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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-254103

 

TS INNOVATION ACQUISITIONS CORP.

Rockefeller Center

45 Rockefeller Plaza

New York, New York 10111

Dear Stockholder:

On January 24, 2021, TS Innovation Acquisitions Corp., a Delaware corporation (“TSIA”), and Lionet Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of TSIA (“Merger Sub”), entered into an Agreement and Plan of Merger (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Merger Agreement”) with Latch, Inc., a Delaware corporation (“Latch”). If (i) the Merger Agreement is adopted and the transactions contemplated thereby, including the Merger, are approved by TSIA’s and Latch’s stockholders, (ii) the Merger Agreement and the transactions contemplated thereby, including the issuance of TSIA Class A common stock to be issued as the merger consideration, pursuant to the Subscription Agreements, and pursuant to the conversion of TSIA Class B common stock, are approved by TSIA’s stockholders, and (iii) the Merger is subsequently completed, Merger Sub will merge with and into Latch, with Latch surviving the merger as a wholly owned subsidiary of TSIA (the “Merger”).

As part of the Business Combination, Latch equityholders will receive aggregate consideration of $1.0 billion, payable in newly issued shares of TSIA Class A common stock at a price of $10.00 per share and, solely with respect to holders of Latch vested stock options with respect to which an election to receive only cash (a “cash election”) has been properly made, the Cash Election Consideration (as defined herein) (collectively, the “merger consideration”).

Under the terms of the Merger Agreement, immediately prior to the effective time of the Merger (the “Effective Time”), (i) Latch will cause each share of Latch preferred stock issued and outstanding to be automatically converted into a number of shares of Latch common stock in accordance with Latch’s certificate of incorporation (the “preferred stock conversion”) and (ii) Latch will cause the outstanding principal and accrued but unpaid interest due on Latch’s convertible notes immediately prior to the Effective Time to be automatically converted into a number of shares of Latch common stock in accordance with the terms of the applicable Latch convertible note (the “convertible note conversion”).

At the Effective Time, (i) each share of Latch common stock issued and outstanding immediately prior to the closing of the Merger (the “Closing”) (including shares of Latch common stock issued upon the preferred stock conversion and the convertible note conversion and upon any exercise of Latch warrants prior to the Closing, but excluding shares owned by Latch as treasury stock or dissenting shares) will be cancelled and converted into the right to receive a number of shares of TSIA Class A common stock equal to the Exchange Ratio, (ii) each Latch vested stock option with respect to which a cash election has been properly made that is issued and outstanding immediately prior to the Closing (such option, a “Cash Elected Company Option”) will be cancelled and converted into the right to receive an amount of cash equal to the Exchange Ratio multiplied by $10.00 (the “Per Share Value”) minus the exercise price applicable to the share of Latch common stock underlying such Latch vested stock option (the “Cash Election Consideration”), and (iii) each outstanding Latch stock option that is not a Cash Elected Company Option, whether vested or unvested, will be converted into an option to purchase a number of shares of TSIA Class A common stock equal to the product of (x) the number of shares of Latch common stock underlying such Latch stock option immediately prior to the Closing and (y) the Exchange Ratio, at an exercise price per share equal to (A) the exercise price per share of Latch common stock underlying such Latch stock option immediately prior to the Closing divided by (B) the Exchange Ratio. The “Exchange Ratio” is the quotient of (x) the aggregate merger consideration of 100,000,000 shares of TSIA Class A common stock, divided by (y) the number of shares of Latch common stock outstanding on a fully diluted net exercise basis.

Based on the number of shares of Latch capital stock outstanding and issuable upon the net exercise or conversion of outstanding stock options, warrants and convertible notes of Latch, in each case, as of April 20, 2021, (i) the estimated Exchange Ratio of shares of TSIA Class A common stock for each share of Latch common stock is 0.8908, (ii) the total number of shares of TSIA Class A common stock expected to be issued (on a fully diluted net exercise basis) in connection with the Closing is approximately 100,000,000, and (iii) holders of shares of Latch common stock (on a fully diluted net exercise basis) as of immediately prior to the closing of the Merger will hold, in the aggregate, approximately 64.2% of the issued and outstanding shares of TSIA Class A common stock immediately following the Closing. TSIA units, TSIA Class A common stock and TSIA public warrants are publicly traded on the NASDAQ Stock Market (the “NASDAQ”). We intend to apply to list the TSIA Class A common stock and TSIA public warrants on the NASDAQ under the symbols “LTCH” and “LTCH.W”, respectively, upon the closing of the Merger. TSIA will not have units traded following the Closing. Following the Closing, TSIA intends to change its name to Latch, Inc.


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See the section entitled “The Business Combination” on page 179 of the attached proxy statement/prospectus for further information on the consideration being paid to the equityholders of Latch in the Merger.

In connection with the execution of the Merger Agreement, TSIA entered into subscription agreements (collectively, the “Subscription Agreements”) with certain parties subscribing for shares of TSIA Class A common stock (the “Subscribers”), pursuant to which the Subscribers have agreed to purchase, and TSIA has agreed to sell to the Subscribers, (i) an aggregate of 19,000,000 shares of TSIA Class A common stock, for a purchase price of $10.00 per share and at an aggregate purchase price of $190,000,000, plus (ii) a number of shares of TSIA Class A common stock at a purchase price of $10.00 per share, equal to the value necessary to fund the Cash Election Consideration described in “The Merger Agreement—Treatment of Latch Equity Awards—Vested Company Option Cash Election; Cash Election Cut-Backs.” The obligations to consummate the transactions contemplated by the Subscription Agreements are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement, including the Merger. See “Other Agreements—Subscription Agreements.

TSIA will hold a special meeting of stockholders in lieu of the 2021 annual meeting of its stockholders (the “Special Meeting”) to consider matters relating to the proposed Merger. TSIA and Latch cannot complete the Merger unless (i) TSIA’s stockholders consent to the approval of the Merger Agreement and the transactions contemplated thereby, including the issuance of TSIA Class A common stock to be issued as the merger consideration, pursuant to the Subscription Agreements, and pursuant to the conversion of TSIA Class B common stock, and (ii) Latch’s stockholders consent to adoption and approval of the Merger Agreement and the transactions contemplated thereby. TSIA is sending you this proxy statement/prospectus to ask you to vote in favor of these and the other matters described in this proxy statement/prospectus.

The Special Meeting will be held at 10 a.m. prevailing Eastern Time, on June 3, 2021, in virtual format.

YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK YOU OWN. To ensure your representation at the Special Meeting, please complete and return the enclosed proxy card or submit your proxy by following the instructions contained in this proxy statement/prospectus and on your proxy card. Please submit your proxy promptly whether or not you expect to attend the meeting. Submitting a proxy now will NOT prevent you from being able to vote in person (which would include presence at a virtual meeting) at the meeting. If you hold your shares in “street name”, you should instruct your broker, bank or other nominee how to vote in accordance with the voting instruction form you receive from your broker, bank or other nominee.

The TSIA board of directors has unanimously approved the Merger Agreement and the transactions contemplated thereby and recommends that TSIA stockholders vote “FOR” the approval of the Merger Agreement, “FOR” the issuance of Class A common stock to be issued as the merger consideration, pursuant to the Subscription Agreements, and pursuant to the conversion of TSIA Class B common stock and “FOR” the other matters to be considered at the Special Meeting.

The Latch board of directors has unanimously approved the Merger Agreement and the transactions contemplated thereby and recommends that Latch stockholders consent to adopt and approve in all respects the Merger Agreement and the transactions contemplated thereby.

This proxy statement/prospectus provides you with detailed information about the proposed Merger. It also contains or references information about TSIA and Latch and certain related matters. You are encouraged to read this proxy statement/prospectus carefully. In particular, you should read the “Risk Factors” section beginning on page 24 for a discussion of the risks you should consider in evaluating the proposed Merger and how it will affect you.

If you have any questions regarding the accompanying proxy statement/prospectus, you may contact Morrow Sodali LLC, TSIA’s proxy solicitor, toll free at (800) 662-5200.

Sincerely,

Robert J. Speyer

Chief Executive Officer and Chairman of the Board of Directors

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Merger, the issuance of shares of TSIA Class A common stock in connection with the Merger or the other transactions described in this proxy statement/prospectus, or passed upon the adequacy or accuracy of the disclosure in this proxy statement/prospectus. Any representation to the contrary is a criminal offense.

This proxy statement/prospectus is dated May 12, 2021, and is first being mailed to stockholders of TSIA on or about May 14, 2021.


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TS INNOVATION ACQUISITIONS CORP.

Rockefeller Center

45 Rockefeller Plaza

New York, New York 10111

NOTICE OF

SPECIAL MEETING IN LIEU OF THE 2021 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON JUNE 3, 2021

TO THE STOCKHOLDERS OF TSIA:

NOTICE IS HEREBY GIVEN that a special meeting in lieu of the 2021 annual meeting of stockholders of TS Innovation Acquisitions Corp., a Delaware corporation (“TSIA”), will be held at 10 a.m. prevailing Eastern Time, on June 3, 2021, in virtual format (the “Special Meeting”). You are cordially invited to attend the Special Meeting, which will be held for the following purposes:

 

  (1)

The Business Combination Proposal—To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of January 24, 2021 (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “Merger Agreement”), by and among TSIA, Lionet Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of TSIA (“Merger Sub”), and Latch, Inc., a Delaware corporation (“Latch”), and the transactions contemplated thereby, pursuant to which Merger Sub will merge with and into Latch, with Latch surviving the merger as a wholly owned subsidiary of TSIA (the “Merger”). A copy of the Merger Agreement is attached to this proxy statement/ prospectus as Annex A (the “Business Combination Proposal”);

 

  (2)

The Charter Approval Proposal—To consider and vote upon a proposal to adopt the Second Amended and Restated Certificate of Incorporation (the “Proposed Charter”) in the form attached hereto as Annex B (the “Charter Approval Proposal”);

 

  (3)

The Governance Proposal—To consider and act upon, on a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Proposed Charter in accordance with United States Securities and Exchange Commission requirements (the “Governance Proposal”);

 

  (4)

The Director Election Proposal—To consider and vote upon a proposal to elect seven directors to serve on the Board of Directors of the Post-Combination Company (the “Board”) until the 2022 annual meeting of stockholders, in the case of Class I directors, the 2023 annual meeting of stockholders, in the case of Class II directors, and the 2024 annual meeting of stockholders, in the case of Class III directors, and, in each case, until their respective successors are duly elected and qualified (the “Director Election Proposal”);

 

  (5)

The NASDAQ Proposal—To consider and vote upon a proposal to approve, for purposes of complying with applicable listing rules of the NASDAQ: (i) the issuance of shares of TSIA Class A common stock to Latch stockholders pursuant to the Merger Agreement; (ii) the issuance of shares of TSIA Class A common stock pursuant to the Subscription Agreements; and (iii) the issuance of shares of TSIA Class A common stock pursuant to the conversion of TSIA Class B common stock (the “NASDAQ Proposal”);

 

  (6)

The Incentive Award Plan Proposal—To consider and vote upon a proposal to approve and adopt the Incentive Plan (as defined herein) (the “Incentive Award Plan Proposal”); and

 

  (7)

The Adjournment Proposal—To consider and vote upon a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Approval Proposal, the Director Election Proposal, the NASDAQ Proposal or the Incentive Award Plan Proposal (the “Adjournment Proposal” and, together with the Business Combination Proposal, the Charter Approval Proposal, the Governance Proposal, the NASDAQ Proposal, the Director Election Proposal and the Incentive Award Plan Proposal, each, a “Proposal” and collectively, the “Proposals”).


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These items of business are described in the attached proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of TSIA common stock at the close of business on May 11, 2021 (the “TSIA Record Date”) are entitled to notice of the Special Meeting and to vote and have their votes counted at the Special Meeting and any adjournments or postponements of the Special Meeting.

Pursuant to TSIA’s Existing Charter, TSIA will provide holders of its Class A common stock (“Public Shares”) with the opportunity to redeem their Public Shares (as defined herein) for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account, which holds the proceeds of TSIA’s initial public offering, as of two business days prior to the consummation of the transactions contemplated by the Business Combination Proposal (including interest earned on the funds held in the trust account and not previously released to TSIA to pay its taxes). For illustrative purposes, based on funds in the trust account of approximately $300.0 million on January 24, 2021, the estimated per share redemption price would have been approximately $10.00, excluding additional interest earned on the funds held in the trust account and not previously released to TSIA to pay taxes. Public stockholders (as defined herein) may elect to redeem their shares even if they vote for the Business Combination Proposal. A holder of Public Shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more than 15% of the Public Shares without the consent of TSIA. Accordingly, all Public Shares in excess of 15% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed for cash without the consent of TSIA. TS Innovation Acquisitions Sponsor, L.L.C., a Delaware limited liability company (the “Sponsor”), and TSIA’s directors and officers have agreed to waive their redemption rights in connection with the consummation of the Business Combination with respect to any shares of common stock they may hold. Currently, the Initial Stockholders (as defined herein) own 20% of TSIA’s common stock, consisting of the Founder Shares (as defined herein). Founder Shares will be excluded from the pro rata calculation used to determine the per-share redemption price. The Sponsor and TSIA’s directors and officers have agreed to vote any shares of common stock owned by them in favor of each of the proposals presented at the Special Meeting.

After careful consideration, TSIA’s board of directors (the “TSIA Board”) has determined that the Merger Proposal, the Charter Approval Proposal, the Governance Proposal, the Director Election Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal are fair to and in the best interests of TSIA and its stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the Business Combination Proposal, “FOR” the Charter Approval Proposal, “FOR” the Governance Proposal, “FOR” the Director Election Proposal, “FOR” the NASDAQ Proposal, “FOR” the Incentive Award Plan Proposal and “FOR” the Adjournment Proposal, if presented.

The approval of each of the Business Combination Proposal, the Governance Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal, if presented, requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A common stock and Class B common stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. The approval of the Charter Approval Proposal requires the affirmative vote (in person or by proxy) of (i) the holders of a majority of the Founder Shares then outstanding, voting separately as a single class, and (ii) the holders of a majority of the shares of Class A common stock and Class B common stock entitled to vote, voting as a single class. The approval of the Director Election Proposal requires the affirmative vote (in person or by proxy) of the holders of a plurality of the outstanding shares of Class A common stock and Class B common stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class.

Consummation of the Business Combination is conditioned on the approval of the Business Combination Proposal, the Charter Approval Proposal, the NASDAQ Proposal and the Incentive Award Plan Proposal at the Special Meeting, subject to the terms of the Merger Agreement. The Merger is not conditioned on the Governance Proposal, the Director Election Proposal or the Adjournment Proposal. If the Business Combination Proposal is not approved, the other proposals (except the Adjournment Proposal) will not be presented to the stockholders for a vote. The proxy statement/prospectus accompanying this notice explains the Merger Agreement and the


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transactions contemplated thereby, as well as the Proposals to be considered at the Special Meeting. Please review the proxy statement/prospectus carefully.

All TSIA stockholders are cordially invited to attend the Special Meeting in virtual format. TSIA stockholders may attend, vote and examine the list of TSIA stockholders entitled to vote at the Special Meeting by visiting and entering the control number found on their proxy card, voting instruction form or notice included in their proxy materials. In light of public health concerns regarding the coronavirus (“COVID-19”) pandemic, the Special Meeting will be held in virtual meeting format only. You will not be able to attend the Special Meeting physically. To ensure your representation at the Special Meeting, you are urged to complete, sign, date and return the enclosed proxy card as soon as possible. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the Special Meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted.

If you have any questions or need assistance voting your shares, please call our proxy solicitor, Morrow Sodali LLC, TSIA’s proxy solicitor, toll free at (800) 662-5200.

Thank you for your participation. We look forward to your continued support.

 

By Order of the Board of Directors

LOGO

Robert J. Speyer

Chief Executive Officer and Chairman of the Board of Directors

May 12, 2021

IF YOU RETURN YOUR PROXY CARD WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR SHARES WILL BE VOTED IN FAVOR OF EACH OF THE PROPOSALS. TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST ELECT TO HAVE TSIA REDEEM YOUR SHARES FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO TSIA’s TRANSFER AGENT AT LEAST TWO (2) BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT AND WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL NOT BE REDEEMED FOR CASH. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANKS OR BROKERS TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS. SEE “TSIA’S SPECIAL MEETING OF STOCKHOLDERS—REDEMPTION RIGHTS” FOR MORE SPECIFIC INSTRUCTIONS.


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TABLE OF CONTENTS

 

     Page  

BASIS OF PRESENTATION AND GLOSSARY

     i  

TRADEMARKS, TRADE NAMES AND SERVICE MARKS

     iii  

QUESTIONS AND ANSWERS

     iv  

SUMMARY

     1  

SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     17  

UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF TSIA AND LATCH

     19  

FORWARD-LOOKING STATEMENTS

     21  

RISK FACTORS

     24  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

     68  

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

     72  

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

     74  

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

     76  

TSIA’S SPECIAL MEETING OF STOCKHOLDERS

     82  

PROPOSAL NO. 1—THE BUSINESS COMBINATION PROPOSAL

     90  

PROPOSAL NO. 2—THE CHARTER APPROVAL PROPOSAL

     91  

PROPOSAL NO. 3—THE GOVERNANCE PROPOSAL

     94  

PROPOSAL NO. 4—THE DIRECTOR ELECTION PROPOSAL

     96  

PROPOSAL NO. 5—THE NASDAQ PROPOSAL

     99  

PROPOSAL NO. 6—THE INCENTIVE AWARD PLAN PROPOSAL

     101  

PROPOSAL NO. 7—THE ADJOURNMENT PROPOSAL

     107  

INFORMATION ABOUT TSIA

     108  

MANAGEMENT OF TSIA

     116  

SELECTED HISTORICAL FINANCIAL INFORMATION OF TSIA

     123  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF TSIA AND THE POST-COMBINATION COMPANY

     128  

INFORMATION ABOUT LATCH

     132  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF LATCH

     142  

LATCH’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     143  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF LATCH

     162  

MANAGEMENT OF THE POST-COMBINATION COMPANY FOLLOWING THE BUSINESS COMBINATION

     165  

EXECUTIVE COMPENSATION

     172  

THE BUSINESS COMBINATION

     179  

REGULATORY APPROVALS REQUIRED FOR THE BUSINESS COMBINATION

     199  

ANTICIPATED ACCOUNTING TREATMENT

     200  

PUBLIC TRADING MARKETS

     201  

THE MERGER AGREEMENT

     202  

OTHER AGREEMENTS

     220  

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

     223  

COMPARISON OF STOCKHOLDERS’ RIGHTS

     231  

DESCRIPTION OF CAPITAL STOCK OF THE POST-COMBINATION COMPANY

     249  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     254  

EXPERTS

     260  

LEGAL MATTERS

     261  

OTHER MATTERS

     262  


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BASIS OF PRESENTATION AND GLOSSARY

As used in this proxy statement/prospectus, unless otherwise noted or the context otherwise requires, references to:

Class A common stock” or “TSIA Class A common stock” are to the shares of TSIA’s Class A common stock, par value $0.0001 per share, prior to the Business Combination, and to shares of the Post-Combination Company’s common stock, par value $0.0001 per share, after the Business Combination;

Class B common stock” or “TSIA Class B common stock” are to the shares of TSIA’s Class B common stock, par value $0.0001 per share;

Code” are to the Internal Revenue Code of 1986, as amended;

common stock” or “TSIA common stock” are to the TSIA Class A common stock and TSIA Class B common stock;

the “Company” or “Latch” are to Latch, Inc.;

Company Owners” or “Latch stockholders” are to the stockholders of Latch prior to the closing of the Business Combination;

DGCL” are to the Delaware General Corporation Law, as may be amended from time to time;

Exchange Act” are to the Securities Exchange Act of 1934, as amended;

Existing Charter” are to the Amended and Restated Certificate of Incorporation of TSIA, dated November 9, 2020;

Founder Shares” are to the shares of TSIA Class B common stock and TSIA Class A common stock issued upon the automatic conversion thereof at the time of TSIA’s initial business combination as provided herein. The 7,500,000 Founder Shares are held of record by the Initial Stockholders as of the TSIA Record Date;

GAAP” are to generally accepted accounting principles in the United States, as applied on a consistent basis;

Initial Stockholders” are to holders of the TSIA’s Founder Shares prior to the Business Combination;

Investment Company Act” are to the Investment Company Act of 1940, as amended;

Latch common stock” are to shares of Latch’s common stock, par value $0.00001 per share;

Latch preferred stock” are to the Latch Series Seed Preferred Stock, Latch Series A Preferred Stock, the Latch Series A-1 Preferred Stock, the Latch Series B Preferred Stock, the Latch Series B-1 Preferred Stock and the Latch Series B-2 Preferred Stock, collectively;

Latch Series A Preferred Stock” are to the shares of Latch’s Series A Preferred Stock, par value $0.00001 per share;

Latch Series A-1 Preferred Stock” are to the shares of Latch’s Series A-1 Preferred Stock, par value $0.00001 per share;

 

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Latch Series B Preferred Stock” are to the shares of Latch’s Series B Preferred Stock, par value $0.00001 per share;

Latch Series B-1 Preferred Stock” are to the shares of Latch’s Series B-1 Preferred Stock, par value $0.00001 per share;

Latch Series B-2 Preferred Stock” are to the shares of Latch’s Series B-2 Preferred Stock, par value $0.00001 per share;

Latch Series Seed Preferred Stock” are to the shares of Latch’s Series Seed Preferred Stock, par value $0.00001 per share;

Merger Sub” are to Lionet Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of TSIA;

Post-Combination Company” are to TSIA following the consummation of the Business Combination and the other transactions contemplated by the Merger Agreement;

Public Shares” are to shares of TSIA Class A common stock sold as part of the units in the TSIA IPO (whether they were purchased in the TSIA IPO or thereafter in the open market);

public stockholders” are to the holders of TSIA’s Public Shares, including TSIA’s Sponsor and management team to the extent TSIA’s Sponsor and/or members of its management team purchase Public Shares provided that TSIA’s Sponsor’s and each member of its management team’s status as a “public stockholder” will only exist with respect to such Public Shares;

Private Placement Warrants” are to the warrants issued to TSIA’s Sponsor in a private placement simultaneously with the closing of the TSIA IPO;

SEC” are to the U.S. Securities and Exchange Commission;

Securities Act” are to the Securities Act of 1933, as amended;

Sponsor” are to TS Innovation Acquisitions Sponsor, L.L.C., a Delaware limited liability company;

Tishman Speyer” are to Tishman Speyer Properties, L.P., a New York limited partnership, and the parent of TSIA’s Sponsor;

Trust Account” are trust account established by TSIA for the benefit of its stockholders at J.P. Morgan Chase Bank, N.A.;

TSIA” are to TS Innovation Acquisitions Corp., a Delaware corporation; and

TSIA IPO” are to the initial public offering by TSIA, which closed on November 13, 2020.

Unless specified otherwise, amounts in this proxy statement/prospectus are presented in United States (“U.S.”) dollars.

Defined terms in the financial statements contained in this proxy statement/prospectus have the meanings ascribed to them in the financial statements.

 

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TRADEMARKS, TRADE NAMES AND SERVICE MARKS

TSIA, Tishman Speyer, Latch and Latch’s subsidiaries own or have rights to trademarks, trade names and service marks that they use in connection with the operation of their business. In addition, their names, logos and website names and addresses are their trademarks or service marks. Other trademarks, trade names and service marks appearing in this proxy statement/prospectus are the property of their respective owners. Solely for convenience, in some cases, the trademarks, trade names and service marks referred to in this proxy statement/prospectus are listed without the applicable ®, M and SM symbols, but they will assert, to the fullest extent under applicable law, their rights to these trademarks, trade names and service marks.

 

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QUESTIONS AND ANSWERS

The questions and answers below highlight only selected information from this proxy statement/prospectus and only briefly address some commonly asked questions about the Business Combination and the Merger, the Special Meeting in lieu of the 2021 annual meeting and the proposals to be presented at the Special Meeting. The following questions and answers do not include all the information that is important to TSIA stockholders. You are urged to read carefully this entire proxy statement/prospectus, including the Annexes and the other documents referred to herein, to fully understand the Business Combination and the voting procedures for the Special Meeting.

QUESTIONS AND ANSWERS ABOUT THE BUSINESS COMBINATION

 

Q:

WHAT IS THE BUSINESS COMBINATION?

 

A:

TSIA, Merger Sub, a wholly owned subsidiary of TSIA, and Latch have entered into the Merger Agreement, pursuant to which Merger Sub will merge with and into Latch, with Latch surviving the Merger as a wholly owned subsidiary of TSIA. In connection with the Closing of the Merger, Latch will be renamed Latch Systems, Inc. and TSIA will be renamed Latch, Inc.

TSIA will hold the Special Meeting to, among other things, obtain the approvals required for the Business Combination and the other transactions contemplated by the Merger Agreement, and you are receiving this proxy statement/prospectus in connection with such meeting. See “The Merger Agreement” beginning on page 202. In addition, a copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A. We urge you to read carefully this proxy statement/prospectus, including the Annexes and the other documents referred to herein, in their entirety.

 

Q:

WHY AM I RECEIVING THIS DOCUMENT?

 

A:

TSIA is sending this proxy statement/prospectus to its stockholders to help them decide how to vote their shares of TSIA common stock with respect to the matters to be considered at the Special Meeting. The Business Combination cannot be completed unless TSIA’s stockholders approve the Business Combination Proposal, the Charter Approval Proposal, the NASDAQ Proposal and the Incentive Award Plan Proposal set forth in this proxy statement/prospectus for their approval. Information about the Special Meeting, the Business Combination and the other business to be considered by stockholders at the Special Meeting is contained in this proxy statement/prospectus. This document constitutes a proxy statement of TSIA and a prospectus of TSIA. It is a proxy statement because the board of directors of TSIA is soliciting proxies using this proxy statement/prospectus from its stockholders. It is a prospectus because TSIA, in connection with the Business Combination, is offering shares of TSIA Class A common stock in exchange for the outstanding shares of Latch common stock, pursuant to the Subscription Agreements, and pursuant to the conversion of TSIA Class B common stock. See “The Merger Agreement—Merger Consideration” and “The Subscription Agreements.

 

Q:

WHAT WILL LATCH STOCKHOLDERS RECEIVE IN THE BUSINESS COMBINATION?

 

A:

As part of the Business Combination, Latch equityholders will receive aggregate consideration of $1.0 billion, payable in newly issued shares of TSIA Class A common stock at a price of $10.00 per share and, solely with respect to holders of Latch vested stock options with respect to which an election to receive only cash (a “cash election”) has been properly made, the Cash Election Consideration (as defined herein) (collectively, the “merger consideration”).

Under the terms of the Merger Agreement, immediately prior to the effective time of the Merger (the “Effective Time”), (i) Latch will cause each share of Latch preferred stock issued and outstanding to be automatically converted into a number of shares of Latch common stock in accordance with Latch’s

 

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certificate of incorporation (the “preferred stock conversion”) and (ii) Latch will cause the outstanding principal and accrued but unpaid interest due on Latch’s convertible notes immediately prior to the Effective Time to be automatically converted into a number of shares of Latch common stock in accordance with terms of the applicable Latch convertible note (the “convertible note conversion”).

At the Effective Time, (i) each share of Latch common stock issued and outstanding immediately prior to the closing of the Merger (the “Closing”) (including shares of Latch common stock issued upon the preferred stock conversion and the convertible note conversion and upon any exercise of Latch warrants prior to the Closing, but excluding shares owned by Latch as treasury stock or dissenting shares) will be cancelled and converted into the right to receive a number of shares of TSIA Class A common stock equal to the Exchange Ratio, (ii) each Latch vested stock option with respect to which cash election has been properly made that is issued and outstanding immediately prior to the Closing (such option, a “Cash Elected Company Option”) will be cancelled and converted into the right to receive an amount of cash equal to the Exchange Ratio multiplied by $10.00 (the “Per Share Value”) minus the exercise price applicable to the share of Latch common stock underlying such Latch vested stock option (the “Cash Election Consideration”), and (iii) each outstanding Latch stock option that is not a Cash Elected Company Option, whether vested or unvested, will be converted into an option to purchase a number of shares of TSIA Class A common stock equal to the product of (x) the number of shares of Latch common stock underlying such Latch stock option immediately prior to the Closing and (y) the Exchange Ratio, at an exercise price per share equal to (A) the exercise price per share of Latch common stock underlying such Latch stock option immediately prior to the Closing divided by (B) the Exchange Ratio. The “Exchange Ratio” is the quotient of (x) the aggregate merger consideration of 100,000,000 shares of TSIA Class A common stock, divided by (y) the number of shares of Latch common stock outstanding on a fully diluted net exercise basis.

Based on the number of shares of Latch capital stock outstanding and issuable upon the net exercise or conversion of outstanding stock options, warrants and convertible notes of Latch, in each case as of April 20, 2021, the total number of shares of TSIA Class A common stock expected to be issued to holders of shares of Latch capital stock in connection with the closing of the Business Combination is approximately 64.2%.

 

Q:

WHEN DO YOU EXPECT THE BUSINESS COMBINATION TO BE COMPLETED?

 

A:

It is currently anticipated that the Business Combination will be consummated promptly following the Special Meeting, which is set for June 3, 2021; however, such meeting could be adjourned, as described herein. Neither TSIA nor Latch can assure you of when or if the Business Combination will be completed and it is possible that factors outside of the control of both companies could result in the Business Combination being completed at a different time or not at all. TSIA must first obtain the approval of its stockholders for certain of the proposals set forth in this proxy statement/prospectus for their approval, Latch must first obtain the written consent of its stockholders for the Merger and TSIA and Latch must also first obtain certain necessary regulatory approvals and satisfy other closing conditions. See “The Merger Agreement—Conditions to the Business Combination” beginning on page 215.

 

Q:

WHAT HAPPENS IF THE BUSINESS COMBINATION IS NOT COMPLETED?

 

A:

If the Business Combination is not completed, Latch stockholders will not receive any consideration for their shares of Latch capital stock, and Latch preferred stock and Latch convertible notes will not be converted into Latch common stock. Instead, Latch will remain an independent company. See “The Merger Agreement—Termination” and “Risk Factors” beginning on page 217 and page 24, respectively.

 

Q:

HOW WILL TSIA BE MANAGED AND GOVERNED FOLLOWING THE BUSINESS COMBINATION?

 

A:

TSIA does not currently have any management-level employees other than Robert J. Speyer, our Chairman and Chief Executive Officer, Paul A. Galiano, our Chief Operating Officer and Chief Financial Officer, and

 

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  Jenny Wong, our Chief Investment Officer. Following the Closing, the Company’s executive officers are expected to be the current management team of Latch. See “Management of the Post-Combination Company Following the Business Combination” for more information.

TSIA is, and after the Closing will continue to be, managed by its board of directors. Following the closing, the size of our board of directors will remain at seven directors and will consist of Luke Schoenfelder, Robert J. Speyer, Peter Campbell, Tricia Han, Raju Rishi, J. Allen Smith and Andrew Sugrue. Following the Closing, we expect that a majority of the directors will be independent under applicable NASDAQ listing rules. See the section entitled “Management of the Post-Combination Company Following the Business Combination” for more information.

 

Q:

WILL TSIA OBTAIN NEW FINANCING IN CONNECTION WITH THE BUSINESS COMBINATION?

 

A:

In connection with the execution of the Merger Agreement, TSIA entered into subscription agreements (collectively, the “Subscription Agreements”) with certain parties subscribing for shares of TSIA Class A common stock (the “Subscribers”) pursuant to which the Subscribers have agreed to purchase, and TSIA has agreed to sell to the Subscribers, (i) an aggregate of 19,000,000 shares of TSIA Class A common stock, for a purchase price of $10.00 per share and at an aggregate purchase price of $190,000,000, plus (ii) a number of shares of TSIA Class A common stock at a purchase price of $10.00 per share, equal to the value necessary to fund the Cash Election Consideration. The obligations to consummate the transactions contemplated by the Subscription Agreements are conditioned upon, among other things, customary closing conditions and the consummation of the transactions contemplated by the Merger Agreement, including the Merger. See “Other Agreements—Subscription Agreements.

