stockholders as they would be absent any conflicts of
interest. Additionally, were we successful in consummating such a
transaction, conflicts could invariably arise from the interest of
the initial stockholders or their affiliates in maximizing their
returns, which may be at odds with the strategy of the
post-business combination company or not in the best interests
of the public stockholders of the post-business combination
company. Any or all of such conflicts could materially reduce the
value of your investment, whether before or after our initial
business combination.
Since our sponsor, officers, and directors will lose their
entire investment in us if our business combination is not
completed, a conflict of interest may arise in determining whether
a particular business combination target is appropriate for our
initial business combination.
Our sponsor currently own 8,546,667 founder shares, which will be
worthless if we do not consummate our initial business combination.
In addition, our sponsor has also purchased 640,000 placement units
for an aggregate purchase price of $6.4 million that will also be
worthless if we do not consummate our initial business combination.
Holders of founder shares and private placement shares have agreed
(A) to vote any shares owned by them in favor of any proposed
business combination and (B) not to redeem any founder shares or
private placement shares in connection with a stockholder vote to
approve a proposed initial business combination. In addition, we
may obtain loans from our sponsor, affiliates of our sponsor or an
officer or director. The personal and financial interests of our
officers and directors may influence their motivation in
identifying and selecting a target business combination, completing
an initial business combination and influencing the operation of
the business following the initial business combination.
We may have a limited ability to assess the management of a
prospective target business and, as a result, may complete our
initial business combination with a target business whose
management may not have the skills, qualifications or abilities to
manage a public company, which could, in turn, negatively impact
the value of our stockholders’ investment in us.
When evaluating the desirability of effecting our initial business
combination with a prospective target business, our ability to
assess the target business’s management may be limited due to a
lack of time, resources or information. Our assessment of the
capabilities of the target’s management, therefore, may prove to be
incorrect and such management may lack the skills, qualifications
or abilities we suspected. Should the target’s management not
possess the skills, qualifications or abilities necessary to manage
a public company, the operations and profitability of the
post-combination business may be negatively impacted.
Accordingly, any stockholders who choose to remain stockholders
following the business combination could suffer a reduction in the
value of their shares. Such stockholders are unlikely to have a
remedy for such reduction in value.
The officers and directors of an acquisition candidate may resign
upon completion of our initial business combination. The departure
of a business combination target’s key personnel could negatively
impact the operations and profitability of our
post-combination business. The role of an acquisition
candidate’s key personnel upon the completion of our initial
business combination cannot be ascertained at this time. Although
we contemplate that certain members of an acquisition candidate’s
management team will remain associated with the acquisition
candidate following our initial business combination, it is
possible that members of the management of an acquisition candidate
will not wish to remain in place.
Risks Relating to our Securities
If we are deemed to be an investment company under the
Investment Company Act, we may be required to institute burdensome
compliance requirements and our activities may be restricted, which
may make it difficult for us to complete our initial business
combination.
If we are deemed to be an investment company under the Investment
Company Act, our activities may be restricted, including:
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● |
restrictions
on the nature of our investments; and |
| |
● |
restrictions
on the issuance of securities; |
each of which may make it difficult for us to complete our initial
business combination.
In addition, we may have imposed upon us burdensome requirements,
including:
| |
● |
registration
as an investment company; |
| |
● |
adoption
of a specific form of corporate structure; and |
| |
● |
reporting,
record keeping, voting, proxy and disclosure requirements and other
rules and regulations. |
In order not to be regulated as an investment company under the
Investment Company Act, unless we can qualify for an exclusion, we
must ensure that we are engaged primarily in a business other than
investing, reinvesting or trading of securities and that our
activities do not include investing, reinvesting, owning, holding
or trading “investment securities” constituting more than 40% of
our total assets (exclusive of U.S. government securities and cash
items) on an unconsolidated basis. Our business is to identify and
complete a business combination and thereafter to operate the
post-transaction business or assets for the long term. We do not
plan to buy businesses or assets with a view to resale or profit
from their resale. We do not plan to buy unrelated businesses or
assets or to be a passive investor.
We do not believe that our anticipated principal activities will
subject us to the Investment Company Act. To this end, the proceeds
held in the trust account may only be invested in United States
“government securities” within the meaning of Section 2(a)(16) of
the Investment Company Act having a maturity of 185 days or less or
in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act which invest only in
direct U.S. government treasury obligations. Pursuant to the trust
agreement, the trustee is not permitted to invest in other
securities or assets. By restricting the investment of the proceeds
to these instruments, and by having a business plan targeted at
acquiring and growing businesses for the long term (rather than on
buying and selling businesses in the manner of a merchant bank or
private equity fund), we intend to avoid being deemed an
“investment company” within the meaning of the Investment Company
Act. Our securities are not intended for persons who are seeking a
return on investments in government securities or investment
securities. The trust account is intended as a holding place for
funds pending the earliest to occur of: (i) the completion of our
primary business objective, which is a business combination; (ii)
the redemption of any public shares properly submitted in
connection with a stockholder vote to amend our amended and
restated certificate of incorporation (a) to modify the substance
or timing of our obligation to redeem 100% of our public shares if
we do not complete our initial business combination within the
completion window or (b) with respect to any other provision
relating to stockholders’ rights or pre-initial business
combination activity; or (iii) absent a business combination, our
return of the funds held in the trust account to our public
stockholders as part of our redemption of the public shares. If we
do not invest the proceeds as discussed above, we may be deemed to
be subject to the Investment Company Act. If we were deemed to be
subject to the Investment Company Act, compliance with these
additional regulatory burdens would require additional expenses for
which we have not allotted funds and may hinder our ability to
consummate our initial business combination. If we are unable to
complete our initial business combination, our public stockholders
may receive only $10.00 per share (based on the trust account
balance as of December 31, 2021) on the liquidation of our trust
account and our warrants will expire worthless. In certain
circumstances, our public stockholders may receive less than $10.00
per share on the redemption of their shares. Please see “— If third
parties bring claims against us, the proceeds held in the trust
account could be reduced and the per-share redemption amount
received by stockholders may be less than $10.00 per share” and
other risk factors in this section.
NASDAQ may delist our securities from trading on its
exchange, which could limit investors’ ability to make transactions
in our securities and subject us to additional trading
restrictions.
Our units, Class A common stock and warrants are currently listed
on NASDAQ. We cannot assure you that our securities will continue
to be listed on NASDAQ in the future or prior to our initial
business combination. In order to continue listing our securities
on NASDAQ prior to our initial business combination, we must
maintain certain financial, distribution and stock price levels.
Generally, we must maintain an average global market capitalization
and a minimum number of holders of our securities (generally 300
public holders). Additionally, in connection with our initial
business combination, we will be required to demonstrate compliance
with NASDAQ’s initial listing requirements, which are more rigorous
than NASDAQ’s continued listing requirements, in order to continue
to maintain the listing of our securities on NASDAQ. For instance,
our stock price would generally be required to be at least $4.00
per share and we would be required to have a minimum of 400 round
lot holders (with at least 50% of such round lot holders holding
securities with a market value of at least $2,500) of our
securities. We cannot assure you that we will be able to meet those
initial listing requirements at that time.
If NASDAQ delists our securities from trading on its exchange and
we are not able to list our securities on another national
securities exchange, we expect our securities could be quoted on
the Over-The-Counter Bulletin Board or the “pink sheets.” If
this were to occur, there could be material adverse consequences,
including:
| |
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a
limited availability of market quotations for our
securities; |
| |
● |
reduced
liquidity for our securities; |
| |
● |
a
determination that our Class A common stock is a “penny stock”
which will require brokers trading in our Class A common stock to
adhere to more stringent rules and possibly result in a reduced
level of trading activity in the secondary trading market for our
securities; |
| |
● |
a
limited amount of news and analyst coverage; and |
| |
● |
a
decreased ability to issue additional securities or obtain
additional financing in the future. |
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 our units, Class A common stock and warrants
are listed on NASDAQ, our units, Class A common stock and warrants
are covered securities. Although the states are preempted from
regulating the sale of our 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 we are 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 we were no longer listed on NASDAQ, our
securities would not be covered securities and we would be subject
to regulation in each state in which we offer our securities.
If we seek stockholder approval of our initial business
combination and we do not conduct redemptions pursuant to the
tender offer rules, and if you or a “group” of stockholders are
deemed to hold in excess of 15.0% of our Class A common stock, you
will lose the ability to redeem all such shares in excess of 15% of
our Class A common stock.
If we seek stockholder approval of our initial business combination
and we do not conduct redemptions in connection with our initial
business combination pursuant to the tender offer rules, our
amended and restated certificate of incorporation provides that a
public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert
or as a “group” (as defined under Section 13 of the Exchange Act),
will be restricted from seeking redemption rights with respect to
more than an aggregate of 15.0% of the shares sold in the initial
public offering, which we refer to as the “Excess Shares”. However,
our amended and restated certificate of incorporation does not
restrict our stockholders’ ability to vote all of their shares
(including Excess Shares) for or against our business
combination. Your inability to redeem the Excess Shares will
reduce your influence over our ability to consummate a business
combination and you could suffer a material loss on your investment
in us if you sell Excess Shares in open market transactions.
Additionally, you will not receive redemption distributions with
respect to the Excess Shares if we consummate our business
combination. As a result, you would continue to hold that number of
shares exceeding 15.0% and, in order to dispose of such shares,
would be required to sell those shares in open market transactions,
potentially at a loss.
We are not registering the shares of Class A common stock
issuable upon exercise of the warrants under the Securities Act or
any state securities laws at this time, and such registration may
not be in place when an investor desires to exercise warrants, thus
precluding such investor from being able to exercise its warrants
except on a cashless basis and potentially causing such warrants to
expire worthless.
We are not registering the shares of Class A common stock issuable
upon exercise of the warrants under the Securities Act or any state
securities laws at this time. However, under the terms of the
warrant agreement, we will use our best efforts to file, and within
60 business days following our initial business combination to have
declared effective, a registration statement under the Securities
Act covering such shares and maintain a current prospectus relating
to the Class A common stock issuable upon exercise of the warrants,
until the expiration of the warrants in accordance with the
provisions of the warrant agreement. We cannot assure you that we
will be able to do so if, for example, any facts or events arise
which represent a fundamental change in the information set forth
in the registration statement or prospectus, the financial
statements contained or incorporated by reference therein are not
current or correct or the SEC issues a stop order. If the shares
issuable upon exercise of the warrants are not registered under the
Securities Act, we will be required to permit holders to exercise
their warrants on a cashless basis. However, no warrant will be
exercisable for cash or on a cashless basis, and we will not be
obligated to issue any shares to holders seeking to exercise their
warrants, unless the issuance of the shares upon such exercise is
registered or qualified under the securities laws of the state of
the exercising holder, or an exemption from registration is
available. Notwithstanding the above, if our Class A common stock
is at the time of any exercise of a warrant not listed on a
national securities exchange such that it satisfies the definition
of a “covered security” under Section 18(b)(1) of the Securities
Act, we may, at our option, require holders of public warrants who
exercise their warrants to do so on a “cashless basis” in
accordance with Section 3(a)(9) of the Securities Act and, in the
event we so elect, we will not be required to file or maintain in
effect a registration statement, but we will be required to use our
best efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available. In no
event will we be required to net cash settle any warrant. If the
issuance of the shares upon exercise of the warrants is not so
registered or qualified or exempt from registration or
qualification, the holder of such warrant shall not be entitled to
exercise such warrant and such warrant may have no value and expire
worthless. In such event, holders who acquired their warrants as
part of a purchase of units will have paid the full unit purchase
price solely for the shares of Class A common stock included in the
units. If and when the warrants become redeemable by us, we may
exercise our redemption right even if we are unable to register or
qualify the underlying shares of Class A common stock for sale
under all applicable state securities laws.
The grant of registration rights to our initial stockholders
may make it more difficult to complete our initial business
combination, and the future exercise of such rights may adversely
affect the market price of our Class A common stock.
Pursuant to an agreement entered into concurrently with the
issuance and sale of the securities in the initial public offering,
our initial stockholders and their permitted transferees can demand
that we register their founder shares, after those shares convert
to our Class A common stock at the time of our initial business
combination, and placement shares. In addition, holders of our
placement warrants and their permitted transferees can demand that
we register the placement warrants and the Class A common stock
issuable upon exercise of the placement warrants, and holders of
warrants included in the units that may be issued upon conversion
of working capital loans may demand that we register such warrants
or the Class A common stock issuable upon exercise of such
warrants. We will bear the cost of registering these securities.
The registration and availability of such a significant number of
securities for trading in the public market may have an adverse
effect on the market price of our Class A common stock. In
addition, the existence of the registration rights may make our
initial business combination more costly or difficult to conclude.
This is because the stockholders of the target business may
increase the equity stake they seek in the combined entity or ask
for more cash consideration to offset the negative impact on the
market price of our Class A common stock that is expected when the
common stock owned by our initial stockholders, holders of our
placement warrants or holders of warrants included in the units
issued upon conversion of our working capital loans or their
respective permitted transferees are registered.
We may issue additional common stock or preferred stock to
complete our initial business combination or under an employee
incentive plan after completion of our initial business
combination. We may also issue shares of Class A common stock upon
the conversion of the Class B common stock at a ratio greater than
one-to-one at the time of our initial business combination as a
result of the anti-dilution provisions contained in our amended and
restated certificate of incorporation. Any such issuances would
dilute the interest of our stockholders and likely present other
risks.
Our amended and restated certificate of incorporation authorizes
the issuance of up to 100,000,000 shares of Class A common
stock, par value $0.0001 per share, 10,000,000 shares of Class
B common stock, par value $0.0001 per share, and
1,000,000 shares of undesignated preferred stock, par value
$0.0001 per share. There are currently 74,360,000 and 1,453,333
authorized but unissued shares of Class A common stock and Class B
common stock, respectively, available for issuance, which amount
does not take into account the shares of Class A common stock
reserved for issuance upon exercise of any outstanding warrants or
the shares of Class A common stock issuable upon conversion of
Class B common stock. There are no shares of preferred stock issued
and outstanding. Shares of Class B common stock are convertible
into shares of our Class A common stock initially at a
one-for-one ratio but subject to adjustment, including in
certain circumstances in which we issue Class A common stock or
equity-linked securities related to our initial business
combination.
We may issue a substantial number of additional shares of Class A
common stock or preferred stock to complete our initial business
combination (including pursuant to a specified future issuance) or
under an employee incentive plan after completion of our initial
business combination (although our amended and restated certificate
of incorporation provides that we may not issue securities that can
vote with common stockholders on matters related to our pre-initial
business combination activity). We may also issue shares of Class A
common stock upon conversion of the Class B common stock at a ratio
greater than one-to-one at the time of our initial business
combination as a result of the applicable anti-dilution provisions
contained in our amended and restated certificate of incorporation.
However, our amended and restated certificate of incorporation
provides, among other things, that prior to our initial business
combination, we may not issue additional shares of capital stock
that would entitle the holders thereof to (i) receive funds from
the trust account or (ii) vote on any initial business
combination.
The issuance of additional shares of common or preferred stock:
| |
● |
may
significantly dilute the equity interest of investors in the
initial public offering; |
| |
● |
may
subordinate the rights of holders of common stock if preferred
stock is issued with rights senior to those afforded our common
stock; |
| |
● |
could
cause a change of control if a substantial number of shares of our
common stock are issued, which may affect, among other things, our
ability to use our net operating loss carry forwards, if any, and
could result in the resignation or removal of our present officers
and directors; and |
| |
● |
may
adversely affect prevailing market prices for our units, Class A
common stock and/or warrants. |
The exercise price for the public warrants is higher than
some similar blank check companies in the past, and, accordingly,
the warrants are more likely to expire worthless.
The exercise price of the public warrants is higher than some
similar blank check companies in the past. Historically, the
exercise price of a warrant was generally a fraction of the
purchase price of the units in the initial public offering. The
exercise price for our public warrants is $11.50 per share. As a
result, the warrants are less likely to ever be in the money and
more likely to expire worthless.
Certain agreements related to the initial public offering may
be amended without stockholder approval.
Certain agreements, including the underwriting agreement relating
to the initial public offering, the investment management trust
agreement between us and Continental Stock Transfer& Trust
Company, the letter agreement among us and our initial
stockholders, officers and directors, the registration rights
agreement among us and our initial stockholders may be amended
without stockholder approval. These agreements contain various
provisions that our public stockholders might deem to be material.
For example, the underwriting agreement contains (i) a
representation that we will not consummate any public or private
equity or debt financing prior to the consummation of a business
combination, unless all investors in such financing expressly
waive, in writing, any rights in or claims against the trust
account and (ii) a covenant that the target company that we acquire
must have a fair market value equal to at least 80% of the balance
in the trust account at the time of signing the definitive
agreement for the transaction with such target business (excluding
the deferred underwriting commissions and taxes payable on the
income earned on the trust account) so long as we obtain and
maintain a listing for our securities on NASDAQ. While we do not
expect our board to approve any amendment to any of these
agreements prior to our initial business combination, it may be
possible that our board, in exercising its business judgment and
subject to its fiduciary duties, chooses to approve one or more
amendments to any such agreement in connection with the
consummation of our initial business combination. Any such
amendment may have an adverse effect on the value of an investment
in our securities.
We may amend the terms of the warrants in a manner that may
be adverse to holders of public warrants with the approval by the
holders of at least 65% of the then outstanding public warrants. As
a result, the exercise price of your warrants could be increased,
the exercise period could be shortened and the number of shares of
our Class A common stock purchasable upon exercise of a warrant
could be decreased, all without your approval.
Our warrants were issued in registered form under a warrant
agreement between Continental Stock Transfer & Trust
Company, as warrant agent, and us. The warrant agreement provides
that the terms of the warrants may be amended without the consent
of any holder to cure any ambiguity or correct any defective
provision, but requires the approval by the holders of at least 65%
of the then outstanding public warrants to make any change that
adversely affects the interests of the registered holders of public
warrants. Accordingly, we may amend the terms of the public
warrants in a manner adverse to a holder if holders of at least 65%
of the then outstanding public warrants approve of such amendment.
Although our ability to amend the terms of the public warrants with
the consent of at least 65% of the then outstanding public warrants
is unlimited, examples of such amendments could be amendments to,
among other things, increase the exercise price of the warrants,
convert the warrants into cash, shorten the exercise period or
decrease the number of shares of our Class A common stock
purchasable upon exercise of a warrant.
We may redeem your unexpired warrants prior to their exercise
at a time that is disadvantageous to you, thereby making your
warrants worthless.
We have the ability to redeem outstanding warrants (excluding any
placement warrants held by our sponsor or its permitted
transferees) at any time after they become exercisable and prior to
their expiration, at a price of $0.01 per warrant, provided that
the last reported sales price of our Class A common stock equals or
exceeds $18.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any
20 trading days within a 30 trading-day period ending on the third
trading day prior to the date on which we give proper notice of
such redemption and provided certain other conditions are met. If
and when the warrants become redeemable by us, we may exercise our
redemption right even if we are unable to register or qualify the
underlying securities for sale under all applicable state
securities laws. Redemption of the outstanding warrants could force
you: (i) to exercise your warrants and pay the exercise price
therefor at a time when it may be disadvantageous for you to do so,
(ii) to sell your warrants at the then-current market price when
you might otherwise wish to hold your warrants or (iii) to accept
the nominal redemption price which, at the time the outstanding
warrants are called for redemption, is likely to be substantially
less than the market value of your warrants.
Our warrants and founder shares may have an adverse effect on
the market price of our Class A common stock and make it more
difficult to consummate our business combination.
We issued warrants to purchase 8,333,333 shares of our Class A
common stock as part of the units sold in the initial public
offering and, simultaneously with the closing of the initial public
offering, we issued to our sponsor in a private placement 640,000
units consisting of one placement share and one-third of one
placement warrant, with each whole warrant exercisable to purchase
one share of Class A common stock at $11.50 per share. Our initial
stockholders currently own 8,546,667 founder shares. The founder
shares are convertible into shares of Class A common stock on a
one-for-one basis, subject to adjustment. In addition, if our
sponsor makes any working capital loans, such loans may be
converted into units, at the price of $10.00 per unit at the option
of the lender. Such units would be identical to the placement
units.
To the extent we issue shares of Class A common stock to consummate
our business combination, the potential for the issuance of a
substantial number of additional shares of Class A common stock
upon exercise of these warrants and conversion rights could make us
a less attractive acquisition vehicle to a target business. Any
such issuance will increase the number of issued and outstanding
shares of our Class A common stock and reduce the value of the
shares of Class A common stock issued to complete the business
combination. Therefore, our warrants and founder shares may make it
more difficult to consummate our business combination or increase
the cost of acquiring the target business.
The placement warrants are identical to the warrants sold as part
of the units in the initial public offering except that, so long as
they are held by our sponsor or its permitted transferees, (i) they
will not be redeemable by us, (ii) they (including the Class A
common stock issuable upon exercise of these warrants) may not,
subject to certain limited exceptions, be transferred, assigned or
sold until 30 days after the completion of our initial business
combination and (iii) they may be exercised by the holders on a
cashless basis.
Because each unit contains one-third of one warrant and only
a whole warrant may be exercised, the units may be worth less than
units of other blank check companies.
Each unit contains one-third of one warrant. Because, pursuant to
the warrant agreement, the warrants may only be exercised for a
whole number of shares, only a whole warrant may be exercised at
any given time. This is different from other blank check companies
similar to ours whose units include one share of common stock and
one warrant to purchase one whole share. We established the
components of the units in this way in order to reduce the dilutive
effect of the warrants upon completion of a business combination
since the warrants will be exercisable in the aggregate for
one-third of the number of shares compared to units that each
contain a warrant to purchase one whole share, thus making us, we
believe, a more attractive business combination partner for target
businesses. Nevertheless, this unit structure may cause our units
to be worth less than if they included a warrant to purchase one
whole share.
A provision of our warrant agreement may make it more
difficult for use to consummate an initial business
combination.
If (x) we issue additional shares of Class A common stock or
equity-linked securities for capital raising purposes in
connection with the closing of our initial business combination at
an issue price or effective issue price of less than $9.20 per
share (with such issue price or effective issue price to be
determined in good faith by us and in the case of any such issuance
to our sponsors or their affiliates, without taking into account
any founder shares held by our initial stockholders or such
affiliates, as applicable, prior to such issuance) (the “Newly
Issued Price”), (y) the aggregate gross proceeds from such
issuances represent more than 50% of the total equity proceeds, and
interest thereon, available for the funding of our initial business
combination on the date of the completion of our initial business
combination (net of redemptions), and (z) the
volume-weighted average trading price of our shares of Class A
common stock during the 20 trading day period starting on the
trading day prior to the day on which we complete our initial
business combination (such price, the “Market Value”) is below
$9.20 per share, the exercise price of the warrants will be
adjusted (to the nearest cent) to be equal to 115% of the higher of
the Market Value and the Newly Issued Price, and the $18.00 per
share redemption trigger price will be adjusted (to the nearest
cent) to be equal to 180% of the higher of the Market Value and the
Newly Issued Price. This may make it more difficult for us to
consummate an initial business combination with a target
business.
Provisions in our amended and restated certificate of
incorporation and Delaware law may inhibit a takeover of us, which
could limit the price investors might be willing to pay in the
future for our Class A common stock and could entrench
management.