If the 19,000,000 shares of TSIA Class A common stock to be issued to the Subscribers simultaneously with the consummation of the Business Combination were currently outstanding, such shares would have an aggregate market value of $191,900,000 based upon the closing price of $10.10 per public share on the NASDAQ on May 6, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus.

 

Q:

WHAT EQUITY STAKE WILL CURRENT TSIA STOCKHOLDERS, THE INITIAL STOCKHOLDERS, THE SUBSCRIBERS AND THE LATCH STOCKHOLDERS HOLD IN TSIA FOLLOWING THE CLOSING?

 

A:

The expected beneficial ownership of shares of the Post-Combination Company’s common stock, assuming no Public Shares of TSIA are redeemed and no cash elections in respect of Latch vested stock options are made, will be as follows:

 

   

Current public TSIA stockholders will own 30,000,000 shares of common stock, representing approximately 19.3% of the total shares outstanding;

 

   

The Initial Stockholders will own 6,762,000 vested shares of common stock (and an additional 738,000 shares subject to vesting requirements pursuant to the Sponsor Agreement), representing approximately 4.3% of the total shares outstanding;

 

   

The Subscribers will own 19,000,000 shares of common stock, representing approximately 12.2% of the total shares outstanding; and

 

   

The current Latch stockholders will own 100,000,000 shares of common stock on a fully diluted net exercise basis, representing approximately 64.2% of the total shares outstanding.

 

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The expected beneficial ownership of shares of the Post-Combination Company’s common stock, assuming all Public Shares of TSIA have been redeemed and no cash elections in respect of Latch vested stock options are made, will be as follows:

 

   

The Initial Stockholders will own 6,762,000 shares of common stock (and an additional 738,000 shares subject to vesting requirements pursuant to the Sponsor Agreement), representing approximately 5.4% of the total shares outstanding;

 

   

The Subscribers will own 19,000,000 shares of common stock, representing approximately 15.1% of the total shares outstanding; and

 

   

The Latch stockholders will own 100,000,000 shares of common stock on a fully diluted net exercise basis, representing approximately 79.5% of the total shares outstanding.

For more information, see “Unaudited Pro Forma Condensed Combined Financial Information.

 

Q:

FOLLOWING THE BUSINESS COMBINATION, WILL TSIA’S SECURITIES CONTINUE TO TRADE ON A STOCK EXCHANGE?

 

A:

Yes. Upon the Closing, we intend to change our name from “TSIA” to “Latch, Inc.,” and our Class A common stock and warrants will be listed following the closing under the symbols “LTCH” and “LTCH.W,” respectively. We intend to apply to continue the listing of our Class A common stock and warrants on NASDAQ following the Closing.

QUESTIONS AND ANSWERS ABOUT TSIA’S SPECIAL STOCKHOLDER MEETING

 

Q:

WHEN AND WHERE IS THE SPECIAL MEETING?

 

A:

The Special Meeting will be held at 10 a.m. prevailing Eastern Time, on June 3, 2021, in virtual format. TSIA stockholders may attend, vote and examine the list of TSIA stockholders entitled to vote at the Special Meeting by visiting and entering the control number found on their proxy card, voting instruction form or notice included in their proxy materials. In light of public health concerns regarding the coronavirus (“COVID-19”) pandemic, the Special Meeting will be held in virtual meeting format only. You will not be able to attend the Special Meeting physically.

 

Q:

WHAT AM I BEING ASKED TO VOTE ON AND WHY IS THIS APPROVAL NECESSARY?

 

A:

The stockholders of TSIA are being asked to vote on the following:

 

   

A proposal to adopt the Merger Agreement and the transactions contemplated thereby. See the section entitled “Proposal No. 1—The Business Combination Proposal.”

 

   

A proposal to adopt the Proposed Charter in the form attached hereto as Annex B. See the section entitled “Proposal No. 2—The Charter Approval Proposal.”

 

   

A proposal with respect to certain governance provisions in the Proposed Charter, which are being separately presented in accordance with SEC requirements and which will be voted upon on a non-binding advisory basis. See the section entitled “Proposal No.3—The Governance Proposal.”

 

   

A proposal to elect seven directors to serve on the Board until the 2022 annual meeting of stockholders, in the case of Class I directors, the 2023 annual meeting of stockholders, in the case of Class II directors, and the 2024 annual meeting of stockholders, in the case of Class III directors, and, in each case, until their respective successors are duly elected and qualified. See the section entitled “Proposal No. 4—The Director Election Proposal.”

 

   

A proposal to approve, for purposes of complying with applicable listing rules of the NASDAQ: (i) the issuance of shares of TSIA Class A common stock to the Latch stockholders pursuant to the Merger

 

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Agreement; (ii) the issuance of shares of TSIA Class A common stock pursuant to the Subscription Agreements; and (iii) the issuance of shares of TSIA Class A common stock pursuant to the conversion of TSIA Class B common stock. See the section entitled “Proposal No. 5—The NASDAQ Proposal.”

 

   

A proposal to approve and adopt the Incentive Plan. See the section entitled “Proposal No. 6—The Incentive Award Plan Proposal.”

 

   

A proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Approval Proposal, the Director Election Proposal, the NASDAQ Proposal or the Incentive Award Plan Proposal. See the section entitled “Proposal No. 7—The Adjournment Proposal.”

TSIA will hold the Special Meeting to consider and vote upon these Proposals. This proxy statement/prospectus contains important information about the proposed Merger and the other matters to be acted upon at the Special Meeting.

Stockholders should read this proxy statement/prospectus carefully, including the Annexes and the other documents referred to herein.

Consummation of the Business Combination is conditioned on the approval of each of the Business Combination Proposal, the Charter Approval Proposal, the NASDAQ Proposal and the Incentive Award Plan Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the other proposals, except the Adjournment Proposal, will not be presented to stockholders for a vote.

The vote of stockholders is important. Stockholders are encouraged to vote as soon as possible after carefully reviewing this proxy statement/prospectus.

 

Q:

I AM A TSIA WARRANT HOLDER. WHY AM I RECEIVING THIS PROXY STATEMENT/PROSPECTUS?

 

A:

Upon consummation of the Merger, the TSIA warrants shall, by their terms, entitle the holders to purchase Class A common stock at a purchase price of $11.50 per share. This proxy statement/prospectus includes important information about Latch and the business of Latch and its subsidiaries following consummation of the Merger. As holders of TSIA warrants will be entitled to purchase Class A common stock of TSIA upon consummation of the Merger, TSIA urges you to read the information contained in this proxy statement/prospectus carefully.

 

Q:

WHO IS LATCH?

 

  

Latch is an enterprise technology company focused on revolutionizing the way people experience spaces by making spaces better places to live, work, and visit. Latch has created a full-building operating system, LatchOS, that addresses the essential needs of modern buildings by streamlining building operations, enhancing the resident experience, and enabling more efficient interactions with service providers. Latch’s product offerings are designed to optimize the resident experience and include smart access, delivery and guest management, smart home and sensors, connectivity, and resident experience. Latch combines hardware, software, and services into a holistic system that we believe makes spaces more enjoyable for resident, more efficient and profitable for building operators, and more convenient for service providers.

 

Q:

WHY IS TSIA PROPOSING THE BUSINESS COMBINATION?

 

A:

TSIA was organized to effect a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses or entities.

 

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On November 13, 2020, TSIA completed its initial public offering of units, with each unit consisting of Class A common stock and one-third of one public warrant, each whole public warrant to purchase one share of common stock at a price of $11.50, raising total gross proceeds of $300,000,000. On the same date TSIA also completed a private placement of warrants to its Sponsor, raising total gross proceeds of $8,000,000. Since the TSIA IPO, TSIA’s activity has been limited to the evaluation of business combination candidates.

Based on its due diligence investigations of Latch and the industry in which it operates, including the financial and other information provided by Latch in the course of their negotiations in connection with the Merger Agreement, TSIA believes that the Merger with Latch is advisable and in the best interests of TSIA and its stockholders. See the section entitled “The Merger—Recommendation of the TSIA Board of Directors and Reasons for the Merger.

 

Q:

DID THE TSIA BOARD OBTAIN A THIRD-PARTY VALUATION OR FAIRNESS OPINION IN DETERMINING WHETHER OR NOT TO PROCEED WITH THE BUSINESS COMBINATION?

 

A:

The TSIA Board did not obtain a third-party valuation or fairness opinion in connection with their determination to approve the Merger with Latch. The directors and officers of TSIA and TSIA’s advisors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of TSIA’s financial advisors and consultants, enabled them to make the necessary analyses and determinations regarding the Merger with Latch. In addition, TSIA’s directors and officers and TSIA’s advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of the TSIA Board and TSIA’s advisors in valuing Latch’s business.

 

Q:

WHY IS TSIA PROVIDING STOCKHOLDERS WITH THE OPPORTUNITY TO VOTE ON THE BUSINESS COMBINATION?

 

A:

We are seeking approval of the Business Combination for purposes of complying with applicable NASDAQ listing rules requiring stockholder approval of issuances of more than 20% of a listed company’s issued and outstanding common stock. In addition, pursuant to the Existing Charter, we must provide all public stockholders with the opportunity to redeem all or a portion of their Public Shares upon the consummation of an initial business combination (as defined in our Existing Charter) either in conjunction with a tender offer or in conjunction with a stockholder vote to approve such initial business combination. If we submit the proposed initial business combination to the stockholders for their approval, our Existing Charter requires us to conduct a redemption offer in conjunction with the proxy solicitation (and not in conjunction with a tender offer) pursuant to the applicable SEC proxy solicitation rules.

 

Q:

DO LATCH’S STOCKHOLDERS NEED TO APPROVE THE BUSINESS COMBINATION?

 

A:

Yes. Concurrently with the execution of the Merger Agreement, TSIA, Merger Sub and the Supporting Latch Stockholders (as defined herein) entered into the Company Holders Support Agreement. The Company Holders Support Agreement provides, among other things, each Supporting Latch Stockholder agreed to (i) vote at any meeting of the stockholders of Latch all of its Latch common stock and/or Latch preferred stock, as applicable (or any securities convertible into or exercisable or exchangeable for Latch common stock or Latch preferred stock), held of record or thereafter acquired in favor of the Transactions and the adoption of the Merger Agreement; (ii) appoint the chief executive officer of Latch as such stockholder’s proxy in the event such stockholder fails to fulfill its obligations under the Company Holders Support Agreement, (iii) be bound by certain other covenants and agreements related to the Merger and (iv) be bound by certain transfer restrictions with respect to Latch securities, in each case, on the terms and subject to the conditions set forth in the Company Holders Support Agreement. The shares of Latch capital stock that are owned by the Supporting Latch Stockholders and subject to the Support Agreements represent

 

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  approximately 40.9% of the outstanding shares of Latch common stock and approximately 64.2% of the outstanding shares of Latch preferred stock, in each case, as of April 20, 2021. The execution and delivery of written consents by all of the Supporting Latch Stockholders will constitute the Latch stockholder approval at the time of such delivery.

 

Q:

DO I HAVE REDEMPTION RIGHTS?

 

A:

If you are a holder of Public Shares, you have the right to demand that TSIA redeem such shares for a pro rata portion of the cash held in the Trust Account, which holds the proceeds of the TSIA IPO, as of two business days prior to the consummation of the transactions contemplated by the Business Combination Proposal (including interest earned on the funds held in the Trust Account and not previously released to TSIA to pay taxes) upon the Closing (“Redemption Rights”).

Notwithstanding the foregoing, a holder of Public Shares, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from seeking redemption with respect to more than 15% of the Public Shares without the consent of TSIA. Accordingly, all Public Shares in excess of 15% held by a public stockholder, together with any affiliate of such stockholder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed without the consent of TSIA.

Under TSIA’s Existing Charter, the Merger may be consummated only if TSIA has at least $5,000,001 of net tangible assets after giving to all holders of Public Shares that properly demand redemption of their shares for cash.

 

Q:

WILL HOW I VOTE AFFECT MY ABILITY TO EXERCISE REDEMPTION RIGHTS?

 

A:

No. You may exercise your redemption rights whether you vote your shares of Public Shares for or against, or whether you abstain from voting on, the Business Combination Proposal or any other Proposal described in this proxy statement/prospectus. As a result, the Business Combination Proposal can be approved by stockholders who will redeem their Public Shares and no longer remain stockholders and the Merger may be consummated even though the funds available from the Trust Account and the number of public stockholders are substantially reduced as a result of redemptions by public stockholders.

 

Q:

HOW DO I EXERCISE MY REDEMPTION RIGHTS?

 

A:

If you are a holder of Public Shares and wish to exercise your redemption rights, you must demand that TSIA redeem your shares for cash no later than the second business day preceding the vote on the Business Combination Proposal by delivering your stock to TSIA’s transfer agent physically or electronically using Depository Trust Company’s DWAC (Deposit and Withdrawal at Custodian) system. Any holder of Public Shares will be entitled to demand that such holder’s shares be redeemed for a pro rata portion of the amount then in the Trust Account (which, for illustrative purposes, was approximately $300,008,817.60, or $10.00 per share, as of May 11, 2021, the TSIA Record Date). Such amount, including interest earned on the funds held in the Trust Account and not previously released to TSIA to pay its taxes, will be paid promptly upon consummation of the Merger. However, under Delaware law, the proceeds held in the Trust Account could be subject to claims which could take priority over those of TSIA’s public stockholders exercising redemption rights, regardless of whether such holders vote for or against the Business Combination Proposal. Therefore, the per-share distribution from the Trust Account in such a situation may be less than originally anticipated due to such claims. Your vote on any proposal will have no impact on the amount you will receive upon exercise of your redemption rights.

Any request for redemption, once made by a holder of Public Shares, may be withdrawn at any time up to the time the vote is taken with respect to the Business Combination Proposal at the Special Meeting. If you deliver your shares for redemption to TSIA’s transfer agent and later decide prior to the Special Meeting not to elect redemption, you may request that TSIA’s transfer agent return the shares (physically or electronically).

 

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If a holder of Public Shares properly makes a request for redemption and the Public Shares are delivered as described to TSIA’s transfer agent as described herein, then, if the Merger is consummated, TSIA will redeem these shares for a pro rata portion of funds deposited in the Trust Account. If you exercise your redemption rights, then you will be exchanging your Public Shares for cash and you will cease to have any rights as a TSIA stockholder (other than the right to receive the redemption amount) upon consummation of the Merger.

For a discussion of the material U.S. federal income tax consequences for holders of Public Shares with respect to the exercise of these redemption rights, see “Material U.S. Federal Income Tax Consequences—Material Tax Consequences of a Redemption of Public Shares” beginning on page 226.

 

Q:

DO I HAVE APPRAISAL RIGHTS IF I OBJECT TO THE PROPOSED BUSINESS COMBINATION?

 

A:

No. Neither TSIA stockholders nor its unit or warrant holders have appraisal rights in connection with the Business Combination under the DGCL. See the section entitled “TSIA’s Special Meeting of Stockholders—Appraisal Rights.

 

Q:

WHAT HAPPENS TO THE FUNDS DEPOSITED IN THE TRUST ACCOUNT AFTER CONSUMMATION OF THE BUSINESS COMBINATION?

 

A:

A total of $300,000,000 in net proceeds of the TSIA IPO and the amount raised from the private sale of warrants simultaneously with the consummation of the TSIA IPO was placed in the Trust Account following the TSIA IPO. After consummation of the Merger, the funds in the Trust Account will be used to pay holders of the Public Shares who exercise redemption rights, to pay fees and expenses incurred in connection with the Merger (including aggregate fees of up to $10,500,000 as deferred underwriting commissions) and for the Post-Combination Company’s working capital and general corporate purposes.

 

Q:

WHAT HAPPENS IF THE MERGER IS NOT CONSUMMATED?

 

A:

If TSIA does not complete the Merger with Latch for whatever reason, TSIA would search for another target business with which to complete a business combination. If TSIA does not complete the Merger with Latch or another target business within 24 months after the closing of the TSIA IPO (the “Completion Window”), TSIA must redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the amount then held in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to TSIA to pay taxes (less up to $100,000 of interest to pay dissolution expenses) divided by the number of outstanding Public Shares. The Initial Stockholders have no redemption rights in the event a business combination is not effected in the Completion Window, and, accordingly, their Founder Shares will be worthless. Additionally, in the event of such liquidation, there will be no distribution with respect to TSIA’s outstanding warrants. Accordingly, the warrants will expire worthless.

 

Q:

HOW DOES THE SPONSOR INTEND TO VOTE ON THE PROPOSALS?

 

A:

The Initial Stockholders of record are entitled to vote an aggregate of 20% of the outstanding shares of TSIA’s common stock. The Sponsor and TSIA’s directors and officers have agreed to vote any Founder Shares and any Public Shares held by them as of the TSIA Record Date in favor of each of the proposals presented at the Special Meeting.

 

Q:

WHAT CONSTITUTES A QUORUM AT THE SPECIAL MEETING?

 

A:

A majority of the voting power of the issued and outstanding common stock of TSIA entitled to vote at the Special Meeting must be present, in person (which would include presence at a virtual meeting) or

 

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  represented by proxy, at the Special Meeting to constitute a quorum and in order to conduct business at the Special Meeting. Abstentions and broker non-votes will be counted as present for the purpose of determining a quorum. The holders of the Founder Shares, who currently own 20% of the issued and outstanding shares of common stock, will count towards this quorum. In the absence of a quorum, the chairman of the Special Meeting has power to adjourn the Special Meeting. As of the TSIA Record Date for the Special Meeting, 18,750,001 shares of common stock would be required to achieve a quorum.

 

Q:

WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL MEETING?

 

A:

The Business Combination Proposal: The affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A common stock and Class B common stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Business Combination Proposal. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Business Combination Proposal, will have no effect on the Business Combination Proposal. TSIA stockholders must approve the Business Combination Proposal in order for the Merger to occur.

The Charter Approval Proposal: The affirmative vote (in person or by proxy) of (i) the holders of a majority of the Founder Shares then outstanding, voting separately as a single class, and (ii) the holders of a majority of the shares of Class A common stock and Class B common stock entitled to vote, voting as a single class is required to approve the Charter Approval Proposal. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Charter Approval Proposal, will have the same effect as a vote “AGAINST” such proposal. The Merger is conditioned on the approval of the Charter Approval Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Charter Approval Proposal will not be presented to the stockholders for a vote.

The Governance Proposal: The affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A common stock and Class B common stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Governance Proposal. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Governance Proposal, will have no effect on the Governance Proposal. The Merger is not conditioned on the approval of the Governance Proposal. If the Business Combination Proposal is not approved, the Governance Proposal will not be presented to the stockholders for a vote.

The Director Election Proposal: The affirmative vote (in person or by proxy) of the holders of a plurality of the outstanding shares of Class A common stock and Class B common stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Director Election Proposal. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Director Election Proposal, will have no effect on the election of directors. The Merger is not conditioned on the approval of the Director Election Proposal. If the Business Combination Proposal is not approved, the Director Election Proposal will not be presented to the stockholders for a vote.

The NASDAQ Proposal: The affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A common stock and Class B common stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the NASDAQ Proposal. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the NASDAQ Proposal, will have no effect on the NASDAQ Proposal. The Merger is conditioned on the approval of the NASDAQ Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the NASDAQ Proposal will not be presented to the stockholders for a vote.

 

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The Incentive Award Plan Proposal: The affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A common stock and Class B common stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Incentive Award Plan Proposal. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Incentive Award Plan Proposal, will have no effect on the Incentive Award Plan Proposal. The Merger is conditioned on the approval of the Incentive Award Plan Proposal, subject to the terms of the Merger Agreement. If the Business Combination Proposal is not approved, the Incentive Award Plan Proposal will not be presented to the stockholders for a vote.

The Adjournment Proposal: The affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A common stock and Class B common stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class, is required to approve the Adjournment Proposal. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Adjournment Proposal, will have no effect on the Adjournment Proposal. The Merger is not conditioned on the approval of the Adjournment Proposal.

As further discussed in the section entitled “Other Agreements—Sponsor Agreement” beginning on page 220 of this proxy statement/prospectus, the Sponsor and TSIA’s directors and officers have entered into an amended and restated letter agreement with TSIA and Latch, a copy of which is attached as Annex D to this proxy statement/prospectus (the “Sponsor Agreement”), pursuant to which the Sponsor and such directors and officers have agreed to vote shares representing 20% of the aggregate voting power of the common stock in favor of the each of the Proposals presented at the Special Meeting.

 

Q:

DO ANY OF TSIA’S DIRECTORS OR OFFICERS HAVE INTERESTS IN THE BUSINESS COMBINATION THAT MAY DIFFER FROM OR BE IN ADDITION TO THE INTERESTS OF TSIA STOCKHOLDERS?

 

A:

Certain of TSIA’s executive officers and certain non-employee directors may have interests in the Merger that may be different from, or in addition to, the interests of TSIA stockholders generally.

These interests include, among other things:

 

   

If the Business Combination with Latch or another business combination is not consummated within the Completion Window, TSIA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and the TSIA Board, dissolving and liquidating. In such event, the 7,500,000 Founder Shares held by TSIA’s Initial Stockholders, including 120,000 Founder Shares held by TSIA’s independent directors, which were acquired for an aggregate purchase price of $25,000 prior to the TSIA IPO, would be worthless because TSIA’s Initial Stockholders are not entitled to participate in any redemption or distribution with respect to such shares. Such Founder Shares had an aggregate market value of $75,750,000 based upon the closing price of $10.10 per share of Class A common stock on the NASDAQ on May 6, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. The 120,000 Founder Shares held by TSIA’s independent directors had an aggregate market value of $1,212,000 based upon the closing price of $10.10 per share of Class A common stock on the NASDAQ on May 6, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus.

 

   

The Sponsor purchased an aggregate of 5,333,334 Private Placement Warrants from TSIA for an aggregate purchase price of $8,000,000 (or $1.50 per warrant). These purchases took place on a private placement basis simultaneously with the consummation of the TSIA IPO. A portion of the proceeds TSIA received from these purchases were placed in the Trust Account. Such warrants had an aggregate market value of $11,946,668 based upon the closing price of $2.24 per public warrant on the NASDAQ

 

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on May 6, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. The Private Placement Warrants would become worthless if TSIA does not consummate a business combination within the Completion Window.

 

   

No compensation of any kind, including finder’s and consulting fees, is paid to our Sponsor, officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination, except for reimbursement for out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. From the date of the TSIA IPO until the date of the Merger Agreement, there have been no reimbursable out-of-pocket expenses incurred in connection with the Business Combination.

The TSIA Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in approving the Merger Agreement and in recommending that the Business Combination be approved by the stockholders of TSIA. See “The Business Combination—Interests of TSIA’s Directors and Officers in the Business Combination” beginning on page 196 of this proxy statement/prospectus.

 

Q:

WHAT DO I NEED TO DO NOW?

 

A:

TSIA urges you to read carefully and consider the information contained in this proxy statement/prospectus, including the Annexes and the other documents referred to herein, and to consider how the Merger will affect you as a stockholder and/or warrant holder of TSIA. Stockholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card.

 

Q:

WHAT HAPPENS IF I SELL MY SHARES OF CLASS A COMMON STOCK BEFORE THE SPECIAL MEETING?

 

A:

The TSIA Record Date for the Special Meeting is earlier than the date that the Business Combination is expected to be completed. If you transfer your shares of Class A common stock after the TSIA Record Date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. However, you will not be able to seek redemption of your shares of Class A common stock because you will no longer be able to tender them prior to the Special Meeting in accordance with the provisions described herein. If you transferred your shares of Class A common stock prior to the TSIA Record Date, you have no right to vote those shares at the Special Meeting or redeem those shares for a pro rata portion of the proceeds held in the Trust Account.

 

Q:

HOW DO I VOTE?

 

A:

If you are a holder of record of TSIA common stock on the TSIA Record Date, you may vote in person (which would include presence at a virtual meeting) at the Special Meeting or by submitting a proxy for the Special Meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the meeting and vote in person (which would include presence at a virtual meeting), obtain a proxy from your broker, bank or nominee.

 

Q:

IF MY SHARES ARE HELD IN “STREET NAME” BY A BROKER, BANK OR OTHER NOMINEE, WILL MY BROKER, BANK OR OTHER NOMINEE VOTE MY SHARES FOR ME?

 

A:

If your shares are held in “street name” in a stock brokerage account or by a broker, bank or other nominee, you must provide the record holder of your shares with instructions on how to vote your shares. Please

 

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  follow the voting instructions provided by your broker, bank or other nominee. Please note that you may not vote shares held in “street name” by returning a proxy card directly to TSIA or by voting in person (which would include presence at a virtual meeting) at the Special Meeting unless you provide a “legal proxy”, which you must obtain from your broker, bank or other nominee.

Under the rules of the NASDAQ, brokers who hold shares in “street name” for a beneficial owner of those shares typically have the authority to vote in their discretion on “routine” proposals when they have not received instructions from beneficial owners. However, brokers are not permitted to exercise their voting discretion with respect to the approval of matters that the NASDAQ determines to be “non-routine” without specific instructions from the beneficial owner. It is expected that all proposals to be voted on at the Special Meeting are “non-routine” matters. Broker non-votes occur when a broker or nominee is not instructed by the beneficial owner of shares to vote on a particular proposal for which the broker does not have discretionary voting power.

If you are a TSIA stockholder holding your shares in “street name” and you do not instruct your broker, bank or other nominee on how to vote your shares, your broker, bank or other nominee will not vote your shares on the Business Combination Proposal, the Charter Approval Proposal, the Governance Proposal, the Director Election Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal or the Adjournment Proposal. Such broker non-votes will be the equivalent of a vote “AGAINST” the Charter Approval Proposal, but will have no effect on the vote count for such other proposals.

 

Q:

WHAT IF I ATTEND THE SPECIAL MEETING AND ABSTAIN OR DO NOT VOTE?

 

A:

For purposes of the Special Meeting, an abstention occurs when a stockholder attends the meeting in person (which would include presence at a virtual meeting) and does not vote or returns a proxy with an “abstain” vote.

If you are a TSIA stockholder that attends the Special Meeting virtually and fails to vote on the Charter Approval Proposal, your failure to vote will have the same effect as a vote “AGAINST” such proposal.

If you are a TSIA stockholder that attends the Special Meeting virtually and fail to vote on the Business Combination Proposal, Governance Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal, your failure to vote will have no effect on the Business Combination Proposal, the Governance Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal or the Adjournment Proposal.

 

Q:

WHAT WILL HAPPEN IF I RETURN MY PROXY CARD WITHOUT INDICATING HOW TO VOTE?

 

A:

If you sign and return your proxy card without indicating how to vote on any particular proposal, the common stock represented by your proxy will be voted “FOR” each of the proposals presented at the Special Meeting.

 

Q:

MAY I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?

 

A:

Yes. You may change your vote at any time before your proxy is exercised by doing any one of the following:

 

   

send another proxy card with a later date;

 

   

notify TSIA’s Secretary in writing before the Special Meeting that you have revoked your proxy; or

 

   

attend the Special Meeting and vote electronically by visiting and entering the control number found on your proxy card, instruction form or notice you previously received.

If you a stockholder of record of TSIA and you choose to send a written notice or to mail a new proxy, you must submit your notice of revocation or your new proxy to TSIA, 45 Rockefeller Plaza, New York, New York 10111 and it must be received at any time before the vote is taken at the TSIA Special

 

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Meeting. Any proxy that you submitted may also be revoked by submitting a new proxy by mail, or online or by telephone, not later than 11:59 p.m. prevailing Eastern Time on June 2, 2021, or by voting online at the TSIA Special Meeting. Simply attending the TSIA Special Meeting will not revoke your proxy. If you have instructed a broker, bank or other nominee to vote your shares of TSIA common stock, you must follow the directions you receive from your broker, bank or other nominee in order to change or revoke your vote.

 

Q:

WHAT HAPPENS IF I FAIL TO TAKE ANY ACTION WITH RESPECT TO THE SPECIAL MEETING?

 

A:

If you fail to take any action with respect to the Special Meeting and the Merger is approved by stockholders and consummated, you will become a stockholder of the Post-Combination Company. Failure to take any action with respect to the Special Meeting will not affect your ability to exercise your redemption rights. If you fail to take any action with respect to the Special Meeting and the Merger is not approved, you will continue to be a stockholder and/or warrant holder of TSIA while TSIA searches for another target business with which to complete a business combination.

 

Q:

WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?

 

A:

Stockholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your TSIA shares.

 

Q:

WHO CAN HELP ANSWER MY QUESTIONS?

 

A:

If you have questions about the Merger or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card you should contact:

Morrow Sodali LLC

470 West Avenue

Stamford, Connecticut 06902

Shareholders may call toll free: (800) 662-5200

Banks and Brokers may call collect: (203) 658-9400

TSIA.info@investor.morrowsodali.com

You may also obtain additional information about TSIA from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.” If you are a holder of Public Shares and you intend to seek redemption of your Public Shares, you will need to deliver your stock (either physically or electronically) to TSIA’s transfer agent at the address below prior to the vote at the Special Meeting. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

1 State Street 30th Floor

New York, New York 10004

 

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SUMMARY

This summary highlights selected information included in this proxy statement/prospectus and does not contain all of the information that may be important to you. You should read this entire document and its annexes and the other documents to which we refer before you decide how to vote. Each item in this summary includes a page reference directing you to a more complete description of that item.

The Business Combination and the Merger Agreement (pages 179 and 202)

The terms and conditions of the Business Combination are contained in the Merger Agreement, which is attached as Annex A to this proxy statement/prospectus. We encourage you to read the Merger Agreement carefully, as it is the legal document that governs the Business Combination.

If the Merger Agreement is approved and adopted and the Business Combination is subsequently completed, Merger Sub will merge with and into Latch with Latch surviving the Merger as a wholly owned subsidiary of TSIA.

Merger Consideration (page 202)

As part of the Business Combination, Latch equityholders will receive aggregate consideration of $1.0 billion, payable in newly issued shares of TSIA Class A common stock at a price of $10.00 per share and, solely with respect to holders of Latch vested stock options with respect to which an election to receive only cash (a “cash election”) has been properly made, the Cash Election Consideration (as defined below) (collectively, the “merger consideration”).

Under the terms of the Merger Agreement, immediately prior to the effective time of the Merger (the “Effective Time”), (i) Latch will cause each share of Latch preferred stock issued and outstanding to be automatically converted into a number of shares of Latch common stock in accordance with Latch’s certificate of incorporation (the “preferred stock conversion”) and (ii) Latch will cause the outstanding principal and accrued but unpaid interest due on Latch’s convertible notes immediately prior to the Effective Time to be automatically converted into a number of shares of Latch common stock in accordance with Section 3 of the applicable Latch convertible note (the “convertible note conversion”).

At the Effective Time, (i) each share of Latch common stock issued and outstanding immediately prior to the closing of the Merger (the “Closing”) (including shares of Latch common stock issued upon the preferred stock conversion and the convertible note conversion and upon any exercise of Latch warrants prior to the Closing, but excluding shares owned by Latch as treasury stock or dissenting shares) will be cancelled and converted into the right to receive a number of shares of TSIA Class A common stock equal to the Exchange Ratio, (ii) each Latch vested stock option with respect to which a cash election has been properly made that is issued and outstanding immediately prior to the Closing (such option, a “Cash Elected Company Option”) will be cancelled and converted into the right to receive an amount of cash equal to the Exchange Ratio multiplied by $10.00 (the “Per Share Value”) minus the exercise price applicable to the share of Latch common stock underlying such Latch vested stock option (the “Cash Election Consideration”), and (iii) each outstanding Latch stock option that is not a Cash Elected Company Option, whether vested or unvested, will be converted into an option to purchase a number of shares of TSIA Class A common stock equal to the product of (x) the number of shares of Latch common stock underlying such Latch stock option immediately prior to the Closing and (y) the Exchange Ratio, at an exercise price per share equal to (A) the exercise price per share of Latch common stock underlying such Latch stock option immediately prior to the Closing divided by (B) the Exchange Ratio. The “Exchange Ratio” is the quotient of (x) the aggregate merger consideration of 100,000,000 shares of TSIA Class A common stock, divided by (y) the number of shares of Latch common stock outstanding on a fully diluted net exercise basis.



 

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Based on the number of shares of Latch capital stock outstanding and issuable upon the net exercise or conversion of outstanding stock options, warrants and convertible notes of Latch, in each case as of May 11, 2021, the total number of shares of TSIA Class A common stock expected to be issued to holders of shares of Latch capital stock in connection with the closing of the Business Combination is approximately 64.2%.

Fractional Shares. No fractional shares of TSIA Class A common stock will be issued by virtue of the Business Combination or the other transactions contemplated by the Merger Agreement. Each person who would otherwise be entitled to a fraction of a share of TSIA Class A common stock (after aggregating all fractional shares of TSIA Class A common stock that otherwise would be received by such holder) will instead have the number of shares of TSIA Class A common stock issued to such person rounded down in the aggregate to the nearest whole share of TSIA Class A common stock.

Ownership of the Post-Combination Company

As of the date of this proxy statement/prospectus, there are 37,500,000 shares of TSIA common stock issued and outstanding, including 7,500,000 shares of TSIA Class B common stock, each of which will be converted into one share of Class A common stock at the Closing. As of the date of this proxy statement/prospectus, there are an aggregate of 15,333,310 warrants outstanding. Each whole warrant entitles the holder thereof to purchase one share of Class A common stock. Therefore, as of the date of this proxy statement/prospectus (without giving effect to the Business Combination and assuming no redemptions), assuming that (i) each share of Class B common stock is converted into one share of Class A common stock and (ii) each outstanding warrant is exercised and one Class A common stock is issued as a result of such exercise, the TSIA fully-diluted stock capital would be 52,833,310 shares of common stock.

It is anticipated that, upon the completion of the Business Combination, the ownership of the Post-Combination Company will be as follows:

 

   

current Latch stockholders will own 100,000,000 shares of common stock on a fully diluted net exercise basis, representing approximately 64.2% of the total shares outstanding;

 

   

the Subscribers will own 19,000,000 shares of common stock, representing approximately 12.2% of the total shares outstanding;

 

   

the current public stockholders will own 30,000,000 shares of common stock, representing approximately 19.3% of the total shares outstanding; and

 

   

the Initial Stockholders will own 6,762,000 vested shares of common stock (and an additional 738,000 shares subject to vesting requirements pursuant to the Sponsor Agreement), representing approximately 4.3% of the total shares outstanding. See “Other Agreements—Sponsor Agreement.”

The numbers of shares and percentage interests set forth above are based on a number of assumptions, including that none of the public stockholders exercise their redemption rights, that no cash elections in respect of Latch vested stock options are made and that TSIA and Latch do not issue any additional equity securities prior to the Business Combination. If the actual facts differ from our assumptions, the numbers of shares and percentage interests set forth above will be different. In addition, the numbers of shares and percentage interests set forth above do not take into account (i) potential future exercises of TSIA’s outstanding warrants or (ii) shares issuable upon the exercise of outstanding options to purchase shares of Latch’s common stock and shares issuable upon the settlement of restricted stock units for shares of Latch’s common stock.

Please see the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for further information.



 

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Recommendation of the TSIA Board of Directors (page 84)

The TSIA board of directors has unanimously determined that the Business Combination, on the terms and conditions set forth in the Merger Agreement, is advisable and in the best interests of TSIA and its stockholders and has directed that the Proposals set forth in this proxy statement/prospectus be submitted to its stockholders for approval at the Special Meeting on the date and at the time and place set forth in this proxy statement/prospectus. The TSIA board of directors unanimously recommends that TSIA’s stockholders vote “FOR” the Business Combination Proposal, “FOR” the Charter Approval Proposal, “FOR” the Governance Proposal, “FOR” the Director Election Proposal, “FOR” the NASDAQ Proposal, “FOR” the Incentive Award Plan Proposal, and “FOR” the Adjournment Proposal, if presented. See “The Business Combination—Recommendation of the TSIA Board of Directors and Reasons for the Business Combination” beginning on page 188.

TSIA’s Special Meeting of Stockholders (page 82)

The Special Meeting in lieu of the 2021 annual meeting of stockholders of TSIA will be held on June 3, 2021, at 10 a.m., prevailing Eastern time, in virtual format. At the Special Meeting, TSIA stockholders will be asked to vote on the Business Combination Proposal, the Charter Approval Proposal, the Governance Proposal, the Director Election Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal and if necessary, the Adjournment Proposal to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Approval Proposal, the NASDAQ Proposal or the Incentive Award Plan Proposal.

Stockholders will be entitled to vote or direct votes to be cast at the Special Meeting if they owned shares of TSIA common stock at the close of business on May 11, 2021, which is the record date for the Special Meeting. Stockholders are entitled to one vote for each share of TSIA common stock owned at the close of business on the TSIA Record Date. If stockholders’ shares are held in “street name” or are in a margin or similar account, stockholders should contact their broker, bank or other nominee to ensure that votes related to the shares they beneficially own are properly counted. On the TSIA Record Date, there were 37,500,000 shares of common stock outstanding, of which 30,000,000 were Public Shares and 7,500,000 were Founder Shares.

A quorum of TSIA stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if a majority of the voting power of all outstanding shares of capital stock of TSIA entitled to vote at the Special Meeting as of the TSIA Record Date is represented in person (which would include presence at a virtual meeting) or by proxy. Abstentions and broker non-votes will be counted as present for the purpose of determining a quorum. The Initial Stockholders, who currently own 20% of the issued and outstanding shares of common stock, will count towards this quorum. As of the TSIA Record Date, 18,750,001 shares of common stock would be required to achieve a quorum. TSIA has entered an agreement with the Sponsor and TSIA’s directors and officers, pursuant to which each agreed to vote any shares of common stock owned by them in favor of each of the Proposals presented at the Special Meeting. The Proposals presented at the Special Meeting will require the following votes:

The approval of each of the Business Combination Proposal, Governance Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal, if presented, requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A common stock and Class B common stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to each of the Business Combination Proposal, the Governance Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal or the Adjournment Proposal, if presented, will have no effect on the Business Combination Proposal, the Governance Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal or the Adjournment Proposal.



 

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The approval of the Charter Approval Proposal requires the affirmative vote of (i) the holders of a majority of the Founder Shares then outstanding, voting separately as a single class, and (ii) the holders of a majority of the outstanding shares of common stock on the TSIA Record Date, voting together as a single class. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Charter Approval Proposal, will have the same effect as a vote “AGAINST” such proposal.

With respect to the Director Election Proposal, directors are elected by a plurality of all of the votes cast by the stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. This means that the seven director nominees who receive the most affirmative votes will be elected. Stockholders may not cumulate their votes with respect to the election of directors. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to election of directors, will have no effect on the election of directors.

Consummation of the Business Combination is conditioned on the approval of the Business Combination Proposal, the Charter Approval Proposal, the NASDAQ Proposal and the Incentive Award Plan Proposal at the Special Meeting, subject to the terms of the Merger Agreement. The Merger is not conditioned on the Governance Proposal, the Director Election Proposal or the Adjournment Proposal. If the Business Combination Proposal is not approved, the other proposals (except the Adjournment Proposal) will not be presented to the stockholders for a vote.

TSIA’s Directors and Executive Officers Have Financial Interests in the Business Combination (page 196)

Certain of TSIA’s executive officers and certain non-employee directors may have interests in the Merger that may be different from, or in addition to, the interests of TSIA stockholders generally. These interests include, among other things:

 

   

If the Business Combination with Latch or another business combination is not consummated within the Completion Window, TSIA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and the TSIA Board, dissolving and liquidating. In such event, the 7,500,000 Founder Shares held by TSIA’s Initial Stockholders, including 120,000 Founder Shares held by TSIA’s independent directors, which were acquired for an aggregate purchase price of $25,000 prior to the TSIA IPO, would be worthless because TSIA’s Initial Stockholders are not entitled to participate in any redemption or distribution with respect to such shares. Such Founder Shares had an aggregate market value of $75,750,000 based upon the closing price of $10.10 per share of Class A common stock on the NASDAQ on May 6, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. The 120,000 Founder Shares held by TSIA’s independent directors had an aggregate market value of $1,212,000 based upon the closing price of $10.10 per share of Class A common stock on the NASDAQ on May 6, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus.

 

   

The Sponsor purchased an aggregate of 5,333,334 Private Placement Warrants from TSIA for an aggregate purchase price of $8,000,000 (or $1.50 per warrant). These purchases took place on a private placement basis simultaneously with the consummation of the TSIA IPO. A portion of the proceeds TSIA received from these purchases were placed in the Trust Account. Such warrants had an aggregate market value of $11,946,668 based upon the closing price of $2.24 per public warrant on the NASDAQ on May 6, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. The Private Placement Warrants will become worthless if TSIA does not consummate a business combination within the Completion Window.



 

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No compensation of any kind, including finder’s and consulting fees, is paid to our Sponsor, officers and directors, or any of their respective affiliates, for services rendered prior to or in connection with the completion of an initial business combination, except for reimbursement for out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Since the TSIA IPO until the date of the Merger Agreement, there have been no such out-of-pocket expenses incurred in connection with the Business Combination.

 

   

In August 2018, an affiliate of Tishman Speyer, which is an affiliate of the Sponsor, participated in Latch’s Series B financing round, purchasing approximately $550,000 in Latch’s Series B Preferred Stock, which constitutes approximately 0.9% of Latch’s Series B Preferred Stock. In August 2019, the same affiliate of Tishman Speyer participated in Latch’s Series B-1 financing round, purchasing approximately $250,000 in Latch’s Series B-1 Preferred Stock, which constitutes approximately 0.4% of Latch’s Series B-1 Preferred Stock. As a result of such participation, Tishman Speyer and its affiliates hold approximately 0.2% of the outstanding fully diluted shares of Latch common stock as of April 20, 2021. Other than the rights, powers and preferences granted generally to holders of Latch’s Series B and Series B-1 Preferred Stock pursuant to Latch’s organizational documents, Tishman Speyer and its affiliates have no additional governance rights in Latch. The TSIA Board and management did not consider such equity interest in Latch to be a material conflict of interest, nor was the ownership interest of an affiliate of Tishman Speyer in Latch a factor in TSIA’s investment decision with respect to the Business Combination.

 

   

The TSIA Board was aware of and considered these interests to the extent such interests existed at the time, among other matters, in reaching the determination to approve the terms of the Business Combination and in recommending to TSIA’s stockholders that they vote to approve the Business Combination. For a detailed discussion of the special interests that TSIA’s directors and executive officers may have in the Business Combination, please see the section entitled “The Business Combination—Interests of TSIA’sDirectors and Executive Officers in the Business Combination” beginning on page 198.

Latch’s Directors and Executive Officers Have Financial Interests in the Business Combination (page 198)

Certain of Latch’s executive officers and directors may have financial interests in the Business Combination that may be different from, or in addition to, the interests of Latch stockholders. The Latch board of directors was aware of and considered these interests, among other matters, in reaching the determination to approve the terms of the Business Combination. For a detailed discussion of the special interests that Latch’s directors and executive officers may have in the Business Combination, please see the section entitled “The Business Combination—Interests of Latch’s Directors and Executive Officers in the Business Combination” beginning on page 198.

Regulatory Approvals Required for the Business Combination (page 199)

Completion of the Business Combination is subject to approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”). Each of Latch and TSIA have agreed to use their respective reasonable best efforts to take all actions to consummate and make effective the transactions contemplated by the Merger Agreement as soon as reasonably practicable and to obtain as promptly as reasonably practicable all consents, registrations, approvals, clearances, permits and authorizations necessary or advisable to be obtained from any third party or any governmental entity in order to consummate the transactions contemplated by the Merger Agreement. TSIA has further agreed to take any steps necessary to eliminate any impediments under the HSR Act or any other antitrust law that is asserted by any governmental entity so as to enable the parties to consummate the Business Combination as soon as possible. TSIA and Latch filed



 

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Notification and Report Forms with the Antitrust Division and the FTC on February 5, 2021, and the 30-day waiting period expired at 11:59 p.m., New York City time, on March 8, 2021. The regulatory approvals to which completion of the Business Combination are subject are described in more detail in the section of this proxy statement/prospectus entitled “Regulatory Approvals Required for the Business Combination” beginning on page 199.

Appraisal Rights (page 263)

Holders of TSIA common stock are not entitled to appraisal rights in connection with the Business Combination under Delaware law.

Conditions to the Business Combination (page 215)

Conditions to Each Party’s Obligations.

The respective obligations of each of TSIA, Latch and Merger Sub to complete the Business Combination are subject to the satisfaction or waiver at or prior to the Closing of the following conditions:

 

   

all applicable waiting periods (and any extensions thereof) under the HSR Act in respect of the transactions contemplated by the Merger Agreement will have expired or been terminated;

 

   

there will not have been entered, enacted or promulgated any governmental order, statute, rule, regulation or governmental order enjoining or prohibiting the consummation of the transactions contemplated by the Merger Agreement;

 

   

the approval of Latch stockholders of the Business Combination Proposal will have been obtained;

 

   

the approval by TSIA stockholders of the Proposals will have been obtained;

 

   

the registration statement of which this proxy statement/prospectus forms a part will have become effective under the Securities Act and no stop order suspending the effectiveness of the registration statement will have been issued and no proceedings for that purpose will have been initiated or threatened by the SEC;

 

   

the Sponsor Agreement, the Company Holders Support Agreement, the Registration Rights Agreement and the Subscription Agreements will be in full force and effect and will not have been rescinded by any of the parties thereto; and

 

   

TSIA will have at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act);

Conditions to Obligations of TSIA and Merger Sub. The obligation of TSIA and Merger Sub to complete the Business Combination is also subject to the satisfaction, or waiver by TSIA, of the following conditions:

 

   

each of the representations and warranties of Latch related to organization, good standing and qualification, corporate authority, approval and fairness, absence of certain changes since September 30, 2020 and brokers and finders must be true and correct as of the date of the Closing (except to the extent that any such representation and warranty expressly speaks as of a particular date or period of time, in which case such representation and warranty will be so true and correct in all material respects as of such particular date or period of time);

 

   

the representation and warranty of Latch related to Latch’s capital structure must be true and correct as of the date of the Closing (except to the extent that any such representation and warranty expressly speaks as of a particular date or period of time, in which case such representation and warranty will be so true and correct in all material respects as of such particular date or period of time) in all but de minimis respects;



 

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all other representations and warranties of Latch must be true and correct as of the date of the Closing (except to the extent that any such representation and warranty expressly speaks as of a particular date or period of time, in which case such representation and warranty will be so true and correct as of such particular date or period of time), except where any failures of any such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;

 

   

each of the covenants of Latch to be performed or complied with as of or prior to the Closing must have been performed or complied with in all material respects; provided, that a covenant of Latch will only be deemed to have not been performed if Latch has failed to cure within twenty days after notice (or if earlier, the Outside Date);

 

   

the receipt of a certificate signed by an executive officer of Latch certifying as to the satisfaction of certain closing conditions; and

 

   

Latch must have delivered a counterpart of each of the Sponsor Agreement, the Company Holders Support Agreement, the Registration Rights Agreement and the Subscription Agreement to which Latch is a party to TSIA.

Conditions to Obligations of Latch. The obligation of Latch to complete the Business Combination is also subject to the satisfaction or waiver by Latch of the following conditions:

 

   

each of the representations and warranties of TSIA and Merger Sub related to organization, good standing and qualification, corporate authority and approval, absence of certain changes since TSIA’s incorporation and brokers and finders must be true and correct as of the date of the Closing (except to the extent that any such representation and warranty expressly speaks as of a particular date or period of time, in which case such representation and warranty will be so true and correct in all material respects as of such particular date or period of time);

 

   

the representation and warranty of the TSIA and Merger Sub related to TSIA’s capital structure must be true and correct as of the date of the Closing (except to the extent that any such representation and warranty expressly speaks as of a particular date or period of time, in which case such representation and warranty will be so true and correct in all material respects as of such particular date or period of time) in all but de minimis respects;

 

   

all other representations and warranties of TSIA and Merger Sub must be true and correct as of the date of the Closing (except to the extent that any such representation and warranty expressly speaks as of a particular date or period of time, in which case such representation and warranty will be so true and correct as of such particular date or period of time), except where any failures of any such representations and warranties to be true and correct would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on TSIA or prevent, materially delay or materially impair the ability of TSIA or Merger Sub to consummate the transactions contemplated by the Merger Agreement;

 

   

each of the covenants of TSIA and Merger Sub to be performed or complied with as of or prior to the Closing must have been performed or complied with in all material respects; provided, that a covenant of TSIA or Merger Sub will only be deemed to have not been performed if TSIA or Merger Sub has failed to cure within twenty days after notice (or if earlier, the Outside Date);

 

   

the TSIA Class A common stock to be issued in connection with the Business Combination must have been approved for listing on the NASDAQ upon official notice of issuance;

 

   

the receipt of a certificate signed by an executive officer of TSIA on behalf of TSIA and Merger Sub certifying as to the satisfaction of certain closing conditions;



 

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TSIA must have cash at the Closing (including cash contained in the Trust Account, plus other cash and cash equivalents of TSIA, plus the cash proceeds anticipated from the Subscription Agreements, less the aggregate amount of cash proceeds that will be required to satisfy the redemption of any shares of TSIA Class A common stock, to the extent not already paid) equal to or in excess of $150 million;

 

   

certain directors and executive officers of TSIA must have been removed from their respective positions or tendered their irrevocable resignations, in each case effective as of the Effective Time; and

 

   

TSIA must have delivered a counterpart of each of the Sponsor Agreement, the Company Holders Support Agreement, the Registration Rights Agreement and the Subscription Agreement to which TSIA is a party.

No Solicitation (page 210)

Latch. From the date of the Merger Agreement until the earlier of the Effective Time or the termination of the Merger Agreement, Latch will not, and will cause its representatives not to, (i) initiate any negotiations with any person with respect to, or provide any non-public information or data concerning Latch or any of its subsidiaries to any person relating to, an acquisition proposal or alternative transaction or afford to any person access to the business, properties, assets or personnel of Latch or any of its subsidiaries in connection with an acquisition proposal or alternative transaction, (ii) enter into any acquisition agreement, merger agreement or similar definitive agreement, or any letter of intent, memorandum of understanding or agreement in principle, or any other agreement relating to an acquisition proposal or alternative transaction, (iii) grant any waiver, amendment or release under any confidentiality agreement or the anti-takeover laws of any state, or (iv) otherwise knowingly facilitate any such inquiries, proposals, discussions, or negotiations or any effort or attempt by any person to make an acquisition proposal or alternative transaction.

TSIA. In addition, through the Closing, TSIA has agreed not to take, nor permit any of its affiliates or representatives to take, whether directly or indirectly, any action to solicit, initiate, continue or engage in discussions or negotiations with, or enter into any agreement, letter of intent, memorandum of understanding or agreement in principle with, or encourage, respond, provide information to or commence due diligence with respect to, any person (other than Latch, its stockholders and/or any of their affiliates or representatives), concerning, relating to or which is intended or is reasonably likely to give rise to or result in, any offer, inquiry, proposal or indication of interest, written or oral relating to any business combination other than with Latch, its stockholders and their respective affiliates and representatives. TSIA has agreed to, and to cause its affiliates and representatives to, immediately cease any and all existing discussions or negotiations with any person conducted prior to the date of the Merger Agreement with respect to, or which is reasonably likely to give rise to or result in, a proposal for a business combination.

Termination (page 217)

The Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after adoption of the Merger Agreement by Latch’s stockholders or approval of the proposals required to effect the Business Combination by TSIA’s stockholders.

Mutual Termination Rights

The Merger Agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to Closing:

 

   

by written consent of Latch and TSIA;

 

   

by written notice from either Latch or TSIA to the other if the merger is not consummated by 5:00 p.m. (New York Time) on July 31, 2021 (the “Outside Date”); provided, that the right to terminate under



 

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this paragraph will not be available to any party that is in material breach of its obligations under the Merger Agreement in any manner that will have proximately contributed to the occurrence of the failure of a condition to the consummation of the Business Combination;

 

   

by written notice from either Latch or TSIA to the other if TSIA stockholder approval has not been obtained at the TSIA stockholders meeting or ay any adjournment or postponement thereof taken in accordance with the Merger Agreement; or

 

   

by written notice from either Latch or TSIA to the other if the consummation of the Business Combination is permanently restrained, enjoined or otherwise prohibited by the enactment, issuance, promulgation, enforcement or entry of the terms of a final, non-appealable governmental order or a statute, rule or regulation; provided, that the right to terminate under this paragraph will not be available to any party that is in material breach of its obligations under the Merger Agreement in any manner that will have proximately contributed to the enactment, issuance, promulgation, enforcement or entry of the terms of a final, non-appealable governmental order or a statute, rule or regulation; provided, further, that the governmental entity issuing such governmental order has jurisdiction over the parties hereto with respect to the transactions contemplated hereby.

Latch Termination Rights

The Merger Agreement may be terminated at any time prior to the Closing, by written notice to TSIA from Latch if there is any breach of any representation, warranty, covenant or agreement on the part of TSIA set forth in the Merger Agreement, such that the conditions described in the first four bullet points under the heading “—Conditions to the Business Combination—Conditions to Obligations of Latch” would not be satisfied at the Closing (a “terminating TSIA breach”), except that, if any such terminating TSIA breach is curable by TSIA, within the earlier of (i) a period of 30 days after receipt by TSIA of notice from Latch of such breach or (ii) three business days prior to the Outside Date (collectively, the “TSIA cure period”), such termination will not be effective, and such termination will become effective only if the terminating TSIA breach is not cured within the TSIA cure period; provided, however, that the right to terminate the Merger Agreement under this paragraph will not be available to Latch if Latch has breached in any material respect its obligations set forth in the Merger Agreement in any manner that will have proximately contributed to the occurrence of the failure of a condition to the consummation of the Merger.

TSIA Termination Rights

The Merger Agreement may be terminated and the transactions contemplated thereby abandoned at any time prior to the closing:

 

   

(i) by written notice to Latch from TSIA if there is any breach of any representation, warranty, covenant or agreement on the part of Latch set forth in the Merger Agreement, such that the conditions described in the first four bullet points under the heading “—Conditions to the Business Combination— Conditions to Obligations of TSIA” would not be satisfied at the closing (a “terminating Latch breach”), except that, if any such terminating Latch breach is curable by Latch, within the earlier of (i) a period of 30 days after receipt by Latch of notice from TSIA of such breach or (ii) three business days prior to the Outside Date (collectively, the “Latch cure period”), such termination will not be effective, and such termination will become effective only if the terminating Latch breach is not cured within the Latch cure period; provided, however, that the right to terminate the Merger Agreement under this paragraph will not be available to TSIA if TSIA has breached in any material respect its obligations set forth in the Merger Agreement in any manner that will have proximately contributed to the occurrence of the failure of a condition to the consummation of the Merger; or



 

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(ii) by written notice to Latch from TSIA if the Company Holders Support Agreement executed by holders of at least a majority of the voting power of all outstanding Latch stock will not have been delivered within two business days following the date of the Merger Agreement.

Effect of Termination

In the event of termination of the Merger Agreement and the abandonment of the Business Combination pursuant to the termination provisions set forth in the above section, the Merger Agreement will become void and of no effect with no liability to any person on the part of any party (or any of its representatives or affiliates); provided, however, and notwithstanding anything in the Merger Agreement to the contrary, (a) no such termination will relieve any party of any liability or damages to any other party resulting from any willful breach of the Merger Agreement and (b) certain provisions, including those relating to the Trust Account, will continue in effect notwithstanding the termination of the Merger Agreement.

None of the parties to the Merger Agreement is required to pay a termination fee or reimburse any other party for its expenses as a result of a termination of the Merger Agreement.

See “The Merger Agreement—Termination” beginning on page 217.

Other Agreements (page 220)

Sponsor Agreement

In connection with the execution of the Merger Agreement and pursuant to the terms of a Sponsor Agreement entered into among Latch, TSIA, the Sponsor and TSIA’s directors and officers, a copy of which is attached to this proxy statement/prospectus as Annex D, the Sponsor and TSIA’s directors and officers have agreed to vote any Public Shares and Founder Shares held by them in favor of each of the proposals presented at the Special Meeting. The Sponsor, TSIA’s directors and officers and their permitted transferees own at least 20% of TSIA’s outstanding common stock entitled to vote thereon. The quorum and voting thresholds at the Special Meeting and the Sponsor Agreement may make it more likely that TSIA will consummate the Business Combination. In addition, pursuant to the terms of the Sponsor Agreement, the Sponsor and TSIA’s directors and officers have agreed to waive their redemption rights with respect to any Founder Shares and any Public Shares held by them in connection with the completion of a business combination, have agreed not to transfer any Public Shares and Founder Shares held by them for a certain period of time following the Business Combination, and have agreed to subject the Founder Shares held by Sponsor as of the Closing to certain time and performance-based vesting provisions. See “Other Agreements—Sponsor Agreement.”

Company Holders Support Agreement

In connection with the execution of the Merger Agreement, TSIA, Latch and certain stockholders of Latch (collectively, the “Supporting Latch Stockholders” and each, a “Supporting Latch Stockholder”) entered into the Company Holders Support Agreement, a copy of which is attached to this proxy statement/prospectus as Annex E. The Company Holders Support Agreement provides, among other things, each Supporting Latch Stockholder agreed to (i) vote at any meeting of the stockholders of Latch all of its Latch common stock and/or Latch preferred stock, as applicable (or any securities convertible into or exercisable or exchangeable for Latch common stock or Latch preferred stock), held of record or thereafter acquired in favor of the Transactions and the adoption of the Merger Agreement; (ii) appoint the chief executive officer of Latch as such stockholder’s proxy in the event such stockholder fails to fulfill its obligations under the Company Holders Support Agreement, (iii) be bound by certain other covenants and agreements related to the Merger and (iv) be bound by certain transfer restrictions with respect to Latch securities, in each case, on the terms and subject to the conditions set forth in the Company Holders Support Agreement. See “Other Agreements—Company Holders Support Agreement.”



 

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Subscription Agreements

In connection with the execution of the Merger Agreement, TSIA entered into Subscription Agreements with the Subscribers in the form attached to this proxy statement/prospectus as Annex F, pursuant to which the Subscribers have agreed to purchase, and TSIA has agreed to sell the Subscribers, (i) an aggregate of 19,000,000 shares of Class A common stock, for a purchase price of $10.00 per share and at an aggregate purchase price of $190,000,000, plus (ii) a number of shares of TSIA Class A common stock at a purchase price of $10.00 per share, equal to the value necessary to fund the Cash Election Consideration. The Subscriptions are expected to close immediately prior to the closing of the Business Combination on the closing date. The consummation of the Subscriptions is contingent upon, among other customary closing conditions, the satisfaction or waiver of all conditions precedent to the closing of the Business Combination set forth in the Merger Agreement and the substantially concurrent consummation of the Business Combination. See “Other Agreements—Subscription Agreements.

If the 19,000,000 shares of TSIA Class A common stock to be issued to the Subscribers simultaneously with the consummation of the Business Combination were currently outstanding, such shares would have an aggregate market value of $191,900,000 based upon the closing price of $10.10 per public share on the NASDAQ on May 6, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus.

Registration Rights Agreement

The Merger Agreement contemplates that, at the Closing, TSIA and certain stockholders of Latch and TSIA will enter into an Amended and Restated Registration Rights Agreement, a copy of which is attached to this proxy statement/prospectus as Annex G (the “Registration Rights Agreement”), pursuant to which TSIA will agree to register for resale, pursuant to Rule 415 under the Securities Act, certain shares of TSIA Class A common stock and other equity securities of TSIA that are held by the parties thereto from time to time. See “Other Agreements—Registration Rights Agreement.

Amended and Restated Bylaws

Pursuant to the terms of the Merger Agreement, in connection with the consummation of the Business Combination, TSIA will amend and restate its bylaws to be in the form attached to this proxy statement/prospectus as Annex C. Pursuant to the amended and restated bylaws, Latch stockholders will be subject to certain restrictions on transfer with respect to the shares of TSIA Class A common stock issued as part of the merger consideration including shares underlying Assumed Options (the “Lock-Up Shares”). Such restrictions begin at Closing and end on the date that is the earlier of (A) one year after the completion of the Business Combination and (B)(i) for 25% of the Lock-up Shares held by each Latch stockholder and their respective permitted transferees, the date on which the last reported sale price of Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 60 days after the Business Combination, (ii) for an additional 25% of the Lock-up Shares held by each Latch stockholder and their respective permitted transferees, the date on which the last reported sale price of Common Stock equals or exceeds $14.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination, (iii) for an additional 25% of the Lock-up Shares held by each Latch stockholder and their respective permitted transferees, the date on which the last reported sale price of Common Stock equals or exceeds $16.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination and (iv) for an additional 25% of the Lock-up Shares held by each Latch stockholder and their respective permitted transferees, the date on which the last reported sale price of Common Stock equals or exceeds $18.00 per share (as adjusted



 

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for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Business Combination.

Proposed Charter Amendment

Pursuant to the terms of the Merger Agreement, in connection with the consummation of the Business Combination, TSIA will amend the Existing Charter to (a) increase the number of authorized shares of TSIA’s capital stock, par value $0.0001 per share, from 277,500,000 shares, consisting of (i) 250,000,000 shares of the Class A common stock and 25,000,000 shares of the Class B common stock, and (ii) 2,500,000 shares of preferred stock, to 1,100,000,000 shares, consisting of (i) 1,000,000,000 shares of common stock and (ii) 100,000,000 shares of preferred stock, (b) eliminate certain provisions in our Charter relating to the Class B common stock, the initial business combination and other matters relating to TSIA’s status as a blank-check company that will no longer be applicable to us following the Closing, and (c) approve and adopt any other changes contained in the Proposed Charter, a copy of which is attached as Annex B to this proxy statement/prospectus. In addition, we will amend our Charter to change the name of the corporation to “Latch, Inc.”

For more information, see the section entitled “Proposal Number 2—The Charter Approval Proposal.”

TSIA NASDAQ Listing (page 211)

The TSIA Class A common stock is listed on NASDAQ under the symbol “TSIA.” Following the Business Combination, the Class A common stock of the Post-Combination Company (including the Class A common stock issuable in the Business Combination) will be listed on NASDAQ under the symbol “LTCH.”

Comparison of Stockholders’ Rights (page 231)

Following the Business Combination, the rights of Latch stockholders who become stockholders of the Post-Combination Company in the Business Combination will no longer be governed by Latch’s charter and Latch’s bylaws (“Latch’s bylaws”) and instead will be governed by the Proposed Charter and the Post-Combination Company’s bylaws (the “Post-Combination Company’s bylaws”). See “Comparison of Stockholders’ Rights” beginning on page 231.

Summary Risk Factors

You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the risk factors described under “Risk Factors” beginning on page 24. Such risks include, but are not limited to:

Risks relating to Latch’s business and industry, including that:

 

   

We are an early-stage company with a history of losses. We have not been profitable historically and may not achieve or maintain profitability in the future.

 

   

Our rapid growth and the quickly changing markets in which we operate make it difficult to evaluate our current business and future prospects, which may increase the risk of investing in our stock.

 

   

If we are unable to develop new solutions, adapt to technological change, sell our software, services, and products into new markets or further penetrate existing markets, our revenue may not grow as expected.