Our amended and restated certificate of incorporation contains
provisions that may discourage unsolicited takeover proposals that
stockholders may consider to be in their best interests. These
provisions include a staggered board of directors and the ability
of the board of directors to designate the terms of and issue new
series of preferred shares, which may make the removal of
management more difficult and may discourage transactions that
otherwise could involve payment of a premium over prevailing market
prices for our securities.
We are also subject to anti-takeover provisions under Delaware
law, which could delay or prevent a change of control. Together
these provisions may make the removal of management more difficult
and may discourage transactions that otherwise could involve
payment of a premium over prevailing market prices for our
securities.
Our amended and restated certificate of incorporation
requires, to the fullest extent permitted by law, that derivative
actions brought in our name, actions against our directors,
officers, other employees or stockholders for breach of fiduciary
duty and other similar actions may be brought only in the Court of
Chancery in the State of Delaware and, if brought outside of
Delaware, the stockholder bringing the suit will be deemed to have
consented to service of process on such stockholder’s counsel,
which may have the effect of discouraging lawsuits against our
directors, officers, other employees or stockholders.
Our amended and restated certificate of incorporation requires, to
the fullest extent permitted by law, that derivative actions
brought in our name, actions against our directors, officers, other
employees or stockholders for breach of fiduciary duty and other
similar actions may be brought only in the Court of Chancery in the
State of Delaware and, if brought outside of Delaware, the
stockholder bringing the suit will be deemed to have consented to
service of process on such stockholder’s counsel except any action
(A) as to which the Court of Chancery in the State of Delaware
determines that there is an indispensable party not subject to the
jurisdiction of the Court of Chancery (and the indispensable party
does not consent to the personal jurisdiction of the Court of
Chancery within ten days following such determination), (B) which
is vested in the exclusive jurisdiction of a court or forum other
than the Court of Chancery, (C) for which the Court of Chancery
does not have subject matter jurisdiction, or (D) any action
arising under the Securities Act, as to which the Court of Chancery
and the federal district court for the District of Delaware shall
have concurrent jurisdiction. Any person or entity purchasing or
otherwise acquiring any interest in shares of our capital stock
shall be deemed to have notice of and consented to the forum
provisions in our amended and restated certificate of
incorporation.
This choice of forum provision may limit a stockholder’s ability to
bring a claim in a judicial forum that it finds favorable for
disputes with us or any of our directors, officers, other employees
or stockholders, which may discourage lawsuits with respect to such
claims, although our stockholders will not be deemed to have waived
our compliance with federal securities laws and the rules and
regulations thereunder. Alternatively, if a court were to find the
choice of forum provision contained in our amended and restated
certificate of incorporation to be inapplicable or unenforceable in
an action, we may incur additional costs associated with resolving
such action in other jurisdictions, which could harm our business,
operating results and financial condition.
Our amended and restated certificate of incorporation provides that
the exclusive forum provision will be applicable to the fullest
extent permitted by applicable law. Section 27 of the Exchange Act
creates exclusive federal jurisdiction over all suits brought to
enforce any duty or liability created by the Exchange Act or the
rules and regulations thereunder. As a result, the exclusive forum
provision will not apply to suits brought to enforce any duty or
liability created by the Exchange Act or any other claim for which
the federal courts have exclusive jurisdiction.
General Risk Factors
We are a company with no operating history and no revenues
and you have no basis on which to evaluate our ability to achieve
our business objective.
We are a company with no operating results, and we will not
commence operations until we consummate our initial business
combination. Because we lack an operating history, you have no
basis upon which to evaluate our ability to achieve our business
objective of completing our initial business combination with one
or more target businesses. We may be unable to complete a business
combination. If we fail to complete a business combination, we will
never generate any operating revenues.
Changes in laws or regulations, or a failure to comply with
any laws and regulations, may adversely affect our business,
investments and results of operations.
We are subject to laws and regulations enacted by national,
regional and local governments. In particular, we are required to
comply with certain SEC reporting and other legal requirements.
Compliance with, and monitoring of, applicable laws and regulations
may be difficult, time consuming and costly. Those laws and
regulations and their interpretation and application may also
change from time to time and those changes could have a material
adverse effect on our business, investments and results of
operations. In addition, a failure to comply with applicable laws
or regulations, as interpreted and applied, could have a material
adverse effect on our business and results of operations.
Our ability to provide financial technology products and
services to customers may be reduced or eliminated by regulatory
changes.
We expect that the customer base for our products or services will
be principally banks and other financial institutions such as
insurance companies and securities firms, all of which are subject
to extensive regulation. Any product or service we supply to these
firms likely will be affected by and designed to comply with the
customer’s regulatory environment. If the regulatory environment
affecting a particular product or service changes, the product or
service could become obsolete or unmarketable, or require extensive
and expensive modification. As a result, regulatory changes may
impair our revenues and our profitability. If we only provide a
single product or service a change in the applicable regulatory
environment could cause a significant business interruption and
loss of revenue until appropriate modifications are made. Moreover,
if the regulatory change eliminates the need for the product or
service, or if the expense of making necessary modifications
exceeds our resources or available financing, we may be unable to
continue in business.
Past performance by our management team may not be indicative
of future performance of an investment in us.
Information regarding performance by, or businesses associated with
our management team and its affiliates is presented for
informational purposes only. Past performance by our management
team is not a guarantee either (i) of success with respect to any
business combination we may consummate or (ii) that we will be able
to locate a suitable candidate for our initial business
combination. You should not rely on the historical record of our
management team’s performance as indicative of our future
performance of an investment in us or the returns we will, or are
likely to, generate going forward.
As the number of special purpose acquisition companies
evaluating targets increases, attractive targets may become scarcer
and there may be more competition for attractive targets. This
could increase the cost of our initial business combination and
could even result in our inability to find a target or to
consummate an initial business combination.
In recent years, the number of special purpose acquisition
companies that have been formed has increased substantially. Many
potential targets for special purpose acquisition companies have
already entered into an initial business combination, and there are
still many special purpose acquisition companies seeking targets
for their initial business combination, as well as many such
companies currently in registration. As a result, at times, fewer
attractive targets may be available, and it may require more time,
more effort and more resources to identify a suitable target and to
consummate an initial business combination.
In addition, because there are more special purpose acquisition
companies seeking to enter into an initial business combination
with available targets, the competition for available targets with
attractive fundamentals or business models may increase, which
could cause target companies to demand improved financial terms.
Attractive deals could also become scarcer for other reasons, such
as economic or industry sector downturns, geopolitical tensions, or
increases in the cost of additional capital needed to close
business combinations or operate targets post-business combination.
This could increase the cost of, delay or otherwise complicate or
frustrate our ability to find and consummate an initial business
combination, and may result in our inability to consummate an
initial business combination on terms favorable to our investors
altogether.
We are an emerging growth company and a smaller reporting
company within the meaning of the Securities Act, and if we take
advantage of certain exemptions from disclosure requirements
available to emerging growth companies or smaller reporting
companies, this could make our securities less attractive to
investors and may make it more difficult to compare our performance
with other public companies.
We are an “emerging growth company” within the meaning of the
Securities Act, as modified by the JOBS Act, and we may take
advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not emerging
growth companies including, but not limited to, not being required
to comply with the auditor internal controls attestation
requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our
periodic reports and proxy statements, and exemptions from the
requirements of holding a nonbinding advisory vote on executive
compensation and stockholder approval of any golden parachute
payments not previously approved. As a result, our stockholders may
not have access to certain information they may deem important. We
could be an emerging growth company for up to five years, although
circumstances could cause us to lose that status earlier, including
if the market value of our Class A common stock held by
non-affiliates equals or exceeds $700 million as of any June 30
before that time, in which case we would no longer be an emerging
growth company as of the following December 31. We cannot predict
whether investors will find our securities less attractive because
we will rely on these exemptions. If some investors find our
securities less attractive as a result of our reliance on these
exemptions, the trading prices of our securities may be lower than
they otherwise would be, there may be a less active trading market
for our securities and the trading prices of our securities
may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth
companies from being required to comply with new or revised
financial accounting standards until private companies (that is,
those that have not had a Securities Act registration statement
declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that
a company can elect to opt out of the extended transition period
and comply with the requirements that apply to non-emerging growth
companies but any such election to opt out is irrevocable. We have
elected not to opt out of such extended transition period which
means that when a standard is issued or revised and it has
different application dates for public or private companies, we, as
an emerging growth company, can adopt the new or revised standard
at the time private companies adopt the new or revised standard.
This may make comparison of our financial statements with another
public company which is neither an emerging growth company nor an
emerging growth company which has opted out of using the extended
transition period difficult or impossible because of the potential
differences in accounting standards used.
Additionally, we are a “smaller reporting company” as defined in
Item 10(f)(1) of Regulation S-K. Smaller reporting companies may
take advantage of certain reduced disclosure obligations,
including, among other things, providing only two years of audited
financial statements. We will remain a smaller reporting company
until the last day of the fiscal year in which (1) the market value
of our common stock held by non-affiliates equals or exceeds
$250 million as of the prior June 30th, or (2) our
annual revenues equaled or exceeded $100 million during such
completed fiscal year and the market value of our common stock held
by non-affiliates equals or exceeds $700 million as of
the prior June 30th. To the extent we take advantage of
such reduced disclosure obligations, it may also make comparison of
our financial statements with other public companies difficult or
impossible.
Our management concluded that there is substantial doubt
about our ability to continue as a “going concern.”
As of December 31, 2021, the Company had $36,042 in its operating
bank accounts and $250,008,357 in securities held in the Trust
Account to be used for a Business Combination or to repurchase or
redeem its common stock in connection therewith. As of December 31,
2021, approximately $8,357 of the amount on deposit in the Trust
Account represented interest income, which is available to pay the
Company’s tax obligations. If the Company is unable to raise
additional capital, it may be required to take additional measures
to conserve liquidity, which could include, but not necessarily be
limited to, suspending the pursuit of a Business Combination. The
Company cannot provide any assurance that new financing will be
available to it on commercially acceptable terms, if at all.
Further, our plans to raise capital and to consummate our initial
business combination may not be successful. These factors, among
others, raise substantial doubt about our ability to continue as a
going concern through our liquidation date. The financial
statements contained elsewhere in this annual report do not include
any adjustments that might result from our inability to consummate
a Business Combination or our inability to continue as a going
concern.
The requirements of being a public company may strain our
resources and divert management’s attention.
As a public company, we are subject to the reporting requirements
of the Exchange Act, the Sarbanes-Oxley Act of 2002 (which we refer
to as the Sarbanes-Oxley Act), the Dodd-Frank Act Wall Street
Reform and Consumer Protection Act (which we refer to as the
Dodd-Frank Act), the listing requirements of NASDAQ and other
applicable securities rules and regulations. Compliance with these
rules and regulations will increase our legal and financial
compliance costs, make some activities more difficult,
time-consuming or costly and increase demand on our systems and
resources, particularly after we are no longer an “emerging growth
company.” The Sarbanes-Oxley Act requires, among other things, that
we maintain effective disclosure controls and procedures and
internal control over financial reporting. In order to maintain
and, if required, improve our disclosure controls and procedures
and internal control over financial reporting to meet this
standard, significant resources and management oversight may be
required. As a result, management’s attention may be diverted from
other business concerns, which could adversely affect our business
and operating results. We may need to hire more employees in the
future or engage outside consultants to comply with these
requirements, which will increase our costs and expenses.
In addition, changing laws, regulations and standards relating to
corporate governance and public disclosure are creating uncertainty
for public companies, increasing legal and financial compliance
costs and making some activities more time consuming. These laws,
regulations and standards are subject to varying interpretations,
in many cases due to their lack of specificity, and, as a result,
their application in practice may evolve over time as new guidance
is provided by regulatory and governing bodies. This could result
in continuing uncertainty regarding compliance matters and higher
costs necessitated by ongoing revisions to disclosure and
governance practices. We intend to invest resources to comply with
evolving laws, regulations and standards, and this investment may
result in increased general and administrative expenses and a
diversion of management’s time and attention from
revenue-generating activities to compliance activities. If our
efforts to comply with new laws, regulations and standards differ
from the activities intended by regulatory or governing bodies due
to ambiguities related to their application and practice,
regulatory authorities may initiate legal proceedings against us
and our business may be adversely affected.
However, for as long as we remain an “emerging growth company” as
defined in the JOBS Act, we may take advantage of certain
exemptions from various reporting requirements that are applicable
to “emerging growth companies” including, but not limited to, not
being required to comply with the auditor attestation requirements
of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy
statements, and exemptions from the requirement of holding a
nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously approved.
We may take advantage of these reporting exemptions until we are no
longer an “emerging growth company.”
We will remain an emerging growth company until the earlier of (1)
the last day of the fiscal year (a) following the fifth anniversary
of the completion of the initial public offering, (b) in which we
have total annual gross revenue of at least $1.07 billion, or (c)
in which we are deemed to be a large accelerated filer, which means
the market value of our shares of common stock that are held by
non-affiliates equals or exceeds $700 million as of the prior June
30, and (2) the date on which we have issued more than $1.0 billion
in non-convertible debt during the prior three year period.
We may be subject to claims from both the firms to whom we
provide our products and services and the clients they
serve.
If the products or services we provide relate to the facilitation
of financial transactions, such as funds or securities settlement
systems, and a failure or compromise of our product or service
results in loss to a customer or its clients, we may be liable for
such loss. The amount of the loss could be significantly greater
that the revenues we derived from providing the product or
service.
If we are unable to keep pace with evolving technology and
changes in the financial services industry, our revenues and future
prospects may decline.
We expect that the markets for the products and services of any
target business we acquire will likely be characterized by rapid
technological change, frequent new product introductions and
evolving industry standards. The introduction of products and
services embodying new technologies and the emergence of new
industry standards can render existing products and services
obsolete and unmarketable in short periods of time. We expect new
products and services, and enhancements to existing products and
services, will be developed and introduced by others, which will
compete with the products and services that we offer. Our success
will depend upon our ability to enhance current products and
services and to develop and introduce new products and services
that keep pace with technological developments and emerging
industry standards. If we are unable to develop and introduce new
products and services or enhancements in a timely manner, or if a
release of a new product or service does not achieve market
acceptance, our revenues and future prospects may decline.
A failure to comply with privacy regulations could adversely
affect relations with customers and have a negative impact on
business.
Depending upon the type of financial technology business we
acquire, in the course of providing services to our customers we
may collect, process and retain sensitive and confidential
information on our customers and their clients. A failure of our
systems due to security breaches, acts of vandalism, computer
viruses, misplaced or lost data, programming and/or human errors,
or other causes could result in the misappropriation, loss or other
unauthorized disclosure of confidential customer information. Any
such failure could result in damage to our reputation with our
customers, expose us to the risk of litigation and liability,
disrupt our operations, and impair our ability to operate
profitably.
Difficulties with any products or services we provide could
damage our reputation and business.
We expect that market acceptance of our products and services will
depend upon the reliable operation and security of our systems and
their connection to the systems of our customers. Any operational
or connectivity failures, system outages or security breaches would
likely result in revenue loss to us until corrected and could
result in client dissatisfaction, causing them to terminate or
reduce their business dealings with us. It may also damage our
business reputation, making it more difficult for us to obtain new
customers and maintain or expand our business.
We may not be able to protect our intellectual property and
we may be subject to infringement claims.
We expect to rely on a combination of contractual rights and
copyright, trademark, patent and trade secret laws to establish and
protect any proprietary technology of a target business. Although
we intend to protect vigorously any intellectual property we
acquire, third parties may infringe or misappropriate our
intellectual property or may develop competitive technology. Our
competitors may independently develop similar technology, duplicate
our products or services or design around our intellectual property
rights. We may have to litigate to enforce and protect our
intellectual property rights, trade secrets and know-how or to
determine their scope, validity or enforceability, which is
expensive, could cause a diversion of resources and may not prove
successful. The loss of intellectual property protection or the
inability to secure or enforce intellectual property protection
could harm our business and ability to compete.
We also may be subject to claims by third parties for infringement
of another party’s proprietary rights, or for breach of copyright,
trademark or license usage rights. Any such claims and any
resulting litigation could subject us to significant liability for
damages. An adverse determination in any litigation of this type
could require us to design around a third party’s intellectual
property, obtain a license for that technology or license
alternative technology from another party. None of these
alternatives may be available to us at a price which would allow us
to operate profitably. In addition, litigation is time consuming
and expensive to defend and could result in the diversion of the
time and attention of management and employees. Any claims from
third parties may also result in limitations on our ability to use
the intellectual property subject to these claims.
Item
1B. UNRESOLVED STAFF COMMENTS.
None.
Item
2. PROPERTIES.
We do not own any real estate or other physical properties. We
currently maintain our executive offices at 2929 Arch Street, Suite
1703, Philadelphia, Pennsylvania 19104. The cost for our use of
this space is included in the $20,000 per month fee we pay to our
sponsor or its affiliate for office space, utilities,
administrative and shared personnel support services. We consider
our current office space adequate for our current operations.
Item
3. LEGAL PROCEEDINGS.
To the knowledge of our management, there is no material
litigation, arbitration or governmental proceeding currently
pending against us or any members of our management team in their
capacity as such.
Item
4. MINE SAFETY DISCLOSURES.
Not applicable.
PART II
Item
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information
Our units commenced public trading on December 4, 2020, and our
Class A common stock and warrants commenced separate trading on
January 25, 2021. Our Class A common stock, warrants and
units are each listed on the NASDAQ Capital Market under the
symbols FTCV, FTCVW and FTCVU, respectively.
Holders
On February 11, 2021, the numbers of record holders of the
Company’s Class A common stock, units and warrants were 1, 2 and 1,
respectively, not including beneficial holders whose securities are
held in street name.
Dividends
We have not paid any cash dividends on our common stock to date and
do not intend to pay cash dividends prior to the completion of our
initial business combination. The payment of cash dividends in the
future will be dependent upon our revenues and earnings, if any,
capital requirements and general financial condition subsequent to
completion of our initial business combination, and will be at the
discretion of our board of directors at such time. In addition, our
board of directors is not currently contemplating and does not
anticipate declaring any stock dividends in the foreseeable future.
Further, if we incur any indebtedness in connection with a business
combination, our ability to declare dividends may be limited by
restrictive covenants we may agree to in connection therewith.
Securities Authorized for Issuance Under Equity
Compensation Plans
None.
Recent Sales of Unregistered Securities and Use of
Proceeds
Unregistered Sales of Equity Securities
On December 8, 2020, we sold 640,000 placement units in the private
placement for an aggregate purchase price of $6,400,000, or $10.00
per unit, to FinTech Investor Holdings V, LLC, pursuant to an
exemption from registration contained in Section 4(a)(2) of the
Securities Act. Each placement unit consists of one share of Class
A common stock and one third of a placement warrant. The placement
warrants are identical to the warrants included in the units issued
in the initial public offering, except that, if held by the sponsor
or its permitted transferees, (a) they are not redeemable by the
Company, (b) they (including the underlying Class A common stock)
may not be transferred, assigned or sold until 30 days after the
consummation of the Company’s initial business combination, subject
to certain limited exceptions, and (c) they may be exercised on a
cashless basis.
Use of Proceeds
On December 8, 2020, we sold 25,000,000 units in our initial public
offering at a price of $10.00 per unit, generating gross proceeds
of $250,000,000. Each unit consists of one share of our Class A
common stock and one third of one warrant, where each whole warrant
entitles the holder to purchase one share of Class A common stock
at an exercise price of $11.50 per share, subject to
adjustment.
Cantor Fitzgerald (as representative of the underwriters) served as
the underwriter for the initial public offering. The units sold in
the initial public offering were registered under the Securities
Act on a registration statement on Form S-1 (No. 333-249646), which
was declared effective by the SEC on December 3, 2020.
We incurred a total of $15,461,590 in transaction costs related to
the initial public offering. We paid a total of $4,360,000 in
underwriting discounts and commissions and approximately $461,590
in other costs and expenses related to the initial public offering.
In addition, the underwriters agreed to defer $10,640,000 in
underwriting discounts and commissions (which is currently held in
the trust account), which will be payable only upon consummation of
an initial business combination.
Following the closing of the initial public offering and the
private placement, an amount of $250,000,000 ($10.00 per unit) from
the net proceeds from the sale of the units in the initial public
offering and the placement units in the private placement was
placed in the trust account. In addition, as of December 8,
2020, cash of $1,575,611 was held outside of the trust account and
available for working capital purposes.
Purchases of Equity Securities by the Issuer and Affiliated
Purchasers
None.
Item
6. [RESERVED]
As a smaller reporting company, we are not required to provide the
information required by this Item.
Item
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Special Note Regarding Forward-Looking Statements
The following discussion and analysis of our financial condition
and results of operations should be read in conjunction with our
audited financial statements and the notes related thereto
contained in “Item 8. Financial Statements and Supplementary Data”
of this Annual Report. Certain information contained in the
discussion and analysis set forth below includes forward-looking
statements that involve risks and uncertainties.
All statements other than statements of historical fact included in
this Annual Report including, without limitation, statements under
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” regarding the Company’s financial position,
business strategy and the plans and objectives of management for
future operations, are forward-looking statements. When used in
this Annual Report, 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 many factors,
including those set forth under “Cautionary Note Regarding
Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere
in this Annual Report.
Overview
We are a blank check company incorporated as a Delaware corporation
and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, recapitalization,
reorganization or similar business combination with one or more
target businesses. We intend to complete our business combination
using cash from the proceeds of the initial public offering and the
sale of the placement units that occurred simultaneously with the
completion of the initial public offering, our capital stock, debt
or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of
our acquisition plans. We cannot assure you that our plans to
complete a business combination will be successful.
Recent Developments
On March 16, 2021, we entered into an Agreement and Plan of Merger
(as amended, the “Merger Agreement”) with eToro Group Ltd., a
company organized under the laws of the British Virgin Islands
(“eToro”), Buttonwood Merger Sub Corp., a Delaware corporation and
a direct, wholly-owned subsidiary of eToro (“Merger Sub”), and the
Company, which provides for, among other things, the merger of
Merger Sub with and into the Company (the “Merger”), with the
Company surviving as a wholly-owned subsidiary of eToro (the
“Business Combination”). At the closing of the Business Combination
and the effective time of the Merger (the “Effective Time”), the
stockholders of the Company will receive certain of the common
shares, no par value, of eToro (“eToro Common Shares”), and eToro
will list as a publicly traded company on NASDAQ and will continue
to conduct the social trading platform business conducted by eToro
prior to the Business Combination.
The Merger Agreement contains customary representations,
warranties, and covenants by the parties thereto and the closing is
subject to certain conditions as further described in the Merger
Agreement.
Results of Operations
We have neither engaged in any operations (other than searching for
a Business Combination after our Initial Public Offering) nor
generated any revenues to date. Our only activities from April 22,
2019 (inception) through December 31, 2021 were organizational
activities, those necessary to prepare for the Initial Public
Offering, described below, and, after the Initial Public Offering,
identifying a target company for an initial Business Combination.
We do not expect to generate any operating revenues until after the
completion of our Business Combination. We expect to generate
non-operating income in the form of interest earned on investments
held after the Initial Public Offering. We incur expenses as a
result of being a public company (for legal, financial reporting,
accounting and auditing compliance), as well as for due diligence
expenses.
For the year ended December 31, 2021, we had net income of
$546,565, which consists of operating costs of $3,991,372, offset
by a change in the fair value of warrant liabilities of $4,512,934
and interest income on investments held in the Trust Account of
$25,003.
For the year ended December 31, 2020, we had a net loss of
$1,804,534, which consists of operating costs of $105,760, a change
in the fair value of warrant liabilities of $1,277,733 and
transaction costs attributable to the Initial Public Offering of
$422,617, offset by interest income on investments held in the
Trust Account of $1,576.
Liquidity and Capital Resources
On December 8, 2020, we consummated the Initial Public Offering of
25,000,000 units (the “Units” and, with respect to the Class A
common stock included in the Units sold, the “Public Shares”),
which includes the partial exercise by the underwriters of their
over-allotment option in the amount of 3,200,000 Units, at $10.00
per Unit, generating gross proceeds of
$250,000,000.
Simultaneously with the closing of the Initial Public Offering, we
consummated the sale of 640,000 units (the “Private Placement
Units”) at a price of $10.00 per Private Placement Unit in a
private placement to FinTech Investor Holdings V, LLC, that closed
simultaneously with the Initial Public Offering, generating gross
proceeds of $6,400,000. The manager of FinTech Investor Holdings V,
LLC is Cohen Sponsor Interests V, LLC.
Transaction costs amounted to $15,461,590, consisting of $4,360,000
in cash underwriting fees, $10,640,000 of deferred underwriting
fees and $461,590 of other offering costs.
For the year ended December 31, 2021, cash used in operating
activities was $1,336,391. Net income of $546,565 was affected by
interest earned on investments held in the Trust Account of
$25,003, change in fair value of warrant liabilities of $4,512,934,
and changes in operating assets and liabilities, which provided
$2,654,981 of cash from operating activities.
For the year ended December 31, 2020, cash used in operating
activities was $548,774. Net loss of $1,804,534 was affected by
interest earned on investments held in the Trust Account of $1,576,
payments of operating costs through promissory notes of $425, a
change in the fair value of warrant liabilities of $1,277,733 and
transaction costs attributable to the Initial Public Offering of
$422,617, and changes in operating assets and liabilities, which
provided $443,439 of cash from operating activities.
As of December 31, 2021, we had cash and investments held in
the Trust Account of $250,008,357. We intend to use substantially
all of the funds held in the Trust Account, including any amounts
representing interest earned on the Trust Account to complete our
Business Combination. We may withdraw interest to pay taxes. During
the period ended December 31, 2021, we withdrew $18,222 of
interest income from the Trust Account to pay taxes. To the extent
that our capital stock or debt is used, in whole or in part, as
consideration to complete our Business Combination, the remaining
proceeds held in the Trust 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.
As of December 31, 2021, we had $36,042 of cash held outside
of the Trust Account. We intend to use the funds held outside the
Trust Account primarily 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, and structure, negotiate and complete a Business
Combination.
In order to finance transaction costs in connection with a Business
Combination, the Sponsor, members of the Company’s management team
or any of their respective affiliates or other third parties may,
but are not obligated to, loan the Company funds as may be required
(“Working Capital Loans”), which will be repaid only upon the
consummation of a Business Combination. If the Company does not
consummate a Business Combination, the Company may use a portion of
any funds held outside the Trust Account to repay the Working
Capital Loans; however, no proceeds from the Trust Account may be
used for such repayment. If such funds are insufficient to repay
the Working Capital Loans, the unpaid amounts would be forgiven.
The Working Capital Loans may be converted into units at a price of
$10.00 per unit at the option of the lender. The units would be
identical to the Private Placement Units. At December 31, 2021,
$300,000 of Working Capital Loans were outstanding. As of October
26, 2021, the Company amended the Working Capital Loans to remove
the conversion feature.
We do not believe we will need to raise additional funds in order
to meet the expenditures required for operating our business.
However, if our estimate of the costs of identifying a target
business, undertaking in-depth due diligence and negotiating a
Business Combination are less than the actual amount necessary to
do so, we may have insufficient funds available to operate our
business prior to our Business Combination. Moreover, we may need
to obtain additional financing either to complete our Business
Combination or because we become obligated to redeem a significant
number of our public shares upon consummation of our Business
Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination. Subject to
compliance with applicable securities laws, we would only complete
such financing simultaneously with the completion of our Business
Combination.
If we are unable to complete our Business Combination because we do
not have sufficient funds available to us, we will be forced to
cease operations and liquidate the Trust Account. In addition,
following our Business Combination, if cash on hand is
insufficient, we may need to obtain additional financing in order
to meet our obligations. If the Company is unable to raise
additional capital, it may be required to take additional measures
to conserve liquidity, which could include, but not necessarily be
limited to, curtailing operations, suspending the pursuit of a
potential transaction, and reducing overhead expenses. The Company
cannot provide any assurance that new financing will be available
to it on commercially acceptable terms, if at all. These conditions
raise substantial doubt about the Company’s ability to continue as
a going concern through one year from the date of these financial
statements if a Business Combination is not consummated. These
financial statements do not include any adjustments relating to the
recovery of the recorded assets or the classification of the
liabilities that might be necessary should the Company be unable to
continue as a going concern.
Off-balance sheet financing arrangements
We have no obligations, assets or liabilities, which would be
considered off-balance sheet arrangements as of December 31, 2021.
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 purchased
any non-financial assets.
Contractual obligations
We do not have any long-term debt, capital lease obligations,
operating lease obligations or long-term liabilities, other than an
agreement to pay the sponsor or an affiliate of the sponsor a
monthly fee of $20,000 for office space, utilities, and shared
personnel support services. We began incurring these fees on
December 4, 2020 and will continue to incur these fees monthly
until the earlier of the completion of the business combination or
the Company’s liquidation.
Pursuant to a registration rights agreement entered into on
December 3, 2020, the holders of the founder shares, placement
units (including securities contained therein) and the units that
may be issued upon conversion of the Working Capital Loans (and any
shares of Class A common stock issuable upon the exercise of the
placement warrants or the warrants included in the units issued
upon conversion of the Working Capital Loans) will be entitled to
registration rights requiring us to register such securities for
resale (in the case of the founder shares, only after conversion to
Class A common stock). The holders of these securities will be
entitled to make up to three demands, excluding short form demands,
that we register such securities. In addition, the holders will
have certain “piggy-back” registration rights with respect to
registration statements filed subsequent to the completion of a
business combination and rights to require us to register for
resale such securities pursuant to Rule 415 under the Securities
Act. We will bear the expenses incurred in connection with the
filing of any such registration statements.
Cantor Fitzgerald & Co., as representative of the several
underwriters, is entitled to a deferred fee of $10,640,000. The
deferred fee will become payable to the representative from the
amounts held in the trust account solely in the event that the
Company completes a business combination, subject to the terms of
the underwriting agreement.
Critical Accounting Policies
The preparation of financial statements and related disclosures in
conformity with accounting principles generally accepted in the
United States of America 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 critical
accounting policies.
Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash
flow, market, or foreign currency risks. We evaluate all of our
financial instruments, including issued stock purchase warrants, to
determine if such instruments are derivatives or contain features
that qualify as embedded derivatives, pursuant to Accounting
Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity” and ASC 815. We account for the Warrants
in accordance with the guidance contained in ASC 815-40 under which
the Warrants do not meet the criteria for equity treatment and must
be recorded as liabilities. Accordingly, we classify the Warrants
as liabilities at their fair value and adjust them to fair value at
each reporting period. This liability is subject to re-measurement
at each balance sheet date until exercised, and any change in fair
value is recognized in our statements of operations. The Warrants
for periods where no observable trading price was available are
valued using a Modified Black-Scholes Option Pricing model for the
Placement Warrants and a Monte Carlo simulation methodology for the
Public Warrants. For periods subsequent to the detachment of the
Public Warrants from the Units, the Public Warrant quoted market
price was used as the fair value as of each relevant date.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible
redemption in accordance with the guidance in ASC Topic 480
“Distinguishing Liabilities from Equity.” Class A common stock
subject to mandatory redemption is classified as a liability
instrument and is 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) is classified as temporary equity. At all other
times, common stock is classified as stockholders’ equity. Our
Class A common stock features certain redemption rights that are
considered to be outside of our control and subject to occurrence
of uncertain future events. Accordingly, Class A common stock
subject to possible redemption is presented as temporary equity,
outside of the stockholders’ equity section of our balance
sheet. Under ASC 480-10-S99, the Company has elected to
recognize changes in the redemption value immediately as they occur
and adjust the carrying value of the security to equal the
redemption value at the end of each reporting period. This method
would view the end of the reporting period as if it were also the
redemption date for the security.
Net Income (Loss) per Common Share
Net income (loss) per common share is computed by dividing net
income (loss) by the weighted average number of shares of common
stock outstanding for the period. Income and losses are shared pro
rata between the two classes of common stock. The Company applies
the two-class method in calculating earnings per share. Accretion
associated with the redeemable shares of Class A common stock is
excluded from earnings per share as the redemption value
approximates fair value.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity (“ASU 2020-06”), which simplifies accounting for
convertible instruments by removing major separation models
required under current GAAP. The ASU also removes certain
settlement conditions that are required for equity-linked contracts
to qualify for the derivative scope exception, and it simplifies
the diluted earnings per share calculation in certain areas. The
Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU
did not impact the Company’s financial position, results of
operations or cash flows.
Management does not believe that any other recently issued, but not
yet effective, accounting standards, if currently adopted, would
have a material effect on our financial statements.
Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
As a smaller reporting company, we are not required to provide the
information required by this Item.
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
This information appears following Item 15 of this Annual Report
and is included herein by reference.
Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
Item 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the
objective of ensuring that information required to be disclosed in
our reports filed under the Exchange Act, such as this Annual
Report, is recorded, processed, summarized, and reported within the
time period specified in the SEC’s rules and forms. Disclosure
controls are also designed with the objective of ensuring that such
information is accumulated and communicated to our management,
including the chief executive officer and chief financial officer,
as appropriate to allow timely decisions regarding required
disclosure. Our management evaluated, with the participation of our
chief executive officer and chief financial officer (our
“Certifying Officers”), the effectiveness of our disclosure
controls and procedures as of December 31, 2021, pursuant to
Rule 13a-15(b) under the Exchange Act. Based upon that
evaluation, our Certifying Officers concluded that, due to the
Company’s restatement of its financial statements as described
below, as of December 31, 2021, our disclosure controls and
procedures were not effective. As a result, we performed additional
analysis as deemed necessary to ensure that our financial
statements were prepared in accordance with U.S. generally accepted
accounting principles. Accordingly, management believes that the
financial statements included in this Annual Report present fairly,
in all material respects, our financial position, result of
operations and cash flows of the periods presented. Other than this
issue, our disclosure controls and procedures were effective at a
reasonable assurance level and, accordingly, provided reasonable
assurance that the information required to be disclosed by us in
reports filed under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the
SEC’s rules and forms.
We do not expect that our disclosure controls and procedures will
prevent all errors and all instances of fraud. Disclosure controls
and procedures, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the
objectives of the disclosure controls and procedures are met.
Further, the design of disclosure controls and procedures must
reflect the fact that there are resource constraints, and the
benefits must be considered relative to their costs. Because of the
inherent limitations in all disclosure controls and procedures, no
evaluation of disclosure controls and procedures can provide
absolute assurance that we have detected all our control
deficiencies and instances of fraud, if any. The design of
disclosure controls and procedures also is based partly on certain
assumptions about the likelihood of future events, and there can be
no assurance that any design will succeed in achieving its stated
goals under all potential future conditions.
Restatement of Previously Issued Financial Statements
On May 11, 2021, we revised our prior position on accounting for
our Public Warrants and Placement Warrants. We restated our
financial statements to reclassify the Company’s Public Warrants
and Placement Warrants. The non-cash adjustments to the financial
statements did not impact the previously reported amounts for cash
and cash equivalents, total assets, revenue, total stockholders’
equity, or cash flows.
On November 22, 2021, we revised our prior position on accounting
for temporary equity and permanent equity and the earnings per
share calculation. We restated our financial statements to revalue
the Company’s Class A common stock subject to possible redemption
and restate its earnings per share calculation. The Company’s
accounting related to temporary equity and permanent equity and its
earnings per share calculation did not have any effect on the
Company’s previously reported investments held in trust or
cash.
On May 11, 2022, we restated the Original Financial Statements
based on further analysis of the Company’s warrant valuation report
as of December 31, 2021. The Company’s accounting related to the
warrant liabilities did not have any effect on the Company’s
previously reported investments held in trust or cash.
Management’s Report on Internal Controls Over Financial
Reporting
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting as defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Because of
its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any
evaluation of effectiveness to future periods are subject to the
risks that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Management assessed the effectiveness of our internal control over
financial reporting as of December 31, 2021. In making this
assessment, management used the criteria set forth by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO)
in Internal Control – Integrated Framework (2013
Framework). Based on this assessment, management believes that, as
of December 31, 2021, our internal control over financial
reporting was not effective.
This Annual Report does not include an attestation report of our
independent registered public accounting firm, because as an
“emerging growth company” under the JOBS Act our independent
registered public accounting firm is not required to issue such an
attestation report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)
of the Exchange Act) during the most recent fiscal quarter that
have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting, other than
as described herein. In light of the restatement of our
financial statements, we plan to enhance our processes to identify
and appropriately apply applicable accounting requirements to
better evaluate and understand the nuances of the complex
accounting standards that apply to our financial statements. Our
plans at this time include providing enhanced access to accounting
literature, research materials and documents and increased
communication among our personnel and third-party professionals
with whom we consult regarding complex accounting applications. The
elements of our remediation plan can only be accomplished over
time, and we can offer no assurance that these initiatives will
ultimately have the intended effects.
Item 9B.
OTHER INFORMATION
None.
Item
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
None.
PART III
Item 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE.
Directors and Executive Officers
Our directors and executive officers are as follows:
|
Name |
|
Age |
|
Title |
| Betsy
Z. Cohen* |
|
80 |
|
Chairman
of the Board |
| Daniel
G. Cohen* |
|
52 |
|
Chief
Executive Officer |
| James
J. McEntee, III |
|
64 |
|
President |
| Douglas
Listman |
|
51 |
|
Chief
Financial Officer |
| Brittain
Ezzes |
|
46 |
|
Director |
| Lesley
Goldwasser |
|
60 |
|
Director |
| Laura
S. Kohn |
|
53 |
|
Director |
| Jan
Rock Zubrow |
|
66 |
|
Director |
| * |
Mr.
Cohen is the son of Ms. Cohen. |
Betsy Z. Cohen has served as Chairman of our board of
directors since June 2019. Since November 2020, she has served as
Chairman of the board of directors of FTAC Athena and FinTech VI,
since January 2021, she has served as Chairman of the board of
directors of FTAC Hera, and since April 2021, she has served as
Chairman of the board of directors of FTAC Emerald. Ms. Cohen
served as Chairman of FinTech IV’s board of directors from May 2019
until June 2021, FTAC Olympus’ board of directors from June 2020
until June 2021, FinTech III’s board of directors from
March 2017 until October 2020, and FinTech II’s board of
directors from August 2016 until July 2018. She served as
a director of FinTech I and its successor, Card Connect Corp., a
provider of payment processing solutions to merchants, from
November 2013 until May 2017, and previously served as
Chairman of the board of directors of FinTech I from July 2014
through July 2016 and as FinTech I’s Chief Executive Officer
from July 2014 through August 2014. . Ms. Cohen also
served as a director of Metromile, Inc. from February 2021 until
July 2021. She served as Chief Executive Officer of Bancorp and its
wholly-owned subsidiary, Bancorp Bank, from
September 2000 and Chairman of Bancorp Bank from
November 2003, and resigned from these positions upon her
retirement in December 2014. She served as the Chairman of the
Board of Trustees and as a trustee of RAIT Financial Trust, a real
estate investment trust, from its founding in August 1997,
through her resignation as of December 31, 2010 and served as
RAIT’s Chief Executive Officer from 1997 to 2006. Ms. Cohen
served as a director of Hudson United Bancorp (a bank holding
company), the successor to JeffBanks, Inc., from December 1999
until July 2000 and as the Chairman of the Jefferson Bank
Division of Hudson United Bank (Hudson United Bancorp’s banking
subsidiary) from December 1999 through March 2000. Before
the merger of JeffBanks, Inc. with Hudson United Bancorp in
December 1999, Ms. Cohen was Chairman and Chief Executive
Officer of JeffBanks, Inc. from its inception in 1981 and also
served as Chairman and Chief Executive Officer of each of its
subsidiaries, Jefferson Bank, which she founded in 1974, and
Jefferson Bank New Jersey, which she founded in 1987. From
1985 until 1993, Ms. Cohen was a director of First Union
Corp. of Virginia (a bank holding company) and its predecessor,
Dominion Bancshares, Inc. In 1969, Ms. Cohen co-founded a
commercial law firm and served as a senior partner until 1984.
Ms. Cohen also served as a director of Aetna, Inc. (NYSE:
AET), an insurance company, from 1994 until May 2018. Our
board has determined that Ms. Cohen’s extensive experience in
the financial services industry generally, and the financial
technology industry in particular, as well as extensive experience
in operating financial services companies in a public company
environment, qualifies her to serve as a member of our board of
directors.
Daniel G. Cohen has served as our Chief Executive Officer
since October 2020, as the Chief Executive Officer of FinTech VI
since November 2020 and as the Chief Executive Officer and
President of FTAC Hera since January 2021. Mr. Cohen has
served as the Chairman of the Board of INSU III since October 2020,
as the Chairman of the Board of INSU IV since November 2020, as the
Chairman of the Board of FTAC Parnassus since December 2020, as
Chairman of the Board of FTAC Zeus since December 2020 and as a
member of the Board of Directors of Perella Weinberg Partners since
June 2021. Previously, he served as the Chairman of the Board of
INSU I from December 2018 to October 2020 and Chairman of
the Board of INSU II from January 2019 to February 2021. Since
February 2018, Mr. Cohen has served as the Chairman of
the board of directors and of the board of managers of
Cohen & Company, LLC, and has, since September 2013,
served as the President and Chief Executive of the European
Business of Cohen & Company Inc. (NYSE American: COHN), a
financial services company with approximately $2.24 billion in
assets under management as of September 30, 2021, and as
President, a director and the Chief Investment Officer of
Cohen & Company Inc.’s indirect majority owned subsidiary,
Cohen & Company Financial Limited (formerly known as
EuroDekania Management Limited), a Financial Conduct Authority
regulated investment advisor and broker dealer focusing on the
European capital markets (“CCFL”). Mr. Cohen served as Vice
Chairman of the board of directors and of the board of managers of
Cohen & Company, LLC from September 2013 to
February 2018. Mr. Cohen served as the Chief Executive
Officer and Chief Investment Officer of Cohen & Company
Inc. from December 2009 to September 2013 and as the
Chairman of the board of directors from October 2006 to
September 2013. Mr. Cohen served as the executive
Chairman of Cohen & Company Inc. from October 2006 to
December 2009. In addition, Mr. Cohen served as the
Chairman of the board of managers of Cohen & Company, LLC
from 2001 to September 2013, as the Chief Investment Officer
of Cohen & Company, LLC from October 2008 to
September 2013, and as Chief Executive Officer of
Cohen & Company, LLC from December 2009 to
September 2013. Mr. Cohen served as the Chairman and
Chief Executive Officer of J.V.B. Financial Group, LLC (formerly
C&Co/PrinceRidge Partners LLC), Cohen & Company Inc.’s
indirect broker dealer subsidiary (“JVB”), from July 2012 to
September 2013. He previously served as the Chairman of The
Bancorp Inc. (“Bancorp”) (NASDAQ: TBBK) and Chairman of the
Executive Committee of Bancorp’s board of directors since its
inception in 1999 until October 2021. Mr. Cohen also
previously served as Vice-Chairman of Bancorp Bank’s board of
directors and Chairman of its Executive Committee. He had
previously been Chairman of Bancorp Bank’s board of directors from
September 2000 to November 2003 and, from July 2000
to September 2000, had been Bancorp Bank’s Chief Executive
Officer. Mr. Cohen previously served as a director and Chief
Executive Officer of FinTech II from May 2015 until
July 2018, as Chief Executive Officer of FinTech III from
March 2017 to October 2020 and as Chief Executive Officer
of FinTech IV from June 2019 to June 2021. He previously
served as a director of FinTech I from November 2013 until
July 2016, as FinTech I’s President and Chief Executive
Officer from August 2014 until July 2016, and as FinTech
I’s Executive Vice President from July 2014 through
August 2014. He also previously served as Chief Executive
Officer of RAIT Financial Trust (“RAIT”) from December 2006,
when it merged with Taberna Realty Finance Trust (“Taberna”), to
February 2009, and served as a trustee from the date RAIT
acquired Taberna until his resignation from that position in
February 2010. Mr. Cohen was Chairman of the board of
trustees of Taberna from its inception in March 2005 until its
December 2006 acquisition by RAIT, and its Chief Executive
Officer from March 2005 to December 2006. Mr. Cohen
served as a director of Star Asia, a joint venture investing in
Asian commercial real estate, from February 2007 to
February 2014 and as a director of Muni Funding Company of
America, LLC, a company investing in
middle-market non-profit organizations, from
April 2007 to June 2011. Mr. Cohen is a member of
the Academy of the University of Pennsylvania, a member of the
Visiting Committees for the Humanities and a member of the Paris
Center of the University of Chicago. Mr. Cohen is also a
Trustee of the List College Board of the Jewish Theological
Seminary, a member of the board of the Columbia Global Center in
Paris, a Trustee of the Paideia Institute and a Trustee of the
Arete Foundation.
James J. McEntee, III has served as our President since June
2019, and as the President of FinTech VI since November 2020. He
also previously served as Chief Financial Officer of FinTech IV
from June 2019 until August 2020, as President of FinTech
IV from June 2019 until June 2021, as President and Chief Financial
Officer of FinTech III from March 2017 until
October 2020, and as President and Chief Financial Officer of
FinTech II from May 2015 until July 2018. He also served
as FinTech I’s Chief Financial Officer and Chief Operating Officer
from August 2014 to July 2016. He has served as the
Managing Principal of StBWell, LLC, an owner and operator of real
estate, since June 2010. Mr. McEntee has been a director
of both Bancorp and its wholly-owned subsidiary Bancorp Bank
since September 2000 and Chairman since October 2021 and was a
director of T-Rex Group, Inc., a provider of risk analytics
software for investors in renewable energy, from November 2014
to January 2018. Mr. McEntee was the Chief Executive
Officer of Alesco Financial, Inc. from the date of its
incorporation in 2006 until its merger with Cohen &
Company in December 2009 and was the Chief Operating Officer
of Cohen & Company from March 2003 until
December 2009, and was a managing director of COHN and was the
Vice-Chairman and Co-Chief Operating Officer of JVB
Financial through October 2013. Mr. McEntee was a
principal in Harron Capital, L.P., a media and communications
venture capital fund, from 1999 to September 2002. From 1990
through 1999, Mr. McEntee was a stockholder at Lamb McErlane,
PC, and from 2000 until 2004 was of counsel to Lamb McErlane.
Mr. McEntee was previously a director of Pegasus
Communications Corporation, a publicly held provider of
communications and other services, and of several other private
companies. Mr. McEntee has served since 2008 as a director of
The Chester Fund, a nonprofit organization, and served as its
Chairman from July 2012 to January 2018.