 

   

If our security controls are breached or unauthorized or inadvertent access to customer information or other data or to control or view systems are otherwise obtained, our products, software or services may be perceived as insecure, our business may be harmed, and we may incur significant liabilities.



 

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We operate in the emerging and evolving smart building technology industry, which may develop more slowly or differently than we expect. If the smart building technology industry does not grow as we expect, or if we cannot expand our platforms and solutions to meet the demands of this market, our revenue may decline, fail to grow or fail to grow at an accelerated rate, and we may incur operating losses.

 

   

We are in the process of expanding our international operations, which exposes us to significant risks.

 

   

The markets in which we participate could become competitive and many companies, including large technology companies, point solution providers such as traditional lock companies, and other managed service providers, may target the markets in which we do business, including the smart building technology industry. If we are unable to compete effectively with these potential competitors, our sales and profitability could be adversely affected.

 

   

Customers may choose to adopt point products that provide control of discrete functions rather than adopting our integrated LatchOS platform. If we are unable to increase market awareness of the benefits of our unified solutions, our revenue may not continue to grow, or it may decline.

 

   

If we are unable to acquire necessary intellectual property or adequately protect our intellectual property, we could be competitively disadvantaged.

 

   

Accusations of infringement of third-party intellectual property rights could materially and adversely affect our business.

 

   

We collect, store, process, and use personal information and other customer data, which subjects us to legal obligations and laws and regulations related to security and privacy, and any actual or perceived failure to meet those obligations could harm our business.

 

   

We rely on a limited number of suppliers, manufacturers, and logistics partners for our products. A loss of any of these partners could negatively affect our business.

 

   

Our smart building technology is subject to varying state and local regulations, which may be updated from time to time.

Risks relating to the Business Combination, including that:

 

   

Latch’s stockholders and TSIA’s stockholders will each have a reduced ownership and voting interest after the Business Combination and will exercise less influence over management.

 

   

There can be no assurance that the Post-Combination Company’s common stock will be approved for listing on the NASDAQ or that the Post-Combination Company will be able to comply with the continued listing standards of the NASDAQ.

 

   

The market price of shares of the Post-Combination Company’s Class A common stock after the Business Combination may be affected by factors different from those currently affecting the prices of shares of TSIA Class A common stock.

 

   

TSIA has not obtained an opinion from an independent investment banking firm, and consequently, there is no assurance from an independent source that the merger consideration is fair to its stockholders from a financial point of view.

 

   

If the Business Combination’s benefits do not meet the expectations of financial analysts, the market price of our common stock may decline.

 

   

The consummation of the Business Combination is subject to a number of conditions and if those conditions are not satisfied or waived, the Merger Agreement may be terminated in accordance with its terms and the Business Combination may not be completed.



 

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TSIA directors and officers may have interests in the Business Combination different from the interests of TSIA stockholders.

 

   

Latch directors and officers may have interests in the Business Combination different from the interests of Latch stockholders.

 

   

Our Sponsor may have interests in the Business Combination different from the interests of TSIA stockholders.

 

   

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is preliminary and the actual financial condition and results of operations after the Business Combination may differ materially.

Risks relating to redemption, including that:

 

   

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 independent directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our public stockholders.

 

   

The ability of TSIA stockholders to exercise redemption rights with respect to a large number of shares could increase the probability that the Business Combination would be unsuccessful and that stockholders would have to wait for liquidation in order to redeem their stock.

 

   

Unlike some other blank check companies, TSIA does not have 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. The absence of such a redemption threshold will make it easier for us to consummate the Business Combination even if a substantial number of our stockholders redeem.

Information about TSIA (page 108)

TS Innovation Acquisitions Corp. is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. The TSIA Class A common stock, units and public warrants are currently listed on NASDAQ under the symbols “TSIA”, “TSIAU” and “TSIAW,” respectively. The mailing address of TSIA’s principal executive office is Rockefeller Center, 45 Rockefeller Plaza, New York, New York 10111 and the telephone number of TSIA’s principal executive office is (212) 715-0300.

Information about Latch (page 132)

Latch is an enterprise technology company focused on revolutionizing the way people experience spaces by making spaces better places to live, work, and visit. Latch has created a full-building operating system, LatchOS, that addresses the essential needs of modern buildings by streamlining building operations, enhancing the resident experience, and enabling more efficient interactions with service providers. Latch is a privately-held Delaware corporation. The mailing address of Latch’s principal executive office is 508 West 26th Street, Suite 6G, New York, New York 10001 and the telephone number of Latch’s principal executive officer is (917) 338-3915.



 

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Summary Historical Financial Data For TSIA

TSIA’s balance sheet data as of December 31, 2020 and statement of operations data for the period from September 18, 2020 (inception) through December 31, 2020 are derived from TSIA’s audited financial statements, included elsewhere in this proxy statement/prospectus. The selected historical financial information of TSIA as of December 31, 2020 and for the period from September 18, 2020 (inception) through December 31, 2020 was derived from the audited financial statements of TSIA included elsewhere in this proxy statement/prospectus. You should read the following summary financial information in conjunction with the sections titled “Selected Historical Financial Information of TSIA” and “TSIA Management’s Discussion and Analysis of Financial Condition and Results of Operations” and TSIA’s financial statements and related notes appearing elsewhere in this proxy statement/prospectus.

We have neither engaged in any operations nor generated any revenue to date. Our only activities from inception through December 31, 2020 were organizational activities and those necessary to complete our initial public offering and identifying a target company for a business combination. We do not expect to generate any operating revenue until after the consummation of the Merger.

 

     Period from
September 18, 2020
(inception)
through
December 31, 2020
(As Restated)
 

Statement of Operations Data:

  

General and administrative expenses

   $ (900,030
  

 

 

 

Other Income/(expense):

  

Change in fair value of warrant liabilities

     (5,756,190

Transaction costs

     (736,407

Interest earned on marketable securities held in Trust Account

     2,255  

Net loss

   $ (7,390,372
  

 

 

 

Basic and diluted weighted average shares outstanding, Class B(1)

     7,500,000  
  

 

 

 

Basic and diluted net loss per share, Class B

   $ (0.99
  

 

 

 

 

(1)

Excludes up to 1,125,000 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters (see Note 3 to TSIA’s audited financial statements for further details on the calculation of net loss per share). On December 24, 2020, the over-allotment option expired without any exercise thereof and the 1,125,000 shares of Class B common stock were returned by the Sponsor to TSIA for no consideration and cancelled.

 

     As of
December 31, 2020
(As Restated)
 

Balance Sheet Data:

  

Total cash

   $ 1,171,569  

Total assets

     301,800,505  

Total liabilities

     37,381,386  

Class A common stock subject to possible redemption

     259,419,110  

Total stockholders’ equity

     5,000,009  


 

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Summary Historical Financial Data For Latch

The following tables set forth Latch’s selected consolidated financial and other data. The following selected consolidated financial data for the years ended December 31, 2020 and 2019 and the selected consolidated balance sheet data as of December 31, 2020 and 2019 are derived from Latch’s audited consolidated financial statements included elsewhere in this proxy statement/prospectus.

The data should be read together with “Latch’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in conjunction with the consolidated financial statements, related notes, and other financial information included elsewhere in this proxy statement/prospectus. Latch’s historical results are not necessarily indicative of the results to be expected in the future.

 

     Year Ended December 31,  
(in thousands)    2020      2019  

Consolidated Statement of Operations Data:

     

Total revenue

   $ 18,061      $ 14,887  

Total cost of revenue

     20,239        17,297  

Total operating expenses

     59,619        47,293  

Loss from operations

     (61,797      (49,703

Other income (expense)

     (4,189      (473

Loss before income taxes

     (65,986      (50,176

Net loss

     (65,994      (50,226

Earnings (loss) per common share:

     

Basic net loss per share

   $ (8.18    $ (6.86

Diluted net loss per share

   $ (8.18    $ (6.86

Weighted average shares outstanding:

     

Basic

     8,069,009        7,317,824  

Diluted

     8,069,009        7,317,824  

 

     December 31,  
     2020      2019  

Consolidated Balance Sheet Data:

                      

Total assets

   $ 89,609      $ 73,572  

Current liabilities

     11,857        7,679  

Total liabilities

     83,281        13,736  

Redeemable convertible preferred stock

     160,605        150,305  

Accumulated deficit

     (162,187      (96,193

Total stockholders’ deficit

     (154,277      (90,469

 

     Year Ended
December 31,
 
     2020      2019  

Statement of Cash Flows Data:

     

Net cash provided by (used in):

     

Operating activities

   $ (53,642    $ (47,625

Investing activities

     (5,468      (3,766

Financing activities

     65,408        66,087  


 

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SUMMARY UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following summary unaudited pro forma condensed combined financial data (the “summary pro forma data”) gives effect to the Transactions (as defined in the section titled “Unaudited Pro Forma Condensed Combined Financial Information” included in this proxy statement/prospectus). Under both the no redemptions and the maximum redemptions scenario, the Business Combination will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, TSIA will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Latch issuing stock for the net assets of TSIA, accompanied by a recapitalization. The net assets of TSIA will be stated at historical cost, with no goodwill or other intangible assets recorded. The summary unaudited pro forma condensed combined statements of operations data for the year ended December 31, 2020 gives effect to the Transactions as if they had occurred on January 1, 2020.

The summary pro forma data have been derived from, and should be read in conjunction with, the more detailed unaudited pro forma condensed combined financial information (the “pro forma financial statements”) of TSIA appearing elsewhere in this proxy statement/prospectus and the accompanying notes to the pro forma financial statements. The pro forma financial statements are based upon, and should be read in conjunction with, the historical consolidated financial statements and related notes of TSIA and Latch for the applicable periods included in this proxy statement/prospectus.

The unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2020 combines the historical balance sheet of TSIA and the historical balance sheet of Latch on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on December 31, 2020. The unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2020 combines the historical statements of operations of TSIA and Latch for such periods on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on January 1, 2020, the beginning of the earliest period presented:

 

   

The merger of Merger Sub, the wholly owned subsidiary of TSIA, with and into Latch, with Latch as the surviving company;

 

   

The conversion of all outstanding Latch shares, warrants, convertible debt, and redeemable convertible preferred stock into Latch common stock that will roll over into the Post-Combination Company;

 

   

The rollover of Latch’s outstanding unvested options into options in the Post-Combination Company;

 

   

The conversion of all outstanding TSIA shares, preferred stock, and warrants into TSIA common stock that will roll over into the Post-Combination Company; and

 

   

The issuance of the Post-Combination Company’s shares to be distributed at $10 per share assuming no redemptions as follows: 100,000,000 shares to equityholders of Latch (on a fully diluted net exercise basis and assuming no cash in respect of Latch vested stock options are made), 30,000,000 shares (no shares assuming max redemptions) to current stockholders of TSIA, 19,000,000 to the Subscribers, 6,762,000 shares to the Sponsor, and 738,000 shares to the Sponsor, which are subject to certain vesting conditions including that the VWAP of the Post-Combination Company equals or exceeds $14.00 for any 20 trading days within a 30 trading day period on or prior to the five year anniversary of consummation of the Business Combination. The 738,000 shares subject to vesting will not be considered outstanding until vesting conditions are achieved.

The summary pro forma data have been presented for informational purposes only and are not necessarily indicative of what Latch’s and TSIA’s financial position or results of operations actually would have been had the Transactions been completed as of the dates indicated. In addition, the summary pro forma data do not purport to project the future financial position or operating results of the Post-Combination Company.



 

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The unaudited pro forma condensed combined financial information has been prepared using the assumptions below:

 

   

Assuming No Redemptions: This presentation assumes that no TSIA stockholders exercise redemption rights with respect to their Public Shares.

 

   

Assuming Maximum Redemptions: This presentation assumes that TSIA stockholders holding 30.0 million Public Shares, will exercise their redemption rights for $300.0 million of funds in TSIA’s trust account.

Furthermore, TSIA will only proceed with the Business Combination if it will have net tangible assets of at least $5,000,001 upon consummation of the Business Combination.

 

(in thousands, except share and per share information)

   Assuming No
Redemptions
     Assuming Max
Redemptions
 

Selected Unaudited Pro Forma Condensed Combined Statement of Operations Data Year Ended December 31, 2020

     

Revenues

   $ 18,061      $ 18,061  

Basic and diluted net loss per common share

   $ (0.45    $ (0.56

Weighted average shares outstanding, basic and diluted

     155,762,000        125,762,000  

Selected Unaudited Pro Forma Condensed Combined Balance Sheet Data As of December 31, 2020

     

Total assets

   $ 536,559      $ 236,557  

Total liabilities

   $ 40,586      $ 40,586  

Total stockholders’ equity

   $ 495,973      $ 195,971  


 

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UNAUDITED HISTORICAL COMPARATIVE AND PRO FORMA COMBINED PER SHARE DATA OF TSIA AND LATCH

The following table sets forth selected historical comparative unit and share information for TSIA and Latch, respectively, and unaudited pro forma condensed combined per share information of TSIA after giving effect to the Business Combination, assuming two redemption scenarios as follows:

 

   

Assuming No Redemptions: This presentation assumes that no TSIA stockholders exercise redemption rights with respect to their Public Shares.

 

   

Assuming Maximum Redemptions: This presentation assumes that TSIA stockholders holding 30.0 million Public Shares, will exercise their redemption rights for the $300.0 million of funds in the Trust Account.

The pro forma book value, weighted average shares outstanding, and net earnings per share information reflects the Business Combination, assuming the Post-Combination Company shares were outstanding since January 1, 2020.

This information is only a summary and should be read together with the selected historical financial information summary included elsewhere in this proxy statement/prospectus, and the audited financial statements of TSIA and Latch and related notes that are included elsewhere in this proxy statement/prospectus. The unaudited TSIA and Latch pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/prospectus.

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of TSIA and Latch would have been had the companies been combined during the period presented.

 

     Historical      Pro Forma Combined     Equivalent Pro Forma
Combined
 
     Latch     TSIA
(As
Restated)(1)
     Assuming No
Redemptions
    Assuming
Maximum
Redemptions
    Assuming No
Redemptions
    Assuming
Maximum
Redemptions
 

As of and for the Year Ended December 31, 2020

             

Book value per share—basic and diluted

   $ (16.94 )(2)    $ 0.43      $ 3.18 (3)    $ 1.56 (3)    $ 2.84 (4)    $ 1.39 (4) 

Weighted average shares outstanding—basic and diluted

     8,069       —          155,762       125,762       155,762       125,762  

Net loss per share—basic and diluted

   $ (8.18   $ (—)      $ (0.45   $ (0.56   $ (0.45   $ (0.56

Cash dividends declared per share

     —         —          —         —         —         —    

 

(1)

TSIA values are presented as of December 31, 2020 and for the period from September 18, 2020 (inception) to December 31, 2020

(2)

Historical book value per share is equal to total stockholders’ equity divided by common stock shares outstanding

(3)

Pro forma book value per share is equal to pro forma total stockholders’ equity divided by pro forma common stock shares outstanding

(4)

Equivalent pro forma book value is equal to pro forma book value multiplied by the Exchange Ratio (0.8908)



 

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MARKET PRICE AND DIVIDEND INFORMATION

TSIA

The TSIA Class A common stock, units and public warrants and are traded on the NASDAQ under the symbols TSIA, TSIAU and TSIAW, respectively.

The closing price of the Class A common stock, units and public warrants on January 22, 2021, the last trading day before announcement of the execution of the Merger Agreement, was $10.36, $11.32 and $2.15, respectively. As of May 11, 2021, the TSIA Record Date, the most recent closing price for each Class A common stock, unit and public warrant was $10.00, $10.61 and $1.97, respectively.

Holders of the Class A common stock, units and public warrants should obtain current market quotations for their securities. The market price of TSIA’s securities could vary at any time before the Business Combination.

Holders

As of May 11, 2021, there were 1 holder of record of TSIA’s units, 1 holder of record of Class A common stock, five holders of record of Class B common stock and 2 holders of record of public warrants. The number of holders of record does not include a substantially greater number of “street name” holders or beneficial holders whose units, Public Shares and public warrants are held of record by banks, brokers and other financial institutions.

Dividend Policy

TSIA has not paid any cash dividends on its common stock to date and does not intend to pay cash dividends prior to the completion of the Business Combination. The payment of cash dividends in the future will be dependent upon the Post-Combination Company’s revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of the Business Combination. The payment of any cash dividends subsequent to the Business Combination will be within the discretion of the Post-Combination Company’s board of directors at such time. The Post-Combination Company’s ability to declare dividends may also be limited by restrictive covenants pursuant to any debt financing agreements.

Latch

Historical market price for Latch’s capital stock is not provided because there is no public market for Latch’s capital stock. See “Latch’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.”



 

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FORWARD-LOOKING STATEMENTS

This proxy statement/prospectus includes forward-looking statements regarding, among other things, the plans, strategies and prospects, both business and financial, of TSIA and Latch. These statements are based on the beliefs and assumptions of the management of TSIA and Latch. Although TSIA and Latch believe that their respective plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, neither TSIA nor Latch can assure you that either will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, and any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes”, “estimates”, “expects”, “projects”, “forecasts”, “may”, “might”, “will”, “should”, “seeks”, “plans”, “scheduled”, “possible”, “anticipates” or “intends” or similar expressions. Forward-looking statements contained in this proxy statement/prospectus include, but are not limited to, statements about the ability of TSIA and Latch prior to the Business Combination, and the Post-Combination Company following the Business Combination, to:

 

   

execute its business strategy, including monetization of services provided and expansions in and into existing and new lines of business;

 

   

anticipate the uncertainties inherent in the development of new business lines and business strategies;

 

   

meet the closing conditions to the Business Combination and Subscriptions, including approval by stockholders of TSIA and Latch on the expected terms and schedule;

 

   

realize the benefits expected from the proposed Business Combination;

 

   

continue to develop new products and innovations to meet constantly evolving customer demands;

 

   

accelerate adoption of our products in homes and apartments;

 

   

acquire or make investments in other businesses, patents, technologies, products or services to grow the business;

 

   

increase brand awareness;

 

   

develop, design, and sell services that are differentiated from those of competitors;

 

   

anticipate the impact of the coronavirus disease 2019 (“COVID-19”) pandemic and its effect on business and financial conditions;

 

   

manage risks associated with operational changes in response to the COVID-19 pandemic;

 

   

retain and hire necessary employees;

 

   

attract, train and retain effective officers, key employees or directors;

 

   

enhance future operating and financial results;

 

   

comply with laws and regulations applicable to its business;

 

   

stay abreast of modified or new laws and regulations applying to its business, including copyright and privacy regulation;

 

   

anticipate the impact of, and response to, new accounting standards;

 

   

respond to fluctuations in foreign currency exchange rates and political unrest and regulatory changes in international markets from various events;

 

   

anticipate the significance and timing of contractual obligations;

 

   

maintain key strategic relationships with partners and distributors;

 

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respond to uncertainties associated with product and service development and market acceptance;

 

   

successfully defend litigation;

 

   

upgrade and maintain information technology systems;

 

   

access, collect and use personal data about consumers;

 

   

acquire and protect intellectual property;

 

   

anticipate rapid technological changes;

 

   

meet future liquidity requirements and comply with restrictive covenants related to long-term indebtedness;

 

   

maintain the listing on, or the delisting of TSIA’s or the Post Combination Company’s securities from, NASDAQ or an inability to have our securities listed on the NASDAQ or another national securities exchange following the Business Combination;

 

   

effectively respond to general economic and business conditions;

 

   

obtain additional capital, including use of the debt market; and

 

   

successfully deploy the proceeds from the Business Combination.

Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements which speak only as of the date hereof. You should understand that the following important factors, in addition to those discussed under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus, could affect the future results of TSIA and Latch prior to the Business Combination, and the Post-Combination Company following the Business Combination, and could cause those results or other outcomes to differ materially from those expressed or implied in the forward-looking statements in this proxy statement/prospectus:

 

   

any delay in closing of the Business Combination or Subscriptions;

 

   

risks related to disruption of management’s time from ongoing business operations due to the proposed transactions;

 

   

litigation, complaints, product liability claims and/or adverse publicity;

 

   

privacy and data protection laws, privacy or data breaches, or the loss of data;

 

   

the impact of changes in consumer spending patterns, consumer preferences, local, regional and national economic conditions, crime, weather, demographic trends and employee availability;

 

   

the impact of the COVID-19 pandemic on the financial condition and results of operations of TSIA and Latch; and

 

   

any defects in new products or enhancements to existing products.

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this proxy statement/prospectus are more fully described under the heading “Risk Factors” and elsewhere in this proxy statement/prospectus. The risks described under the heading “Risk Factors” are not exhaustive. Other sections of this proxy statement/prospectus describe additional factors that could adversely affect the business, financial condition or results of operations of TSIA and Latch prior to the Business Combination, and the Post-Combination Company following the Business Combination. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can TSIA or Latch assess the impact of all such risk factors on the business of TSIA and Latch prior to the Business Combination, and the Post-Combination Company following the Business Combination, or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to TSIA or Latch or persons acting on their behalf are expressly qualified

 

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in their entirety by the foregoing cautionary statements. TSIA and Latch prior to the Business Combination, and the Post-Combination Company following the Business Combination, undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, statements of belief and similar statements reflect the beliefs and opinions of TSIA or Latch, as applicable, on the relevant subject. These statements are based upon information available to TSIA or Latch, as applicable, as of the date of this proxy statement/prospectus, and while such party believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that TSIA or Latch, as applicable, has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

 

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RISK FACTORS

In addition to the other information contained in this proxy statement/prospectus, including the matters addressed under the heading “Forward-Looking Statements”, you should carefully consider the following risk factors in deciding how to vote on the proposals presented in this proxy statement/prospectus. In this section “we,” “us” and “our” refer to Latch prior to the Business Combination and to the Post-Combination Company following the Business Combination.

Risks Related to Latch’s Business and Industry

We are an early-stage company with a history of losses. We have not been profitable historically and may not achieve or maintain profitability in the future.

We experienced net losses in each year since inception, including a net loss of $50.3 million for 2019. We believe we will continue to incur operating losses and negative cash flow in the near-term as we continue to invest significantly in our business, in particular to enhance and develop new LatchOS modules, services, and products to position us for future growth. Additionally, we have incurred substantial losses and expended significant resources upfront to market, promote and sell our solutions and products and expect to continue to do so in the future. We also expect to continue to invest for future growth, including for customer acquisition, technology infrastructure, services development, international expansion, and expansion into new verticals. In addition, as a public company, we will incur significant accounting, legal, and other expenses.

We expect to continue to incur losses for at least the foreseeable future and will have to generate and sustain increased revenues to achieve future profitability. Achieving profitability will require us to increase revenues, manage our cost structure, and avoid significant liabilities. Revenue growth may slow, revenues may decline, or we may incur significant losses in the future for a number of possible reasons, including general macroeconomic conditions, increasing competition (including competitive pricing pressures), a decrease in the growth of the markets in which we compete, or if we fail for any reason to continue to capitalize on growth opportunities. Additionally, we may encounter unforeseen operating expenses, difficulties, complications, delays, service delivery, and quality problems and other unknown factors that may result in losses in future periods. If these losses exceed our expectations or our revenue growth expectations are not met in future periods, our financial performance will be harmed and our stock price could be volatile or decline.

Our operating results and financial condition may fluctuate from period to period.

Our operating results and financial condition fluctuate from quarter-to-quarter and year-to-year and are likely to continue to vary due to a number of factors, many of which will not be within our control. Both our business and the smart building technology industry are changing and evolving rapidly, and our historical operating results may not be useful in predicting our future operating results. If our operating results do not meet the guidance that we provide to the marketplace or the expectations of securities analysts or investors, the market price of our common stock will likely decline. Fluctuations in our operating results and financial condition may be due to a number of factors, including:

 

   

the portion of our revenue attributable to software-as-a-service, or SaaS, versus hardware and other sales;

 

   

fluctuations in demand, including due to seasonality, for our platform and solutions;

 

   

changes in pricing by us in response to competitive pricing actions;

 

   

the ability of our hardware vendors to continue to manufacture high-quality products and to supply sufficient products to meet our demands;

 

   

the timing and success of introductions of new solutions, products or upgrades by us or our competitors;

 

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changes in our business and pricing policies or those of our competitors;

 

   

the ability to accurately forecast revenue;

 

   

our ability to control costs, including our operating expenses and the costs of the hardware we purchase;

 

   

competition, including entry into the industry by new competitors and new offerings by existing competitors;

 

   

our ability to successfully manage any future acquisitions and integrations of businesses;

 

   

issues related to introductions of new or improved products such as shortages of prior generation products or short-term decreased demand for next generation products;

 

   

the amount and timing of expenditures, including those related to expanding our operations, increasing research and development, introducing new solutions or paying litigation expenses;

 

   

the ability to effectively manage growth within existing and new markets domestically and abroad;

 

   

changes in the payment terms for our platform and solutions;

 

   

the strength of regional, national and global economies;

 

   

changes in the fair values of our financial instruments (including certain warrants assumed in connection with the Business Combination); and

 

   

the impact of natural disasters or manmade problems such as terrorism.

Due to the foregoing factors, and the other risks discussed in this proxy statement/prospectus, you should not rely on quarter-over-quarter and year-over-year comparisons of our operating results as an indicator of our future performance.

Our rapid growth and the quickly changing markets in which we operate make it difficult to evaluate our current business and future prospects, which may increase the risk of investing in our stock.

We have grown rapidly since 2017 when we introduced our smart building technology. We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly changing markets. If our assumptions regarding these uncertainties are incorrect or change in reaction to changes in our markets, or if we do not manage or address these risks successfully, our results of operations could differ materially from our expectations, and our business could suffer.

Growth may place significant demands on our management and our operational and financial infrastructure and require us to commit substantial financial, operational and technical resources to attract, service, and retain an increasing number of customers. If we are unable to hire, retain, manage and motivate our employees, we may not be able to grow effectively and our business, results of operations and financial condition could be adversely affected.

We have recently experienced substantial growth in our business. This growth has placed and may continue to place significant demands on our management, and our operational and financial infrastructure. As our operations grow in size, scope, and complexity, we will need to increase our sales and marketing efforts and add additional sales and marketing personnel and senior management in various regions worldwide and improve and upgrade our systems and infrastructure to attract, service, and retain an increasing number of customers. For example, we plan to explore opportunities for international expansion and extend our offerings to current customers by introducing new software, services and products. The expansion of our systems and infrastructure will require us to commit substantial financial, operational, and technical resources in advance of an increase in the volume of business, with no assurance that the volume of business will increase. Any such additional capital investments will increase our cost base.

Continued growth could also strain our ability to maintain reliable service levels for our customers, develop and improve our operational, financial and management controls, enhance our billing and reporting systems and

 

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procedures and recruit, train and retain highly skilled personnel. Competition for highly skilled personnel is often intense, especially in New York City and San Francisco, where we have a substantial presence and need for highly skilled personnel. We may not be successful in attracting, integrating, or retaining qualified personnel to fulfill our current or future needs, including, but not limited to, senior management, engineers, designers, product managers, operations, logistics, and supply chain personnel. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. The loss of services of senior management or other key employees could significantly delay or prevent the achievement of our development and strategic objectives. In particular, we depend to a considerable degree on the vision, skills, experience, and effort of our co-founder, Chairman, and Chief Executive Officer, Luke Schoenfelder. The replacement of senior management or other key personnel would likely involve significant time and costs, and such loss could significantly delay or prevent the achievement of our business objectives and future growth.

In addition, our existing systems, processes, and controls may not prevent or detect all errors, omissions, or fraud. We may also experience difficulties in managing improvements to our systems, processes, and controls or in connection with third-party software licensed to help us with such improvements. Any future growth, particularly any additional international expansion, would add complexity to our organization and require effective communication and coordination throughout our organization. Additionally, our productivity and the quality of our solutions and services may be adversely affected if we do not integrate and train our new employees quickly and effectively. If we fail to achieve the necessary level of efficiency in our organization as we grow, our business, results of operations and financial condition could be materially and adversely affected.

Our future operating results will rely in part upon the successful execution of our strategic partnerships, which may not be successful. If these companies choose not to partner with us, our business and results of operations may be harmed.

A strategic partnership between two independent businesses is a complex, costly, and time-consuming process that will require significant management attention and resources. Realizing the benefits of our strategic partnerships, particularly our relationships with Google Nest, Honeywell, ecobee, Jasco, Leviton and Sonos, among others, will depend in part on our ability to work with our strategic partners to develop, integrate, market and sell co-branded solutions. In particular, working with major technology platforms and their products and services may take an extended period of time to deliver. Setting up and maintaining the operations and processes necessary for these strategic partnerships may cause us to incur significant costs, disrupt our business and, if implemented ineffectively, would limit the expected benefits to us. In addition, the process of bringing third-party solutions to market may take longer than anticipated, which could negate or reduce our anticipated benefits and revenue opportunities, and it may be necessary in the future to renegotiate agreements relating to various aspects of these solutions or other third-party solutions. The failure to successfully and timely implement and operate our strategic partnerships could harm our ability to realize the anticipated benefits of these partnerships and could adversely affect our business, financial condition, cash flows and results of operations. In addition, if these third-party solution providers choose not to partner with us, choose to integrate their solutions with our competitors’ platforms, or are unable or unwilling to update their solutions, our business, financial condition, cash flows and results of operations could be harmed.

If our security controls are breached or unauthorized or inadvertent access to customer information or other data or to control or view systems are otherwise obtained, our products, software or services may be perceived as insecure, our business may be harmed, and we may incur significant liabilities.

Use of our solutions involves the storage, transmission and processing of personal, payment, credit and other confidential and private information of our customers, and may in certain cases permit access to our customers’ homes or property or help secure them. We also maintain and process confidential and proprietary information in our business, including our employees’ and contractors’ personal information and confidential business information. We rely on proprietary and commercially available systems, software, tools and monitoring

 

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to protect against unauthorized use or access of the information we process and maintain. Our services and the networks and information systems we utilize in our business are at risk for breaches as a result of third-party action, employee or partner error, malfeasance, or other factors.

Criminals and other nefarious actors are using increasingly sophisticated methods, including cyber-attacks, phishing, social engineering and other illicit acts to capture, access, or alter various types of information, to engage in illegal activities such as fraud and identity theft, and to expose and exploit potential security and privacy vulnerabilities in corporate systems and websites. Unauthorized intrusion into the portions of our systems and networks and data storage devices that process and store customer confidential and private information, the loss of such information or the deployment of malware or other harmful code to our services or our networks or systems may result in negative consequences, including the actual or alleged malfunction of our products, software or services. In addition, third parties, including our partners, could also be sources of security risks to us in the event of a failure of their own security systems and infrastructure. The threats we and our partners face continue to evolve and are difficult to predict due to advances in computer capabilities, new discoveries in the field of cryptography and new and sophisticated methods used by criminals. There can be no assurances that our defensive measures will prevent cyber-attacks or that we will discover network or system intrusions or other breaches on a timely basis or at all. We cannot be certain that we will not suffer a compromise or breach of the technology protecting the systems or networks that house or access our software, services and products or on which we or our partners process or store personal information or other sensitive information or data, or that any such incident will not be believed or reported to have occurred. Any such actual or perceived compromises or breaches to systems, or unauthorized access to our customers’ data, products, software or services, or acquisition or loss of, data, whether suffered by us, our partners or other third parties, whether as a result of employee error or malfeasance or otherwise, could harm our business. They could, for example, cause interruptions in operations, loss of data, loss of confidence in our services, software and products and damage to our reputation, and could limit the adoption of our software, services and products. They could also subject us to costs, regulatory investigations and orders, litigation, contract damages, indemnity demands and other liabilities and materially and adversely affect our customer base, sales, revenues and profits. Any of these could, in turn, have a material adverse impact on our business, financial condition, cash flows or results of operations.