Douglas Listman has been our Chief Financial Officer since
October 2020, the Chief Financial Officer of FinTech VI since
November 2020, the Chief Financial Officer of FTAC Athena since
December 2020, the Chief Financial Officer of FTAC Hera since
January 2021 and the Chief Financial Officer of FTAC Emerald since
June 2021. He previously served as the Chief Financial Officer of
each of FTAC Olympus and FinTech IV from August 2020 until June
2021. He has served as the Chief Accounting Officer of
Cohen & Company Inc. since December 2009 and Chief
Accounting Officer of Cohen & Company, LLC since
2006. From 2004 to 2006, Mr. Listman served as an
associate for Resources Global Professionals (a worldwide
accounting services consulting firm). From 1992 to 2003,
Mr. Listman served in various accounting and finance positions
including: senior accountant with KPMG; Assistant Corporate
Controller of Integrated Health Services (a publicly traded
provider of skilled nursing services; NYSE: IHS); Controller of
Integrated Living Communities (a publicly traded provider of
assisted living services; NASDAQ: ILCC); Chief Financial Officer of
Senior Lifestyles Corporation (a private owned provider of assisted
living services); and Chief Financial Officer of Monarch Properties
(a privately owned health care facility real estate investment
company). Mr. Listman is a Certified Public Accountant and
graduated from the University of Delaware with a B.S. in
accounting.
Independent Directors
Brittain Ezzes has served as a director since December
2020, and as a director of FTAC Hera since March 2021. She
previously served as a director of FinTech III from November 2018
until October 2020 and as a director of FinTech IV from May 2019
until June 2021. Since April 2020, Ms. Ezzes has served as
Executive Vice President and Portfolio Manager for Small Cap Value
and Mid Cap Value funds at Mutual of America. Previously, Ms. Ezzes
served as a Portfolio Manager and Senior Research Analyst at Cramer
Rosenthal McGlynn, an equity investment company, where she was
responsible for investing portfolios and recommending stocks for a
variety of industries. She served as the Co-Portfolio Manager
of the CRM Small/Mid Cap Value Strategy from 2014 to April 2020 and
as Co-Portfolio Manager of the CRM Mid Cap Value Strategy from
2016 to April 2020. Ms. Ezzes joined Cramer Rosenthal McGlynn in
2010 as an investment analyst. Ms. Ezzes began her career in public
equities in 2003 and previously worked at MissionPoint Capital and
Iridian Asset Management. From 1999 until 2003 she worked in
private equity at SG Capital Partners where she was a member of the
investment team focused on leveraged buyouts, leveraged
recapitalizations and growth equity investments. She started her
career in 1998 as a Business Analyst with Price Waterhouse, LLP.
Ms. Ezzes holds a B.A. in International Relations and Russian
Studies from Brown University. Our board has determined that Ms.
Ezzes’ extensive experience in the financial services industry
qualifies her to serve as a member of our board of directors.
Lesley Goldwasser has served as a director since December
2020 and as a director of FTAC Parnassus since March 2021. Ms.
Goldwasser has been a Managing Partner of GreensLedge Capital
Markets LLC (“GreensLedge”) since September 2013. Prior to joining
GreensLedge, she was associated with Credit Suisse Group AG
(“Credit Suisse”) as a Managing Director from September 2010 to
November 2013, where she had global responsibility for the Hedge
Fund Strategic Services unit. Before Credit Suisse, Ms. Goldwasser
spent 12 years at Bear Stearns where she was co-head of Global Debt
and Equity Capital Markets units and had global responsibility for
structured products. Prior to her tenure at Bear Stearns, Ms.
Goldwasser spent 12 years at Credit Suisse in a variety of
management positions, including responsibility for both the Asset
Backed and Non-Agency Mortgage Trading Desks. Ms. Goldwasser
has been a member of the board of directors of TipTree Inc.
(Nasdaq: TIPT), a financial services company, since January 2015.
Ms. Goldwasser was selected to serve on our board because of
her extensive experience in the financial services industry, which
we believe makes her a valuable addition to the board of
directors.
Laura S. Kohn has served as a director since
December 2020 and as a director of FinTech VI since June 2021.
She previously served as a director of FinTech IV from September
2020 until June 2021. Ms. Kohn is an independent investor and
entrepreneur focused primarily on real estate investments.
Previously, Ms. Kohn was Vice President and Head of
Institutional Strategy at Charles Schwab from 2009 to 2012 and
Senior Vice President of Strategic Initiatives at Wells Fargo from
2007 to 2009. Prior to that Ms. Kohn served as Senior
Principal at the Parthenon Group, a provider of strategy
consulting, where she directed consulting engagements and developed
relationships with client executives at Fortune 500 companies,
mid-tier companies and start-up ventures. Ms. Kohn
began her career at the Boston Consulting Group, where she provided
strategic consulting services to executive management of Fortune
500 companies. She holds an M.B.A. in Finance from the Wharton
School of Business, a Ph.D. in Industrial and Organizational
Behavior from Rice University and a B.A. in Psychology from
Binghamton University. Our board believes that Ms. Kohn’s
breadth and depth of experience as an investor and strategic
planner make her well qualified to serve as a director.
Jan Rock Zubrow has served as a director since December
2020 and as a director of FTAC Hera since March 2021. She
previously served as a director of FinTech IV from
September 2020 until June 2021. Ms. Rock Zubrow is a
leader of non-profit organizations active in international
development and education. She has served as Chair of the Board of
Women for Women International, an organization that provides
vocational and life skills to women in war-torn countries,
since 2015. In addition, Ms. Rock Zubrow has served on the
board of New Leaders, an organization that trains educators to be
transformational school leaders who can help bridge the achievement
gap in the nation’s inner-city schools, since 2013. From 1998
to 2015, Ms. Rock Zubrow was president of MedCapital, LLC, a
venture capital firm that she founded that invested in early stage
healthcare companies. Before starting MedCapital, Ms. Rock
Zubrow managed significant consumer franchises at
Johnson & Johnson, Tambrands, Inc. and the Procter and
Gamble Company. Ms. Rock Zubrow is a trustee emeritus of the
Cornell University Board of Trustees and served as Chair of
Cornell’s Executive Committee from 2011-2018. Additionally, she
chaired the Presidential Search Committee for Cornell’s thirteenth
and fourteenth presidents. Previously, she served as
Co-Chair of Cornell’s $6 billion capital
campaign and the task-force which led to the establishment of
the Cornell Tech campus in New York City. Ms. Rock Zubrow
received a B.A. in Economics from Cornell University and a M.B.A.
from the Harvard Business School. Our board has determined that
Ms. Rock Zubrow’s extensive venture capital investing
experience as well as her prior experience as a director qualifies
her to serve as a member of our board of directors.
Number and Terms of Office of Officers and Directors
Our board of directors is divided into two classes with only one
class of directors being elected in each year and each class
(except for those directors appointed prior to our first annual
meeting of stockholders) serving a two-year term. The term of
office of the Class I directors, consisting of Betsy Z. Cohen and
Jan Zubrow, will expire at our first annual meeting of
stockholders. The term of office of the Class II directors,
consisting of Laura Kohn, Lesley Goldwasser and Brittain Ezzes,
will expire at our second annual meeting of stockholders.
Collectively, through their positions described above, our officers
and directors have extensive experience in public companies and in
the financial services industry. These individuals play a key role
in identifying and evaluating prospective acquisition candidates,
selecting the target businesses, and structuring, negotiating and
consummating their acquisition.
Our officers are appointed by the board of directors and serve at
the discretion of the board of directors, rather than for specific
terms of office. Our board of directors is authorized to appoint
persons to the offices set forth in our bylaws as it deems
appropriate. Our bylaws provide that our officers may consist of
one or more Chairmen of the Board, one or more Chief Executive
Officers, a President, a Chief Financial Officer, Vice Presidents,
Secretary, Treasurer and such other offices as may be determined by
the board of directors.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires our executive officers
and directors, and persons who own more than ten percent of any
publicly traded class of our equity securities, to file reports of
ownership and changes in ownership of equity securities of the
Company with the SEC. Officers, directors, and
greater-than-ten-percent stockholders are required by the SEC’s
regulations to furnish the Company with copies of all Section 16(a)
forms that they file.
Based solely upon a review of Forms 3 and Forms 4 furnished to the
Company during the most recent fiscal year, and Forms 5 with
respect to its most recent fiscal year, we believe that all such
forms required to be filed pursuant to Section 16(a) of the
Exchange Act were timely filed by the officers, directors, and
security holders required to file the same during the fiscal year
ended December 31, 2021, other than one Form 4 for each of Ms.
Cohen, Mr. Cohen and our sponsor.
Board Committees
Audit Committee
The rules of Nasdaq and Section 10A of the Exchange Act require
that the audit committee of a listed company be comprised solely of
independent directors. We have established an audit committee of
the board of directors, which consists of Mses. Ezzes, Kohn and
Zubrow, all of whom meet the independent director standard under
NASDAQ’s listing standards and under Rule 10A-3(b)(1) of the
Exchange Act. Ms. Ezzes serves as Chairman of our audit
committee.
The audit committee’s duties, which are specified in our Audit
Committee Charter, include, but are not limited to:
| |
● |
the
appointment, compensation, retention, replacement, and oversight of
the work of the independent registered public accounting firm and
any other independent registered public accounting firm engaged by
us; |
| |
● |
pre-approving all
audit and permitted non-audit services to be provided by the
independent registered public accounting firm or any other
registered public accounting firm engaged by us, and establishing
pre-approval policies and procedures; |
| |
● |
reviewing
and discussing with the independent registered public accounting
firm all relationships the auditors have with us in order to
evaluate their continued independence; |
| |
● |
setting
clear hiring policies for employees or former employees of the
independent registered public accounting firm; |
| |
● |
setting
clear policies for audit partner rotation in compliance with
applicable laws and regulations; |
| |
● |
obtaining
and reviewing a report, at least annually, from the independent
registered public accounting firm describing (i) the independent
auditor’s internal quality-control procedures and (ii) any
material issues raised by the most recent internal
quality-control review, or peer review, of the audit
firm, or by any inquiry or investigation by governmental or
professional authorities within the preceding five years respecting
one or more independent audits carried out by the firm and any
steps taken to deal with such issues; |
| |
● |
reviewing
and approving any related party transaction required to be
disclosed pursuant to Item 404 of Regulation S-K promulgated
by the SEC prior to us entering into such transaction;
and |
| |
● |
reviewing
with management, the independent auditors, and our legal advisors,
as appropriate, any legal, regulatory or compliance matters,
including any correspondence with regulators or government agencies
and any employee complaints or published reports that raise
material issues regarding our financial statements or accounting
policies and any significant changes in accounting standards or
rules promulgated by the Financial Accounting Standards Board, the
SEC or other regulatory authorities. |
Financial Expert on Audit Committee
The audit committee will at all times be composed exclusively of
independent directors who are “financially literate” as defined
under NASDAQ’s listing standards. The NASDAQ listing standards
define “financially literate” as being able to read and understand
fundamental financial statements, including a company’s balance
sheet, income statement and cash flow statement.
In addition, we must certify to the NASDAQ Capital Market that the
committee has, and will continue to have, at least one member who
has past employment experience in finance or accounting, requisite
professional certification in accounting, or other comparable
experience or background that results in the individual’s financial
sophistication. We have determined that Ms. Ezzes satisfies
NASDAQ’s definition of financial sophistication and also qualifies
as an “audit committee financial expert,” as defined under rules
and regulations of the SEC.
Compensation Committee
We have established a compensation committee of the board of
directors, which consists of Mses. Ezzes and Kohn, each of whom
meets the independent director standard under NASDAQ’s listing
standards applicable to members of the compensation committee. Ms.
Kohn serves as Chairman of our compensation committee.
The compensation committee’s duties, which are specified in our
Compensation Committee Charter, include, but are not limited
to:
| |
● |
reviewing
and approving on an annual basis the corporate goals and objectives
relevant to our Chief Executive Officer’s
compensation, evaluating our Chief Executive Officer’s
performance in light of such goals and objectives and determining
and approving the remuneration (if any) of our Chief Executive
Officer based on such evaluation; |
| |
● |
reviewing
and approving on an annual basis the compensation of all of our
other officers; |
| |
|
|
| |
● |
reviewing
on an annual basis our executive compensation policies and
plans; |
| |
|
|
| |
● |
implementing
and administering our incentive compensation equity-based
remuneration plans; |
| |
|
|
| |
● |
assisting
management in complying with our proxy statement and annual report
disclosure requirements; |
| |
|
|
| |
● |
approving
all special perquisites, special cash payments and other special
compensation and benefit arrangements for our officers and
employees; |
| |
|
|
| |
● |
If
required, producing a report on executive compensation to be
included in our annual proxy statement; and |
| |
|
|
| |
● |
reviewing,
evaluating and recommending changes, if appropriate, to the
remuneration for directors. |
Notwithstanding the foregoing, as indicated above, other than the
payment to our sponsor or its affiliate of $20,000 per month, for
up to 24 months, for office space, utilities, and shared
personnel support services, a customary advisory fee to an
affiliate of our sponsor at the closing of our initial business
combination, in an amount that constitutes a market standard
advisory fee for comparable transactions and services provided, and
reimbursement of expenses, no compensation of any kind, including
finders, consulting or other similar fees, will be paid to any of
our existing stockholders, officers, directors or any of their
respective affiliates, prior to, or for any services they render in
order to complete the consummation of a business combination.
Accordingly, it is likely that prior to the consummation of an
initial business combination, the compensation committee will only
be responsible for the review and recommendation of any
compensation arrangements to be entered into in connection with
such initial business combination.
The charter also provides that the compensation committee may, in
its sole discretion, retain or obtain the advice of a compensation
consultant, legal counsel or other adviser and will be directly
responsible for the appointment, compensation and oversight of the
work of any such adviser. However, before engaging or receiving
advice from a compensation consultant, external legal counsel or
any other adviser, the compensation committee will consider the
independence of each such adviser, including the factors required
by NASDAQ and the SEC.
Director Nominations
We do not have a standing nominating committee. In accordance with
Rule 5605(e)(2) of the NASDAQ Rules, a majority of the independent
directors may recommend a director nominee for selection by the
board of directors. The board of directors believes that the
independent directors can satisfactorily carry out the
responsibility of properly selecting or approving director nominees
without the formation of a standing nominating committee. As there
is no standing nominating committee, we do not have a nominating
committee charter in place.
The board of directors will also consider director candidates
recommended for nomination by our stockholders during such times as
they are seeking proposed nominees to stand for election at the
next annual meeting of stockholders (or, if applicable, a special
meeting of stockholders). Our stockholders that wish to nominate a
director for election to our board of directors should follow the
procedures set forth in our bylaws.
We have not formally established any specific, minimum
qualifications that must be met or skills that are necessary for
directors to possess. In general, in identifying and evaluating
nominees for director, our board of directors considers educational
background, diversity of professional experience, knowledge of our
business, integrity, professional reputation, independence, wisdom,
and the ability to represent the best interests of our
stockholders.
Code of Conduct and Ethics
We have adopted a code of conduct and ethics applicable to our
directors, officers and employees in accordance with applicable
federal securities laws, a copy of which is attached as an exhibit
to this Annual Report. We intend to disclose any amendments to or
waivers of certain provisions of our code of conduct and ethics in
a Current Report on Form 8-K. We will make a printed copy of our
code of conduct and ethics available to any stockholder who so
requests. Requests for a printed copy may be directed to us as
follows: FinTech Acquisition Corp. V, 2929 Arch Street, Suite 1703,
Philadelphia, PA 19104 Attention: Secretary.
Item 11.
EXECUTIVE COMPENSATION.
Compensation Discussion and Analysis
None of our officers or directors has received any cash
compensation for services rendered. No compensation of any kind,
including finder’s and consulting fees, will be paid to our
sponsor, officers and directors, or any entity with which they are
affiliated, for services rendered prior to or in connection with
the consummation of an initial business combination other than (i)
repayment of an aggregate of up to $300,000 in loans made to us by
our sponsor, (ii) repayment of loans which may be made by our
sponsor or an affiliate of our sponsor or certain of our officers
and directors to finance transaction costs in connection with an
intended initial business combination (provided that if we do not
consummate an initial business combination, we may use working
capital held outside the trust account to repay such loaned
amounts, but no proceeds from our trust account would be used for
such repayment), (iii) payments to our sponsor or its affiliate of
a total of $20,000 per month for office space, utilities, and
shared personnel support services, (iv) at the closing of our
initial business combination, a customary advisory fee to an
affiliate of our sponsor, in an amount that constitutes a market
standard advisory fee for comparable transactions and services
provided, and (v) to reimburse for any out-of-pocket expenses
related to identifying, investigation and completing an initial
business combination. Our audit committee will review on a
quarterly basis all payments that were made to our sponsor,
officers or directors, or our or their affiliates.
After the consummation of our initial business combination,
directors or members of our management team who remain in one of
those capacities may be paid director, consulting, management or
other fees from the combined company with any and all amounts being
fully disclosed to stockholders, to the extent then known, in the
tender offer materials or proxy solicitation materials furnished to
our stockholders in connection with a proposed business
combination. It is unlikely the amount of such compensation will be
known at the time, as it will be up to the directors of the
post-combination business to determine executive and director
compensation.
Any compensation to be paid to our officers will be determined, or
recommended to the board of directors for determination, either by
a compensation committee constituted solely by independent
directors or by a majority of the independent directors on our
board of directors.
We do not intend to take any action to ensure that members of our
management team maintain their positions with us after the
consummation of our initial business combination, although it is
possible that some or all of our executive officers and directors
may negotiate employment or consulting arrangements to remain with
us after the initial business combination. The existence or terms
of any such employment or consulting arrangements may influence our
management’s motivation in identifying or selecting a target
business although we do not believe that the ability of our
management to remain with us after the consummation of an initial
business combination will be a determining factor in our decision
to proceed with any potential business combination. We are not
party to any agreements with our officers and directors that
provide for benefits upon termination of employment.
Compensation Committee Interlocks and Insider
Participation
No member of the compensation committee serves or served during the
fiscal year ended December 31, 2021, as a member of the board of
directors or compensation committee of a company that has one or
more executive officers serving as a member of our Board or
compensation committee.
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The following table sets forth information regarding the beneficial
ownership of our common stock as of February 17, 2022, by:
| |
● |
each
person known by us to be the beneficial owner of more than 5% of
our outstanding shares of common stock; |
| |
|
|
| |
● |
each
of our named executive officers and directors that beneficially
owns shares of our common stock; and |
| |
|
|
| |
● |
all
our executive officers and directors as a group. |
The table below represents beneficial ownership of Class A common
stock, Class B common stock and Class A common stock and Class B
common stock voting together as a single class, and is reported in
accordance with the beneficial ownership rules of the SEC under
which a person is deemed to be the beneficial owner of a security
if that person has or shares voting power or investment power with
respect to such security or has the right to acquire such ownership
within 60 days. The table does not reflect record or
beneficial ownership of any outstanding warrants as no warrants are
exercisable within 60 days.
The beneficial ownership of the Company’s voting common stock is
based on 25,640,000 shares of Class A common stock outstanding
and 8,546,667 shares of Class B common stock outstanding, except as
otherwise indicated.
Unless otherwise indicated, we believe that all persons named in
the table have sole voting and investment power with respect to all
shares of common stock beneficially owned by them.
|
|
|
Class A Common
Stock |
|
|
Class B Common
Stock |
|
|
Combined
Voting
Power(2) |
|
|
Name and Address of Beneficial Owners |
|
Number |
|
|
% of class |
|
|
Number |
|
|
% of class |
|
|
Number |
|
|
% of class |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors and Executive
Officers:(1) |
|
|
|
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|
|
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|
|
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|
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Betsy Z. Cohen |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Daniel G. Cohen |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
James J. McEntee, III |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Douglas Listman |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Brittain Ezzes(3) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Lesley Goldwasser(3) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Laura
S. Kohn(3) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
Jan Rock Zubrow(3) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
All directors and executive officers as a group (eight
individuals) |
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
– |
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
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|
|
|
|
|
|
5% or Greater Beneficial Owners: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HGC
Investment Management Inc.(4) |
|
|
1,300,000 |
|
|
|
5.1 |
% |
|
|
– |
|
|
|
– |
|
|
|
1,300,000 |
|
|
|
3.8 |
% |
|
Wellington
Management Group LLP(5) |
|
|
2,150,958 |
|
|
|
8.4 |
% |
|
|
– |
|
|
|
– |
|
|
|
2,150,958 |
|
|
|
6.3 |
% |
|
Bay
Pond Partners, L.P.(6) |
|
|
1,570,920 |
|
|
|
6.1 |
% |
|
|
– |
|
|
|
– |
|
|
|
1,570,920 |
|
|
|
4.6 |
% |
|
Nantahala
Capital Management, LLC(7) |
|
|
1,324,763 |
|
|
|
5.2 |
% |
|
|
- |
|
|
|
- |
|
|
|
1,324,763 |
|
|
|
3.9 |
% |
|
Atalaya
Capital Management LP(8) |
|
|
1,800,000 |
|
|
|
7.0 |
% |
|
|
– |
|
|
|
– |
|
|
|
1,800,000 |
|
|
|
5.3 |
% |
|
P.
Schoenfeld Asset Management LP(9) |
|
|
1,899,568 |
|
|
|
7.4 |
% |
|
|
– |
|
|
|
– |
|
|
|
1,899,568 |
|
|
|
5.6 |
% |
|
Citadel
Advisors LLC(10) |
|
|
1,654,774 |
|
|
|
6.5 |
% |
|
|
– |
|
|
|
– |
|
|
|
1,654,774 |
|
|
|
4.8 |
% |
|
Luxor
Capital Partners, LP(11) |
|
|
3,985,968 |
|
|
|
15.5 |
% |
|
|
– |
|
|
|
– |
|
|
|
3,985,968 |
|
|
|
11.7 |
% |
|
FinTech
Investor Holdings V, LLC(12)(13) |
|
|
640,000 |
|
|
|
2.5 |
% |
|
|
2,660,000 |
|
|
|
31.1 |
% |
|
|
3,300,000 |
|
|
|
9.7 |
% |
|
FinTech
Masala Advisors V, LLC(12)(13) |
|
|
– |
|
|
|
– |
|
|
|
5,886,667 |
|
|
|
68.9 |
% |
|
|
5,886,667 |
|
|
|
17.2 |
% |
| 1. |
Unless
otherwise noted, the business address of each of the following
individuals is c/o FinTech Acquisition Corp. V, 2929 Arch Street,
Suite 1703, Philadelphia, PA 19104. |
| |
|
| 2. |
Represents
the percentage of voting power of our Class A common stock and
Class B common stock voting together as a single class. |
| |
|
| 3. |
This
individual is a member of our sponsor, but does not have voting or
investment power over the shares held by our sponsor. |
| |
|
| 4. |
Based
on information contained in a Schedule 13G filed on February 16,
2021 by HGC Investment Management Inc. (“HGC Management”).
HGC Management serves as the investment manager of HGC
Arbitrage Fund LP (“HGC Fund”) with respect to the shares of Class
A common stock held by HGC Management on behalf of the HGC Fund.
The business address of HGC Management is 366 Adelaide, Suite 601,
Toronto, Ontario, M5V 1R9 Canada. |
| 5. |
Based
on information contained in a Schedule 13G/A filed on February 4,
2022 by Wellington Management Group LLP, Wellington Group Holdings
LLP, Wellington Investment Advisors Holdings LLP and Wellington
Management Company LLP (the “Wellington Entities”). Each such
entity reported that it has shared power to vote 2,150,958 shares
of Class A common stock and shared power to dispose of 2,150,958
shares of Class A common stock. The business address for each
reporting person is c/o Wellington Management Company LLP, 280
Congress Street, Boston, MA 02210. |
| 6. |
Based
on a Schedule 13G/A filed on February 4, 2022. The business address
of the reporting person is c/o Wellington Management Company LLP,
280 Congress Street, Boston, MA 02210. |
| 7. |
Based
on a Schedule 13G filed on February 14, 2022 by Nantahala Capital
Management, LLC (“Nantahala”), Wilmot B. Harkey and Daniel Mack. As
of December 31, 2021, Nantahala may be deemed to be the beneficial
owner of 1,324,763 shares held by funds and separately managed
accounts under its control, and as the managing members of
Nantahala, each of Messrs. Harkey and Mack may be deemed to be a
beneficial owner of those shares. The business address of each of
the reporting persons is 130 Main St., 2nd Floor, New
Canaan, CT 06840. |
| 8. |
Based
upon information contained in a Schedule 13G/A filed on
February 14, 2022, by Atalaya Capital Management LP (“ACM”),
Atalaya Special Purpose Investment Fund LP (ASPIF), Corbin ERISA
Opportunity Fund, Ltd. (“CEOF”), Corbin Capital Partners GP, LLC
(“Corbin GP”), Corbin Capital Partners, L.P. (“CCP”) and Corbin
Opportunity Fund, L.P. (“COF”). ASPIF, CEOF and COF beneficially
own 180,000, 1,080,000 and 540,000 shares, respectively. As ASPIFs
investment manager, ACM has the power to vote and direct the
disposition of all shares held by ASPIF.As CEOF and COFs investment
manager, CCP has the power to vote and direct the disposition of
all shares held by CEOF and COF. Each of Corbin GP and CCP may be
deemed the beneficial owner of the shares held of record by CEOF
and COF. The address of the principal business office of ACM and
ASPIF is One Rockefeller Plaza, 32nd Floor, New
York, NY 10020. The address of the principal business office of
each of CEOF, Corbin GP, CCP and COF is 590 Madison Avenue,
31st Floor, New York, NY 10022. |
| 9. |
Based
on information contained in a Schedule 13G filed on April 13, 2021
by P. Schoenfeld Asset Management LP (“PSAM”) and Peter M.
Schoenfeld. PSAM is the investment advisor to certain funds and
accounts that directly hold the shares of the issuer’s Class A
Common Stock. Mr. Schoenfeld is the managing member of P.
Schoenfeld Asset Management GP, LLC, a Delaware limited liability
company that serves as the general partner of PSAM. The business
address of each reporting person is 1350 Avenue of the Americas,
21st Floor, New York, NY 10019. |
| 10. |
Based
on information contained in a Schedule 13G/A filed on February 14,
2022 by Citadel Advisors LLC (“Citadel Advisors”), Citadel Advisors
Holdings LP (“CAH”), Citadel GP LLC (“CGP”), Citadel Securities LLC
(“Citadel Securities”), Citadel Securities Group LP (“CALC4”),
Citadel Securities GP LLC (“CSGP”) and Mr. Kenneth Griffin. All
shares reported are owned by Citadel Multi-Strategy Equities Master
Fund Ltd. (“CM”) and Citadel Securities. Citadel Advisors is the
portfolio manager for CM. CAH is the sole member of
Citadel Advisors. CGP is the general partner of
CAH. CALC4 is the non-member manager of Citadel
Securities. CSGP is the general partner of
CALC4. Mr. Griffin is the President and Chief Executive
Officer of CGP, and owns a controlling interest in CGP and CSGP.
The address of the principal business office of each of the
reporting persons is 131 S. Dearborn Street, 32nd Floor, Chicago,
Illinois 60603. |
| 11. |
Based
on information contained in a Schedule 13G/A filed on February 14,
2022 by Luxor Capital Partners, LP (the “Onshore Fund”), Luxor
Capital Partners Offshore Master Fund, LP (the “Offshore
Master Fund”), Luxor Capital Partners Offshore, Ltd. (the
“Offshore Feeder Fund”), Luxor Capital Partners Long, LP (the “Long
Onshore Fund”), Luxor Capital Partners Long Offshore Master Fund,
LP (the “Long Offshore Master Fund”), Luxor Capital Partners Long
Offshore, Ltd. (the “Long Offshore Feeder Fund”), Luxor Wavefront,
LP (the “Wavefront Fund”), LCG Holdings, LLC (“LCG Holdings”),
Luxor Capital Group, LP (“Luxor Capital Group”), Luxor
Management, LLC (“Luxor Management”), and Christian Leone. The
Onshore Fund beneficially owns 2,137,720 shares of Class A Common
Stock, including 54,000 shares of Class A Common Stock underlying
call options currently exercisable. The Offshore Master Fund
beneficially owns 1,299,284 shares of Class A Common Stock,
including 34,000 shares of Class A Common Stock underlying call
options currently exercisable. The Offshore Feeder Fund, as the
owner of a controlling interest in the Offshore Master Fund, may be
deemed to beneficially own the shares of Class A Common Stock
beneficially owned by the Offshore Master Fund. The Long Onshore
Fund beneficially owns 53,137 shares of Class A Common Stock. The
Long Offshore Master Fund beneficially owns 17,396 shares of Class
A Common Stock. The Long Offshore Feeder Fund, as the owner
of a controlling interest in the Long Offshore Master Fund, may be
deemed to beneficially own the shares of Class A Common Stock
beneficially owned by the Long Offshore Master Fund. The Wavefront
Fund beneficially owns 478,431 shares of Class A Common Stock,
including 12,000 shares of Class A Common Stock underlying call
options currently exercisable. LCG Holdings, as the general partner
of the Onshore Fund, the Offshore Master Fund, the Long Onshore
Fund, the Long Offshore Master Fund and the Wavefront Fund, may be
deemed to beneficially own the 3,985,968 shares of Class A Common
Stock beneficially owned by the Onshore Fund, the Offshore Master
Fund, the Long Onshore Fund, the Long Offshore Master Fund and the
Wavefront Fund, including 100,000 shares of Class A Common Stock
underlying call options currently exercisable. Luxor Capital Group,
as the investment manager of the Onshore Fund, the Offshore Feeder
Fund, the Offshore Master Fund, the Long Onshore Fund, the Long
Offshore Feeder Fund, the Long Offshore Master Fund and the
Wavefront Fund (collectively, the “Funds”), may be deemed to
beneficially own the 3,985,968 shares of Class A Common
Stock beneficially owned by the Funds, including 100,000 shares of
Class A Common Stock underlying call options currently exercisable.
Luxor Management, as the general partner of Luxor Capital Group,
may be deemed to beneficially own the 3,985,968 shares of
Class A Common Stock beneficially owned by Luxor Capital Group,
including 100,000 shares of Class A Common Stock underlying call
options currently exercisable. Mr. Leone, as the managing member of
Luxor Management, may be deemed to beneficially own
the 3,985,968 shares of Class A Common Stock beneficially
owned by Luxor Management, including 100,000 shares of Class A
Common Stock underlying call options currently exercisable. The
principal business address of each of the Onshore Fund, the Long
Onshore Fund, the Wavefront Fund, Luxor Capital Group, Luxor
Management, LCG Holdings and Mr. Leone is 1114 Avenue of the
Americas, 28th Floor, New York, New York 10036. The
principal business address of each of the Offshore Master Fund, the
Offshore Feeder Fund, the Long Offshore Master Fund and the Long
Offshore Feeder Fund is c/o Maples Corporate Services Limited, P.O.
Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman
Islands. |
| 12. |
FinTech
Investor Holdings V, LLC (“Holdings”) is the direct beneficial
owner of 640,000 shares of our Class A common stock and 2,660,000
shares of our Class B common stock. FinTech Masala Advisors V, LLC
(“Masala Advisors” and together with Holdings, the “Sponsors”) is
the direct beneficial owner of 5,886,667 shares of our Class B
common stock. The shares of Class B common stock held by the
Sponsors will automatically convert into shares of Class A common
stock at the time of our initial business combination on a
one-for-one basis, subject to certain adjustments described in our
charter documents. Certain of our officers and directors are
members of the Sponsors, but none has any voting or investment
power over the shares held by the Sponsors. Each such entity or
person disclaims any beneficial ownership of the reported shares
other than to the extent of any pecuniary interest they may have
therein, directly or indirectly. |
| 13. |
Cohen
Sponsor Interests V, LLC is the manager of each of the
Sponsors. FinTech Masala, LLC is the sole member of
Cohen Sponsor Interests V, LLC. FinTech Masala Holdings,
LLC is the sole member of FinTech Masala, LLC. FinTech
Masala Holdings, LLC is in turn managed by its members, none of
which is deemed a beneficial owner of our securities held by
FinTech Masala Holdings, LLC based on the so-called “rule of
three.” As a result of the foregoing, each of Cohen
Sponsor Interests V, LLC, FinTech Masala, LLC and FinTech Masala
Holdings, LLC shares voting and investment power over the shares of
our common stock held directly by the Sponsors. |
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
Related Party Policy
We have adopted a code of conduct and ethics requiring us to avoid,
wherever possible, all conflicts of interests, except under
guidelines or resolutions approved by our board of directors (or
the appropriate committee of the board) or as disclosed in our
public filings with the SEC. Under our code of conduct and ethics,
conflict of interest situations include any financial transaction,
arrangement or relationship (including any indebtedness or
guarantee of indebtedness) involving the Company.
In addition, our audit committee, pursuant to the Audit Committee
Charter, is responsible for reviewing and approving related party
transactions to the extent that we enter into such transactions. An
affirmative vote of a majority of the members of the audit
committee present at a meeting at which a quorum is present will be
required in order to approve a related party transaction. A
majority of the members of the entire audit committee will
constitute a quorum. Without a meeting, the unanimous written
consent of all of the members of the audit committee is required to
approve a related party transaction. We also require each of
our directors and officers to complete a directors’ and officers’
questionnaire that elicits information about related party
transactions. These procedures are intended to determine
whether any such related party transaction impairs the independence
of a director or presents a conflict of interest on the part of a
director, employee or officer. Our audit committee reviews on a
quarterly basis all payments that were made to our sponsor,
officers or directors, or our or their affiliates.
Founder shares
In June 2019, FinTech Investor Holdings V, LLC purchased 1,000
founder shares for an aggregate purchase price of $25,000. We
effected a 8,445-for-1 forward stock split in October 2020 and
a stock dividend in December 2020 of 1.01360142 shares of Class B
common stock for each share of Class B common stock outstanding
prior to the dividend. Also in December 2020, as a result of
the underwriters exercising their overallotment option in part, our
initial holders forfeited 23,333 founder shares. As a result, our
initial holders hold 8,546,667 founder shares. The number of
founder shares was determined based on the expectation that the
founder shares would represent 25% of the aggregate of our founder
shares, the placement shares and our issued and outstanding public
shares after the initial public offering. The founder shares
represent 100% of our issued and outstanding shares of Class B
common stock.
The initial holders have agreed not to transfer, assign or sell any
of their founder shares (except to permitted transferees), (a) with
respect to 25% of such shares, until consummation of our initial
business combination, (b) with respect to 25% of such shares, when
the closing price of our Class A common stock exceeds $12.00 for
any 20 trading days within a 30-trading day period following
the consummation of our initial business combination, (c) with
respect to 25% of such shares, when the closing price of our Class
A common stock exceeds $13.50 for any 20 trading days within a
30-trading day period following the consummation of our
initial business combination, and (d) with respect to 25% of such
shares, when the closing price of our Class A common stock exceeds
$17.00 for any 20 trading days within a 30-trading day period
following the consummation of our initial business combination or
earlier, in any case, if, following a business combination, we
complete a liquidation, merger, capital stock exchange,
reorganization or other similar transaction that results in all of
our stockholders having the right to exchange their shares of
common stock for cash, securities or other property.
Private Placement
Simultaneously with the initial public offering, FinTech Investor
Holdings V, LLC purchased an aggregate of 640,000 placement units
at a price of $10.00 per unit (or an aggregate purchase price of
$6,400,000). Each placement unit consists of one placement share
and one-third of one placement warrant to purchase one share of our
Class A common stock exercisable at $11.50. The proceeds from the
placement units and the proceeds from the initial public offering
(initially totaling $250,000,000) are held in the trust account.
There will be no redemption rights or liquidating distributions
from the trust account with respect to the placement shares or
placement warrants.
The placement warrants are identical to the warrants included in
the units sold in the initial public offering, except that if held
by our sponsor or its permitted transferees, they (a) may be
exercised for cash or on a cashless basis, (b) are not subject to
being called for redemption and (c) they (including our common
stock issuable upon exercise of these warrants) may not, subject to
certain limited exceptions, be transferred, assigned or sold by the
holders until 30 days after the consummation of our initial
business combination. There are no redemption rights or liquidating
distributions with respect to the founder shares, placement shares
or placement warrants, which will expire worthless if we do not
complete an initial business combination.
Promissory Note — Related Party
Prior to the closing of the initial public offering, FinTech
Investor Holdings V, LLC loaned us $45,365 for expenses related to
our formation and the initial public offering. The loan was
non-interest bearing, unsecured and due on the earlier of March 31,
2021 or the closing of the initial public offering. The loan was
repaid upon the closing of the initial public offering on December
8, 2020.
Related Party Loans
In order to finance transaction costs in connection with an
intended initial business combination, our sponsor, an affiliate of
our sponsor or certain of our officers and directors may, but are
not obligated to, loan us funds as may be required. The loans will
be interest free. If we consummate an initial business combination,
we would repay such loaned amounts. If we do not consummate an
initial business combination, we may use a portion of any working
capital held outside the trust account to repay such loaned
amounts; however, no proceeds from the trust account may be used
for such repayment. If such funds are insufficient to repay the
loan amounts, the unpaid amounts would be forgiven. Up to
$1,500,000 of such loans may be converted into units at a price of
$10.00 per unit at the option of the lender at the time of the
business combination. The units would be identical to the placement
units. The terms of such loans, if any, have not been determined
and no written agreements exist with respect to such loans. We do
not expect to seek loans from parties other than our sponsor or an
affiliate of our sponsor 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. There were
$300,000 in working capital loans outstanding as of December 31,
2021. As of October 26, 2021, the Company amended the Working
Capital Loans to remove the conversion feature.
Registration Rights
Pursuant to a registration rights agreement entered into on
December 3, 2020, the holders of the founder shares, placement
units (including securities contained therein) and units that may
be issued upon conversion of working capital loans (and any shares
of Class A common stock issuable upon the exercise of the placement
warrants and warrants included in the units that may be issued upon
conversion of working capital loans and upon conversion of the
founder shares) made by our sponsor, an affiliate of our sponsor or
certain of our officers and directors, if any, are entitled to
registration rights to require us to register a sale of any of our
securities held by them (in the case of the founder shares, only
after conversion to our Class A common stock). The holders of the
majority of these securities are entitled to make up to three
demands, excluding short form demands, that we register such
securities. In addition, the holders have certain “piggy-back”
registration rights with respect to registration statements filed
subsequent to the completion of our initial business combination
and rights to require us to register for resale such securities
pursuant to Rule 415 under the Securities Act. We will bear the
expenses incurred in connection with the filing of any such
registration statements.
Administrative Services
Commencing on December 4, 2020, we pay an amount equal to $20,000
per month to our sponsor or its affiliate for office space,
utilities, and shared personnel support services provided to
us.
Trust Account Indemnification
FinTech Investor Holdings V, LLC has agreed that, if the trust
account is liquidated without the consummation of a business
combination, it will indemnify us to the extent any claims by a
third party for services rendered or products sold to us, or any
claims by a prospective target business with which we have
discussed entering into a transaction agreement, reduce the amount
of funds in the trust account to below $10.00 per public share,
except for any claims by any third party who executed a waiver of
any and all rights to seek access to the trust account, regardless
of whether such waiver is enforceable, and except for claims
arising from our obligation to indemnify the underwriters of the
initial public offering pursuant to the underwriting agreement. We
have not independently verified whether FinTech Investor Holdings
V, LLC has sufficient funds to satisfy its indemnity obligations,
we have not asked FinTech Investor Holdings V, LLC to reserve for
such obligations and it may not be able to satisfy those
obligations. We believe the likelihood of FinTech Investor Holdings
V, LLC having to indemnify the trust account is limited because we
endeavor to have all third parties that provide products or
services to us and prospective target businesses execute agreements
with us waiving any right, title, interest or claim of any kind in
or to monies held in the trust account.
Conflicts of Interest
In general, officers and directors of a Delaware corporation are
required to present business opportunities to the corporation
if:
| |
● |
the
corporation could financially undertake the
opportunity; |
| |
● |
the
opportunity is within the corporation’s line of business;
and |
| |
● |
it
would not be fair to the corporation and its stockholders for the
opportunity not to be brought to the attention of the
corporation. |
Our amended and restated certificate of incorporation provides,
however, that the doctrine of corporate opportunity, or any other
analogous doctrine, does not apply to us or any of our officers or
directors or in circumstances that would conflict with any current
or future fiduciary duties or contractual obligations.
Accordingly, if any of our officers or directors becomes aware of a
business combination opportunity that falls within the line of
business of any entity to which he or she has pre-existing
fiduciary or contractual obligations, he or she may be required to
present the opportunity to such entity prior to presenting the
opportunity to us or, if he or she is subject to a non-compete
obligation that includes business opportunities, he or she may be
prohibited from referring such opportunity to us. Below is a table
summarizing the companies to which our officers and directors owe
fiduciary obligations that could conflict with their fiduciary
obligations to us, all of which may have to (i) be presented
appropriate potential target businesses by our officers or
directors, and (ii) reject the opportunity to acquire such
potential target business, before the opportunity may be presented
to us:
|
Individual |
|
Entity(1) |
|
Affiliation |
| Betsy
Z. Cohen |
|
FTAC Emerald Acquisition Corp.
FTAC Athena Acquisition Corp.
FTAC Hera Acquisition Corp.
FinTech Acquisition Corp. VI
|
|
Chairman
Chairman
Chairman
Chairman
|
| |
|
|
|
|
| Daniel
G. Cohen |
|
Cohen & Company Inc.
J.V.B. Financial Group, LLC
Insurance Acquisition Corp. III
FinTech Acquisition Corp. VI
FTAC Hera Acquisition Corp.
FTAC Parnassus Acquisition Corp.
FTAC Zeus Acquisition Corp.
Perella Weinberg Partners
|
|
Chairman
Affiliate
Chairman
Chief Executive Officer
Chief Executive Officer and President
Chairman
Chairman
Director
|
| |
|
|
|
|
| James
J. McEntee, III |
|
The Bancorp, Inc.
FinTech Acquisition Corp. VI
|
|
Chairman
President and Secretary
|
| |
|
|
|
|
| Douglas
Listman |
|
Cohen & Company Inc.
J.V.B. Financial Group, LLC
FTAC Emerald Acquisition Corp.
|
|
Chief Accounting Officer
Chief Financial Officer
Chief Financial Officer
|
| |
|
FinTech Acquisition Corp. VI
FTAC Athena Acquisition Corp.
|
|
Chief Financial Officer
Chief Financial Officer
|
| |
|
FTAC
Hera Acquisition Corp. |
|
Chief
Financial Officer |
| |
|
|
|
|
| Jan
Rock Zubrow |
|
FTAC
Hera Acquisition Corp. |
|
Director |
| |
|
|
|
|
| Brittain
Ezzes |
|
FTAC
Hera Acquisition Corp. |
|
Director |
| |
|
|
|
|
| Laura
S. Kohn |
|
FinTech
Acquisition Corp. VI |
|
Director |
| |
|
|
|
|
| Lesley
Goldwasser |
|
Greenledge
TipTree Inc.
FTAC Parnassus Acquisition Corp.
|
|
Managing Partner
Director
Director
|
| (1) |
Does
not include blank check companies, such as INSU IV, which have not
yet consummated an initial public offering. |
Mr. McEntee is a director of Bancorp, a financial holding company,
and its subsidiary bank, Bancorp Bank, which provide banking and
other financial services, including prepaid and debit cards,
private label banking, healthcare accounts and merchant card
processing. As such, he is required to present corporate
opportunities relating to the current business of Bancorp and
Bancorp Bank, as well as businesses that may be undertaken by a
financial holding company under federal banking law, prior to
presenting them to us.
Messrs. Cohen and Listman are also executives and/or directors of
Cohen & Company, a financial services company specializing in
credit-related fixed income investments, including fixed income
sales, trading and financing, and management of fixed income
assets. As such, Messrs. Cohen and Listman are obligated to present
corporate opportunities relating to such businesses to the
respective companies prior to presenting those opportunities to
us.
We do not believe that any of the foregoing pre-existing fiduciary
duties will materially affect our ability to consummate our initial
business combination because, although the foregoing entities are
involved in the financial services industry broadly defined, the
specific industry focuses of a majority of these entities differ
from our focus on financial technology businesses.
Messrs. Cohen and Listman are affiliated with Cohen & Company,
Mr. Cohen is the son of Ms. Cohen and Ms. Rock Zubrow is a
cousin of Mr. Cohen and Ms. Cohen. These relationships
may influence the roles taken by our officers and directors with
respect to us. In particular, one of our directors or officers may
be less likely to object to a course of action with respect to our
activities because it may jeopardize his or her relationships with
the others.
In addition, each of our sponsor, officers and directors may
participate in the formation of, or become an officer or director
of, any other blank check company prior to the completion of our
initial business combination. As a result, our sponsor, officers
and directors could have conflicts of interest in determining
whether to present business combination opportunities to us or to
any other blank check company with which they may become involved.
In particular, an affiliate of our sponsor is currently sponsoring
other blank check companies, including FinTech VI, which is seeking
to complete a business combination. Further, many of our directors
and officers serve in the same roles for FinTech VI. Mr. Cohen
also serves as the Chairman of the board of directors of INSU III,
INSU IV, FTAC Parnassus and FTAC Zeus and President and Chief
Executive Officer of FTAC Hera, each of which is a blank check
company seeking to complete a business combination. Ms. Cohen
and Mr. Listman also serve as the Chairman of the Board and
Chief Financial Officer, respectively, of FTAC Emerald, FTAC Athena
and FTAC Hera, each of which is a blank check company seeking to
complete a business combination. Any such companies, including
FinTech VI, INSU III, INSU IV, FTAC Emerald, FTAC Athena, FTAC
Hera, FTAC Parnassus and FTAC Zeus, may present additional
conflicts of interest in pursuing an acquisition target. However,
we do not believe that any potential conflicts would materially
affect our ability to complete our initial business
combination.
Director Independence
The NASDAQ rules require that a majority of the board of directors
of a company listed on NASDAQ must be composed of “independent
directors,” which is defined generally as a person other than an
officer or employee of the company or its subsidiaries or any other
individual having a relationship, which, in the opinion of the
company’s board of directors, would interfere with the director’s
exercise of independent judgment in carrying out the
responsibilities of a director. We have determined that Mses. Kohn,
Zubrow, Ezzes and Goldwasser are independent directors under the
NASDAQ rules and Rule 10A-3 of the Exchange Act.
Item 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The firm of WithumSmith+Brown, PC, or Withum, acted as our
independent registered public accounting firm during the years
ended December 31, 2020 and 2021. The following is a summary of
fees paid or to be paid to Withum for services rendered.
Audit Fees
Audit fees consist of fees billed for professional services
rendered for the audit of our year-end financial statements and
services that are normally provided by Withum in connection with
regulatory filings. The aggregate fees billed by Withum for
professional services rendered for the audit of our annual
financial statements, our initial public offering and other
required filings with the SEC for the years ended December 31, 2020
and 2021 totaled $89,610 and $121,685, respectively. The above
amounts include interim procedures and audit fees, as well as
attendance at audit committee meetings.