If such an event results in unauthorized access to or loss of any data subject to data privacy and security laws and regulations, then we could be subject to substantial fines by U.S. federal and state authorities, foreign data privacy authorities around the world and private claims by companies or individuals. A cyber-attack may cause additional costs, such as investigative and remediation costs, and the costs of providing individuals and/or data owners with notice of the breach, legal fees, and the costs of any additional fraud detection activities required by law, a court or a third-party. Additionally, some of our customer contracts require us to indemnify customers from damages they may incur as a result of a breach of our systems. There can be no assurance that the limitation of liability provisions in our contracts for a security breach would be enforceable or would otherwise protect us from any such liabilities or damages with respect to any particular claim.

Further, if a high profile security breach occurs with respect to another provider of smart building solutions, our customers and potential customers may lose trust in the security of our services or in the smart building technology industry generally, which could adversely impact our ability to retain existing customers or attract new ones. Even in the absence of any security breach, customer concerns about security, privacy or data protection may deter them from using our software, services and products.

Our insurance policies covering errors and omissions and certain security and privacy damages and claim expenses may not be sufficient to compensate for all potential liability. Although we maintain cyber liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all.

 

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Our new integrated direct selling and deployment strategy may subject us to additional risks.

Historically, our channel partners have contracted with building owners to own the full scope of installation and service of our smart access products. However, we are in the process of developing a new integrated direct selling and deployment strategy targeted at our larger enterprise accounts in which Latch owns directly the full scope of installation and service of our products with the building. This new strategy may involve significant risks and uncertainties, including distraction of management from other business operations, significant research and development costs and time, sales and marketing, and other resources to be dedicated to the new strategy at the expense of time dedicated to our other business operations, generation of insufficient revenue to offset expenses associated with the new strategy, inadequate return of capital, increased exposure to liability for improper installation, and other risks that we may not have adequately anticipated. Because new strategies and initiatives are inherently risky, our new integrated direct selling and deployment strategy may not be successful and could materially adversely affect our business, results of operations and financial condition.

We may be unable to attract new customers and maintain customer satisfaction with current customers, which could have an adverse effect on our business and rate of growth.

We have experienced significant customer growth over the past several years. Our continued business and revenue growth is dependent on our ability to continuously attract and retain customers, and we cannot be sure that we will be successful in these efforts, or that customer retention levels will not materially decline. There are a number of factors that could lead to a decline in customer levels or that could prevent us from increasing our customer levels, including:

 

   

our failure to introduce new features, products, or services that customers find engaging or our introduction of new products or services, or changes to existing products and services that are not favorably received;

 

   

harm to our brand and reputation;

 

   

pricing and perceived value of our offerings;

 

   

our inability to deliver quality products, software, and services;

 

   

our customers engaging with competitive software, services and products;

 

   

technical or other problems preventing customers from using our software, services and products in a rapid and reliable manner or otherwise affecting the customer experience;

 

   

deterioration of the real estate industry, including declining levels of new construction of multi-family and single family rental buildings and reduced spending in the real estate industry;

 

   

unsatisfactory experiences with the delivery, installation, or service of our products; and

 

   

deteriorating general economic conditions or a change in consumer spending preferences or buying trends.

Additionally, further expansion into international markets such as Germany, France, and the United Kingdom will create new challenges in attracting and retaining customers that we may not successfully address. As a result of these factors, we cannot be sure that our customer levels will be adequate to maintain or permit the expansion of our operations. A decline in customer levels could have an adverse effect on our business, financial condition, and operating results.

We rely on certain third-party providers of licensed software and services that are important to the operations of our business.

Certain aspects of the operation of our business depend on third-party software and service providers. We rely on certain software technology that we license from third parties and use in our software, services and

 

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products to perform key functions and provide critical functionality. With regard to licensed software technology, we are, to a certain extent, dependent upon the ability of third parties to maintain, enhance or develop their software and services on a timely and cost-effective basis, to meet industry technological standards and innovations to deliver software and services that are free of defects or security vulnerabilities, and to ensure their software and services are free from disruptions or interruptions. Further, these third-party services and software licenses may not always be available to us on commercially reasonable terms or at all.

If our agreements with third-party software or services vendors are not renewed or the third-party software or services become obsolete, fail to function properly, are incompatible with future versions of our products or services, are defective or otherwise fail to address our needs, there is no assurance that we would be able to replace the functionality provided by the third-party software or services with software or services from alternative providers. Furthermore, even if we obtain licenses to alternative software or services that provide the functionality we need, we may be required to replace hardware installed at our customers’ apartment buildings or homes to affect our integration of or migration to alternative software products. Any of these factors could have a material adverse effect on our financial condition, cash flows or results of operations.

We rely on our channel partner network to acquire additional LatchOS subscribers and the inability of our channel partners to attract, retain, support, or cover installations, or the loss of key channel partners, could adversely affect our operating results.

A portion of our revenue is generated by sales through our channel partners as they act as our outsourced sales force of Latch’s hardware and often carry out installation and service at customer buildings. We provide our channel partners with specific training and programs to assist them in selling our software, services and products, but there can be no assurance that these steps will be effective. In addition, our channel partners may be unsuccessful in marketing, selling and supporting our software, services and products. If we are unable to develop and maintain effective sales incentive programs for our channel partners, we may not be able to incentivize these partners to sell our products to customers. In the future, these partners may also market, sell, and support products and services that are competitive with ours and may devote more resources to the marketing, sales and support of such competitive products. We cannot assure you that we will retain these channel partners or that we will be able to secure additional or replacement channel partners. The loss of one or more of our significant channel partners or a decline in the number or size of orders from any of them could harm our results of operations. In addition, any new channel partner requires training and may take several weeks or more to achieve productivity. Our channel partner sales structure could subject us to lawsuits, potential liability and reputational harm if, for example, any of our channel partners misrepresents the functionality of our software, services, or products to customers or violates laws or our corporate policies. If we fail to effectively manage our existing sales channels, if our channel partners are unsuccessful in fulfilling the orders for our products, or if we are unable to enter into arrangements with, and retain a sufficient number of, high quality channel partners in each of the regions in which we sell products and services and keep them motivated to sell our products, our ability to sell our products and results of operations will be harmed.

Potential customer turnover in the future, or costs we incur to retain and upsell our customers, could materially and adversely affect our financial performance.

Our customers have no obligation to renew their contracts for our software services after the expiration of the initial term, which on average is more than six years. In the event that these customers do renew their contracts, they may choose to renew for fewer units, shorter contract lengths, or for less expensive subscriptions. We cannot predict the renewal rates for customers that have entered into software contracts with us.

Customer turnover, as well as reductions in the number of units for which a customer subscribes, each could have a significant impact on our results of operations, as does the cost we incur in our efforts to retain our customers and encourage them to upgrade their services and increase the number of their units that use our software, services, and products. Our turnover rate could increase in the future if customers are not satisfied with

 

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our software, services, and products, the value proposition of our services or our ability to otherwise meet their needs and expectations. Turnover and reductions in the number of booked units may also increase due to factors beyond our control, including the failure or unwillingness of customers to pay for our software, services, and products due to financial constraints and the impact of a slowing economy. There is no guarantee that the number of booked units will convert into actual deliveries, or will convert into deliveries within the timeframe we anticipate. If a significant number of customers terminate, reduce, or fail to renew their software contracts, or if a number of booked units do not convert to deliveries, we may be required to incur significantly higher marketing expenditures than we currently anticipate in order to increase the number of new customers or to upsell existing customers, and such additional marketing expenditures could harm our business and results of operations.

Our future success also depends in part on our ability to sell additional functionalities to our current customers and to sell into our customers’ future projects. This may require increasingly sophisticated and more costly sales efforts, technologies, tools and a longer sales cycle. Any increase in the costs necessary to upgrade, expand and retain existing customers could materially and adversely affect our financial performance. If our efforts to convince customers to add units and, in the future, to purchase additional functionalities are not successful, our business may suffer. In addition, such increased costs could cause us to increase our rates, which could increase our turnover rate.

If we are unable to develop new solutions, adapt to technological change, sell our software, services and products into new markets or further penetrate our existing markets, our revenue may not grow as expected.

Our ability to increase sales will depend, in large part, on our ability to enhance and improve our platforms, software, services, and products, introduce new software, services, and products in a timely manner, sell into new markets and further penetrate our existing markets. The success of any enhancement or new platform, software, services and products depends on several factors, including the timely completion, introduction and market acceptance of enhanced or new software, services and products, the ability to maintain and develop relationships with partners and vendors, the ability to attract, retain and effectively train sales and marketing personnel, the effectiveness of our marketing programs, and the ability of our software, services, and products to maintain compatibility with a wide range of connected devices. Any new product or service we develop or acquire may not be introduced in a timely or cost-effective manner, and may not achieve the broad market acceptance necessary to generate significant revenue. Any new markets into which we attempt to sell our software, services and products, including new vertical markets (e.g., commercial office) and new countries or regions, may not be receptive. Our ability to further penetrate our existing markets depends on the quality, availability and reliability of our software, services and products and our ability to design our software, services and products to meet customer demand. Similarly, if any of our potential competitors implement new technologies before we are able to implement ours, those competitors may be able to provide more effective products, possibly at lower prices. Any delay or failure in the introduction of new or enhanced solutions could harm our business, financial condition, cash flows and results of operations.

We operate in the emerging and evolving smart building technology industry, which may develop more slowly or differently than we expect. If the smart building technology industry does not grow as we expect, or if we cannot expand our platforms and solutions to meet the demands of this market, our revenue may decline, fail to grow or fail to grow at an accelerated rate, and we may incur operating losses.

The market for integrated smart building solutions, such as home automation, security monitoring, video monitoring, energy management and building services, are in an early stage of development, and it is uncertain how rapidly or how consistently this market will develop and the degree to which our platforms and solutions will be accepted into the markets in which we operate. Some customers may be reluctant or unwilling to use our platforms and solutions for a number of reasons, including satisfaction with traditional solutions, concerns about additional costs, concerns about data privacy, and lack of awareness of the benefits of our platforms and solutions. Our ability to expand the sales of our platforms and solutions into new markets depends on several factors, including the reputation and recognition of our platforms and solutions, the timely completion,

 

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introduction and market acceptance of our platforms and solutions, the ability to attract, retain and effectively train sales and marketing personnel, the ability to develop relationships with service providers, the effectiveness of our marketing programs, the costs of our platforms and solutions and the success of our competitors. If we are unsuccessful in developing and marketing our platforms and solutions into new markets, or if customers do not perceive or value the benefits of our platforms and solutions, the market for our platforms and solutions might not continue to develop or might develop more slowly than we expect, either of which would harm our revenue and growth prospects.

We are in the process of expanding our international operations, which exposes us to significant risks.

We currently have operations in the United States and Canada and are planning to expand our international operations to Germany, France, and the United Kingdom, and may further grow our international presence in the future. The future success of our business will depend, in part, on our ability to expand our operations and customer base worldwide. Operating in international markets requires significant resources and management attention and will subject us to regulatory, economic, and political risks that are different from those in the U.S. Due to our limited experience with international operations and developing and managing sales and distribution channels in international markets, our international expansion efforts may not be successful. In addition, we will face risks in doing business internationally that could materially and adversely affect our business, including:

 

   

our ability to comply with differing and evolving technical and environmental standards, telecommunications regulations, building and fire codes, and certification requirements outside the U.S.;

 

   

difficulties and costs associated with staffing and managing foreign operations;

 

   

our ability to effectively price our products and subscriptions in competitive international markets;

 

   

potentially greater difficulty collecting accounts receivable and longer payment cycles;

 

   

the need to adapt and localize our products and subscriptions for specific countries;

 

   

the need to offer customer care in various native languages;

 

   

reliance on third parties over which we have limited control;

 

   

availability of reliable network connectivity in targeted areas for expansion;

 

   

lower levels of adoption of credit or debit card usage for Internet related purchases by foreign customers and compliance with various foreign regulations related to credit or debit card processing and data protection requirements;

 

   

difficulties in understanding and complying with local laws, regulations, and customs in foreign jurisdictions;

 

   

restrictions on travel to or from countries in which we operate or inability to access certain areas;

 

   

export controls and economic sanctions;

 

   

changes in diplomatic and trade relationships, including tariffs and other non-tariff barriers, such as quotas and local content rules;

 

   

U.S. government trade restrictions, including those which may impose restrictions, including prohibitions, on the exportation, re-exportation, sale, shipment or other transfer of programming, technology, components, and/or services to foreign persons;

 

   

our ability to comply with different and evolving laws, rules, and regulations, including the European Union General Data Protection Regulation (the “GDPR”) and other data privacy and data protection laws, rules and regulations;

 

   

compliance with various anti-bribery and anti-corruption laws such as the Foreign Corrupt Practices Act and U.K. Bribery Act of 2010;

 

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more limited protection for intellectual property rights in some countries;

 

   

adverse tax consequences;

 

   

fluctuations in currency exchange rates;

 

   

exchange control regulations, which might restrict or prohibit our conversion of other currencies into U.S. Dollars;

 

   

restrictions on the transfer of funds;

 

   

new and different sources of competition;

 

   

political and economic instability created by the U.K.’s departure from the EU (“Brexit”);

 

   

deterioration of political relations between the U.S. and other countries in which we may operate; or

 

   

political or social unrest, economic instability, conflict or war in such countries, or sanctions implemented by the U.S. against countries in which we operate, all of which could have a material adverse effect on our operations.

We have limited experience with international regulatory environments and market practices and may not be able to penetrate or successfully operate in the markets we choose to enter. In addition, we may incur significant expenses as a result of our international expansion, and we may not be successful. We may face limited brand recognition in certain parts of the world that could lead to non-acceptance or delayed acceptance of our software, services, and products by customers in new markets. Our failure to successfully manage these risks could harm our international operations and have an adverse effect on our business, financial condition, and operating results.

The markets in which we participate could become competitive and many companies, including large technology companies, point solution providers such as traditional lock companies, and other managed service providers, may target the markets in which we do business, including the smart building technology industry. If we are unable to compete effectively with these potential competitors, our sales and profitability could be adversely affected.

The smart building technology industry in which we participate may become competitive and competition may intensify in the future.

Our ability to compete depends on a number of factors, including:

 

   

our platforms’ and solutions’ functionality, performance, ease of use, reliability, availability, and cost effectiveness relative to that of our competitors’ products;

 

   

our success in utilizing new and proprietary technologies to offer solutions and features previously not available in the marketplace;

 

   

our success in identifying new markets, applications and technologies;

 

   

our ability to attract and retain partners;

 

   

our name recognition and reputation;

 

   

our ability to recruit software engineers and sales and marketing personnel; and

 

   

our ability to protect our intellectual property.

Customers may prefer to purchase from their existing suppliers rather than a new supplier regardless of product performance or features. In the event a customer decides to evaluate a smart building solution, the customer may be more inclined to select one of our competitors if such competitor’s product offerings are broader or at a better price point than those that we offer.

 

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The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain senior management and qualified board members.

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, the listing requirements of the securities exchange on which our common stock will be traded 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 Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and results of operations. 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 harm our business and results of operations. Although we have already hired additional employees to comply with these requirements, we may need to hire more employees in the future or engage outside consultants, 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. Our failure to comply with these laws, regulations and standards could materially and adversely affect our business and results of operations.

However, for as long as the Post-Combination Company remains an “emerging growth company” as defined in the JOBS Act, the Post-Combination Company will 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, exemption from the requirement 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 shareholder approval of any golden parachute payments not previously approved. We will take advantage of these reporting exemptions until we are no longer an “emerging growth company.”

We will cease to be an “emerging growth company” upon the earliest of (i) the first fiscal year following the fifth anniversary of the TSIA IPO, (ii) the first fiscal year after the Post-Combination Company’s annual gross revenues are $1.07 billion or more, (iii) the date on which the Post-Combination Company has, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities or (iv) as of the end of any fiscal year in which the market value of the Post-Combination Company’s common stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.

We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

 

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As a result of disclosure of information in this proxy statement/prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in more litigation, including by competitors and other third parties. If such claims are successful, our business and results of operations could be materially and adversely affected, even if the claims do not result in litigation or are resolved in our favor. These claims, and the time and resources necessary to resolve them, could divert the resources of our management and materially and adversely affect our business and results of operations.

As a private company, we have not been required to document and test our internal controls over financial reporting nor has our management been required to certify the effectiveness of our internal controls and our auditors have not been required to opine on the effectiveness of our internal control over financial reporting. We have identified material weaknesses in our internal control over financial reporting which, if not corrected, could affect the reliability of our consolidated financial statements and have other adverse consequences.

A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the financial statements would not be prevented or detected on a timely basis.

Latch has identified material weaknesses in its internal control over financial reporting that Latch is currently working to remediate, which relate to: (a) Latch’s general segregation of duties, including the review and approval of journal entries; (b) the lack of a formalized risk assessment process; and (c) selection and development of control activities, including over information technology.

Latch’s management has concluded that these material weaknesses in Latch’s internal control over financial reporting are due to the fact that Latch is a private company with limited resources and does not have the necessary business processes and related internal controls formally designed and implemented coupled with the appropriate resources with the appropriate level of experience and technical expertise to oversee Latch’s business processes and controls.

Latch’s management is in the process of developing a remediation plan. The material weaknesses will be considered remediated when Latch’s management designs and implements effective controls that operate for a sufficient period of time and management has concluded, through testing, that these controls are effective. Latch’s management will monitor the effectiveness of its remediation plans and will make changes management determines to be appropriate.

If not remediated, these material weaknesses could result in material misstatements to Latch’s annual or interim consolidated financial statements that might not be prevented or detected on a timely basis, or in delayed filing of required periodic reports.

On April 12, 2021, the Staff of the SEC issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Statement”). Following issuance of the SEC Statement, on April 29, 2021, TSIA concluded that it was appropriate to restate our previously issued audited financial statements as of and for the period ended December 31, 2020, and as part of such process, TSIA identified a material weakness in its internal controls over financial reporting. As the accounting acquirer in the Business Combination, we will have to address any unremediated material weakness in internal controls over the financial reporting at TSIA, including this material weakness with respect to accounting for TSIA’s warrants. See “Risks Related to the Business Combination - We have identified a material weakness in our internal control over financial reporting as of December 31, 2020. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.

 

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If Latch is unable to assert that its internal control over financial reporting is effective, or when required in the future after the consummation of the Business Combination, if our Independent Registered Public Accounting Firm is unable to express an unqualified opinion as to the effectiveness of the internal control over financial reporting, investors may lose confidence in the accuracy and completeness of the Company’s financial reports, the market price of the Post-Combination Company common stock could be adversely affected and the Post-Combination Company could become subject to litigation or investigations by the NASDAQ, the SEC, or other regulatory authorities, which could require additional financial and management resources.

We may expand through acquisitions of, or investments in, other companies, each of which may divert our management’s attention, result in additional dilution to our stockholders, increase expenses, disrupt our operations and harm our results of operations.

Our business strategy may, from time to time, include acquiring or investing in complementary services, technologies or businesses. We cannot assure you that we will successfully identify suitable acquisition candidates, integrate or manage disparate technologies, lines of business, personnel and corporate cultures, realize our business strategy or the expected return on our investment, or manage a geographically dispersed company. Any such acquisition or investment could materially and adversely affect our results of operations. Acquisitions and other strategic investments involve significant risks and uncertainties, including:

 

   

the potential failure to achieve the expected benefits of the combination or acquisition;

 

   

unanticipated costs and liabilities;

 

   

difficulties in integrating new software, services and products, businesses, operations and technology infrastructure in an efficient and effective manner;

 

   

difficulties in maintaining customer relations;

 

   

the potential loss of key employees of the acquired businesses;

 

   

the diversion of the attention of our senior management from the operation of our daily business;

 

   

the potential adverse effect on our cash position to the extent that we use cash for the purchase price;

 

   

the potential significant increase of our interest expense, leverage, and debt service requirements if we incur additional debt to pay for an acquisition;

 

   

the potential issuance of securities that would dilute our stockholders’ percentage ownership;

 

   

the potential to incur large and immediate write-offs and restructuring and other related expenses; and

 

   

the inability to maintain uniform standards, controls, policies and procedures.

Any acquisition or investment could expose us to unknown liabilities. Moreover, we cannot assure you that we will realize the anticipated benefits of any acquisition or investment. In addition, our inability to successfully operate and integrate newly acquired businesses appropriately, effectively, and in a timely manner could impair our ability to take advantage of future growth opportunities and other advances in technology, as well as on our revenues, gross margins and expenses.

Customers may choose to adopt point products that provide control of discrete functions rather than adopting our integrated LatchOS platform. If we are unable to increase market awareness of the benefits of our unified solutions, our revenue may not continue to grow, or it may decline.

Many vendors have emerged, and may continue to emerge, to provide point products with advanced functionality for use in buildings, such as a video doorbell, thermostat, or lights that can be controlled by an application on a smartphone. We expect more and more electronics and appliance products to be network-aware and connected—each very likely to have its own smart device (phone or tablet) application. Customers may be attracted to the relatively low costs of these point solution products and the ability to expand their building

 

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control solution over time with minimal upfront costs, despite some of the disadvantages of this approach, which may reduce demand for our integrated solutions. If so, building managers that are our current customers may switch and offer the point products and services of competing companies, which would adversely affect our sales and profitability. If a significant number of customers in our target market choose to adopt point products rather than our integrated solutions, then our business, financial condition, cash flows and results of operations will be harmed, and we may not be able to achieve sustained growth or our business may decline.

Changes in effective tax rates, or adverse outcomes resulting from examination of our income or other tax returns, could adversely affect our results of operations and financial condition.

Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

 

   

changes in the valuation of our deferred tax assets and liabilities;

 

   

expiration of, or lapses in, the research and development tax credit laws;

 

   

expiration or non-utilization of net operating loss carryforwards;

 

   

tax effects of share-based compensation;

 

   

expansion into new jurisdictions;

 

   

potential challenges to and costs related to implementation and ongoing operation of our intercompany arrangements;

 

   

changes in tax laws and regulations and accounting principles, or interpretations or applications thereof; and

 

   

certain non-deductible expenses as a result of acquisitions.

Any changes in our effective tax rate could adversely affect our results of operations.

We may be unable to use some or all of our net operating loss carryforwards, which could materially and adversely affect our reported financial condition and results of operations.

As of December 31, 2019, we had approximately $18.2 million in federal net operating loss carryforwards available to offset future taxable income that will begin to expire in 2034 and approximately $70.5 million in federal net operating loss carryforwards available to offset future taxable income that have an indefinite life. As of December 31, 2019 we had approximately $54.5 million in state net operating loss carryforwards available to offset future taxable income. Some of these state net operating losses have an indefinite life and others are subject to different expiration rules.

In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, our ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders, who each own at least 5% of our stock, increase their collective ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. We have not yet undertaken an analysis of whether the transactions contemplated by the Merger Agreement will give rise to an “ownership change” for purposes of Section 382 of the Internal Revenue Code or whether there are any existing limitations on use with respect to our net operating losses.

It is possible that we will not generate taxable income in time to use our net operating loss carryforwards that are subject to expiration (or that we will not generate taxable income at all). If we have previously had, or have in the future, one or more Section 382 “ownership changes,” including in connection with our initial public offering or another offering, we may not be able to utilize a material portion of our NOLs, even if we achieve

 

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profitability. If we are limited in our ability to use our NOLs in future years in which we have taxable income, we will pay more taxes than if we were able to fully utilize our NOLs. This could materially and adversely affect our results of operations.

We may require additional capital to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances. If capital is not available to us, our business, results of operations, and financial condition may be adversely affected.

We intend to continue to make expenditures and investments to support the growth of our business and may require additional capital to pursue our business objectives and respond to business opportunities, challenges, or unforeseen circumstances, including the need to develop new products or software or enhance our existing products and software, enhance our operating infrastructure, and acquire complementary businesses and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. However, additional funds may not be available when we need them on terms that are acceptable to us, or at all. Any debt financing that we secure in the future could involve restrictive covenants, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. In addition, the restrictive covenants in credit facilities we may secure in the future may restrict us from being able to conduct our operations in a manner required for our business and may restrict our growth, which could have an adverse effect on our business, financial condition, or results of operations.

We cannot assure you that we will be able to comply with any such restrictive covenants. In the event that we are unable to comply with these covenants in the future, we would seek an amendment or waiver of the covenants. We cannot assure you that any such waiver or amendment would be granted. In such an event, we may be required to repay any or all of our existing borrowings, and we cannot assure you that we will be able to borrow under our existing credit agreements, or obtain alternative funding arrangements on commercially reasonable terms, or at all.

In addition, volatility in the credit markets may have an adverse effect on our ability to obtain debt financing. Any future issuances of equity or convertible debt securities could result in significant dilution to our existing stockholders, and any new equity securities we issue could have rights, preferences, and privileges superior to those of holders of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges, or unforeseen circumstances could be significantly limited, and our business, results of operations, financial condition and prospects could be materially and adversely affected.

If we are unable to acquire necessary intellectual property or adequately protect our intellectual property, we could be competitively disadvantaged.

Our intellectual property, including our patents, trademarks, copyrights, trade secrets and other proprietary rights, constitutes a significant part of our value. Our success depends, in part, on our ability to protect our proprietary technology, brands and other intellectual property against dilution, infringement, misappropriation and competitive pressure by defending our intellectual property rights. To protect our intellectual property rights, we rely on a combination of patent, trademark, copyright and trade secret laws of the United States, Canada and countries in Europe and Asia and a combination of confidentiality procedures, contractual provisions and other methods, all of which offer only limited protection. In addition, we make efforts to acquire rights to intellectual property necessary for our operations. However, there can be no assurance that these measures will be successful in any given case, particularly in those countries where the laws do not protect our proprietary rights as fully as in the United States.

We own a portfolio of issued U.S. patents and pending U.S. and foreign patent applications that relate to a variety of smart building technology utilized in our business. We may file additional patent applications in the future in the United States and internationally. The process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable

 

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cost or in a timely manner all the way through to the successful issuance of a patent. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions. In addition, issuance of a patent does not guarantee that we have an absolute right to practice the patented invention.

If we fail to acquire the necessary intellectual property rights or adequately protect or assert our intellectual property rights, competitors may dilute our brands or manufacture and market similar software, services and products or convert our customers, which could adversely affect our market share and results of operations. We may not receive patents or trademarks for all our pending patent and trademark applications, and existing or future patents or licenses may not provide competitive advantages for our software, services and products. Furthermore, it is possible that our patent applications may not issue as granted patents, that the scope of our issued patents will be insufficient or not have the coverage originally sought, or that our issued patents will not provide us with any competitive advantages. Our competitors may challenge, invalidate or avoid the application of our existing or future intellectual property rights that we obtain or license. In addition, patent rights may not prevent our competitors from developing, using or selling products or services that are similar to or address the same market as our software, services and products. The loss of protection for our intellectual property rights could reduce the market value of our brands and our software, services and products, reduce new customer originations or upgrade sales to existing customers, lower our profits, and could have a material adverse effect on our business, financial condition, cash flows or results of operations.

Our policy is to require our employees that were hired to develop material intellectual property included in our products to execute written agreements in which they assign to us their rights in potential inventions and other intellectual property created within the scope of their employment (or, with respect to consultants and service providers, their engagement to develop such intellectual property), but we cannot assure you that we have adequately protected our rights in every such agreement or that we have executed an agreement with every such party. Finally, in order to benefit from the protection of patents and other intellectual property rights, we must monitor and detect infringement, misappropriation or other violations of our intellectual property rights and pursue infringement, misappropriation or other claims in certain circumstances in relevant jurisdictions, all of which are costly and time-consuming. As a result, we may not be able to obtain adequate protection or to effectively enforce our issued patents or other intellectual property rights.

In addition to patents and registered trademarks, we rely on trade secret rights, copyrights and other rights to protect our unpatented proprietary intellectual property and technology. Despite our efforts to protect our proprietary technologies and our intellectual property rights, unauthorized parties, including our employees, consultants, service providers or subscribers, may attempt to copy aspects of our products or obtain and use our trade secrets or other confidential information. We generally enter into confidentiality agreements with our employees and third parties that have access to our material confidential information, and generally limit access to and distribution of our proprietary information and proprietary technology through certain procedural safeguards. These agreements may not effectively prevent unauthorized use or disclosure of our intellectual property or technology, could be breached or otherwise may not provide meaningful protection for our trade secrets and know-how related to the design, manufacture or operation of our products and may not provide an adequate remedy in the event of unauthorized use or disclosure. We cannot assure you that the steps taken by us will prevent misappropriation of our intellectual property or technology or infringement of our intellectual property rights. Competitors may independently develop technologies or products that are substantially equivalent or superior to our solutions or that inappropriately incorporate our proprietary technology into their products or they may hire our former employees who may misappropriate our proprietary technology or misuse our confidential information. In addition, if we expand the geography of our service offerings, the laws of some foreign countries where we may do business in the future do not protect intellectual property rights and technology to the same extent as the laws of the United States, and these countries may not enforce these laws as diligently as government agencies and private parties in the United States.

 

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From time to time, legal action by us may be necessary to enforce our patents and other intellectual property rights, to protect our trade secrets, to determine the validity and scope of the intellectual property rights of others or to defend against claims of infringement, misappropriation or invalidity. Such litigation could result in substantial costs and diversion of resources and could negatively affect our business, operating results and financial condition. If we are unable to protect our intellectual property and technology, we may find ourselves at a competitive disadvantage to others who need not incur the additional expense, time and effort required to create the innovative products that have enabled us to be successful to date.

Accusations of infringement of third-party intellectual property rights could materially and adversely affect our business.

There has been substantial litigation in the areas in which we operate regarding intellectual property rights and we may be sued for infringement from time to time in the future. Also, in some instances, we have agreed to indemnify our customers for expenses and liability resulting from claimed intellectual property infringement by our solutions. From time to time, we may receive requests for indemnification in connection with allegations of intellectual property infringement and we may choose, or be required, to assume the defense and/or reimburse our customers for their expenses, settlement and/or liability. We cannot assure you that we will be able to settle any future claims or, if we are able to settle any such claims, that the settlement will be on terms favorable to us. Our broad range of technology may increase the likelihood that third parties will claim that we, or our customers infringe their intellectual property rights.

We have in the past received, and may in the future receive, notices of allegations of infringement, misappropriation or misuse of other parties’ proprietary rights. Furthermore, regardless of their merits, accusations and lawsuits like these, may require significant time and expense to defend, may negatively affect customer relationships, may divert management’s attention away from other aspects of our operations and, upon resolution, may have a material adverse effect on our business, results of operations, financial condition, and cash flows.

Certain technology necessary for us to provide our solutions may, in fact, be patented by other parties either now or in the future. If such technology were validly patented by another person, we would have to negotiate a license for the use of that technology. We may not be able to negotiate such a license at a price that is acceptable to us or at all. The existence of such a patent, or our inability to negotiate a license for any such technology on acceptable terms, could force us to cease using the technology and cease offering subscriptions incorporating the technology, which could materially and adversely affect our business and results of operations.

If we, or any of our solutions, were found to be infringing on the intellectual property rights of any third party, we could be subject to liability for such infringement, which could be material. We could also be prohibited from using or selling certain subscriptions, prohibited from using certain processes, or required to redesign certain products, each of which could have a material adverse effect on our business and results of operations.

These and other outcomes may:

 

   

result in the loss of a substantial number of existing customers or prohibit the acquisition of new customers;

 

   

cause us to pay license fees for intellectual property we are deemed to have infringed;

 

   

cause us to incur costs and devote valuable technical resources to redesigning our products;

 

   

cause our cost of revenues to increase;

 

   

cause us to accelerate expenditures to preserve existing revenues;

 

   

materially and adversely affect our brand in the marketplace and cause a substantial loss of goodwill;

 

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cause us to change our business methods or subscriptions; and

 

   

require us to cease certain business operations or offering certain products or features.

Our products and services may be affected from time to time by design and manufacturing defects that could adversely affect our business and result in harm to our reputation.

We offer complex software and hardware products and services that can be affected by design and manufacturing defects. Sophisticated full building operating system software and applications, such as those offered by us, have issues that can unexpectedly interfere with the intended operation of hardware or software products. Defects may also exist in components and products that we source from third parties. Any such defects could make our software, services and products unsafe, create a risk of property damage and personal injury, and subject us to the hazards and uncertainties of product liability claims and related litigation. In addition, from time to time, we may experience outages, service slowdowns, or errors that affect our software and full building operating system offerings. As a result, our services may not perform as anticipated and may not meet customer expectations. There can be no assurance that we will be able to detect and fix all issues and defects in the hardware, software, and services we offer. Failure to do so could result in widespread technical and performance issues affecting our products and services and could lead to claims against us. We maintain general liability insurance; however, design and manufacturing defects, and claims related thereto, may subject us to judgments or settlements that result in damages materially in excess of the limits of our insurance coverage. In addition, we may be exposed to recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment, or intangible assets, and significant warranty and other expenses such as litigation costs and regulatory fines. If we cannot successfully defend any large claim, maintain our general liability insurance on acceptable terms, or maintain adequate coverage against potential claims, our financial results could be adversely impacted. Further, given that some of our solutions are considered security systems, quality problems could subject us to substantial liability, adversely affect the experience for users of our software, services and products, and result in harm to our reputation, loss of competitive advantage, poor market acceptance, reduced demand for our software, services and products, delay in new product and service introductions, and lost revenue.

Our new software, services and products may not be successful.

We launched our first smart building products in 2017. Since that time, we have launched a number of other offerings and anticipate launching additional software, services and products in the future, such as expanding into new verticals (e.g., commercial offices) or introducing new LatchOS modules aimed at capturing residents’ digital services spending. The software, services and products we may launch in the future may not be well-received by our customers, may not help us to generate new customers, may adversely affect the attrition rate of existing customers, may increase our customer acquisition costs and may increase the costs to service our customers. Any profits we may generate from these or other new products, software or services may be lower than profits generated from our existing software, services, and products and may not be sufficient for us to recoup our development or customer acquisition costs incurred. New software, services and products may also have lower gross margins, particularly to the extent that they do not fully utilize our existing infrastructure. In addition, new software, services and products may require increased operational expenses or customer acquisition costs and present new and difficult technological and intellectual property challenges that may subject us to claims or complaints if subscribers experience service disruptions or failures or other quality issues. To the extent our new software, services and products are not successful, it could have a material adverse effect on our business, financial condition, cash flows or results of operations.

If we fail to continue to develop our brand or our reputation is harmed, our business may suffer.

We believe that continuing to strengthen our current brand will be critical to achieving widespread acceptance of our software, services, and products and will require continued focus on active marketing efforts. The demand for and cost of online and traditional advertising have been increasing and may continue to increase. Accordingly, we may need to increase our investment in, and devote greater resources to, advertising, marketing,

 

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and other efforts to create and maintain brand loyalty among users, especially as we launch new LatchOS modules aimed to capture resident’s digital services spending. Brand promotion activities may not yield increased revenues, and even if they do, any increased revenues may not offset the expenses incurred in building our brand. In addition, if we do not handle customer complaints effectively, our brand and reputation may suffer, we may lose our customers’ confidence, and they may choose to terminate, reduce or not to renew their subscriptions. Many of our customers also participate in social media and online blogs about smart building technology solutions, including our products, and our success depends in part on our ability to minimize negative and generate positive customer feedback through such online channels where existing and potential customers seek and share information. If we fail to promote and maintain our brand, our business could be materially and adversely affected.

Our applications run on mobile operating systems, networks, and devices that we do not control.

Our customers access our platform through the Latch App and Latch Manager App (collectively, “Latch Apps”). There is no guarantee that popular mobile devices and operating systems will continue to support the Latch Apps. We are dependent on the interoperability of the Latch Apps with popular mobile operating systems that we do not control, such as Android and iOS, and any changes in such systems that degrade the functionality of our digital offering or give preferential treatment to competitors could adversely affect our platform’s usage on mobile devices. Additionally, in order to deliver high-quality mobile content, it is important that our digital offering is designed effectively and works well with a range of mobile technologies, systems, networks, and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing products that operate effectively with these technologies, systems, networks, or standards, which could harm our business.

Potential problems with our information systems, third-party systems, and infrastructure that we rely on could interfere with our business and operations.

We rely on our information systems and third parties information systems and infrastructure (such as cloud computing platforms and databases) for hosting and making our software products available, processing customer orders, distribution of our products, billing our customers, processing credit card transactions, customer relationship management, supporting financial planning and analysis, accounting functions and financial statement preparation, and otherwise running our business. Information systems may experience interruptions, including interruptions of related services from third-party providers, which may be beyond our control. Such business interruptions could cause us to fail to meet customer requirements. All information systems, both internal and external, are potentially vulnerable to damage or interruption from a variety of sources, including without limitation, computer viruses, security breaches, energy blackouts, natural disasters, terrorism, war, telecommunication failures, employee or other theft, and third-party provider failures. Any errors or disruption in our information systems and those of the third parties upon which we rely could have a significant impact on our business. In addition, we may implement further and enhanced information systems in the future to meet the demands resulting from our growth and to provide additional capabilities and functionality. The implementation of new systems and enhancements is frequently disruptive to the underlying business of an enterprise, and can be time-consuming and expensive, increase management responsibilities, and divert management attention.

We collect, store, process, and use personal information and other customer data, which subjects us to legal obligations and laws and regulations related to security and privacy, and any actual or perceived failure to meet those obligations could harm our business.

We collect, process, store, and use a wide variety of data from current and prospective customers, including personal information, such as home addresses and geolocation. Federal, state, and international laws and regulations governing privacy, data protection, and e-commerce transactions require us to safeguard our customers’ personal information. The scope of such laws and regulations is rapidly changing. We are also subject to the terms of our privacy policies and contractual obligations to third parties related to privacy, data protection

 

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and information security. We strive to comply with applicable laws, regulations, policies and other legal obligations relating to privacy, data protection, and information security. However, the regulatory framework for privacy, data protection, and information security is, and is likely to remain, uncertain for the foreseeable future, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices.

We also expect that there will continue to be new laws, regulations and industry standards concerning privacy, data protection, and information security proposed and enacted in various jurisdictions. Various states throughout the United States, are increasingly adopting or revising privacy, information security and data protection laws and regulations that could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of customer, consumer and/or employee information, as well as any other third-party information we receive, and some of our current or planned business activities. For example, California recently enacted legislation, the California Consumer Privacy Act of 2018 (“CCPA”), that affords consumers who are California residents expanded privacy protections and control over the collection, use and sharing of their personal information. The CCPA went into effect on January 1, 2020, and gives California residents expanded rights to access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used. The CCPA also provides for a private right of action for data breaches that may increase data breach litigation. Relatedly, the California Privacy Rights Act (the “CPRA”) was recently adopted by California voters. The CPRA significantly amends the CCPA and imposes additional data protection obligations on covered companies doing business in California, including additional consumer rights processes and opt outs for certain uses of sensitive data. It also creates a new California data protection agency specifically tasked to enforce the law, which would likely result in increased regulatory scrutiny of California businesses in the areas of data protection and security. The substantive requirements for businesses subject to the CPRA will go into effect on January 1, 2023, and become enforceable on July 1, 2023.

Additionally, the interpretations of existing federal and state consumer protection laws relating to online collection, use, dissemination, and security of personal information adopted by the Federal Trade Commission (the “FTC”), state attorneys general, private plaintiffs, and courts have evolved, and may continue to evolve, over time. Consumer protection laws require us to publish statements that describe how we handle personal information and choices individuals may have about the way we handle their personal information. If such information that we publish is considered untrue, we may be subject to government claims of unfair or deceptive trade practices, which could lead to significant liabilities and consequences. Furthermore, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce and thus violate Section 5(a) of the FTC Act. The FTC expects a company’s data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

In Canada, the Personal Information Protection and Electronic Documents Act (“PIPEDA”), and similar provincial laws may impose obligations with respect to processing personal information. PIPEDA requires companies to obtain an individual’s consent when collecting, using or disclosing that individual’s personal information. Individuals have the right to access and challenge the accuracy of their personal information held by an organization, and personal information may only be used for the purposes for which it was collected. If an organization intends to use personal information for another purpose, it must again obtain that individual’s consent. Failure to comply with PIPEDA could result in significant fines and penalties. In Europe, the GDPR went into effect in May 2018 and imposes strict requirements for processing the personal data of individuals within the European Economic Area (“EEA”). Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater. Relatedly, from January 1, 2021, companies have to comply with both the GDPR and the GDPR as incorporated into United Kingdom national law, the latter regime having the ability to separately fine up to the greater of £17.5 million or 4% of global turnover. The relationship between the

 

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United Kingdom and the European Union in relation to certain aspects of data protection law remains unclear, and it is unclear how United Kingdom data protection laws and regulations will develop in the medium to longer term, and how data transfers to and from the United Kingdom will be regulated in the long term. Currently there is a four to six-month grace period agreed in the EU and United Kingdom Trade and Cooperation Agreement, ending June 30, 2021 at the latest, whilst the parties discuss an adequacy decision. However, it is not clear whether (and when) an adequacy decision may be granted by the European Commission enabling data transfers from EU member states to the United Kingdom long term without additional measures. These changes may lead to additional costs and increase our overall risk exposure.

With data privacy and security laws and regulations imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices, and may incur significant costs and expenses in an effort to do so. Any failure or perceived failure by us to comply with our privacy policies, our data privacy or security related obligations to our customers or any of our other legal obligations relating to data privacy or security may result in governmental investigations or enforcement actions, litigation, claims or public statements against us by consumer advocacy groups or others, and could result in significant liability, loss of relationships with key third parties, or cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.

Although we have established security procedures to protect customer information, our or partners’ security and testing measures may not prevent security breaches. Further, advances in computer capabilities, new discoveries in the field of cryptography, inadequate facility security, or other developments may result in a compromise or breach of the technology we use to protect customer data. Any compromise of our security or breach of our customers’ privacy could harm our reputation or financial condition and, therefore, our business.

In addition, a party who circumvents our security measures or exploits inadequacies in our security measures, could, among other effects, misappropriate customer data or other proprietary information, cause interruptions in our operations, or expose customers to computer viruses or other disruptions. Actual or perceived vulnerabilities may lead to claims against us. To the extent that the measures we or our third-party business partners have taken prove to be insufficient or inadequate, we may become subject to litigation, breach notification obligations, or regulatory or administrative sanctions, which could result in significant fines, penalties, or damages and harm to our reputation. Depending on the nature of the information compromised, in the event of a data breach or other unauthorized access to our customer data, we may also have obligations to notify customers about the incident and we may need to provide some form of remedy, such as a subscription to a credit monitoring service, for the individuals affected by the incident. A growing number of legislative and regulatory bodies have adopted consumer notification requirements in the event of unauthorized access to or acquisition of certain types of personal data. Such breach notification laws continue to evolve and may be inconsistent from one jurisdiction to another. Complying with these obligations could cause us to incur substantial costs and could increase negative publicity surrounding any incident that compromises customer data.

Furthermore, we may be required to disclose personal data pursuant to demands from individuals, privacy advocates, regulators, government agencies, and law enforcement agencies in various jurisdictions with conflicting privacy and security laws. This disclosure or refusal to disclose personal data may result in a breach of privacy and data protection policies, notices, laws, rules, court orders, and regulations and could result in proceedings or actions against us in the same or other jurisdictions, damage to our reputation and brand, and inability to provide our products and services to customers in certain jurisdictions. Additionally, changes in the laws and regulations that govern our collection, use, and disclosure of customer data could impose additional requirements with respect to the retention and security of customer data, could limit our marketing activities, and have an adverse effect on our business, financial condition, and operating results.

We rely on a limited number of suppliers, manufacturers, and logistics partners for our products. A loss of any of these partners could negatively affect our business.

We rely on a limited number of suppliers to manufacture and transport our products, including in some cases only a single supplier for some of our products and components. Our reliance on a limited number of

 

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manufacturers for our products increases our risks, since we do not currently have alternative or replacement manufacturers beyond these key parties. In the event of interruption from any of our manufacturers, we may not be able to increase capacity from other sources or develop alternate or secondary sources without incurring material additional costs and substantial delays. Furthermore, many of these manufacturers’ primary facilities are located in Asia. Thus, our business could be adversely affected if one or more of our suppliers is impacted by a natural disaster or other interruption at a particular location.

If we experience a significant increase in demand for our products, or if we need to replace an existing supplier or logistics partner, we may be unable to supplement or replace them on terms that are acceptable to us, which may undermine our ability to deliver our products to customers in a timely manner. For example, it may take a significant amount of time to identify a manufacturer that has the capability and resources to build our products to our specifications in sufficient volume. Identifying suitable suppliers, manufacturers, and logistics partners is an extensive process that requires us to become satisfied with their quality control, technical capabilities, responsiveness and service, financial stability, regulatory compliance, and labor and other ethical practices. Accordingly, a loss of any of our significant suppliers, manufactures, or logistics partners could have an adverse effect on our business, financial condition and operating results.

We have limited control over our suppliers, manufacturers, and logistics partners, which may subject us to significant risks, including the potential inability to produce or obtain quality products and services on a timely basis or in sufficient quantity.

We have limited control over our suppliers, manufacturers, and logistics partners, which subjects us to risks, such as the following:

 

   

inability to satisfy demand for our products;

 

   

reduced control over delivery timing and product reliability;

 

   

reduced ability to monitor the manufacturing process and components used in our products;

 

   

limited ability to develop comprehensive manufacturing specifications that take into account any materials shortages or substitutions;

 

   

variance in the manufacturing capability of our third-party manufacturers;

 

   

price increases;

 

   

failure of a significant supplier, manufacturer, or logistics partner to perform its obligations to us for technical, market, or other reasons;

 

   

insolvency, bankruptcy or liquidation of a significant supplier, manufacturer, or logistics partner;

 

   

difficulties in establishing additional supplier, manufacturer, or logistics partner relationships if we experience difficulties with our existing suppliers, manufacturers, or logistics partners;

 

   

shortages of materials or components;

 

   

misappropriation of our intellectual property;

 

   

exposure to natural catastrophes, political unrest, terrorism, labor disputes, and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured or the components thereof are sourced;

 

   

changes in local economic conditions in the jurisdictions where our suppliers, manufacturers, and logistics partners are located;

 

   

the imposition of new laws and regulations, including those relating to labor conditions, quality and safety standards, imports, duties, tariffs, taxes, and other charges on imports, as well as trade restrictions and restrictions on currency exchange or the transfer of funds; and

 

   

insufficient warranties and indemnities on components supplied to our manufacturers or performance by our partners.

 

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The occurrence of any of these risks, especially during seasons of peak demand, could cause us to experience a significant disruption in our ability to produce and deliver our products to our customers.

Increases in component costs, long lead times, supply shortages, and supply changes could disrupt our supply chain and have an adverse effect on our business, financial condition, and operating results.

Meeting customer demand partially depends on our ability to obtain timely and adequate delivery of components for our smart building products. All of the components that go into the manufacturing of our products are sourced from a limited number of third-party suppliers, and some of these components are provided by a single supplier. Our manufacturers generally purchase these components on our behalf, subject to certain approved supplier lists, and we do not have long-term arrangements with some of our component suppliers. We are therefore subject to the risk of shortages and long lead times in the supply of these components and the risk that our suppliers discontinue or modify components used in our products. In addition, the lead times associated with certain components are lengthy and preclude rapid changes in design, quantities, and delivery schedules. We may in the future experience component shortages, and the predictability of the availability of these components may be limited. In the event of a component shortage or supply interruption from suppliers of these components, we may not be able to develop alternate sources in a timely manner. Developing alternate sources of supply for these components may be time-consuming, difficult, and costly and we may not be able to source these components on terms that are acceptable to us, or at all, which may undermine our ability to fill our orders in a timely manner. Any interruption or delay in the supply of any of these parts or components, or the inability to obtain these parts or components from alternate sources at acceptable prices and within a reasonable amount of time, would harm our ability to meet our scheduled products deliveries to our customers.

Moreover, volatile economic conditions may make it more likely that our suppliers may be unable to timely deliver supplies, or at all, and there is no guarantee that we will be able to timely locate alternative suppliers of comparable quality at an acceptable price. Increases in our component costs could have a material effect on our gross margins. The loss of a significant supplier, an increase in component costs, or delays or disruptions in the delivery of components, could adversely impact our ability to generate future revenue and earnings and have an adverse effect on our business, financial condition, and operating results.

Some of our products and services contain open source software, which may pose particular risks to our proprietary software, technologies, products, and services in a manner that could harm our business.

We use open source software in our products and services and anticipate using open source software in the future. Some open source software licenses require those who distribute open source software as part of their own software product to publicly disclose all or part of the source code to such software product or to make available any derivative works of the open source code on unfavorable terms or at no cost. The terms of many open source licenses to which we are subject have not been interpreted by U.S. or foreign courts, and there is a risk that open source software licenses could be construed in a manner that imposes unanticipated conditions or restrictions on our ability to provide or distribute our products or services. Additionally, we could face claims from third parties claiming ownership of, or demanding release of, the open source software or derivative works that we developed using such software, which could include our proprietary source code, or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to make our software source code freely available, purchase a costly license, or cease offering the implicated products or services unless and until we can re-engineer them to avoid infringement. This re-engineering process could require us to expend significant additional research and development resources, and we cannot guarantee that we will be successful.

Additionally, the use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software. There is typically no support available for open source software, and we cannot ensure that the authors of such open source software will implement or push updates to address security risks or will not abandon further

 

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development and maintenance. Many of the risks associated with the use of open source software, such as the lack of warranties or assurances of title or performance, cannot be eliminated, and could, if not properly addressed, negatively affect our business. We have processes to help alleviate these risks, including a review process for screening requests from our developers for the use of open source software, but we cannot be sure that all open source software is identified or submitted for approval prior to use in our products and services. Any of these risks could be difficult to eliminate or manage, and, if not addressed, could have an adverse effect on our business, financial condition, and operating results.

From time to time, we may be subject to legal proceedings, regulatory disputes, and governmental inquiries that could cause us to incur significant expenses, divert our management’s attention, and materially harm our business, financial condition, and operating results.

From time to time, we may be subject to claims, lawsuits, government investigations, and other proceedings involving products liability, competition and antitrust, intellectual property, privacy, consumer protection, securities, tax, labor and employment, commercial disputes, and other matters that could adversely affect our business operations and financial condition. As our business grows, we may see a rise in the number and significance of these disputes and inquiries. Litigation and regulatory proceedings, and particularly the intellectual property infringement matters that we could face, may be protracted and expensive, and the results are difficult to predict. Additionally, our litigation costs could be significant. Adverse outcomes with respect to litigation or any of these legal proceedings may result in significant settlement costs or judgments, penalties and fines, or require us to modify our products or services, make content unavailable, or require us to stop offering certain features, all of which could negatively affect our membership and revenue growth. See the section titled “Information About Latch—Legal Proceedings.

The results of litigation, investigations, claims, and regulatory proceedings cannot be predicted with certainty, and determining reserves for pending litigation and other legal and regulatory matters requires significant judgment. There can be no assurance that our expectations will prove correct, and even if these matters are resolved in our favor or without significant cash settlements, these matters, and the time and resources necessary to litigate or resolve them, could harm our business, financial condition, and operating results.

Our business is subject to the risk of earthquakes, fire, power outages, floods, and other catastrophic events, and to interruption by manmade problems such as terrorism.

Our business is vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins, and similar events. The third-party systems and operations and manufacturers we rely on are subject to similar risks. For example, a significant natural disaster, such as an earthquake, fire, or flood, could have an adverse effect on our business, financial condition and operating results, and our insurance coverage may be insufficient to compensate us for losses that may occur. Acts of terrorism, which may be targeted at metropolitan areas that have higher population density than rural areas, could also cause disruptions in our or our suppliers’ and manufacturers’ businesses or the economy as a whole. We may not have sufficient protection or recovery plans in some circumstances, such as natural disasters affecting locations that store significant inventory of our products or that house our servers. As we rely heavily on our computer and communications systems, and the internet to conduct our business and provide high-quality customer service, these disruptions could negatively impact our ability to run our business and either directly or indirectly disrupt suppliers’ and manufacturers’ businesses, which could have an adverse effect on our business, financial condition, and operating results.

The outbreak of the COVID-19 coronavirus pandemic, or COVID-19, could have an adverse effect on our business, results of operations, and financial condition.

COVID-19 has caused significant volatility in financial markets and has caused what is likely to be an extended global recession. Public health problems resulting from COVID-19 and precautionary measures

 

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instituted by governments and businesses to mitigate its spread, including travel restrictions and quarantines, could contribute to a general slowdown in the global economy, adversely impact our customers, third-party suppliers and other business partners, and disrupt our operations. Changes in our and our customers’ operations in response to COVID-19 or employee illnesses resulting from the pandemic has resulted in and may continue to result in inefficiencies or delays, including in sales, delivery, and product development efforts, and additional costs related to business continuity initiatives, that cannot be fully mitigated through succession and business continuity planning, employees working remotely or teleconferencing technologies. For example, in the first quarter of 2020, we initiated a restructuring plan as part of our efforts to reduce operating expenses and preserve liquidity due to the uncertainty and challenges stemming from the COVID-19 pandemic. This restructuring included an approximate 25% reduction in headcount, which resulted in severance and benefit costs for affected employees and other miscellaneous direct and indirect costs. As a result of our strong 2020 performance, we have begun to rehire some of our employees who were terminated at the outset of the pandemic in connection with the restructuring, which may lead to increased expenses associated with the increasing headcount. Additionally, the COVID-19 pandemic has disrupted and may in the future continue to disrupt our hardware deliveries due to delays in construction timelines at our customers’ building sites.

COVID-19 and related governmental reactions have had and may continue to have a negative impact on our business, liquidity, results of operations, and stock price due to the occurrence of some or all of the following events or circumstances, among others:

 

   

our inability to manage our business effectively due to key employees becoming ill, working from home inefficiently, and being unable to travel to our facilities;

 

   

our and our customers’, third-party suppliers’ and other business partners’ inability to operate worksites, including construction sites, manufacturing facilities and shipping and fulfillment centers, due to employee illness or reluctance to appear at work, or “stay-at-home” regulations;

 

   

interruptions in manufacturing (including the sourcing of key components) and shipment of our products;

 

   

disruptions of the operations of our third-party suppliers, which could impact our ability to purchase components at efficient prices and in sufficient amounts;

 

   

reduced demand for our products and services, including due to any prolonged economic downturn that may occur;

 

   

our inability to raise additional capital or the dilution of our common stock if we raise capital by issuing equity securities;

 

   

volatility in the market price of the Post-Combination Company’s Class A common stock; and

 

   

incurrence of significant increases to employee health care and benefits costs.

The extent of the impact of COVID-19 on our business and financial results will depend largely on future developments, including the duration of the spread of the outbreak, the impact on capital and financial markets, and the related impact on the financial circumstances of our customers, all of which are highly uncertain and cannot be predicted. This situation is changing rapidly, and additional impacts may arise that we are not aware of currently.

Our smart building technology is subject to varying state and local regulations, which may be updated from time to time.

Our smart building technology is subject to certain state and local regulations, which may be updated from time to time. For example, our software, services and products are subject to regulations relating to building and fire codes, public safety, and may eventually be subject to state and local regulation regarding access control systems. The regulations to which we are subject may change, additional regulations may be imposed, or existing

 

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regulations may be applied in a manner that creates special requirements for the implementation and operation of our software, services, and products that may significantly impact or even eliminate some of our revenues or markets. In addition, we may incur material costs or liabilities in complying with any such regulations. Furthermore, some of our customers must comply with numerous laws and regulations, which may affect their willingness and ability to purchase our software, services and products. The modification of existing laws and regulations or interpretations thereof or the adoption of future laws and regulations could adversely affect our business, cause us to modify or alter our methods of operations and increase our costs and the price of our software, services and products. In addition, we cannot provide any assurance that we will be able, for financial or other reasons, to comply with all applicable laws and regulations. If we fail to comply with these laws and regulations, we could become subject to substantial penalties or restrictions that could materially and adversely affect our business.

We may fail to comply with import and export, bribery and money laundering laws, regulations and controls.

We conduct our business in the U.S. and Canada and source our products from Asia and the U.S. We are subject to regulation by various federal, state, local and foreign governmental agencies, including, but not limited to, agencies and regulatory bodies or authorities responsible for monitoring and enforcing product safety and consumer protection laws, data privacy and security laws and regulations, employment and labor laws, workplace safety laws and regulations, environmental laws and regulations, antitrust laws, federal securities laws and tax laws and regulations.

We are subject to the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. Travel Act, and possibly other anti-bribery laws, including those that comply with the Organization for Economic Cooperation and Development, or OECD, Convention on Combating Bribery of Foreign Public Officials in International Business Transactions and other international conventions. Anti-corruption laws are interpreted broadly and prohibit our company from authorizing, offering, or providing directly or indirectly improper payments or benefits to recipients in the public or private-sector. Certain laws could also prohibit us from soliciting or accepting bribes or kickbacks. We can be held liable for the corrupt activities of our employees, representatives, contractors, partners and agents, even if we did not explicitly authorize such activity. Although we have implemented policies and procedures designed to ensure compliance with anti-corruption laws, there can be no assurance that all of our employees, representatives, contractors, partners, and agents will comply with these laws and policies.

Our operations require us to import from Asia and export to Canada, which geographically stretches our compliance obligations. We are also subject to anti-money laundering laws such as the USA PATRIOT Act and may be subject to similar laws in other jurisdictions. Our products are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S. Customs regulations, and various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Controls. We may also be subject to import/export laws and regulations in other jurisdictions in which we conduct business or source our products. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to substantial civil or criminal penalties, including the possible loss of export or import privileges; fines, which may be imposed on us and responsible employees or managers; and, in extreme cases, the incarceration of responsible employees or managers.

Changes in laws that apply to us could result in increased regulatory requirements and compliance costs which could harm our business, financial condition, cash flows and results of operations. In certain jurisdictions, regulatory requirements may be more stringent than in the United States. Noncompliance with applicable regulations or requirements could subject us to whistleblower complaints, investigations, sanctions, settlements, mandatory product recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions, suspension or debarment from contracting with certain governments or other customers, the loss of export privileges, multi-jurisdictional liability, reputational harm, and other collateral consequences. If any governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal litigation, our business, financial condition, cash flows and results of operations could be materially harmed. In

 

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addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and an increase in defense costs and other professional fees.

Our operating results could be adversely affected if we are unable to accurately forecast customer demand for our products and services and adequately manage our inventory.

To ensure adequate inventory supply, we must forecast inventory needs and expenses and place orders sufficiently in advance with our suppliers and contract manufacturers, based on our estimates of future demand for particular products and services. Failure to accurately forecast our needs may result in manufacturing delays or increased costs. Our ability to accurately forecast demand could be affected by many factors, including changes in customer demand for our products and services, changes in demand for the software, services and products of our competitors, unanticipated changes in general market conditions, and the weakening of economic conditions or customer confidence in future economic conditions, such as those caused by the current COVID-19 outbreak. This risk will be exacerbated by the fact that we may not carry a significant amount of inventory and may not be able to satisfy short-term demand increases. If we fail to accurately forecast customer demand, we may experience excess inventory levels or a shortage of products available for sale.

Inventory levels in excess of customer demand may result in inventory write-downs or write-offs and the sale of excess inventory at discounted prices, which would cause our gross margins to suffer and could impair the strength of our brand. Further, lower than forecasted demand could also result in excess manufacturing capacity or reduced manufacturing efficiencies, which could result in lower margins. Conversely, if we underestimate customer demand, our suppliers and manufacturers may not be able to deliver products to meet our requirements or we may be subject to higher costs in order to secure the necessary production capacity. An inability to meet customer demand and delays in the delivery of our products to our customers could result in reputational harm and damaged customer relationships and have an adverse effect on our business, financial condition, and operating results.

If we are unable to sustain pricing levels for our software, services, and products, our business could be adversely affected.

If we are unable to sustain pricing levels for our software subscriptions and products, whether due to competitive pressure or otherwise, our gross margins could be significantly reduced. Further, our decisions around the development of new software, services and products are grounded in assumptions about eventual pricing levels. If there is price compression in the market after these decisions are made, it could have a negative effect on our business.

Insurance policies may not cover all of our operating risks and a casualty loss beyond the limits of our coverage could negatively impact our business.

We are subject to all of the operating hazards and risks normally incidental to the provision of our products and services and business operations. In addition to contractual provisions limiting our liability to customers and third parties, we maintain insurance policies in such amounts and with such coverage and deductibles as required by law and that we believe are reasonable and prudent. Nevertheless, such insurance may not be adequate to protect us from all the liabilities and expenses that may arise from claims for personal injury, death, or property damage arising in the ordinary course of our business and current levels of insurance may not be able to be maintained or available at economical prices. If a significant liability claim is brought against us that is not covered by insurance, then we may have to pay the claim with our own funds, which could have a material adverse effect on our business, financial condition, cash flows or results of operations.

Downturns in general economic and market conditions and reductions in spending may reduce demand for our software, services, and products, which could harm our revenue, results of operations and cash flows.

Our revenue, results of operations and cash flows depend on the overall demand for our software, services and products. Negative conditions in the general economy both in the United States and abroad, including

 

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conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, construction slowdowns, energy costs, international trade relations and other geopolitical issues, the availability and cost of credit and the global housing and mortgage markets could cause a decrease in consumer discretionary spending and business investment and diminish growth expectations in the U.S. economy and abroad.

During weak economic times, the available pool of potential customers may decline as the prospects for new multifamily apartment and single family rental construction and residential building renovation projects diminish, which may have a corresponding impact on our growth prospects. In addition, there is an increased risk during these periods that an increased percentage of property developers will file for bankruptcy protection, which may harm our revenue, profitability and results of operations. In addition, we may determine that the cost of pursuing any claim may outweigh the recovery potential of such claim. Prolonged economic slowdowns and reductions in new residential and commercial building construction and renovation projects may result in diminished sales of our software, services and products. Further worsening, broadening or protracted extension of an economic downturn could have a negative impact on our business, revenue, results of operations and cash flows.

We may face exposure to foreign currency exchange rate fluctuations.

While we have historically transacted in U.S. dollars with the majority of our customers and suppliers, we have transacted in some foreign currencies, such as the Canadian Dollar, Chinese Renminbi and the New Taiwan Dollar, and may transact in more foreign currencies in the future. Accordingly, changes in the value of foreign currencies relative to the U.S. dollar may affect our revenue and operating results. As a result of such foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and operating results. In addition, to the extent that fluctuations in currency exchange rates cause our operating results to differ from our expectations or the expectations of our investors, the trading price of the Post-Combination Company’s common stock could be lowered.

Risks Related to the Business Combination

Latch’s stockholders will have a reduced ownership and voting interest after the Business Combination and will exercise less influence over management.

Latch’s stockholders currently have the right to vote in the election of the Latch board of directors and on other matters requiring stockholder approval under Delaware law and Latch’s charter and bylaws. Upon the completion of the Business Combination, Latch stockholders who become stockholders of the Post-Combination Company will have a percentage ownership of the Post-Combination Company that is smaller than such stockholders’ percentage ownership of Latch. Additionally, one of the expected members of the Post-Combination Company’s board of directors following the Business Combination will be Robert J. Speyer, a current director of TSIA. Based on the number of issued and outstanding shares of TSIA common stock, Latch preferred stock and Latch common stock and the number of outstanding stock options, warrants, restricted stock awards and restricted stock unit awards of Latch, in each case as of April 20, 2021, and based on the merger consideration, stockholders of Latch, as a group, will receive shares in the Business Combination constituting up to approximately 64.2% of the Post-Combination Company’s common stock expected to be outstanding immediately after the Business Combination. Because of this, current Latch stockholders, as a group, will have less influence on the board of directors, management and policies of the Post-Combination Company than they now have on the board of directors, management and policies of Latch.