Audit-Related Fees
Audit-related services consist of fees billed for assurance and
related services that are reasonably related to performance of the
audit or review of our financial statements and are not reported
under “Audit Fees.” These services include attest services that are
not required by statute or regulation and consultations concerning
financial accounting and reporting standards. We did not pay Withum
for audit-related services during the years ended December 31, 2020
and 2021.
Tax Fees
The aggregate fees billed by Withum for professional tax services
for the years ended December 31, 2020 and 2021 were $6,695 and
$7,500.
All Other Fees
We did not pay Withum for products or services provided for the
years ended December 31, 2020 and 2021 other than those set forth
above.
Audit Committee Pre-Approval Policies and Procedures
Our audit committee was formed upon the consummation of the initial
public offering. As a result, the audit committee did not
pre-approve all of the foregoing services, although any services
rendered prior to the formation of our audit committee were
approved by our board of directors. Since the formation of our
audit committee, and on a going-forward basis, the audit committee
has and will pre-approve all auditing services and permitted
non-audit services to be performed for us by our auditors,
including the fees and terms thereof (subject to the de minimis
exceptions for non-audit services described in the Exchange Act
which are approved by the audit committee prior to the completion
of the audit).
PART IV
Item 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
| (a) |
The
following documents are filed as part of this Annual
Report: |
| |
(1) |
Financial
Statements: |
| |
(2) |
Financial
Statements Schedule |
None.
The following exhibits are filed as part of, or incorporated by
reference into, this Annual Report on Form 10-K. The SEC maintains
an Internet site at www.sec.gov that contains reports, proxy and
information statements, and other information regarding issuers
that file electronically with the SEC, including the Company.
Copies of the exhibits which are incorporated herein by reference
can be obtained on the SEC website at www.sec.gov.
|
Exhibit No. |
|
Description |
| 1.1 |
|
Underwriting Agreement, dated December 3, 2020, between the Company
and Cantor Fitzgerald & Co. (1) |
| 2.1 |
|
Agreement and Plan of Merger, dated March 16, 2021, by and among
the Company, eToro Group Ltd and Buttonwood Merger Sub
Corp.(3) |
| 2.2 |
|
Amendment No. 1 to Agreement and Plan of Merger, dated as of
December 30, 2021, by and among eToro Group Ltd., Buttonwood Merger
Sub Corp., and FinTech Acquisition Corp. V(4) |
| 3.1 |
|
Amended and Restated Certificate of Incorporation, filed with the
Secretary of State of the State of Delaware on December 4,
2020(1) |
| 3.2 |
|
Amended and Restated Bylaws(2) |
| 4.1 |
|
Specimen Unit Certificate(2) |
| 4.2 |
|
Specimen Common Stock Certificate(2) |
| 4.3 |
|
Specimen Warrant Certificate(2) |
| 4.4 |
|
Warrant Agreement, dated December 3, 2020, between Continental
Stock Transfer & Trust Company and the
Company(1) |
| 4.5 |
|
FinTech Acquisition Corp. V Description of
Securities(5) |
| 10.1 |
|
Letter Agreement, dated December 3, 2020, by and among the Company
and certain security holders, officers and directors of the
Company(1) |
| 10.2 |
|
Administrative Services Agreement, dated December 3, 2020, between
the Company and FinTech Masala, LLC(1) |
| 10.3 |
|
Unit Subscription Agreement, dated December 3, 2020 between the
Company and FinTech Investor Holdings V, LLC(1) |
| 10.4 |
|
Investment Management Trust Agreement, dated December 3, 2020,
between Continental Stock Transfer & Trust Company and the
Company(1) |
| 10.5 |
|
Registration Rights Agreement, dated December 3, 2020, between the
Company and certain security holders of the
Company(1) |
| 10.6 |
|
Form of Indemnity Agreement(2) |
| 10.7 |
|
Promissory Note for expenses prior to initial public offering from
FinTech Investor Holdings V, LLC to Registrant(2) |
| 10.8 |
|
Promissory Note dated September 15, 2021 made by FinTech
Acquisition Corp. V to the order of FinTech Masala,
LLC (6) |
| 10.9 |
|
Amendment to Promissory Note dated October 26, 2021 made by and
between FinTech Acquisition Corp. V and FinTech Masala,
LLC(7) |
| 10.10 |
|
Second Amendment to Promissory Note dated January 6, 2022 made by
and between FinTech Acquisition Corp. V and FinTech Masala,
LLC(8) |
| 14.1 |
|
Code of Business Conduct and Ethics(2) |
| 21.1** |
|
Subsidiaries
of the Registrant |
| 31.1* |
|
Certification of the Chief Executive Officer required by Rule
13a-14(a) or Rule 15d-14(a) |
| 31.2* |
|
Certification of the Chief Financial Officer required by Rule
13a-14(a) or Rule 15d-14(a) |
| 32.1* |
|
Certification of the Chief Executive Officer required by Rule
13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350 |
| 32.2* |
|
Certification of the Chief Financial Officer required by Rule
13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350 |
| 101.INS* |
|
Inline
XBRL Instance Document |
| 101.SCH* |
|
Inline
XBRL Taxonomy Extension Schema Document. |
| 101.CAL* |
|
Inline
XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF* |
|
Inline
XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB* |
|
Inline
XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE* |
|
Inline
XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104* |
|
Cover
Page Interactive Data File (formatted as Inline XBRL and contained
in Exhibit 101). |
| (1) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on
December 9, 2020 |
| (2) |
Previously
filed as an exhibit to our Registration Statement on Form S-1, as
amended (File No. 333-249646) |
| (3) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on
March 16, 2021 |
| (4) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on
December 30, 2021 |
| (5) |
Previously
filed as an exhibit to our Annual Report on Form 10-K filed on
March 30, 2021 |
| (6) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on
September 15, 2021 |
| (7) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on
October 27, 2021 |
| (8) |
Previously
filed as an exhibit to our Current Report on Form 8-K filed on
January 6, 2022 |
Item 16.
FORM 10-K SUMMARY.
Not applicable.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
| |
FINTECH
ACQUISITION CORP. V |
| |
|
| Dated:
May 11, 2022 |
/s/
Daniel G. Cohen |
| |
Daniel G. Cohen
Chief Executive Officer
(Principal Executive Officer)
|
Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
|
Name |
|
Position |
|
Date |
| |
|
|
|
|
| /s/ Daniel G. Cohen |
|
Chief Executive
Officer |
|
May
11, 2022 |
| Daniel G. Cohen |
|
(Principal Executive
Officer) |
|
|
| |
|
|
|
|
| /s/ Douglas Listman |
|
Chief Financial
Officer |
|
May
11, 2022 |
| Douglas Listman |
|
(Principal Financial Officer and
Principal Accounting Officer) |
|
|
| |
|
|
|
|
| /s/ James J. McEntee, III |
|
President |
|
May
11, 2022 |
| James J. McEntee, III |
|
|
|
|
| |
|
|
|
|
| /s/ Betsy Z. Cohen |
|
Chairman of the Board |
|
May
11, 2022 |
| Betsy Z. Cohen |
|
|
|
|
| |
|
|
|
|
| /s/ Laura S. Kohn |
|
Director |
|
May
11, 2022 |
| Laura S. Kohn |
|
|
|
|
| |
|
|
|
|
| /s/ Jan Rock Zubrow |
|
Director |
|
May
11, 2022 |
| Jan Rock Zubrow |
|
|
|
|
| |
|
|
|
|
| /s/ Brittain Ezzes |
|
Director |
|
May
11, 2022 |
| Brittain Ezzes |
|
|
|
|
| |
|
|
|
|
| /s/ Lesley Goldwasser |
|
Director |
|
May
11, 2022 |
| Lesley Goldwasser |
|
|
|
|
FINTECH ACQUISITION CORP. V
TABLE OF CONTENTS
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
FinTech Acquisition Corp. V
Opinion on the Financial Statements
We have audited the accompanying balance sheets of FinTech
Acquisition Corp. V (the “Company”) as of December 31, 2021 and
2020, the related statements of operations, changes in
stockholders’ deficit and cash flows for the years ended December
31, 2021 and 2020 and the related notes (collectively referred to
as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2021 and 2020, and the
results of its operations and its cash flows for the years ended
December 31, 2021 and 2020, in conformity with accounting
principles generally accepted in the United States of America.
Restatement of Financial Statements
As discussed in Note 2 to the financial statements, the 2021
financial statements have been restated to correct certain
misstatements.
Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 1 to the financial statements, if the Company is unable to
raise additional funds to alleviate liquidity needs and complete a
business combination by December 8, 2022 then the Company
will cease all operations except for the purpose of liquidating.
The liquidity condition and date for mandatory liquidation and
subsequent dissolution raise substantial doubt about the Company’s
ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the
Company's financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting
Oversight Board (United States) (“PCAOB”) and are required to be
independent with respect to the Company in accordance with the U.S.
federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the
PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the financial
statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged
to perform, an audit of its internal control over financial
reporting. As part of our audits we are required to obtain an
understanding of internal control over financial reporting but not
for the purpose of expressing an opinion on the effectiveness of
the Company's internal control over financial reporting.
Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis,
evidence regarding the amounts and disclosures in the financial
statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as
well as evaluating the overall presentation of the financial
statements. We believe that our audits provide a reasonable basis
for our opinion.
/s/ WithumSmith+Brown, PC
We have served as the Company's auditor since 2020.
New York, New York
May 11, 2022
PCAOB ID Number 100
FINTECH ACQUISITION CORP. V
BALANCE SHEETS
|
|
|
December 31, |
|
|
December 31, |
|
|
|
|
2021 |
|
|
2020 |
|
|
|
|
(Restated) |
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
| Current
assets |
|
|
|
|
|
|
| Cash |
|
$ |
36,042 |
|
|
$ |
1,054,211 |
|
|
Prepaid expenses |
|
|
239,706 |
|
|
|
503,683 |
|
|
Total Current Assets |
|
|
275,748 |
|
|
|
1,557,894 |
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account |
|
|
250,008,357 |
|
|
|
250,001,576 |
|
|
TOTAL ASSETS |
|
$ |
250,284,105 |
|
|
$ |
251,559,470 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
|
|
|
|
Accrued expenses |
|
$ |
2,452,673 |
|
|
$ |
61,669 |
|
|
Promissory note – related party |
|
|
300,000 |
|
|
|
—
|
|
|
Total Current Liabilities |
|
|
2,752,673 |
|
|
|
61,669 |
|
|
|
|
|
|
|
|
|
|
|
|
Warrant Liabilities |
|
|
12,791,867 |
|
|
|
17,304,801 |
|
|
Deferred underwriting fee payable |
|
|
10,640,000 |
|
|
|
10,640,000 |
|
|
TOTAL LIABILITIES |
|
|
26,184,540 |
|
|
|
28,006,470 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and Contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A common stock subject to possible redemption, 25,000,000
shares as of December 31, 2021 and 2020, respectively (at
$10.00 per share) |
|
|
250,000,000 |
|
|
|
250,000,000 |
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit |
|
|
|
|
|
|
|
|
|
Preferred stock, $0.0001 par value; 1,000,000 shares authorized,
none
issued or outstanding |
|
|
—
|
|
|
|
—
|
|
|
Class A common stock, $0.0001 par value; 100,000,000 shares
authorized; 640,000 issued and outstanding (excluding 25,000,000
shares subject to possible redemption) as of December 31, 2021
and 2020, respectively |
|
|
64 |
|
|
|
64 |
|
|
Class B common stock, $0.0001 par value; 10,000,000 shares
authorized; 8,546,667 shares issued and outstanding at
December 31, 2021 and 2020, respectively |
|
|
855 |
|
|
|
855 |
|
|
Additional paid-in capital |
|
|
—
|
|
|
|
—
|
|
|
Accumulated deficit |
|
|
(25,901,354 |
) |
|
|
(26,447,919 |
) |
|
Total Stockholders’ Deficit |
|
|
(25,900,435 |
) |
|
|
(26,447,000 |
) |
|
Total Liabilities and Stockholders’ Deficit |
|
$ |
250,284,105 |
|
|
$ |
251,559,470 |
|
The accompanying notes are an integral part of the financial
statements.
FINTECH ACQUISITION CORP. V
STATEMENTS OF OPERATIONS
| |
|
Year
Ended
December 31, |
|
|
Year
Ended
December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| |
|
(Restated) |
|
|
|
|
|
General and administrative expenses |
|
$ |
3,991,372 |
|
|
$ |
105,760 |
|
|
Loss from operations |
|
|
(3,991,372 |
) |
|
|
(105,760 |
) |
| |
|
|
|
|
|
|
|
|
| Other income (expense): |
|
|
|
|
|
|
|
|
| Change in fair
value of warrant liabilities |
|
|
4,512,934 |
|
|
|
(1,277,733 |
) |
| Transaction
Costs |
|
|
—
|
|
|
|
(422,617 |
) |
|
Interest earned on marketable securities held in Trust Account |
|
|
25,003 |
|
|
|
1,576 |
|
|
Other income (expense), net |
|
|
4,537,937 |
|
|
|
(1,698,774 |
) |
| |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
546,565 |
|
|
$ |
(1,804,534 |
) |
| |
|
|
|
|
|
|
|
|
| Weighted average shares outstanding
of Class A common stock |
|
|
25,640,000 |
|
|
|
1,611,257 |
|
| Basic
and diluted net income (loss) per share, Class A |
|
$ |
0.02 |
|
|
$ |
(0.20 |
) |
| |
|
|
|
|
|
|
|
|
| Weighted average shares outstanding
of Class B common stock |
|
|
8,546,667 |
|
|
|
7,547,031 |
|
| Basic
and diluted net income (loss) per share, Class B |
|
$ |
0.02 |
|
|
$ |
(0.20 |
) |
The accompanying notes are an integral part of the financial
statements.
FINTECH ACQUISITION CORP. V
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(RESTATED)
| |
|
Class A
Common Stock |
|
|
Class B
Common Stock |
|
|
Stock Subscription |
|
|
Additional
Paid-in |
|
|
Accumulated |
|
|
Total
Stockholders’ |
|
| |
|
Shares |
|
|
Amount |
|
|
Shares |
|
|
Amount |
|
|
Receivable |
|
|
Capital |
|
|
Deficit |
|
|
Deficit |
|
|
Balance – December 31, 2019 |
|
|
— |
|
|
$ |
—
|
|
|
|
8,570,000 |
|
|
$ |
857 |
|
|
$ |
(25,000 |
) |
|
$ |
24,143 |
|
|
$ |
(1,425 |
) |
|
$ |
(1,425 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collection of stock subscription receivable from stockholder |
|
|
— |
|
|
|
—
|
|
|
|
— |
|
|
|
—
|
|
|
|
25,000 |
|
|
|
—
|
|
|
|
—
|
|
|
|
25,000 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Sale
of 640,000 Private Placement Warrants |
|
|
640,000 |
|
|
|
64 |
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,956,203 |
|
|
|
—
|
|
|
|
5,956,267 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Forfeiture of
founder shares |
|
|
—
|
|
|
|
—
|
|
|
|
(23,333 |
) |
|
|
(2 |
) |
|
|
—
|
|
|
|
2 |
|
|
|
—
|
|
|
|
—
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accretion for Class A common stock to redemption amount |
|
|
— |
|
|
|
—
|
|
|
|
— |
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,980,348 |
) |
|
|
(26,641,960 |
) |
|
|
(30,622,308 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
|
— |
|
|
|
—
|
|
|
|
— |
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1,804,534 |
) |
|
|
(1,804,534 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – December 31, 2020 |
|
|
640,000 |
|
|
|
64 |
|
|
|
8,546,667 |
|
|
|
855 |
|
|
|
—
|
|
|
|
—
|
|
|
|
(26,447,919 |
) |
|
|
(26,447,000 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
|
— |
|
|
|
—
|
|
|
|
— |
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
546,565 |
|
|
|
546,565 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance – December 31, 2021 |
|
|
640,000 |
|
|
$ |
64 |
|
|
|
8,546,667 |
|
|
$ |
855 |
|
|
$ |
—
|
|
|
$ |
—
|
|
|
$ |
(25,901,354 |
) |
|
$ |
(25,900,435 |
) |
The accompanying notes are an integral part of the financial
statements.
FINTECH ACQUISITION CORP. V
STATEMENTS OF CASH FLOWS
| |
|
Year
Ended
December 31, |
|
|
Year
Ended
December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| |
|
(Restated) |
|
|
|
|
| Cash Flows from Operating
Activities: |
|
|
|
|
|
|
| Net income (loss) |
|
$ |
546,565 |
|
|
$ |
(1,804,534 |
) |
| Adjustments to reconcile net income
(loss) to net cash used in operating activities: |
|
|
|
|
|
|
|
|
| Operating costs paid through
promissory note |
|
|
—
|
|
|
|
425 |
|
| Interest earned on marketable
securities held in trust account |
|
|
(25,003 |
) |
|
|
(1,576 |
) |
| Change in fair value of warrant
liabilities |
|
|
(4,512,934 |
) |
|
|
1,277,733 |
|
| Transaction costs allocable to warrant
liabilities |
|
|
—
|
|
|
|
422,617 |
|
| Changes in
operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Prepaid
expenses |
|
|
263,977 |
|
|
|
(503,683 |
) |
|
Accounts payable and accrued expenses |
|
|
2,391,004 |
|
|
|
60,244 |
|
|
Net cash used in operating activities |
|
|
(1,336,391 |
) |
|
|
(548,774 |
) |
| |
|
|
|
|
|
|
|
|
| Cash Flows from
Investing Activities: |
|
|
|
|
|
|
|
|
| Investment of cash into Trust
Account |
|
|
—
|
|
|
|
(250,000,000 |
) |
| Cash withdrawn
from Trust Account to pay franchise taxes |
|
|
18,222 |
|
|
|
—
|
|
|
Net cash provided by (used in) investing activities |
|
|
18,222 |
|
|
|
(250,000,000 |
) |
| |
|
|
|
|
|
|
|
|
| Cash Flows from
Financing Activities: |
|
|
|
|
|
|
|
|
| Proceeds from the collection of the
stock subscription receivable |
|
|
|
|
|
|
|
|
| Proceeds from sale of Units, net of
underwriting discounts paid |
|
|
—
|
|
|
|
245,640,000 |
|
| Proceeds from sale of Private
Placement Units |
|
|
—
|
|
|
|
6,400,000 |
|
| Advances from related party |
|
|
—
|
|
|
|
—
|
|
| Repayment of advances from related
party |
|
|
—
|
|
|
|
—
|
|
| Proceeds from promissory note –
related party |
|
|
300,000 |
|
|
|
—
|
|
| Repayment of promissory note – related
party |
|
|
—
|
|
|
|
(45,365 |
) |
| Payment of
offering costs |
|
|
—
|
|
|
|
(391,650 |
) |
|
Net cash provided by financing activities |
|
|
300,000 |
|
|
|
251,602,985 |
|
| |
|
|
|
|
|
|
|
|
| Net Change in
Cash |
|
|
(1,018,169 |
) |
|
|
1,054,211 |
|
| Cash – Beginning of period |
|
|
1,054,211 |
|
|
|
—
|
|
| Cash – End of
period |
|
$ |
36,042 |
|
|
$ |
1,054,211 |
|
| |
|
|
|
|
|
|
|
|
| Non-cash investing
and financing activities: |
|
|
|
|
|
|
|
|
| Offering costs
paid through promissory note |
|
$ |
—
|
|
|
$ |
44,940 |
|
| Offering costs
paid by Sponsor to satisfy the stock subscription receivable |
|
$ |
—
|
|
|
$ |
25,000 |
|
| Deferred
underwriting fee payable |
|
$ |
—
|
|
|
$ |
10,640,000 |
|
The accompanying notes are an integral part of the financial
statements.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
FinTech Acquisition Corp. V (the “Company”) is a blank check
company incorporated in Delaware on April 22, 2019. The Company was
formed for the purpose of acquiring, through a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization
or other similar business transaction, one or more operating
businesses or assets that the Company has not yet identified (a
“Business Combination”). The Company has neither engaged in any
operations nor generated significant revenue to date.
As of December 31, 2021, the Company had not commenced operations.
All activity through December 31, 2021 relates to the Company’s
formation, the Initial Public Offering (as defined below), and,
subsequent to the Initial Public Offering, identifying a target
company for a Business Combination.
The registration statement for the Company’s Initial Public
Offering was declared effective on December 3, 2020. On December 8,
2020, the Company consummated the Initial Public Offering of
25,000,000 units (the “Units” and, with respect to the Class A
common stock included in the Units sold, the “Public Shares”),
which includes the partial exercise by the underwriters of their
over-allotment option in the amount of 3,200,000 Units, at $10.00
per Unit, generating gross proceeds of $250,000,000 which is
described in Note 4.
Simultaneously with the closing of the Initial Public Offering, the
Company consummated the sale of 640,000 units (the “Private
Placement Units”) at a price of $10.00 per Private Placement Unit
in a private placement to FinTech Investor Holdings V, LLC, that
closed simultaneously with the Initial Public Offering, generating
gross proceeds of $6,400,000, which is described in Note 5. The
manager of FinTech Investor Holdings V, LLC is Cohen Sponsor
Interests V, LLC.
Transaction costs amounted to $15,461,590, consisting of $4,360,000
in cash underwriting fees, $10,640,000 of deferred underwriting
fees and $461,590 of other offering costs.
Following the closing of the Initial Public Offering on December 8,
2020, an amount of $250,000,000 ($10.00 per Unit) from the net
proceeds of the sale of the Units in the Initial Public Offering
and the sale of the Private Placement Units was placed in a trust
account (the “Trust Account”) and invested in U.S. government
securities, within the meaning of Section 2(a)(16) of the
Investment Company Act of 1940, as amended, or the Investment
Company Act, with a maturity of 185 days or less, or in money
market funds meeting certain conditions under Rule 2a-7 of the
Investment Company Act, which invest only in direct U.S. government
treasury obligations, until the earlier of: (i) the
consummation of a Business Combination; (ii) the redemption of
any Public Shares in connection with a stockholder vote to amend
the Company’s Amended and Restated Certificate of Incorporation
(i) to modify the substance or timing of the Company’s
obligation to redeem 100% of its Public Shares if it does not
complete an initial Business Combination by December 8, 2022 (the
“Combination Period”) or (ii) with respect to any other
provisions relating to stockholders’ rights or pre-initial Business
Combination activity; or (iii) the distribution of the Trust
Account, as described below, except that interest earned on the
Trust Account can be released to pay the Company’s tax obligations,
if the Company is unable to complete an initial Business
Combination within the Combination Period or upon any earlier
liquidation of the Company.
The Company’s management has broad discretion with respect to the
specific application of the net proceeds of the Initial Public
Offering and Private Placement Units, although substantially all of
the net proceeds are intended to be applied generally toward
consummating a Business Combination. Nasdaq Capital Market
(“NASDAQ”) rules provide that the Company’s initial Business
Combination must be with one or more target businesses that
together have a fair market value equal to at least 80% of the
balance in the Trust Account (less any deferred underwriting
commissions and taxes payable on interest earned) at the time of
the signing a definitive agreement in connection with a Business
Combination. However, the Company will only complete a Business
Combination if the post-Business Combination company owns or
acquires a majority of the outstanding voting securities of the
target or otherwise acquires a controlling interest in the target
sufficient for it not to be required to register as an investment
company under the Investment Company Act. There is no assurance
that the Company will be able to successfully effect a Business
Combination.
The Company will provide its stockholders with the opportunity to
redeem all or a portion of the Public Shares upon the completion of
a Business Combination either (i) in connection with a
stockholder meeting called to approve the Business Combination or
(ii) by means of a tender offer. The decision as to whether
the Company will seek stockholder approval of a Business
Combination or conduct a tender offer will be made by the Company,
solely in its discretion. The stockholders will be entitled to
redeem their shares for a pro rata portion of the amount then on
deposit in the Trust Account (initially approximately $10.00 per
share, plus any pro rata interest earned on the funds held in the
Trust Account and not previously released to the Company to pay its
tax obligations). The per-share amount to be distributed to
stockholders who redeem their shares will not be reduced by the
deferred underwriting commissions the Company will pay to the
representative (as discussed in Note 7). There will be no
redemption rights upon the completion of a Business Combination
with respect to the Company’s warrants.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
If a stockholder vote is not required by law and the Company does
not decide to hold a stockholder vote for business or other legal
reasons, the Company will, pursuant to its Amended and Restated
Certificate of Incorporation, conduct the redemptions pursuant to
the tender offer rules of the Securities and Exchange Commission
(“SEC”), and file tender offer documents with the SEC prior to
completing a Business Combination. If, however, stockholder
approval of the transaction is required by law, or the Company
decides to obtain stockholder approval for business or other legal
reasons, the Company will offer to redeem shares in conjunction
with a proxy solicitation pursuant to the proxy rules and not
pursuant to the tender offer rules. If the Company seeks
stockholder approval in connection with a Business Combination,
FinTech Investor Holdings V, LLC and FinTech Masala Advisors V, LLC
(collectively, the “Sponsor”) and the Company’s officers and
directors (together with the Sponsor, the “Insiders”) have agreed
to vote their Founder Shares (as defined in Note 6), the shares of
Class A common stock included in the Private Placement Units
(the “Private Placement Shares”) and any Public Shares held by them
in favor of approving a Business Combination.
The Company will have until the expiration of the Combination
Period to consummate its initial Business Combination. If the
Company is unable to consummate a Business Combination within the
Combination Period, the Company will (i) cease all operations
except for the purposes of winding up of its affairs;
(ii) distribute the aggregate amount then on deposit in the
Trust Account, including any amounts representing interest earned
on the Trust Account not previously released to the Company to pay
its franchise and income taxes and up to $100,000 to pay
dissolution expenses, pro rata to the public stockholders by way of
redemption of the Public Shares (which redemption would completely
extinguish such holders’ rights as stockholders, including the
right to receive further liquidation distributions, if any); and
(iii) as promptly as possible following such redemption,
dissolve and liquidate the balance of the Company’s net assets to
its remaining stockholders, as part of its plan of dissolution and
liquidation.
The Company will also provide its stockholders with the opportunity
to redeem all or a portion of their Public Shares in connection
with any stockholder vote to approve an amendment to the Company’s
amended and restated certificate of incorporation (i) that
would modify the substance or timing of the Company’s obligation to
redeem 100% of Public Shares if it does not complete an initial
Business Combination within the Combination Period or
(ii) with respect to any other provisions relating to
stockholders’ rights or pre-initial Business Combination activity.
The stockholders will be entitled to redeem their shares for a pro
rata portion of the amount then on deposit in the Trust Account
(initially approximately $10.00 per share, plus any pro rata
interest earned on the funds held in the Trust Account, net of
taxes payable). The per-share amount to be distributed to
stockholders who redeem their shares will not be reduced by the
deferred underwriting commissions the Company will pay to the
representative (as discussed in Note 7). There will be no
redemption rights with respect to the Company’s warrants in
connection with such a stockholder vote to approve such an
amendment to the Company’s amended and restated certificate of
incorporation. Notwithstanding the foregoing, the Company may not
redeem shares in an amount that would cause its net tangible assets
to be less than $5,000,001. The Insiders have agreed to vote any
Founder Shares, Private Placement Shares and any Public Shares held
by them in favor of any such amendment.
The Insiders have agreed to waive their redemption rights with
respect to any Founder Shares and Private Placement Shares, as
applicable, (i) in connection with the consummation of a
Business Combination, (ii) in connection with a stockholder
vote to amend the Company’s Amended and Restated Certificate of
Incorporation (a) to modify the substance or timing of the
Company’s obligation to redeem 100% of its Public Shares if it does
not complete its initial Business Combination within the
Combination Period or (b) with respect to any other provisions
relating to stockholders’ rights or pre-initial Business
Combination activity, and (iii) if the Company fails to
consummate a Business Combination within the Combination Period.
The Insiders have also agreed to waive their redemption rights with
respect to any Public Shares held by them in connection with the
consummation of a Business Combination and in connection with a
stockholder vote to amend the Company’s Amended and Restated
Certificate of Incorporation (i) to modify the substance or
timing of the Company’s obligation to redeem 100% of its Public
Shares if it does not complete its initial Business Combination
within the Combination Period or (ii) with respect to any
other provisions relating to stockholders’ rights or pre-initial
Business Combination activity. However, the Insiders will be
entitled to redemption rights with respect to Public Shares if the
Company fails to consummate a Business Combination or liquidates
within the Combination Period. The representative of the
underwriters has agreed to waive its rights to deferred
underwriting commissions held in the Trust Account in the event the
Company does not consummate a Business Combination within the
Combination Period and, in such event, such amounts will be
included with the funds held in the Trust Account that will be
available to fund the redemption of the Public Shares. In the event
of such distribution, it is possible that the per share value of
the residual assets remaining available for distribution (including
Trust Account assets) will be less than the initial public offering
price per Unit in the Initial Public Offering. Placing funds in the
Trust Account may not protect those funds from third party claims
against the Company. Although the Company will seek to have all
vendors, service providers, prospective target businesses or other
entities it engages (except for the Company’s independent
registered public accounting firm), execute agreements with the
Company waiving any claim of any kind in or to any monies held in
the Trust Account, there is no guarantee that such persons will
execute such agreements. FinTech Investor Holdings V, LLC has
agreed that it will be liable under certain circumstances to ensure
that the proceeds in the Trust Account are not reduced by the
claims of target businesses or vendors or other entities that are
owed money by the Company for service rendered, contracted for or
products sold to the Company. However, it may not be able to
satisfy those obligations should they arise.
Notwithstanding the foregoing redemption rights, if the Company
seeks stockholder approval of its Business Combination and it does
not conduct redemptions in connection with its Business Combination
pursuant to the tender offer rules, the Amended and Restated
Certificate of Incorporation provides that a public stockholder,
together with any affiliate of such stockholder or any other person
with whom such stockholder is acting in concert or as a “group” (as
defined under Section 13 of the Exchange Act), will be
restricted from redeeming its shares with respect to an aggregate
of 15% or more of the shares sold in the Initial Public Offering.
However, there is no restriction on the Company’s stockholders’
ability to vote all of their shares for or against a Business
Combination.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
Going Concern and Liquidity
As of December 31, 2021, the Company had $36,042 in its operating
bank accounts, $250,008,357 in marketable securities held in the
Trust Account to be used for a Business Combination or to
repurchase or redeem its common stock in connection therewith and
working capital deficit of $2,476,925. As of December 31, 2021,
$26,579 represented interest income on the Trust Account, of which
$18,222 had been withdrawn to pay the Company’s tax
obligations.
If the Company is unable to raise additional capital, it may be
required to take additional measures to conserve liquidity, which
could include, but not necessarily be limited to, suspending the
pursuit of a Business Combination. The Company cannot provide any
assurance that new financing will be available to it on
commercially acceptable terms, if at all.
In connection with the Company’s assessment of going concern
considerations in accordance with Financial Accounting Standard
Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures
of Uncertainties about an Entity’s Ability to Continue as a Going
Concern,” the Company has until December 8, 2022 to consummate a
Business Combination. It is uncertain that the Company will be able
to consummate a Business Combination by this time. If a Business
Combination is not consummated by this date, there will be a
mandatory liquidation and subsequent dissolution of the Company.
Management has determined that the liquidity condition and
mandatory liquidation, should a Business Combination not occur, and
potential subsequent dissolution raises substantial doubt about the
Company’s ability to continue as a going concern. No adjustments
have been made to the carrying amounts of assets or liabilities
should the Company be required to liquidate after December 8,
2022.
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL
STATEMENTS
After further analysis of the Company’s warrant valuation report,
an error was identified in which management concluded it should
restate its previously issued financial statements by amending its
Annual Report on Form 10-K filed with the SEC on February 18, 2022,
to correct the accounting for complex financial instruments,
specifically warrant liabilities.
The impact of the restatement on the Company’s financial statements
is reflected in the following table.
| |
|
As Reported |
|
|
Adjustments |
|
|
As Restated |
|
| |
|
|
|
|
|
|
|
|
|
| Balance sheet as of December 31,
2021 |
|
|
|
|
|
|
|
|
|
| Warrant liabilities |
|
$ |
21,480,268 |
|
|
$ |
(8,688,401 |
) |
|
$ |
12,791,867 |
|
| Total Liabilities |
|
|
34,872,941 |
|
|
|
(8,688,401 |
) |
|
|
26,184,540 |
|
| Accumulated deficit |
|
|
(34,589,755 |
) |
|
|
8,688,401 |
|
|
|
(25,901,354 |
) |
| Total Stockholders’ Deficit |
|
|
(34,588,836 |
) |
|
|
8,688,401 |
|
|
|
(25,900,435 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Statement of Operations for the Year
Ended December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
| Change in fair value of warrant
liabilities |
|
$ |
(4,175,467 |
) |
|
$ |
8,688,401 |
|
|
$ |
4,512,934 |
|
| Other income (expense) |
|
|
(4,150,464 |
) |
|
|
8,688,401 |
|
|
|
4,537,937 |
|
| Net income (loss) |
|
|
(8,141,836 |
) |
|
|
8,688,401 |
|
|
|
546,565 |
|
| Basic and diluted net income per
share, Class A common stock |
|
|
(0.24 |
) |
|
|
0.26 |
|
|
|
0.02 |
|
| Basic and diluted net loss per share,
Class B common stock |
|
|
(0.24 |
) |
|
|
0.26 |
|
|
|
0.02 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Statement of Cash
Flows for the Year Ended December 31, 2021 |
|
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(8,141,836 |
) |
|
$ |
8,688,401 |
|
|
$ |
546,565 |
|
| Change in fair value of warrant
liabilities |
|
|
(4,175,467 |
) |
|
|
8,688,401 |
|
|
|
4,512,934 |
|
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America (“U.S. GAAP”) and pursuant to the rules
and regulations of the SEC.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
Emerging Growth Company
The Company is an “emerging growth company,” as defined in
Section 2(a) of the Securities Act, as modified by the
Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and
it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are
not emerging growth companies including, but not limited to, not
being required to comply with the independent registered public
accounting firm attestation requirements of Section 404 of the
Sarbanes-Oxley Act of 2002, reduced disclosure obligations
regarding executive compensation in its periodic reports and proxy
statements, and exemptions from the requirements of holding a
nonbinding advisory vote on executive compensation and stockholder
approval of any golden parachute payments not previously
approved.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or
revised financial accounting standards until private companies
(that is, those that have not had a Securities Act registration
statement declared effective or do not have a class of securities
registered under the Exchange Act) are required to comply with the
new or revised financial accounting standards. The JOBS Act
provides that a company can elect to opt out of the extended
transition period and comply with the requirements that apply to
non-emerging growth companies but any such election to opt out is
irrevocable. The Company has elected not to opt out of such
extended transition period which means that when a standard is
issued or revised and it has different application dates for public
or private companies, the Company, as an emerging growth company,
can adopt the new or revised standard at the time private companies
adopt the new or revised standard. This may make comparison of the
Company’s financial statements with another public company which is
neither an emerging growth company nor an emerging growth company
which has opted out of using the extended transition period
difficult or impossible because of the potential differences in
accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting periods.
Making estimates requires management to exercise significant
judgment. It is at least reasonably possible that the estimate of
the effect of a condition, situation or set of circumstances that
existed at the date of the financial statements, which management
considered in formulating its estimate, could change in the near
term due to one or more future events. Accordingly, the actual
results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original
maturity of three months or less when purchased to be cash
equivalents. The Company did not have any cash equivalents as of
December 31, 2021 and 2020.
Marketable Securities Held in Trust Account
The Company’s portfolio of investments held in the Trust Account is
comprised of U.S. government securities, within the meaning set
forth in Section 2(a)(16) of the Investment Company Act, with a
maturity of 185 days or less, or investments in money market funds
that invest in U.S. government securities, or a combination
thereof. At December 31, 2021 and 2020, the assets held in the
Trust Account were held in money market funds which are invested
primarily in U.S. Treasury Securities.
Warrant Liabilities
The Company does not use derivative instruments to hedge exposures
to cash flow, market, or foreign currency risks. The Company
evaluates all of its financial instruments, including issued stock
purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant
to Accounting Standards Codification (“ASC”) Topic 480,
“Distinguishing Liabilities from Equity” (“ASC 480”) and FASB ASC
Topic 815, “Derivatives and Hedging” (“ASC 815”). The Company
accounts for the Public Warrants and Private Placement Warrants
(together with the Public Warrants, the “Warrants”) in accordance
with the guidance contained in ASC 815-40 under which the Warrants
do not meet the criteria for equity treatment and must be recorded
as liabilities. Accordingly, the Company classifies the Warrants as
liabilities at their fair value and adjusts them to fair value at
each reporting period. This liability is subject to re-measurement
at each balance sheet date until exercised, and any change in fair
value is recognized in the statements of operations. The Warrants
for periods where no observable trading price was available are
valued using a Modified Black-Scholes Option Pricing model. For
periods subsequent to the detachment of the Public Warrants from
the Units, the Public Warrant quoted market price was used as the
fair value as of each relevant date.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
Class A Common Stock Subject to Possible
Redemption
The Company accounts for its Class A common stock subject to
possible redemption in accordance with the guidance in Accounting
Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.” Class A common stock subject to mandatory
redemption is classified as a liability instrument and is 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 the Company’s
control) is classified as temporary equity. At all other times,
common stock is classified as stockholders’ equity. The Company’s
Class A common stock features certain redemption rights that are
considered to be outside of the Company’s control and subject to
occurrence of uncertain future events. Accordingly, at
December 31, 2021 and 2020, Class A common stock subject to
possible redemption is presented as temporary equity, outside of
the stockholders’ deficit section of the Company’s balance
sheets.
The Company recognizes changes in redemption value immediately as
they occur and adjusts the carrying value of redeemable common
stock to equal the redemption value at the end of each reporting
period.
At December 31, 2021 and 2020, the Class A common stock reflected
in the balance sheets are reconciled in the following table:
| Gross proceeds |
|
$ |
250,000,000 |
|
| Less: |
|
|
|
|
| Proceeds
allocated to Public Warrants |
|
$ |
(15,583,335 |
) |
| Class A common
stock issuance costs |
|
|
(15,038,973 |
) |
| Plus: |
|
|
|
|
| Accretion
of carrying value to redemption value |
|
$ |
30,622,308 |
|
| |
|
|
|
|
| Class A
common stock subject to possible redemption |
|
$ |
250,000,000 |
|
Offering Costs
Offering costs consisted of underwriting, legal, accounting and
other expenses incurred through the Initial Public Offering that
were directly related to the Initial Public Offering. Offering
costs are allocated to the separable financial instruments issued
in the Initial Public Offering based on a relative fair value
basis, compared to total proceeds received. Offering costs
associated with derivative warrant liabilities are expenses as
incurred, presented as non-operating expenses in the statements of
operations. Offering costs associated with the Public Shares were
charged against the carrying value of the shares of Class A common
stock upon the completion of the Initial Public Offering. Offering
costs amounted to $15,461,590, of which $15,038,973 were charged to
temporary equity upon the completion of the Initial Public Offering
and $422,617 were charged to the statement of operations.
Income Taxes
The Company accounts for income taxes under ASC Topic 740 “Income
Taxes” (“ASC 740”), which requires an asset and liability approach
to financial accounting and reporting for income taxes. Deferred
income tax assets and liabilities are computed for differences
between the financial statement and tax bases of assets and
liabilities that will result in future taxable or deductible
amounts, based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to
reduce deferred tax assets to the amount expected to be realized.
As of December 31, 2021 and 2020, the Company had a deferred tax
assets of $854,816 and $21,879, respectively, which had full
valuation allowances of $854,816 and $21,879, respectively.
The Company’s taxable income primarily consists of interest income
on the Trust Account. The Company’s general and administrative
costs are generally considered start-up costs and are not currently
deductible. The Company’s effective tax rate of 0% for the year
ended December 31, 2021 differs from the expected income tax rate
primarily due to the start-up costs (discussed above), which are
not currently deductible, and to permanent differences mainly
attributable to the change in the fair value of the warrant
liabilities.
ASC 740 prescribes a recognition threshold and a measurement
attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For
those benefits to be recognized, a tax position must be more likely
than not to be sustained upon examination by taxing authorities.
The Company recognizes accrued interest and penalties related to
unrecognized tax benefits as income tax expense. There were no
unrecognized tax benefits and no amounts accrued for interest and
penalties as of December 31, 2021 and 2020. The Company is
currently not aware of any issues under review that could result in
significant payments, accruals or material deviation from its
position.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
The Company may be subject to potential examination by federal,
state and city taxing authorities in the areas of income taxes.
These potential examinations may include questioning the timing and
amount of deductions, the nexus of income among various tax
jurisdictions and compliance with federal, state and city tax laws.
The Company’s management does not expect that the total amount of
unrecognized tax benefits will materially change over the next
twelve months. The Company is subject to income tax examinations by
major taxing authorities since inception.
Net Income (Loss) Per Common Share
The Company complies with accounting and disclosure requirements of
FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per
common share is computed by dividing net income (loss) by the
weighted average number of shares of common stock outstanding for
the period. The Company applies the two-class method in calculating
earnings per share. Accretion associated with the redeemable shares
of Class A common stock is excluded from earnings per share as the
redemption value approximates fair value.
The calculation of diluted income (loss) per share does not
consider the effect of the warrants issued in connection with the
(i) Initial Public Offering, and (ii) the private placement since
the exercise of the warrants is contingent upon the occurrence of
future events. The warrants are exercisable to purchase 8,546,667
shares of Class A common stock in the aggregate. As of December 31,
2021 and 2020, the Company did not have any dilutive securities or
other contracts that could, potentially, be exercised or converted
into common stock and then share in the earnings of the Company. As
a result, diluted net income (loss) per common share is the same as
basic net income (loss) per common share for the periods
presented.
The following table reflects the calculation of basic and diluted
net income (loss) per common share (in dollars, except per share
amounts):
| |
|
Year Ended
December 31, 2021 |
|
|
Year Ended
December 30, 2020 |
|
| |
|
Class A |
|
|
Class B |
|
|
Class A |
|
|
Class B |
|
| Basic and diluted net income (loss)
per common share |
|
|
|
|
|
|
|
|
|
|
|
|
| Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income (loss), as adjusted |
|
$ |
409,924 |
|
|
$ |
136,641 |
|
|
$ |
(317,479 |
) |
|
$ |
(1,487,055 |
) |
| Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and
diluted weighted average shares outstanding |
|
|
25,640,000 |
|
|
|
8,546,667 |
|
|
|
1,611,257 |
|
|
|
7,547,031 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Basic and diluted net income (loss)
per common share |
|
$ |
0.02 |
|
|
$ |
0.02 |
|
|
$ |
(0.20 |
) |
|
$ |
(0.20 |
) |
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of a cash account in a
financial institution, which, at times, may exceed the Federal
Depository Insurance Corporation coverage limit of $250,000. The
Company has not experienced losses on this account and management
believes the Company is not exposed to significant risks on such
account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities which
qualify as financial instruments under ASC Topic 820, “Fair Value
Measurement,” approximate the carrying amounts represented in the
Company’s balance sheets, primarily due to their short-term nature
other than warrant liabilities (see Note 11). As of December 31,
2021 and 2020, the carrying values of cash, accounts payable and
accrued expenses approximate their fair values due to the
short-term nature of the instruments. The Company’s portfolio of
marketable securities held in the Trust Account is comprised of
investments in U.S. Treasury securities with an original maturity
of 185 days or less. The fair value for trading securities is
determined using quoted market prices in active markets.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with
Conversion and Other Options (Subtopic 470-20) and Derivatives and
Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):
Accounting for Convertible Instruments and Contracts in an Entity’s
Own Equity (“ASU 2020-06”), which simplifies accounting for
convertible instruments by removing major separation models
required under current U.S. GAAP. The ASU also removes certain
settlement conditions that are required for equity-linked contracts
to qualify for the derivative scope exception, and it simplifies
the diluted earnings per share calculation in certain areas. The
Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU
did not impact the Company’s financial position, results of
operations or cash flows.
Management does not believe that any other recently issued, but not
yet effective, accounting standards if currently adopted would have
a material effect on the Company’s financial statements.
NOTE 4. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold
25,000,000 units, which includes a partial exercise by the
underwriters of their over-allotment option in the amount of
3,200,000 Units, at a purchase price of $10.00 per Unit. Each Unit
consists of one share of Class A common stock and one-third of
one warrant (“Public Warrant”). Each whole Public Warrant entitles
the holder to purchase one share of Class A common stock at an
exercise price of $11.50, subject to adjustment (see Note 9).
NOTE 5. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering,
FinTech Investor Holdings V, LLC purchased 640,000 Private
Placement Units at a price of $10.00 per Private Placement Unit, or
$6,400,000 in the aggregate in a private placement. Each Private
Placement Unit consists of one share of Class A common stock
and one-third of one warrant (the “Private Placement Warrant”).
Each whole Private Placement Warrant is exercisable for one whole
share of Class A common stock at a price of $11.50 per share,
subject to adjustment. The proceeds from the Private Placement
Units were added to the proceeds from the Initial Public Offering
held in the Trust Account. If the Company does not complete a
Business Combination within the Combination Period, the proceeds
from the sale of the Private Placement Units will be used to fund
the redemption of the Public Shares (subject to the requirements of
applicable law) and the Private Placement Warrants will expire
worthless. There will be no redemption rights or liquidating
distributions from the Trust Account with respect to the Private
Placement Warrants.
NOTE 6. RELATED PARTY TRANSACTIONS
Founder Shares
In June 2019, the Company issued an aggregate of 1,000 shares
of common stock to FinTech Investor Holdings V, LLC (the “Founder
Shares”) for an aggregate purchase price of $25,000. FinTech
Investor Holdings V, LLC paid for certain offering costs
on behalf of the Company in October 2020 in lieu of remitting
payment for the purchase of the Founder Shares to the Company.
In October 2020, the Company filed an amendment to its
Certificate of Incorporation to, among other things, create two
classes of common stock, Class A and Class B, and to
convert the outstanding Founder Shares into shares of Class B
common stock. The Founder Shares will automatically convert into
shares of Class A common stock upon consummation of a Business
Combination on a one-for-one basis, subject to certain adjustments,
as described in Note 8. Additionally, the Company completed an
approximate 8,455-for-1 forward stock split of its common stock and
a share dividend of 1.01360142. As a result of these transactions,
the Sponsor held 8,570,000 Founder Shares, of which 1,090,000
shares were subject to forfeiture to the extent that the
underwriters’ over-allotment option was not exercised in full or in
part, so that the Founder Shares would represent 25% of the
Company’s aggregate Founder Shares, Private Placement Shares and
issued and outstanding Public Shares after the Initial Public
Offering. As a result of the underwriters’ election to partially
exercise their over-allotment option and the forfeiture of their
remaining over-allotment option, 23,333 Founder Shares were
forfeited and 1,066,667 Founder Shares are no longer subject to
forfeiture, resulting in an aggregate of 8,546,667 Founder Shares
issued and outstanding.