TSIA stockholders will have a reduced ownership and voting interest after the Business Combination and will exercise less influence over management.

Upon the issuance of the shares to Latch stockholders, current TSIA stockholders’ percentage ownership will be diluted. Assuming no public stockholders exercise their redemption rights and excluding any shares issuable pursuant to TSIA’s outstanding warrants, current TSIA stockholders’ percentage ownership in the Post-

 

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Combination Company following the issuance of shares to Latch stockholders would be 19.3%. Additionally, of the expected members of the Post-Combination Company’s board of directors after the completion of the Business Combination, only one will be a current director of TSIA and six will be current directors of Latch. The percentage of the Post-Combination Company’s common stock that will be owned by current TSIA stockholders as a group will vary based on the number of Public Shares for which the holders thereof request redemption in connection with the Business Combination. To illustrate the potential ownership percentages of current TSIA stockholders under different redemption levels, based on the number of issued and outstanding shares of TSIA common stock and Latch capital stock on April 20, 2021, and based on the merger consideration, current TSIA stockholders (including the Sponsor and directors of TSIA), as a group, will own (1) if there are no redemptions of Public Shares, 23.6% of the Post-Combination Company’s common stock expected to be outstanding immediately after the Business Combination or (2) if there are redemptions of 100% of the outstanding Public Shares, 5.4% of the Post-Combination Company’s common stock expected to be outstanding immediately after the Business Combination. Because of this, current TSIA stockholders, as a group, will have less influence on the board of directors, management and policies of the Post-Combination Company than they now have on the board of directors, management and policies of TSIA.

The market price of shares of the Post-Combination Company’s Class A common stock after the Business Combination may be affected by factors different from those currently affecting the prices of shares of TSIA Class A common stock.

Upon completion of the Business Combination, holders of shares of Latch common stock and preferred stock will become holders of shares of the Post-Combination Company’s Class A common stock. Prior to the Business Combination, TSIA has had limited operations. Upon completion of the Business Combination, the Post-Combination Company’s results of operations will depend upon the performance of Latch’s businesses, which are affected by factors that are different from those currently affecting the results of operations of TSIA.

TSIA has not obtained an opinion from an independent investment banking firm, and consequently, there is no assurance from an independent source that the merger consideration is fair to its stockholders from a financial point of view.

TSIA is not required to, and has not, obtained an opinion from an independent investment banking firm that the merger consideration it is paying for Latch is fair to TSIA’s stockholders from a financial point of view. The fair market value of Latch has been determined by the TSIA Board based upon standards generally accepted by the financial community, such as potential sales and the price for which comparable businesses or assets have been valued. TSIA’s board of directors believes because of the financial skills and background of its directors, it was qualified to conclude that the Business Combination was fair from a financial perspective to its stockholders and that Latch’s fair market value was at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the agreement to enter into the Business Combination. TSIA’s stockholders will be relying on the judgment of its board of directors with respect to such matters.

If the Business Combination’s benefits do not meet the expectations of financial analysts, the market price of our common stock may decline.

The market price of our common stock may decline as a result of the Business Combination if we do not achieve the perceived benefits of the Business Combination as rapidly, or to the extent anticipated by, financial analysts or the effect of the Business Combination on our financial results is not consistent with the expectations of financial analysts. Accordingly, holders of our common stock following the consummation of the Business Combination may experience a loss as a result of a decline in the market price of such common stock. In addition, a decline in the market price of our common stock following the consummation of the Business Combination could adversely affect our ability to issue additional securities and to obtain additional financing in the future.

 

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There can be no assurance that the Post-Combination Company’s common stock will be approved for listing on the NASDAQ or that the Post-Combination Company will be able to comply with the continued listing standards of the NASDAQ.

In connection with the closing of the Business Combination, we intend to list the Post-Combination Company’s common stock and warrants on the NASDAQ under the symbols “LTCH” and “LTCH.W,” respectively. The Post-Combination Company’s continued eligibility for listing may depend on the number of our shares that are converted. If, after the Business Combination, the NASDAQ delists the Post-Combination Company’s shares from trading on its exchange for failure to meet the listing standards, the Post-Combination Company and its stockholders could face significant material adverse consequences including:

 

   

a limited availability of market quotations for the Post-Combination Company’s securities;

 

   

reduced liquidity for the Post-Combination Company’s securities;

 

   

a determination that the Post-Combination Company’s common stock is a “penny stock” which will require brokers trading in the Post-Combination Company’s common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for shares of the Post-Combination Company’s common stock;

 

   

a limited amount of analyst coverage; and

 

   

a decreased ability to issue additional securities or obtain additional financing in the future.

The consummation of the Business Combination is subject to a number of conditions and if those conditions are not satisfied or waived, the Merger Agreement may be terminated in accordance with its terms and the Business Combination may not be completed.

The Merger Agreement is subject to a number of conditions which must be fulfilled in order to complete the Business Combination. Those conditions include: approval of the Merger Agreement by Latch stockholders, approval of the proposals required to effect the Business Combination by TSIA stockholders, as well as receipt of certain requisite regulatory approvals, absence of orders prohibiting completion of the Business Combination, effectiveness of the registration statement of which this proxy statement/prospectus is a part, approval of the shares of Class A common stock to be issued to TSIA stockholders for listing on the NASDAQ, the resignation of specified TSIA executive officers and directors, the requirement that TSIA have $150 million in Required Funds, the accuracy of the representations and warranties by both parties (subject to the materiality standards set forth in the Merger Agreement) and the performance by both parties of their covenants and agreements. These conditions to the closing of the Business Combination may not be fulfilled in a timely manner or at all, and, accordingly, the Business Combination may not be completed. In addition, the parties can mutually decide to terminate the Merger Agreement at any time, before or after stockholder approval, or TSIA or Latch may elect to terminate the Merger Agreement in certain other circumstances. See “The Merger Agreement—Termination” beginning on page 217.

The parties to the Merger Agreement may amend the terms of the Merger Agreement or waive one or more of the conditions to the Business Combination, and the exercise of discretion by our directors and officers in agreeing to changes to the terms of or waivers of closing conditions in the Merger Agreement may result in a conflict of interest when determining whether such changes to the terms of the Merger Agreement or waivers of conditions are appropriate and in the best interests of our stockholders.

In the period leading up to the Closing, other events may occur that, pursuant to the Merger Agreement, would require us to agree to amend the Merger Agreement, to consent to certain actions or to waive certain closing conditions or other rights that we are entitled to under the Merger Agreement. Such events could arise because of changes in the course of Latch’s business, a request by Latch to undertake actions that would otherwise be prohibited by the terms of the Merger Agreement or the occurrence of other events that would have a material adverse effect on Latch’s business and would entitle us to terminate the Merger Agreement. In any of

 

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such circumstances, it would be in our discretion, acting through our board of directors, to grant our consent or waive our rights. The existence of the financial and personal interests of the directors and officers described elsewhere in this proxy statement may result in a conflict of interest on the part of one or more of the directors or officers between what he or she may believe is best for TSIA and our stockholders and what he or she may believe is best for himself or herself or his or her affiliates in determining whether or not to take the requested action.

For example, it is a condition to TSIA’s obligation to close the Business Combination that Latch’s representations and warranties be true and correct as of the Closing in all respects subject to the applicable materiality standards as set forth in the Merger Agreement. However, if the TSIA board determines that any such breach is not material to the business of Latch, then the TSIA board may elect to waive that condition and close the Business Combination. The parties will not waive the condition that TSIA’s stockholders approve the Business Combination.

As of the date of this proxy statement, we do not believe there will be any material changes or waivers that our directors and officers would be likely to make after stockholder approval of the Business Combination has been obtained. While certain changes could be made without further stockholder approval, if there is a change to the terms of the Business Combination that would have a material impact on the stockholders, we will be required to circulate a new or amended proxy statement or supplement thereto and resolicit the vote of our stockholders with respect to the Business Combination Proposal.

Termination of the Merger Agreement could negatively impact Latch and TSIA.

If the Business Combination is not completed for any reason, including as a result of Latch stockholders declining to adopt the Merger Agreement or TSIA stockholders declining to approve the proposals required to effect the Business Combination, the ongoing businesses of Latch and TSIA may be adversely impacted and, without realizing any of the anticipated benefits of completing the Business Combination, Latch and TSIA would be subject to a number of risks, including the following:

 

   

Latch or TSIA may experience negative reactions from the financial markets, including negative impacts on its stock price (including to the extent that the current market price reflects a market assumption that the Business Combination will be completed);

 

   

Latch may experience negative reactions from its customers, resellers, vendors and employees;

 

   

Latch and TSIA will have incurred substantial expenses and will be required to pay certain costs relating to the Business Combination, whether or not the Business Combination is completed; and

 

   

since the Merger Agreement restricts the conduct of Latch’s and TSIA’s businesses prior to completion of the Business Combination, each of Latch and TSIA may not have been able to take certain actions during the pendency of the Business Combination that would have benefitted it as an independent company, and the opportunity to take such actions may no longer be available (see the section entitled “The Merger Agreement—Covenants and Agreements” beginning on page 204 of this proxy statement/prospectus for a description of the restrictive covenants applicable to Latch and TSIA).

If the Merger Agreement is terminated and Latch’s board of directors seeks another merger or business combination, Latch stockholders cannot be certain that Latch will be able to find a party willing to offer equivalent or more attractive consideration than the consideration TSIA has agreed to provide in the Business Combination or that such other merger or business combination is completed. If the Merger Agreement is terminated and the TSIA Board seeks another merger or business combination, TSIA stockholders cannot be certain that TSIA will be able to find another acquisition target that would constitute a business combination that such other merger or business combination will be completed. See “The Merger Agreement—Termination” on page 217.

 

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Latch will be subject to business uncertainties and contractual restrictions while the Business Combination is pending.

Uncertainty about the effect of the Business Combination on employees and customers may have an adverse effect on Latch and consequently on TSIA. These uncertainties may impair Latch’s ability to attract, retain and motivate key personnel until the Business Combination is completed and could cause customers and others that deal with Latch to seek to change existing business relationships with Latch. Retention of certain employees may be challenging during the pendency of the Business Combination as certain employees may experience uncertainty about their future roles. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the business, our business following the Business Combination could be negatively impacted. In addition, the Merger Agreement restricts Latch from making certain expenditures and taking other specified actions without the consent of TSIA until the Business Combination occurs. These restrictions may prevent Latch from pursuing attractive business opportunities that may arise prior to the completion of the Business Combination. See “The Merger Agreement—Covenants and Agreements” beginning on page 204.

TSIA directors and officers may have interests in the Business Combination different from the interests of TSIA stockholders.

Executive officers of TSIA negotiated the terms of the Merger Agreement with their counterparts at Latch, and the TSIA Board determined that entering into the Merger Agreement was in the best interests of TSIA and its stockholders, declared the Merger Agreement advisable and recommended that TSIA stockholders approve the proposals required to effect the Business Combination. In considering these facts and the other information contained in this proxy statement/prospectus, you should be aware that TSIA’s executive officers and directors may have financial interests in the Business Combination that may be different from, or in addition to, the interests of TSIA stockholders. The TSIA Board was aware of and considered these interests, among other matters, in reaching the determination to approve the terms of the Business Combination and in recommending to TSIA’s stockholders that they vote to approve the Business Combination. For a detailed discussion of the special interests that TSIA’s directors and executive officers may have in the Business Combination, please see the section entitled “The Business Combination—Interests of TSIA’s Directors and Executive Officers in the Business Combination” beginning on page 195.

Latch directors and officers may have interests in the Business Combination different from the interests of Latch stockholders.

Executive officers of Latch negotiated the terms of the Merger Agreement with their counterparts at TSIA, and the Latch board of directors determined that entering into the Merger Agreement was in the best interests of Latch and its stockholders. In considering these facts and the other information contained in this proxy statement/prospectus, you should be aware that Latch’s executive officers and directors may have financial interests in the Business Combination that may be different from, or in addition to, the interests of Latch stockholders. The Latch board of directors was aware of and considered these interests, among other matters, in reaching the determination to approve the terms of the Business Combination. For a detailed discussion of the special interests that Latch’s directors and executive officers may have in the Business Combination, please see the section entitled “The Business Combination—Interests of Latch’s Directors and Executive Officers in the Business Combination” beginning on page 198.

The Sponsor may have interests in the Business Combination different from the interests of TSIA stockholders.

When considering our board of directors’ recommendation that our stockholders vote in favor of the approval of the Business Combination Proposal and the other Proposals described in this proxy statement, our stockholders should be aware that the Sponsor has interests in the Business Combination that may be different

 

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from, in addition to, or conflict with the interests of our stockholders in general. For a more complete description of these interests, see the section entitled “The Business CombinationInterests of TSIA’s Directors and Executive Officers in the Business Combination.”

The Business Combination will result in changes to the board of directors that may affect our strategy.

If the parties complete the Business Combination and the Director Election Proposal is approved, the composition of the Post-Combination Company’s board of directors will change from the current boards of directors of TSIA and Latch. The board of directors of the Post-Combination Company will be divided into three classes and will consist of the directors elected pursuant to the Director Election Proposal, each of which will serve an initial term ending in either 2022, 2023 or 2024, and thereafter will serve a three-year term. This new composition of the Post-Combination Company board of directors may affect our business strategy and operating decisions upon the completion of the Business Combination.

The Merger Agreement contains provisions that may discourage other companies from trying to acquire Latch for greater merger consideration.

The Merger Agreement contains provisions that prohibit Latch from seeking alternative business combinations during the pendency of the Business Combination. These provisions include a general prohibition on Latch from soliciting or entering into discussions with any third party regarding any acquisition proposal or offers for competing transactions. Latch also has an unqualified obligation to submit the proposal to adopt the Merger Agreement to a vote by its stockholders, even if Latch receives an alternative acquisition proposal that its board of directors believes is superior to the Business Combination, unless the Merger Agreement has been terminated in accordance with its terms. See “The Merger Agreement—Termination” beginning on page 217.

The Merger Agreement contains provisions that may discourage TSIA from seeking an alternative business combination.

The Merger Agreement contains provisions that prohibit TSIA from seeking alternative business combinations during the pendency of the Business Combination. Further, if TSIA is unable to obtain the requisite approval of its stockholders, either party may terminate the Merger Agreement. See “The Merger Agreement—Termination” beginning on page 217.

The unaudited pro forma condensed combined financial information included in this proxy statement/prospectus is preliminary and the actual financial condition and results of operations after the Business Combination may differ materially.

The unaudited pro forma financial information included in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what our actual financial position or results of operations would have been had the Business Combination been completed on the date(s) indicated. The preparation of the pro forma financial information is based upon available information and certain assumptions and estimates that TSIA and Latch currently believe are reasonable. The unaudited pro forma financial information reflects adjustments, which are based upon preliminary estimates, among other things, to allocate the purchase price to Latch’s net assets. The purchase price allocation reflected in this proxy statement/prospectus is preliminary, and the final allocation of the purchase price will be based upon the actual purchase price and the fair value of the assets and liabilities of Latch as of the date of the completion of the Business Combination. In addition, following the completion of the Business Combination, there may be further refinements of the purchase price allocation as additional information becomes available. Accordingly, the final purchase accounting adjustments may differ materially from the pro forma adjustments reflected in this proxy statement/prospectus. See “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 17.

 

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TSIA and Latch will incur transaction costs in connection with the Business Combination.

Each of TSIA and Latch has incurred and expects that it will incur significant, non-recurring costs in connection with consummating the Business Combination. TSIA and Latch may also incur additional costs to retain key employees. TSIA and Latch will also incur significant legal, financial advisor, accounting, banking and consulting fees, fees relating to regulatory filings and notices, SEC filing fees, printing and mailing fees and other costs associated with the Business Combination. TSIA and Latch estimate that they will incur $47.8 million in aggregate transaction costs, inclusive of $10.5 million in deferred underwriting fees. Some of these costs are payable regardless of whether the Business Combination is completed. See “The Business Combination—Terms of the Business Combination” beginning on page 179.

Latch’s stockholders will have their rights as stockholders governed by the Post-Combination Company’s organizational documents.

As a result of the completion of the Business Combination, holders of shares of Latch common stock and preferred stock may become holders of shares of the Post-Combination Company’s Class A common stock, which will be governed by the Post-Combination Company’s organizational documents. As a result, there will be differences between the rights currently enjoyed by Latch stockholders and the rights that Latch stockholders who become stockholders of the Post-Combination Company will have as stockholders of the Post-Combination Company. See “Comparison of Stockholders’ Rights” beginning on page 231.

The Sponsor has agreed to vote in favor of each of the proposals presented at the Special Meeting, regardless of how public stockholders vote.

Pursuant to the Sponsor Agreement, the Sponsor has agreed to vote its Founder Shares and any Public Shares it holds in favor of each of the proposals presented at the Special Meeting, regardless of how public stockholders vote. Accordingly, the agreement by the Sponsor to vote in favor of the each of the proposals presented at the Special Meeting will increase the likelihood that TSIA will receive the requisite stockholder approval for the Business Combination and the transactions contemplated thereby. See “Other AgreementsSponsor Agreement” beginning on page 220 of this proxy statement/prospectus.

TSIA’s and Latch’s ability to consummate the Business Combination, and the operations of the Post-Combination Company following the Business Combination, may be materially adversely affected by the recent coronavirus (COVID-19) pandemic.

The COVID-19 pandemic has resulted, and other infectious diseases could result, in a widespread health crisis that has and could continue to adversely affect the economies and financial markets worldwide, which may delay or prevent the consummation of the Business Combination, and the business of Latch or Post-Combination Company following the Business Combination could be materially and adversely affected. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted.

The parties will be required to consummate the Business Combination even if Latch, its business, financial condition and results of operations are materially affected by COVID-19. The disruptions posed by COVID-19 have continued, and other matters of global concern may continue, for an extensive period of time, and if Latch is unable to recover from business disruptions due to COVID-19 or other matters of global concern on a timely basis, Latch’s ability to consummate the Business Combination and the Post-Combination Company’s financial condition and results of operations following the Business Combination may be materially adversely affected. Each of Latch and the Post-Combination Company may also incur additional costs due to delays caused by COVID-19, which could adversely affect the Post-Combination Company’s financial condition and results of operations.

 

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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.

The SEC 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 Statement are common in SPACs and are similar to the terms contained in the warrant agreement governing our warrants. In response to the SEC Statement, we reevaluated the accounting treatment of our public warrants and private 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, 2020 contained elsewhere in this proxy statement/prospectus are derivative liabilities related to embedded features contained within our warrants. Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), provides for the re-measurement 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 a material weakness in our internal control over financial reporting as of December 31, 2020. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.

Following issuance of the SEC Statement, on April 29, 2021, our management and our audit committee concluded that, in light of the SEC Statement, it was appropriate to restate our previously issued audited financial statements as of and for the period ended December 31, 2020 (the “Restatement”). See “Risks Related to the Business Combination—Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.” As part of such process, we also identified a material weakness in our internal controls over financial reporting.

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 and corrected on a timely basis. We became aware of the need to change the classification of our warrants when the SEC Statement was issued on April 12, 2021. As a result, management, including our Chief Executive Officer and Chief Financial Officer, concluded that there was a material weakness in internal control over financial reporting as of December 31, 2020.

Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness.

If we identify any new material weaknesses in the future, any such newly identified material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting and our stock price may decline as a result. We cannot assure you that the measures we have taken to date, or any measures we may take in the future, will be sufficient to avoid potential future material weaknesses.

 

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Risks Related to Ownership of Our Class A Common Stock Following the Business Combination

Our Class A common stock price may be volatile or may decline regardless of our operating performance. You may lose some or all of your investment.

The trading price of our Class A common stock following the Business Combination is likely to be volatile. The stock market recently has experienced extreme volatility. This volatility often has been unrelated or disproportionate to the operating performance of particular companies. You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “—Risks Related to Latch’s Business and Industry” and the following:

 

   

the impact of the COVID-19 pandemic on our financial condition and the results of operations;

 

   

our operating and financial performance and prospects;

 

   

our quarterly or annual earnings or those of other companies in our industry compared to market expectations;

 

   

conditions that impact demand for our products and/or services;

 

   

future announcements concerning our business, our clients’ businesses or our competitors’ businesses;

 

   

the public’s reaction to our press releases, other public announcements and filings with the SEC;

 

   

the market’s reaction to our reduced disclosure and other requirements as a result of being an “emerging growth company” under the Jumpstart Our Business Startups Act (the “JOBS Act”);

 

   

the size of our public float;

 

   

coverage by or changes in financial estimates by securities analysts or failure to meet their expectations;

 

   

market and industry perception of our success, or lack thereof, in pursuing our growth strategy;

 

   

strategic actions by us or our competitors, such as acquisitions or restructurings;

 

   

changes in laws or regulations which adversely affect our industry or us;

 

   

privacy and data protection laws, privacy or data breaches, or the loss of data;

 

   

changes in accounting standards, policies, guidance, interpretations or principles;

 

   

changes in senior management or key personnel;

 

   

issuances, exchanges or sales, or expected issuances, exchanges or sales of our capital stock;

 

   

changes in our dividend policy;

 

   

adverse resolution of new or pending litigation against us; and

 

   

changes in general market, economic and political conditions in the United States and global economies or financial markets, including those resulting from natural disasters, terrorist attacks, acts of war and responses to such events.

These broad market and industry factors may materially reduce the market price of our Class A common stock, regardless of our operating performance. In addition, price volatility may be greater if the public float and trading volume of our Class A common stock is low. As a result, you may suffer a loss on your investment.

In the past, following periods of market volatility, stockholders have instituted securities class action litigation. If we were involved in securities litigation, it could have a substantial cost and divert resources and the attention of executive management from our business regardless of the outcome of such litigation.

 

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We do not intend to pay dividends on our Class A common stock for the foreseeable future.

We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. As a result, we do not anticipate declaring or paying any cash dividends on our Class A common stock in the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of our board of directors and will depend on, among other things, our business prospects, results of operations, financial condition, cash requirements and availability, certain restrictions related to our indebtedness, industry trends and other factors that our board of directors may deem relevant. Any such decision will also be subject to compliance with contractual restrictions and covenants in the agreements governing our current and future indebtedness. In addition, we may incur additional indebtedness, the terms of which may further restrict or prevent us from paying dividends on our common stock. As a result, you may have to sell some or all of your Class A common stock after price appreciation in order to generate cash flow from your investment, which you may not be able to do. Our inability or decision not to pay dividends, particularly when others in our industry have elected to do so, could also adversely affect the market price of our Class A common stock.

If securities analysts do not publish research or reports about us, or if they issue unfavorable commentary about us or our industry or downgrade our Class A common stock, the price of our Class A common stock could decline.

The trading market for our Class A common stock will depend in part on the research and reports that third-party securities analysts publish about us and the industries in which we operate. We may be unable or slow to attract research coverage and if one or more analysts cease coverage of us, the price and trading volume of our securities would likely be negatively impacted. If any of the analysts that may cover us change their recommendation regarding our securities adversely, or provide more favorable relative recommendations about our competitors, the price of our securities would likely decline. If any analyst that may cover us ceases covering us or fails to regularly publish reports on us, we could lose visibility in the financial markets, which could cause the price or trading volume of our securities to decline. Moreover, if one or more of the analysts who cover us downgrades our Class A common stock, or if our reporting results do not meet their expectations, the market price of our Class A common stock could decline.

Our issuance of additional shares of Class A common stock or convertible securities could make it difficult for another company to acquire us, may dilute your ownership of us and could adversely affect our stock price.

In connection with the proposed Business Combination, we intend to file a registration statement with the SEC on Form S-8 providing for the registration of shares of our Class A common stock issued or reserved for issuance under the Incentive Plan. Subject to the satisfaction of vesting conditions and the expiration of lockup agreements, shares registered under the registration statement on Form S-8 will be available for resale immediately in the public market without restriction. From time to time in the future, we may also issue additional shares of our Class A common stock or securities convertible into Class A common stock pursuant to a variety of transactions, including acquisitions. The issuance by us of additional shares of our Class A common stock or securities convertible into our Class A common stock would dilute your ownership of us and the sale of a significant amount of such shares in the public market could adversely affect prevailing market prices of our Class A common stock.

In the future, we expect to obtain financing or to further increase our capital resources by issuing additional shares of our capital stock or offering debt or other equity securities, including senior or subordinated notes, debt securities convertible into equity, or shares of preferred stock. Issuing additional shares of our capital stock, other equity securities, or securities convertible into equity may dilute the economic and voting rights of our existing stockholders, reduce the market price of our Class A common stock, or both. Debt securities convertible into equity could be subject to adjustments in the conversion ratio pursuant to which certain events may increase the number of equity securities issuable upon conversion. Preferred stock, if issued, could have a preference with respect to liquidating distributions or a preference with respect to dividend payments that could limit our ability

 

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to pay dividends to the holders of our common stock. Our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, which may adversely affect the amount, timing or nature of our future offerings. As a result, holders of our Class A common stock bear the risk that our future offerings may reduce the market price of our Class A common stock and dilute their percentage ownership. See “Description of Capital Stock of the Post-Combination Company.”

Future sales, or the perception of future sales, of our common stock by us or our existing stockholders in the public market following the closing of the Business Combination could cause the market price for our common stock to decline.

The sale of substantial amounts of shares of our Class A common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon consummation of the Business Combination, we will have a total of 155,762,000 shares of Class A common stock outstanding, consisting of (i) 100,000,000 shares issued to holders of shares of common and preferred stock of Latch, (ii) 19,000,000 shares issued pursuant to the Subscription Agreements, (iii) 30,000,000 shares held by TSIA’s public stockholders (assuming no redemptions by such public stockholders) and (iv) 6,762,000 vested shares held by the Initial Stockholders (not including 738,000 shares subject to vesting requirements pursuant to the Sponsor Agreement). All shares issued as merger consideration in the Business Combination will be freely tradable without registration under the Securities Act and without restriction by persons other than our “affiliates” (as defined under Rule 144 of the Securities Act, referred to herein as “Rule 144”), including our directors, executive officers and other affiliates.

In connection with the Business Combination, pursuant to the amended and restated bylaws, Latch stockholders will be subject to certain restrictions on transfer with respect to the shares of TSIA Class A common stock issued as part of the merger consideration beginning at closing and ending on the date that is one year after the completion of the Business Combination, subject to certain price-based releases. See “Other Agreements—Amended and Restated Bylaws” for a description of the amended and restated bylaws.

Upon the expiration or waiver of the lock-ups described above, shares held by certain of our stockholders will be eligible for resale, subject to, in the case of certain stockholders, volume, manner of sale and other limitations under Rule 144. In addition, pursuant to the Registration Rights Agreement, certain stockholders will have the right, subject to certain conditions, to require us to register the sale of their shares of our Class A common stock under the Securities Act. By exercising their registration rights and selling a large number of shares, these stockholders could cause the prevailing market price of our Class A common stock to decline. Following completion of the Business Combination, the shares covered by registration rights would represent approximately 32.7% of our outstanding common stock. See “Other Agreements—Registration Rights Agreement” for a description of these registration rights.

As restrictions on resale end or if these stockholders exercise their registration rights, the market price of shares of our Class A common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them. These factors could also make it more difficult for us to raise additional funds through future offerings of our shares of Class A common stock or other securities.

In addition, the shares of our Class A common stock reserved for future issuance under the Incentive Plan will become eligible for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements, lock-up agreements and, in some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable. The number of shares to be reserved for future issuance under the Incentive Plan is expected to equal (i) 11.5% of the total number of issued and outstanding shares of TSIA common stock on a fully diluted basis as of the closing of the Business Combination and (ii) an annual

 

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increase for ten years on the first day of each calendar year beginning January 1, 2022, equal to the lesser of (A) 5% of the aggregate number of shares of Post-Combination Company common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares as is determined by the board of directors of the Post-Combination Company. The maximum number of shares of Post-Combination Company common stock that may be issued pursuant to the exercise of incentive stock options (“ISOs”) granted under the Incentive Plan will be equal to 61.5% of the total number of issued and outstanding shares of TSIA common stock on a fully diluted basis as of the closing of the Business Combination. We expect to file one or more registration statements on Form S-8 under the Securities Act to register shares of our Class A common stock or securities convertible into or exchangeable for shares of our Class A common stock issued pursuant to our equity incentive plans. Any such Form S-8 registration statements will automatically become effective upon filing. Accordingly, shares registered under such registration statements will be available for sale in the open market. The initial registration statement on Form S-8 is expected to cover approximately 22,526,859 shares of our Class A common stock.

Subsequent to the consummation of the Business Combination, the Post-Combination Company may be required to take write-downs or write-offs, or the Post-Combination Company may be subject to restructuring, impairment or other charges that could have a significant negative effect on the Post-Combination Company’s financial condition, results of operations and the price of the Post-Combination Company’s securities, which could cause you to lose some or all of your investment.

Although TSIA has conducted due diligence on Latch, this diligence may not surface all material issues that may be present with Latch’s business. Factors outside of TSIA’s and outside of Latch’s control may, at any time, arise. As a result of these factors, the Post-Combination Company may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in the Post-Combination Company reporting losses. Even if TSIA’s due diligence successfully identified 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 therefore not have an immediate impact on the Post-Combination Company’s liquidity, the fact that the Post-Combination Company reports charges of this nature could contribute to negative market perceptions about the Post-Combination Company or its securities. In addition, charges of this nature may cause the Post-Combination Company to be unable to obtain future financing on favorable terms or at all.

The obligations associated with being a public company will involve significant expenses and will require significant resources and management attention, which may divert from our business operations.

As a result of the Business Combination, we will become subject to the reporting requirements of the Exchange Act and the Sarbanes-Oxley Act. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal control over financial reporting. As a result, we will incur significant legal, accounting and other expenses that we did not previously incur. Our entire management team and many of our other employees will need to devote substantial time to compliance and may not effectively or efficiently manage our transition into a public company.

In addition, the need to establish the corporate infrastructure demanded of a public company may also divert management’s attention from implementing our business strategy, which could prevent us from improving our business, results of operations and financial condition. We have made, and will continue to make, changes to our internal control over financial reporting, including IT controls, and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, the measures we take may not be sufficient to satisfy our obligations as a public company. If we do not continue to develop and implement the right processes and tools to manage our changing enterprise and maintain our culture, our ability to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition and results of operations. In addition, we cannot predict or estimate the amount of additional costs we may incur to comply with these requirements. We anticipate that these costs will materially increase our general and administrative expenses.

 

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These rules and regulations result in our incurring legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified people to serve on our board of directors, our board committees or as executive officers.

Latch’s management has limited experience in operating a public company.

Latch’s executive officers have limited experience in the management of a publicly traded company. Latch’s management team may not successfully or effectively manage its transition to a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. Their limited experience in dealing with the increasingly complex laws pertaining to public companies could be a significant disadvantage in that it is likely that an increasing amount of their time may be devoted to these activities which will result in less time being devoted to the management and growth of the Post-Combination Company. Latch may not have adequate personnel with the appropriate level of knowledge, experience, and training in the accounting policies, practices or internal controls over financial reporting required of public companies in the United States. The development and implementation of the standards and controls necessary for the Post-Combination Company to achieve the level of accounting standards required of a public company in the United States may require costs greater than expected. It is possible that the Post-Combination Company will be required to expand its employee base and hire additional employees to support its operations as a public company which will increase its operating costs in future periods.

As a public reporting company, we will be subject to rules and regulations established from time to time by the SEC regarding our internal control over financial reporting. We have identified material weaknesses in our internal control over financial reporting which, if not corrected, could affect the reliability of our consolidated financial statements and have other adverse consequences.

Upon consummation of the Business Combination, we will become a public reporting company subject to the rules and regulations established from time to time by the SEC and NASDAQ. These rules and regulations will require, among other things that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.