The Insiders have agreed not to transfer, assign or sell any of
their Founder Shares (except to permitted transferees)
(i) with respect to 25% of such shares, until consummation of
the Company’s initial Business Combination, (ii) with respect
to 25% of such shares, until the closing price of the Class A
common stock exceeds $12.00 for any 20 trading days within a
30-trading day period following the consummation of a Business
Combination, (iii) with respect to 25% of such shares, until
the closing price of the Class A common stock exceeds $13.50
for any 20 trading days within a 30-trading day period following
the consummation of a Business Combination, and (iv) with
respect to 25% of such shares, until the closing price of the
Class A common stock exceeds $17.00 for any 20 trading days
within a 30-trading day period following the consummation of a
Business Combination or earlier, in any case, if, following a
Business Combination, the Company completes a liquidation, merger,
capital stock exchange, reorganization or other similar transaction
that results in all of the public stockholders having the right to
exchange their shares of common stock for cash, securities or other
property.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
Administrative Services Agreement
The Company agreed, commencing on December 4, 2020 through the
earlier of the Company’s consummation of a Business Combination and
its liquidation, to pay the Sponsor or an affiliate of the Sponsor
$20,000 per month for office space, administrative and shared
personnel support services. As of December 31, 2021 and 2020, the
Company incurred and paid $240,000 and $20,000 for administrative
services, respectively.
Promissory Note – Related Party
On October 13, 2020, the Company issued a promissory note to the
Sponsor, pursuant to which the Sponsor agreed to loan the Company
up to an aggregate of $300,000 to be used for the payment of costs
related to the Initial Public Offering (the “Promissory Note”). The
Promissory Note was non-interest bearing, unsecured and due on the
earlier of March 31, 2021 or the completion of the Initial Public
Offering. The outstanding balance under the Promissory Note of
$45,365 was repaid at the closing of the Initial Public Offering on
December 8, 2020.
On September 15, 2021, the Company issued a promissory note to
FinTech Masala, LLC, pursuant to which the Company could borrow up
to an aggregate principal amount of $750,000, which was
subsequently amended on October 27, 2021 to remove the conversion
option. As of December 31, 2021 and 2020, the Company had $300,000
and no outstanding borrowings under this promissory note,
respectively. The promissory note was further amended on January 6,
2022 to increase the Maximum Principal Amount from $750,000 to
$2,000,000 (see Note 12). The promissory note is non-interest
bearing, unsecured and due upon the completion of the Initial
Business Combination.
Related Party Loans
In order to finance transaction costs in connection with a Business
Combination, the Sponsor, members of the Company’s management team
or any of their respective affiliates or other third parties may,
but are not obligated to, loan the Company funds as may be required
(“Working Capital Loans”), which will be repaid only upon the
consummation of a Business Combination. If the Company does not
consummate a Business Combination, the Company may use a portion of
any funds held outside the Trust Account to repay the Working
Capital Loans; however, no proceeds from the Trust Account may be
used for such repayment. If such funds are insufficient to repay
the Working Capital Loans, the unpaid amounts would be forgiven.
The Working Capital Loans may be converted into units at a price of
$10.00 per unit at the option of the holder. The units would be
identical to the Private Placement Units.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19
pandemic and has concluded that while it is reasonably possible
that the virus could have a negative effect on the Company’s
financial position and/or search for a target company, the specific
impact is not readily determinable as of the date of these
financial statements. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
Registration Rights
Pursuant to a registration rights agreement entered into on
December 3, 2020, the holders of the Founder Shares, Private
Placement Units (including securities contained therein) and the
units that may be issued upon conversion of the Working Capital
Loans (and any shares of Class A common stock issuable upon
the exercise of the Private Placement Warrants or the warrants
included in the units issued upon conversion of the Working Capital
Loans) will be entitled to registration rights, requiring the
Company to register such securities for resale (in the case of the
Founder Shares, only after conversion to Class A common
stock). The holders of the majority 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 completion of a
Business Combination and rights to require the Company to register
for resale such securities pursuant to Rule 415 under the
Securities Act. The registration rights agreement does not contain
liquidated damages or other cash settlement provisions resulting
from delays in registering securities. The Company will bear the
expenses incurred in connection with the filing of any such
registration statements.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
Underwriting Agreement
Cantor Fitzgerald & Co., as representative of the several
underwriters, is entitled to a deferred fee of (i) 4.0% of the
gross proceeds of the initial 21,800,000 Units sold in the Initial
Public Offering, or $8,720,000, and (ii) 6% of the gross proceeds
from the Units sold pursuant to the over-allotment option, or
$1,920,000. The deferred fee will become payable to the
representative from the amounts held in the Trust Account solely in
the event that the Company completes a Business Combination,
subject to the terms of the underwriting agreement.
Merger Agreement
On March 16, 2021, the Company entered into an Agreement and Plan
of Merger (the “Merger Agreement”) with eToro Group Ltd., a company
organized under the laws of the British Virgin Islands (“eToro”),
Buttonwood Merger Sub Corp., a Delaware corporation and a direct,
wholly-owned subsidiary of eToro (“Merger Sub”), and the Company,
which provides for, among other things, the merger of Merger Sub
with and into the Company (the “Merger”), with the Company
surviving as a wholly-owned subsidiary of eToro (the “Business
Combination”). At the closing of the Business Combination and the
effective time of the Merger (the “Effective Time”), the
stockholders of the Company will receive certain of the common
stock, no par value, of eToro (“eToro Common Stock”), and eToro
will list as a publicly traded company on Nasdaq and will continue
to conduct the social trading platform business conducted by eToro
prior to the Business Combination.
The Merger Agreement contains customary representations, warranties
and covenants by the parties thereto and the closing is subject to
certain conditions as further described in the Merger
Agreement.
NOTE 8. STOCKHOLDERS’ DEFICIT
Preferred Stock — On December 4, 2020, the
Company filed its amended and restated certificate of
incorporation, pursuant to which it is authorized to issue
1,000,000 shares of preferred stock with a par value of $0.0001 per
share with such designation, rights and preferences as may be
determined from time to time by the Company’s Board of Directors.
At December 31, 2021 and 2020, there were no shares of preferred
stock issued or outstanding.
Class A Common Stock — On December 4, 2020,
the Company filed its amended and restated certificate of
incorporation, pursuant to which it is authorized to issue
100,000,000 shares of Class A common stock with a par value of
$0.0001 per share. Holders of Class A common stock are
entitled to one vote for each share. At December 30, 2021 and 2020,
there were 640,000 shares of Class A common stock issued and
outstanding, excluding 25,000,000 shares of Class A common stock
subject to possible redemption which are accounted for as temporary
equity.
Class B Common Stock — On December 4, 2020,
the Company filed its amended and restated Certification of
Incorporation, pursuant to which it is authorized to issue
10,000,000 shares of Class B common stock with a par value of
$0.0001 per share. Holders of the Company’s Class B common
stock are entitled to one vote for each share. At December 31, 2021
and 2020, there were 8,546,667 shares of Class B common stock
issued and outstanding.
Holders of Class B common stock will vote on the election of
directors prior to the consummation of a Business Combination.
Holders of Class A common stock and Class B common stock
will vote together as a single class on all other matters submitted
to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically convert
into shares of Class A common stock at the time of a Business
Combination on a one-for-one basis, subject to adjustment. In the
case that additional shares of Class A common stock or
equity-linked securities are issued or deemed issued in excess of
the amounts offered in the Initial Public Offering and related to
the closing of a Business Combination, the ratio at which shares of
Class B common stock shall convert into shares of Class A
common stock will be adjusted (unless the holders of a majority of
the outstanding shares of Class B common stock agree to waive
such adjustment with respect to any such issuance or deemed
issuance) so that the number of shares of Class A common stock
issuable upon conversion of all shares of Class B common stock
will equal, in the aggregate, on an as-converted basis, 25% of the
sum of the total number of all shares of common stock issued and
outstanding upon completion of the Initial Public Offering,
including Private Placement Shares, plus all shares of Class A
common stock and equity-linked securities issued or deemed issued
in connection with a Business Combination (excluding any shares or
equity-linked securities issued, or to be issued, to any seller in
a Business Combination). Holders of Founder Shares may also elect
to convert their shares of Class B common stock into an equal
number of shares of Class A common stock, subject to
adjustment as provided above, at any time.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
NOTE 9. WARRANT LIABILITIES
Warrants — Public Warrants may only be exercised
for a whole number of shares. No fractional shares will be issued
upon exercise of the Public Warrants. The Public Warrants will
become exercisable on the later of (a) 30 days after the
completion of a Business Combination or (b) 12 months from the
closing of the Initial Public Offering; provided in each case that
the Company has an effective registration statement under the
Securities Act covering the shares of common stock issuable upon
exercise of the Public Warrants and a current prospectus relating
to them is available. At December 31, 2021 and 2020, there were
8,546,667 warrants outstanding (8,333,334 Public Warrants and
213,333 Private Placement Warrants).
The Company will not be obligated to deliver any Class A
common stock pursuant to the exercise of a Public Warrant and will
have no obligation to settle such Public Warrant exercise unless a
registration statement under the Securities Act with respect to the
shares of Class A common stock underlying the Public Warrants
is then effective and a current prospectus relating thereto is
available, subject to the Company satisfying its obligations with
respect to registration. No Public Warrant will be exercisable for
cash or on a cashless basis, and the Company will not be obligated
to issue any shares to holders seeking to exercise their Public
Warrants, unless the issuance of the shares upon such exercise is
registered, qualified or deemed exempt under the securities laws of
the state of the exercising holder.
The Company has agreed that as soon as practicable, but in no event
later than 20 business days, after the closing of a Business
Combination, it will use its best efforts to file with the SEC a
registration statement covering the issuance, under the Securities
Act, of the Class A common stock issuable upon exercise of the
Public Warrants. The Company will use its best efforts to cause the
same to become effective within 60 business days after the closing
of the Business Combination and to maintain the effectiveness of
such registration statement, and a current prospectus relating
thereto, until the expiration of the Public Warrants in accordance
with the provisions of the warrant agreement. Notwithstanding the
above, if the Class A common stock are, at the time of any
exercise of a Public Warrant, not listed on a national securities
exchange such that they satisfy the definition of a “covered
security” under Section 18(b)(1) of the Securities Act, the
Company may, at its option, require holders of Public Warrants who
exercise their Public Warrants to do so on a “cashless basis” in
accordance with Section 3(a)(9) of the Securities Act and, in
the event the Company so elects, the Company will not be required
to file or maintain in effect a registration statement, but will
use its best efforts to qualify the shares under applicable blue
sky laws to the extent an exemption is not available.
Redemption of Warrants for Cash. The
Company may redeem the Public Warrants:
| |
● |
in
whole and not in part; |
|
● |
at a
price of $0.01 per warrant; |
|
● |
upon
not less than 30 days’ prior written notice of redemption to each
warrant holder; and |
|
● |
if,
and only if, the reported last sale price of the Company’s Class A
common stock equals or exceeds $18.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within a 30-trading day
period ending three business days prior to the date on which the
Company sends the notice of redemption to the warrant
holders. |
If and when the warrants become redeemable by the Company, the
Company may exercise its redemption right even if it is unable to
register or qualify the underlying securities for sale under all
applicable state securities laws.
If the Company calls the Public Warrants for redemption for cash,
management will have the option to require all holders that wish to
exercise the Public Warrants to do so on a “cashless basis,” as
described in the warrant agreement. The exercise price and number
of shares of Class A common stock issuable upon exercise of
the warrants may be adjusted in certain circumstances including in
the event of a stock dividend, or recapitalization, reorganization,
merger or consolidation. Additionally, in no event will the Company
be required to net cash settle the warrants.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
In addition, if (x) the Company issues additional Class A
common stock or equity-linked securities for capital raising
purposes in connection with the closing of a Business Combination
at an issue price or effective issue price of less than $9.20 per
Class A common stock (with such issue price or effective issue
price to be determined in good faith by the Company and, in the
case of any such issuance to the Sponsor or its affiliates, without
taking into account any Founder Shares held by the initial
stockholders or such affiliates, as applicable, prior to such
issuance) (the “Newly Issued Price”), (y) the aggregate gross
proceeds from such issuances represent more than 50% of the total
equity proceeds, and interest thereon, available for the funding of
a Business Combination on the date of the consummation of a
Business Combination (net of redemptions), and (z) the volume
weighted average trading price of its Class A common stock
during the 20 trading day period starting on the trading day prior
to the day on which the Company consummates its Business
Combination (such price, the “Market Value”) is below $9.20 per
share, the exercise price of the warrants will be adjusted (to the
nearest cent) to be equal to 115% of the higher of the Market Value
and the Newly Issued Price, and the $18.00 per share redemption
trigger price will be adjusted (to the nearest cent) to be equal to
180% of the higher of the Market Value and the Newly Issued
Price.
The Private Placement Warrants are identical to the Public Warrants
underlying the Units sold in the Initial Public Offering, except
that the Private Placement Warrants and the Class A common
stock issuable upon the exercise of the Private Placement Warrants
will not be transferable, assignable or saleable until 30 days
after the completion of a Business Combination, subject to certain
limited exceptions. Additionally, the Private Placement Warrants
will be non-redeemable so long as they are held by the Sponsor or
its permitted transferees. If the Private Placement Warrants are
held by someone other than the Sponsor or its permitted
transferees, the Private Placement Warrants will be redeemable by
the Company and exercisable by such holders on the same basis as
the Public Warrants.
NOTE 10. INCOME TAX
The Company’s net deferred tax assets are as follows:
| |
|
As of December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| Deferred tax asset |
|
|
|
|
|
|
| Net
operating loss carryforward |
|
$ |
45,638 |
|
|
$ |
8,889 |
|
|
Organizational costs/Startup expenses |
|
|
809,178 |
|
|
|
12,990 |
|
| Total deferred tax asset |
|
|
854,816 |
|
|
|
21,879 |
|
| Valuation
allowance |
|
|
(854,816 |
) |
|
|
(21,879 |
) |
| Deferred tax
asset, net of allowance |
|
$ |
—
|
|
|
$ |
—
|
|
The income tax provision consists of the following:
| |
|
As of December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| Federal |
|
|
|
|
|
|
| Current |
|
$ |
—
|
|
|
$ |
—
|
|
| Deferred |
|
|
(832,937 |
) |
|
|
(21,879 |
) |
| |
|
|
|
|
|
|
|
|
| State |
|
|
|
|
|
|
|
|
| Current |
|
$ |
—
|
|
|
$ |
—
|
|
| Deferred |
|
|
—
|
|
|
|
—
|
|
| Change in
valuation allowance |
|
|
832,937 |
|
|
|
21,879 |
|
| Income tax
provision |
|
$ |
—
|
|
|
$ |
—
|
|
As of December 31, 2021 and 2020, the Company had $174,997 and
$42,327, respectively, of U.S. federal net operating loss
carryovers available to offset future taxable income until the
close of a business combination or upon mandatory liquidation.
In assessing the realization of the deferred tax assets, management
considers whether it is more likely than not that some portion of
all of the deferred tax assets will not be realized. The ultimate
realization of deferred tax assets is dependent upon the generation
of future taxable income during the periods in which temporary
differences representing net future deductible amounts become
deductible. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income and tax planning
strategies in making this assessment. After consideration of all of
the information available, management believes that significant
uncertainty exists with respect to future realization of the
deferred tax assets and has therefore established a full valuation
allowance. For the years ended December 31, 2021 and 2020, the
change in the valuation allowance was $832,937 and $21,879,
respectively.
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
A reconciliation of the federal income tax rate to the Company’s
effective tax rate is as follows:
| |
|
As of December 31, |
|
| |
|
2021 |
|
|
2020 |
|
| |
|
|
|
|
|
|
| Statutory federal income
tax rate |
|
|
21.0 |
% |
|
|
21.0 |
% |
| Change in fair value of warrant
liabilities |
|
|
(173.4 |
)% |
|
|
(15.0 |
)% |
| Transaction costs attributable to
Initial Public Offering |
|
|
—
|
% |
|
|
(5.0 |
)% |
| Change in
valuation allowance |
|
|
152.4 |
% |
|
|
(1.0 |
)% |
| Income tax
provision |
|
|
(0.0 |
)% |
|
|
(0.0 |
)% |
The Company files income tax returns in the U.S. federal
jurisdiction in various state and local jurisdictions and is
subject to examination by the various taxing authorities.
NOTE 11. FAIR VALUE MEASUREMENTS
At December 31, 2021 and 2020, assets held in the Trust Account
were comprised of $250,008,357 and $250,001,576, respectively, in
money market funds which are invested primarily in U.S. Treasury
Securities.
The Company classifies its U.S. Treasury and equivalent securities
as held-to-maturity in accordance with ASC Topic 320 “Investments -
Debt and Equity Securities.” Held-to-maturity securities are those
securities which the Company has the ability and intent to hold
until maturity. Held-to-maturity treasury securities are recorded
at amortized cost on the accompanying balance sheets and adjusted
for the amortization or accretion of premiums or discounts.
The fair value of the Company’s assets and liabilities that are
re-measured and reported at fair value at each reporting period,
and non-financial assets and liabilities that are re-measured and
reported at fair value at least annually are reported under ASC
Topic 820, “Fair Value Measurement.”
The fair value of the Company’s financial assets and liabilities
reflects management’s estimate of amounts that the Company would
have received in connection with the sale of the assets or paid in
connection with the transfer of the liabilities in an orderly
transaction between market participants at the measurement date. In
connection with measuring the fair value of its assets and
liabilities, the Company seeks to maximize the use of observable
inputs (market data obtained from independent sources) and to
minimize the use of unobservable inputs (internal assumptions about
how market participants would price assets and liabilities). The
following fair value hierarchy is used to classify assets and
liabilities based on the observable inputs and unobservable inputs
used in order to value the assets and liabilities:
| |
Level 1: |
Quoted
prices in active markets for identical assets or liabilities. An
active market for an asset or liability is a market in which
transactions for the asset or liability occur with sufficient
frequency and volume to provide pricing information on an ongoing
basis. |
| |
|
|
| |
Level 2: |
Observable
inputs other than Level 1 inputs. Examples of Level 2 inputs
include quoted prices in active markets for similar assets or
liabilities and quoted prices for identical assets or liabilities
in markets that are not active. |
| |
|
|
| |
Level 3: |
Unobservable
inputs based on an assessment of the assumptions that market
participants would use in pricing the asset or
liability. |
The following table presents information about the Company’s assets
and liabilities that are measured at fair value on a recurring
basis at December 31, 2021 and 2020 and indicates the fair value
hierarchy of the valuation inputs the Company utilized to determine
such fair value:
|
Description |
|
Level |
|
|
December 31,
2021 |
|
|
December 31,
2020 |
|
|
Assets: |
|
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account – U.S. Treasury
Securities Money Market Fund |
|
|
1 |
|
|
$ |
250,008,357 |
|
|
$ |
250,001,576 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant liabilities – Public Warrants |
|
|
1 |
|
|
$ |
12,250,001 |
|
|
$ |
16,833,335 |
|
|
Warrant liabilities – Private Placement Warrants |
|
|
3 |
|
|
$ |
541,866 |
|
|
$ |
471,466 |
|
FINTECH ACQUISITION CORP. V
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2021
The Warrants were accounted for as liabilities in accordance with
ASC 815-40 and are presented within warrant liabilities on the
Company’s balance sheets. The warrant liabilities are measured at
fair value at inception and on a recurring basis, with changes in
fair value presented within change in fair value of warrant
liabilities in the statements of operations.
The Private Placement Warrants were valued using a Modified Black
Scholes Option Pricing Model. The Private Placement Warrants are
considered to be a Level 3 fair value measurement due to the use of
unobservable inputs. The Modified Black Scholes Option Pricing
Model’s primary unobservable input utilized in determining the fair
value of the Private Placement Warrants is the expected volatility
of the common stock as well as the probability of consummation of a
Business Combination. The probability assigned to the consummation
of the Business Combination was 90% as of December 31, 2021 and
2020, which was determined based on the observed success rates of
business combinations for special purpose acquisition companies.
The expected volatility as of the Initial Public Offering date was
derived from observable public warrant pricing on comparable
‘blank-check’ companies without an identified target. The expected
volatility as of subsequent valuation dates will be implied from
the Company’s own public warrant pricing. A Monte Carlo simulation
methodology was used in estimating the fair value of the Public
Warrants for periods where no observable traded price was
available, using the same expected volatility as was used in
measuring the fair value of the Private Placement Warrants. For
periods subsequent to the detachment of the warrants from the
Units, including December 31, 2021, the closing price of the Public
Warrants was used as the fair value as of each relevant date.
The key inputs into the model for the Private Placement Warrants at
December 31, 2021 and the Private Placement Warrants and the Public
Warrants at December 31, 2020 were as follows:
|
Input |
|
December 31,
2021
|
|
|
December 31,
2020
|
|
| Stock price |
|
$ |
9.92 |
|
|
$ |
10.00 |
|
| Strike price |
|
$ |
11.50 |
|
|
$ |
11.50 |
|
| Term (in years) |
|
|
5.3 |
|
|
|
5.4 |
|
| Volatility |
|
|
35.0 |
% |
|
|
35.0 |
% |
| Risk-free rate |
|
|
1.3 |
% |
|
|
0.4 |
% |
| Dividend yield |
|
|
0.0 |
% |
|
|
0.0 |
% |
The following table presents the changes in the fair value of Level
3 warrant liabilities:
| Fair value of derivative warrant liabilities
as of December 31, 2020 |
|
$ |
17,304,801 |
|
| Change in fair value of derivative
warrant liabilities |
|
|
3,422,667 |
|
| Transfer to
Level 1 |
|
|
(20,000,002 |
) |
| Fair value of derivative warrant liabilities as of March 31,
2021 |
|
$ |
727,466 |
|
| Change in fair
value of derivative warrant liabilities |
|
|
170,666 |
|
| Fair value of derivative warrant liabilities as of June 30,
2021 |
|
$ |
898,132 |
|
| Change in fair
value of derivative warrant liabilities |
|
|
(307,200 |
) |
| Fair value of derivative warrant liabilities as of September
30, 2021 |
|
$ |
590,932 |
|
| Change in fair
value of derivative warrant liabilities |
|
|
(49,066 |
) |
| Fair value of derivative warrant
liabilities as of December 31, 2021 |
|
$ |
541,866 |
|
Transfers to/from Levels 1, 2 and 3 are recognized at the end of
the reporting period. There were no transfers between levels for
the year ended December 31, 2021 other than the transfer of the
Public Warrants from Level 3 to Level 1 following the detachment of
the Public Warrants from the Units on January 25, 2021.
NOTE 12. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that
occurred after the balance sheet date up to the date that the
financial statements were issued. Based upon this review, other
than as described below, the Company did not identify any
subsequent events that would have required adjustment or disclosure
in the financial statements.
On January 6, 2022, the Company amended its September 15, 2021
promissory note to increase the Maximum Principal Amount to
$2,000,000 from $750,000. Subsequently, the Company made a draw on
the promissory note of $850,000.
F-19
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