In addition, as a public company, we will be required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting. For additional information related to the risks and uncertainties of our compliance with the Sarbanes-Oxley Act, see “Risk FactorsAs a private company, we have not been required to document and test our internal controls over financial reporting nor has out management been required to certify the effectiveness of our internal controls and our auditors have not been required to opine on the effectiveness of our internal control over financial reporting. We have identified material weakness in our internal control over financial reporting which, if not corrected, could affect the reliability of our consolidated financial statements and have other adverse consequences.

Anti-takeover provisions in our governing documents and under Delaware law could make an acquisition of us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

The Proposed Charter, the Post-Combination Company’s bylaws and Delaware law contain or will contain provisions that could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors. Among other things, the Proposed Charter and/or the Post-Combination Company’s bylaws will include the following provisions:

 

   

a staggered board, which means that our board of directors is classified into three classes of directors with staggered three-year terms and directors are only able to be removed from office for cause;

 

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limitations on convening special stockholder meetings, which could make it difficult for our stockholders to adopt desired governance changes;

 

   

a prohibition on stockholder action by written consent, which means that our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter;

 

   

a forum selection clause, which means certain litigation against us can only be brought in Delaware;

 

   

the authorization of undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and

 

   

advance notice procedures, which apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.

These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management. As a Delaware corporation, we are also subject to provisions of Delaware law, including Section 203 of the DGCL, which prevents interested stockholders, such as certain stockholders holding more than 15% of our outstanding common stock, from engaging in certain business combinations unless (i) prior to the time such stockholder became an interested stockholder, the board of directors approved the transaction that resulted in such stockholder becoming an interested stockholder, (ii) upon consummation of the transaction that resulted in such stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the common stock, or (iii) following board approval, such business combination receives the approval of the holders of at least two-thirds of our outstanding common stock not held by such interested stockholder at an annual or special meeting of stockholders.

Any provision of the Proposed Charter, the Post-Combination Company’s bylaws or Delaware law that has the effect of delaying, preventing or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock and could also affect the price that some investors are willing to pay for our common stock.

The Proposed Charter and the Post-Combination Company’s bylaws will provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

The Proposed Charter and the Post-Combination Company’s bylaws, each of which will become effective prior to the completion of the Business Combination, will provide that, unless we consent in writing to the selection of an alternative forum, the (a) Court of Chancery (the “Chancery Court”) of the State of Delaware (or, in the event that the Chancery Court does not have jurisdiction, the federal district court for the District of Delaware or other state courts of the State of Delaware) shall, to the fullest extent permitted by law, be the sole and exclusive forum for: (i) any derivative action, suit or proceeding brought on our behalf; (ii) any action, suit or proceeding asserting a claim of breach of fiduciary duty owed by any of our directors, officers, or stockholders to us or to our stockholders; (iii) any action, suit or proceeding asserting a claim arising pursuant to the DGCL, the Proposed Charter or the Post-Combination Company’s bylaws; or (iv) any action, suit or proceeding asserting a claim governed by the internal affairs doctrine; and (b) subject to the foregoing, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Notwithstanding the foregoing, such forum selection provisions shall not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts of the United States have exclusive jurisdiction. The 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 our directors, officers, or other employees, which may discourage such lawsuits against us and our directors, officers, and other employees. Alternatively, if a court were to find the choice of forum provision contained in the Proposed Charter 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, results of operations, and financial condition.

 

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Additionally, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As noted above, the Proposed Charter and the Post-Combination Company’s bylaws will provide that the federal district courts of the United States of America shall have jurisdiction over any action arising under the Securities Act. Accordingly, there is uncertainty as to whether a court would enforce such provision. Our stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

Risks Related to Redemption

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 have sought and will continue to seek to have all vendors, service providers, prospective target businesses, including Latch, 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. WithumSmith+Brown, PC, our independent registered public accounting firm, did 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 initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial 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. Our Sponsor has agreed that it will be liable to us if and to the extent any claims by a vendor 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 our 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 our Sponsor will not be responsible to the extent of any liability for such third party claims. We have not independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations and believe that our Sponsor’s only assets are our securities. We have not asked our Sponsor to reserve for such indemnification obligations. Therefore, we cannot assure you that our Sponsor would be able to satisfy those obligations. As a result, if any such claims were successfully made against the Trust Account, the

 

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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 our Sponsor, 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 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 our Sponsor 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 our Sponsor to enforce its indemnification obligations.

While we currently expect that our independent directors would take legal action on our behalf against our Sponsor 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.

There is no guarantee that a TSIA public stockholder’s decision whether to redeem their Public Shares for a pro rata portion of the Trust Account will put such stockholder in a better future economic position.

No assurance can be given as to the price at which a public stockholder may be able to sell the shares of our Class A common stock in the future following the completion of the Business Combination. Certain events following the consummation of any business combination, including the Business Combination, may cause an increase in our stock price, and may result in a lower value realized now than a TSIA stockholder might realize in the future had the stockholder not elected to redeem such stockholder’s Public Shares. Similarly, if a TSIA public stockholder does not redeem his, her or its shares, such stockholder will bear the risk of ownership of our Class A common stock after the consummation of the Business Combination, and there can be no assurance that a stockholder can sell his, her or its shares of our Class A common stock in the future for a greater amount than the redemption price set forth in this proxy statement/prospectus. A TSIA public stockholder should consult his, her or its own tax and/or financial advisor for assistance on how this may affect its individual situation.

If TSIA public stockholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their Public Shares for a pro rata portion of the funds held in the Trust Account.

To exercise their redemption rights, holders are required to deliver their stock, either physically or electronically using Depository Trust Company’s DWAC System, to TSIA’s transfer agent two business days prior to the vote at the Special Meeting. If a holder properly seeks redemption as described in this proxy statement/prospectus and the Business Combination with Latch is consummated, TSIA will redeem these shares for a pro rata portion of funds deposited in the Trust Account and the holder will no longer own such shares following the Business Combination. See the section entitled “TSIA’s Special Meeting of StockholdersRedemption Rights” for additional information on how to exercise your redemption rights.

 

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The ability of TSIA stockholders to exercise redemption rights with respect to a large number of shares could increase the probability that the Business Combination would be unsuccessful and that stockholders would have to wait for liquidation in order to redeem their stock.

At the time TSIA entered into the Merger Agreement and related agreements for the Business Combination, TSIA did not know how many stockholders would exercise their redemption rights, and therefore TSIA structured the Business Combination based on its expectations as to the number of shares that will be submitted for redemption. The Merger Agreement requires TSIA to have at least $150,000,000 of required funds at the Closing. If a larger number of shares are submitted for redemption than initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account. The above considerations may limit our ability to complete the Business Combination or optimize our capital structure.

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.

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 you or a “group” of stockholders of which you are a part are deemed to hold an aggregate of more than 15% of the Public Shares, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares in excess of 15% of the Public Shares.

A public stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its Public Shares or, if part of such a group, the group’s Public Shares, in excess of 15% of the Public Shares without the consent of TSIA. Your inability to redeem any such excess Public Shares could resulting in you suffering a material loss on your investment in TSIA if you sell such excess Public Shares in open market transactions. TSIA cannot assure you that the value of such excess Public Shares will appreciate over time following the Business Combination or that the market price of the Public Shares will exceed the per-share redemption price.

However, TSIA’s stockholders’ ability to vote all of their Public Shares (including such excess shares) for or against the Business Combination Proposal is not restricted by this limitation on redemption.

 

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There is uncertainty regarding the federal income tax consequences of the redemption to the holders of TSIA Class A common stock.

There is some uncertainty regarding the federal income tax consequences to holders of TSIA Class A common stock that exercise their redemption rights. The uncertainty of tax consequences relates primarily to the individual circumstances of the taxpayer and include (i) whether the redemption will be treated as a corporate distribution potentially taxable as a dividend, or a sale, that would potentially give rise to capital gain or capital loss, and (ii) whether such capital gain is “long-term” or “short-term.” Whether the redemption qualifies for sale treatment, resulting in taxation as capital gain rather than treatment as a corporate distribution, will depend largely on whether the holder owns (or is deemed to own) any shares of Class A common stock following the redemption, and if so, the total number of shares of TSIA Class A common stock treated as held by the holder both before and after the redemption relative to all shares of TSIA voting stock outstanding both before and after the redemption. The redemption generally will be treated as a sale, rather than a distribution, if the redemption (i) is “substantially disproportionate” with respect to the holder, (ii) results in a “complete termination” of the holder’s interest in TSIA or (iii) is “not essentially equivalent to a dividend” with respect to the holder. Due to the personal and subjective nature of certain of such tests and the absence of clear guidance from the Internal Revenue Service (“IRS”), there is uncertainty as to how a holder who elects to exercise its redemption rights will be taxed in connection with the exercise of redemption rights. See the section entitled “Material U.S. Federal Income Tax Consequences—Material Tax Consequences of a Redemption of Public Shares.”

Unlike some other blank check companies, TSIA does not have a specified maximum redemption threshold. The absence of such a redemption threshold will make it easier for us to consummate the Business Combination even if a substantial number of our stockholders redeem.

Unlike some other blank check companies, TSIA does not have a specified maximum redemption threshold, except that we will not redeem Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001. Some other blank check companies’ structures disallow the consummation of a business combination if the holders of such companies’ Public Shares elect to redeem or convert more than a specified percentage of the shares sold in such companies’ initial public offering. Because we have no such maximum redemption threshold, we may be able to consummate the Business Combination even though a substantial number of our public stockholders have redeemed their shares.

However, the Merger Agreement provides that the obligation of Latch to consummate the Business Combination is subject to the Required Funds, requiring TSIA having cash on hand equal to or in excess of $150 million (without, for the avoidance of doubt, taking into account any transaction expenses), after the closing of the transactions contemplated by the Subscription Agreements (the “Subscriptions”) (in respect of which investors have signed commitments of up to $190 million) and after distribution of the Trust Account, deducting all amounts to be paid pursuant to the redemption of Public Shares. While TSIA has entered into Subscription Agreements with respect to the Subscriptions to raise up to $190 million in the aggregate, there can be no assurance that the Subscribers will perform their obligations thereunder. 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 the required amount of required funds pursuant to the Merger Agreement 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.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Introduction

TSIA is providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of the Business Combination. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.”

TSIA is a blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with one or more businesses. TSIA was incorporated in Delaware on September 18, 2020. As of December 31, 2020, there was $300.0 million held in the trust account.

Latch is an enterprise technology company focused on revolutionizing the way people experience spaces by making spaces better places to live, work, and visit. Latch has created a full-building operating system, LatchOS, that addresses the essential needs of modern buildings by streamlining building operations, enhancing the resident experience, and enabling more efficient interactions with service providers.

The unaudited pro forma condensed combined balance sheet as of December 31, 2020 combines the historical balance sheet of TSIA and the historical balance sheet of Latch on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on December 31, 2020. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 combines the historical statements of operations of TSIA and Latch for such periods on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on January 1, 2020, the beginning of the earliest period presented:

 

   

The merger of Merger Sub, the wholly owned subsidiary of TSIA, with and into Latch, with Latch as the surviving company;

 

   

The conversion of all outstanding Latch shares, warrants, convertible debt, and redeemable convertible preferred stock into Latch common stock that will roll over into the Post-Combination Company;

 

   

The rollover of Latch’s outstanding unvested options into options in the Post-Combination Company;

 

   

The conversion of all outstanding TSIA shares, preferred stock, and warrants into TSIA common stock that will roll over into the Post-Combination Company; and

 

   

The issuance of the Post-Combination Company’s shares to be distributed at $10 per share assuming no redemptions as follows: 100,000,000 shares to Latch, 30,000,000 shares (no shares assuming max redemptions) to TSIA, 19,000,000 shares to the Subscribers, 6,762,000 shares to the Sponsor, and 738,000 shares to the Sponsor, which are subject to certain vesting conditions including that the VWAP of the Post-Combination Company equals or exceeds $14.00 for any 20 trading days within a 30 trading day period on or prior to the five year anniversary of the consummation of the Business Combination. The 738,000 shares subject to vesting will not be considered outstanding until vesting conditions are achieved.

The historical financial information of TSIA was derived from the audited financial statements of TSIA as of December 31, 2020 and for the period from September 18, 2020 (inception) through December 31, 2020, included elsewhere in this proxy statement/prospectus. The historical financial information of Latch was derived from the audited consolidated financial statements of Latch as of and for the year ended December 31, 2020, included elsewhere in this proxy statement/prospectus. This information should be read together with TSIA’s and Latch’s audited financial statements and related notes, the sections titled “Other Information Related to TSIA—TSIA’s Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Latch’s

 

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Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included elsewhere in this proxy statement/prospectus.

The pro forma combined financial statements do not necessarily reflect what the Post-Combination Company’s financial condition or results of operations would have been had the Business Combination occurred on the dates indicated. The pro forma combined financial information also may not be useful in predicting the future financial condition and results of operations of the Post-Combination Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

Accounting for the Business Combination

The Business Combination will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with accounting principles generally accepted in the United States of America. Under this method of accounting, TSIA will be treated as the acquired company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Latch issuing shares for the net assets of TSIA, accompanied by a recapitalization. The net assets of TSIA will be recognized at fair value (which is expected to be consistent with carrying value), with no goodwill or other intangible assets recorded.

Latch has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

   

Latch’s shareholders will have majority of the voting power under both the no redemption and maximum redemption scenarios

 

   

Latch will appoint the majority of the board of directors of the Post-Combination Company

 

   

Latch’s existing management will comprise the management of the Post-Combination Company

 

   

Latch will comprise the ongoing operations of the Post-Combination Company

 

   

Latch is the larger entity based on historical revenues and business operations

 

   

The Post-Combination Company will assume Latch’s name.

Description of the Business Combination

Pursuant to the Merger Agreement, the aggregate stock consideration issued by the Post-Combination Company in the Business Combination will be $1.558 billion and $1.258 billion, consisting of 155,762,000 and 125,762,000 newly issued shares, under a no redemptions and maximum redemption scenarios, respectively, of the Post-Combination Company valued at $10.00 per share. Under both scenarios, Latch will receive $1.0 billion in the form of 100,000,000 newly issued shares of the Post-Combination Company. TSIA public shareholders will receive $300.0 million in the form of 30,000,000 newly issued shares assuming no redemptions, the Subscribers will receive $190.0 million in the form of 19,000,000 newly issued shares, and the Sponsor will receive $67.6 million in the form of 6,762,000 newly issued shares in exchange for TSIA’s existing Class B common stock. The following represents the consideration at closing of the Business Combination:

 

(in millions)

   Assuming No
Redemptions
     Assuming
Maximum
Redemptions
 

Share issuance to Latch shareholders

   $ 1,000.0      $ 1,000.0  

Share issuance to TSIA shareholders

     300.0        —    

Share issuance to Subscriber(s)

     190.0        190.0  

Share issuance to Sponsor

     67.6        67.6  
  

 

 

    

 

 

 

Share Consideration—at Closing

   $ 1,557.6      $ 1,257.6  

 

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The value of share consideration issuable at the Closing is determined by application of the Exchange Ratio of 0.8908, which is based on the implied $10.00 per share prior to the Business Combination. The Business Combination is accounted for as a reverse recapitalization, therefore any change in the Exchange Ratio will not impact the pro forma financial statements because Latch will account for the acquisition of TSIA based on the amount of net assets acquired upon consummation.

In connection with the execution of the Merger Agreement, Sponsor and TSIA’s directors and officers (the “Sponsor Agreement Parties”) entered into the Sponsor Agreement. The Sponsor Agreement sets forth both the lock-up periods and vesting provisions for the outstanding Founder Shares and Private Placement Warrants. The Sponsor Agreement Parties have agreed, subject to certain exceptions, not to transfer the Founder Shares until the earlier of (A) one year after the completion of the Business Combination and (B) subsequent to the Business Combination, (x) the date on which the last reported sales price of the common stock equals or exceeds $12 per share for any 20-trading days within any 30-trading day period commencing at least 150 days after the closing date of the Business Combination or (y) the date on which TSIA completes a liquidation, merger, capital stock exchange, reorganization or similar transaction that results in TSIA’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. In addition, the Sponsor Agreement Parties have agreed not to transfer the Private Placement Warrants (or any shares of common stock issuable upon exercise thereof) until 30 days after the completion of the Business Combination. Refer to the vesting provisions for the Founder Shares documented in the footnotes of the shares table below.

Basis of Pro Forma Presentation

Pursuant to TSIA’s amended and restated certificate of incorporation, TSIA’s Public Stockholders may demand that TSIA redeem their shares of Class A common stock for cash if the Business Combination is consummated, irrespective of whether they vote for or against the Business Combination. If a Public Stockholder properly demands redemption of their shares, TSIA will redeem each share for cash equal to the Public Stockholder’s pro rata portion of the trust account, calculated as of two business days prior to the anticipated consummation of the Business Combination.

The unaudited pro forma condensed combined financial information has been prepared assuming two alternative levels of cash redemptions of TSIA’s common stock:

 

   

Assuming No Redemptions: This presentation assumes that no TSIA public stockholder exercises redemption rights with respect to its shares for a pro rata portion of the funds in the Trust Account.

 

   

Assuming Maximum Redemptions: This presentation assumes that TSIA public stockholders holding 30,000,000 of TSIA’s public shares exercise their redemption rights and that such shares are redeemed for their pro rata share ($10.00 per share) of the funds in the Trust Account for aggregate redemption proceeds of $300.0 million.

 

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The following summarizes the pro forma Post-Combination Company shares outstanding under the two scenarios:

 

     Assuming No
Redemptions
    Assuming Maximum
Redemptions(1)
 
     (Shares)      %     (Shares)      %  

Post-Combination Company shares issued to Latch stockholders

     100,000,000          100,000,000     
  

 

 

      

 

 

    

Total Latch shares

     100,000,000        64.2     100,000,000        79.5

Post-Combination Company shares issued to TSIA public stockholders

     30,000,000          30,000,000     

Less: shares redeemed(1)

     —            (30,000,000   
  

 

 

      

 

 

    

Total TSIA shares

     30,000,000        19.3     —          0

Post-Combination Company shares issued to Subscribers

     19,000,000          19,000,000     
  

 

 

      

 

 

    

Total Subscriber shares

     19,000,000      12.2     19,000,000      15.1

Post-Combination Company shares issued to the Sponsor and certain TSIA’s directors(2)

     6,762,000          6,762,000     
  

 

 

      

 

 

    

Total Sponsor and director shares

     6,762,000        4.3     6,762,000        5.4

Pro Forma Shares Outstanding

     155,762,000        100     125,762,000        100

 

(1)

This presentation assumes that TSIA stockholders holding 30.0 million Public Shares will exercise their redemption rights at a value of $10 per share for $300.0 million of funds in the Trust Account.

(2)

Post-Combination Combined Company shares to TSIA sponsor includes 6,762,000 shares to be outstanding in the Combined Company upon consummation of the Business Combination, and excludes an additional 738,000 shares which are subject to certain vesting conditions including a Combined Company share price that equals or exceeds $14.00 for any 20 trading days within a 30 trading day period on or prior to the five year anniversary of the consummation of the Business Combinations. The 738,000 shares will not be considered outstanding until vesting conditions are achieved.

The actual results will be within the parameters described by the two scenarios. However, there can be no assurance regarding which scenario will be closest to the actual results.

The following unaudited pro forma condensed combined balance sheet as of December 31, 2020 and the unaudited pro forma condensed combined statement of operations for the year ended December 31, 2020 are based on the historical financial statements of TSIA and Latch. The unaudited pro forma adjustments are based on information currently available. The assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information. Certain amounts that appear in this section may not sum due to rounding.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

(In thousands)

 

     As of
December 31,
2020
                As of
December 31,
2020
                As of
December 31,
2020
 
     Latch
(Historical)
     TSIA
(Historical)

(As Restated)
     Transaction
Accounting
Adjustments
(Assuming
No
Redemptions)
         Pro Forma
Combined
(Assuming
No
Redemptions)
     Additional
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemptions)
         Pro Forma
Combined
(Assuming
Maximum
Redemptions)
 

ASSETS

                     

Current assets

                     

Cash and cash equivalents

   $ 60,529      $ 1,172      $ 300,002     (A)    $ 506,852      $ (300,002   (L)    $ 206,850  
           (10,500   (B)           
           (28,651   (C)           
           190,000     (D)           
           (5,700   (D)           

Accounts receivable, net

     8,227        —          —            8,227        —            8,227  

Inventories, net

     8,293        —          —            8,293             8,293  

Prepaid expenses and other current assets

     3,309        627        —            3,936        —            3,936  

Total Current Assets

     80,358        1,799        445,151          527,308        (300,002        227,306  

Cash held in Trust Account

     —          300,002        (300,002   (A)      —          —            —    

Property and equipment, net

     753        —          —            753        —            753  

Internally developed software, net

     7,416        —          —            7,416        —            7,416  

Other non-current assets

     1,082        —          —            1,082        —            1,082  

Total Assets

   $ 89,609      $ 301,801      $ 145,149        $ 536,559      $ (300,002      $ 236,557  
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

      

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

               

Current liabilities

                     

Accounts payable

   $ 3,732      $ 1,220      $ —          $ 4,952      $ —          $ 4,952  

Accrued expenses

     5,781        —          —            5,781        —            5,781  

Due to related party

     —          17        —            17        —            17  

Deferred revenue

     2,344        —          —            2,344        —            2,344  

Total Current Liabilities

     11,857        1,237        —            13,094        —            13,094  
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

      

 

 

 

Deferred revenue

     13,178        —          —            13,178        —            13,178  

Term loan, net

     5,481        —          (714   (E)      4,767        —            4,767  

Convertible notes, net

     51,714        —          (51,714   (F)      —          —            —    

Warrant liability

     —          25,644        (16,657   (M)      8,987        —            8,987  

Deferred underwriters’ discount

     —          10,500        (10,500   (B)      —          —            —    

Other non-current liabilities

     1,051        —          (491   (F)      560        —            560  

Total Liabilities

     83,281        37,381        (80,076        40,586        —            40,586  
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

      

 

 

 

Commitments and Contingencies

                     

Class A common stock subject to possible redemption – TSIA

     —          259,419        (259,419   (J)      —          —            —    

Redeemable convertible preferred stock

     160,605        —          (160,605   (G)      —          —            —    

Stockholders’ Equity

                     

Common stock - Latch

       —        —          —       (E)      —          —            —    
           —       (F)           

 

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     As of
December 31,
2020
               As of
December 31,
2020
               As of
December 31,
2020
 
     Latch
(Historical)
    TSIA
(Historical)

(As Restated)
    Transaction
Accounting
Adjustments
(Assuming
No
Redemptions)
         Pro Forma
Combined
(Assuming
No
Redemptions)
    Additional
Transaction
Accounting
Adjustments
(Assuming
Maximum
Redemptions)
         Pro Forma
Combined
(Assuming
Maximum
Redemptions)
 
         1     (G)          
         (1   (H)          

Preferred stock – TSIA

     —         —         —            —         —            —    

Class A common stock- TSIA

     —         —         2     (D)      16       (3   (L)      13  
         10     (H)          
         1     (I)          
         3     (J)          

Class B common stock - TSIA

     —         1       (1   (I)      —         —            —    

Additional paid-in capital

     7,901       12,390       (24,921   (C)      660,151       (299,999   (L)      360,152  
         189,998     (D)          
         (5,700   (D)          
         714     (E)          
         50,491     (F)          
         160,604     (G)          
         (9   (H)          
         259,416     (J)          
         (7,390   (K)          
         16,657     (M)          

Accumulated other comprehensive income

     9       —         —            9       —            9  

Accumulated deficit

     (162,187     (7,390     (3,730   (C)      (164,203     —            (164,203
         1,714     (F)          
         7,390     (K)          
  

 

 

   

 

 

   

 

 

      

 

 

   

 

 

      

 

 

 

Total Stockholders’ Equity

     (154,277     5,001       645,249          495,973       (300,002        195,971  
  

 

 

   

 

 

   

 

 

      

 

 

   

 

 

      

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 89,609     $ 301,801     $ 145,149        $ 536,559     $ (300,002      $ 236,557  
  

 

 

   

 

 

   

 

 

      

 

 

   

 

 

      

 

 

 

See accompanying notes to unaudited pro forma condensed combined financial information.

 

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UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

 

     Twelve Months
Ended
December 31,
2020

 

Latch
(Historical)

    For the
Period from
September 18,
2020
(inception)
thru

December 31,
2020

 

TSIA
(Historical)

(As Restated)

    Transaction
Accounting
Adjustments
(Assuming
No and
Maximum
Redemptions)
   

 

     Twelve
Months
Ended
December 31,
2020

Pro Forma
Combined
(Assuming
No and
Maximum
Redemptions)
 

Revenue:

                                                               

Hardware revenue

   $ 14,264     $       $ —        $ 14,264  

Software revenue

     3,797         —          3,797  

Total revenue

     18,061         —          18,061  

Cost of revenue:

           

Cost of hardware revenue

     19,933         —          19,933  

Cost of software revenue

     306         —          306  

Total cost of revenue

     20,239         —          20,239  

Operating expenses:

           

Research and development

     25,314         —          25,314  

Sales and marketing

     13,126         —          13,126  

General and administrative(2)

     19,797       900       3,730       (AA)        24,427  

Depreciation and amortization

     1,382              1,382  

Total operating expenses

     59,619       900       3,730          64,249  

Loss from operations

     (61,797 )      (900 )      (3,730 )         (66,427 ) 

Other income:

           

Extinguishment of debt

     (199            (199

Unrealized loss on change in fair value of warrant liabilities

       (5,756     3,691       (EE)        (2,065

Transaction costs

       (736          (736

Interest income (expense), net

     (3,172     2       (2     (BB)        (3,172

Other income (expense)

     (818       1,714       (CC)        1,759  
         863       (DD)     

Total other income (expense)

     (4,189     (6,490     6,266          (4,413

Income/(loss) before income tax

     (65,986     (7,390     2,536          (70,840

Income taxes(1)

     8              8  

Net income (loss)

   $ (65,994 )    $ (7,390 )    $ 2,536        $ (70,848 ) 
                 Assuming No
Redemptions
           Assuming
Maximum
Redemptions
 

Basic and diluted net loss per common share

   $ (8.18)     $ (—     (0.45      $ (0.56)  

Weighted average shares outstanding, basic and diluted

     8,069       —       155,762          125,762  

Basic and diluted net loss per common share, Class A common stock

       —           

Weighted average shares outstanding, basic and diluted, Class A common stock

       30,000         

Basic and diluted net loss per common share, Class B common stock

       (0.99)         

Weighted average shares outstanding, basic and diluted, Class B common stock

       7,500         

 

(1)

The unaudited Pro Forma Condensed Combined Statement of Operations adjustments do not have an income tax effect due to the pro forma net loss position and existing valuation allowance.

 

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(2)

Latch and TSIA incurred $1,568 and $778, respectively, for transaction expenses related to the Business Combination in the year ended December 31, 2020, which have been included within the unaudited Pro Forma Condensed Combined Statement of Operations, but are not expected to reoccur beyond 12 months after the Business Combination.

See accompanying notes to unaudited pro forma condensed combined financial information.

 

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NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

1.

Basis of Presentation

The Business Combination will be accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, TSIA will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on evaluation of the following facts and circumstances: (i) Latch’s shareholders will have majority of the voting power under both the no redemption and maximum redemption scenarios; (ii) Latch will appoint the majority of the board of directors of the Post Combination Company; (iii) Latch’s existing management will comprise the management of the Post Combination Company; (iv) Latch will comprise the ongoing operations of the Post Combination Company; (v) Latch is the larger entity based on historical revenues and business operations; and (vi) the Post-Combination Company will assume Latch’s name. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Latch issuing shares for the net assets of TSIA, accompanied by a recapitalization. The net assets of TSIA will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Latch.

The unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2020 assumes that the Business Combination occurred on December 31, 2020. The unaudited Pro Forma Condensed Combined Statement of operations for the year ended December 31, 2020 presents the pro forma effect of the Business Combination as if it had been completed on January 1, 2020. These periods are presented on the basis of Latch as the accounting acquirer.

The unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2020 has been prepared using, and should be read in conjunction with, the following:

 

   

TSIA’s audited Balance Sheet as of December 31, 2020 and the related notes for the period ended December 31, 2020, included elsewhere in this proxy statement/prospectus; and

 

   

Latch’s audited Consolidated Balance Sheet as of December 31, 2020 and the related notes for the year ended December 31, 2020, included elsewhere in this proxy statement/prospectus.

The unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2020 has been prepared using, and should be read in conjunction, with the following:

 

   

TSIA’s audited Statement of Operations for the period from September 18, 2020 (inception) through December 31, 2020 and the related notes, included elsewhere in this proxy statement/prospectus; and

 

   

Latch’s audited Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2020 and the related notes, included elsewhere in this proxy statement/prospectus.

Management has made significant estimates and assumptions in its determination of the pro forma adjustments (“Transaction Accounting Adjustments”). As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” The pro forma financial information reflects transaction related adjustments management believes are necessary to present fairly Latch’s pro forma results of operations and financial position following the closing of the Business Combination and related transactions as of and for the periods indicated. The related transaction accounting adjustments are based on currently available information and assumptions management believes are, under the circumstances and given the information available at this time, reasonable, and reflective of adjustments necessary to report Latch’s financial condition

 

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and results of operations as if the Business Combination was completed. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. TSIA believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination and related transactions contemplated based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings, or cost savings that may be associated with the Business Combination.

The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated.

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the Post-Combination Company. They should be read in conjunction with the audited financial statements and notes thereto of each of TSIA and Latch included elsewhere in this proxy statement/prospectus.

 

2.

Accounting Policies

Upon consummation of the Business Combination, management will perform a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the Post-Combination Company.

 

3.

Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only.

The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to events that directly reflect the accounting for the transaction. Latch and TSIA have not had any historical relationship prior to the Business Combination, other than Tishman Speyer, an affiliate of the Sponsor, being a customer and investor in Latch in the ordinary course of business. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the Post-Combination Company filed consolidated income tax returns during the periods presented.

The pro forma basic and diluted earnings per share amounts presented in the unaudited Pro Forma Condensed Combined Statement of Operations are based upon the number of the Post-Combination Company’s shares outstanding, assuming the Business Combination occurred on January 1, 2020.

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

The adjustments included in the unaudited Pro Forma Condensed Combined Balance Sheet as of December 31, 2020 are as follows:

 

  (A)

Reflects the reclassification of cash and cash equivalents held in TSIA’s trust account that becomes available in connection with the Business Combination.

 

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  (B)

Reflects the settlement of deferred underwriters’ fees incurred during the TSIA IPO due upon completion of the Business Combination.

 

  (C)

Reflects the transaction costs incurred by Latch and TSIA in 2021 including, but not limited to, advisory fees, legal fees and registration fees that will be paid in connection with the consummation of the Business Combination.

 

  (D)

Represents the proceeds from the issuance of 19,000,000 shares of the Post-Combination Company at $10.00 per share to the Subscribers, offset by the PIPE placement fees of $5.7 million. The costs related to the issuance of the PIPE investment are adjusted against additional paid-in capital.

 

  (E)

Represents the settlement of Latch’s warrants immediately prior to the consummation of the Business Combination. The warrants will be net settled in a cashless exchange for common stock of Latch.

 

  (F)

Represents the conversion of the outstanding principal amount of $50.0 million and accrued interest of $0.5 million on Latch’s convertible notes immediately prior to the consummation of the Business Combination into Latch common stock. The remaining adjustment of $1.7 million to retained earnings reflects the gain from the difference between the carrying amount of the convertible notes at conversion of $51.7 million and the associated outstanding principal of $50.0 million.

 

  (G)

Represents the conversion of Latch’s redeemable convertible preferred stock immediately prior to the consummation of the Business Combination into Latch common stock.

 

  (H)

Represents recapitalization of Latch’s equity and issuance of 100,000,000 shares of the Post-Combination Company’s common stock to Latch’s equity holders as consideration for the reverse recapitalization.

 

  (I)

Reflects the conversion of TSIA Class B common stock held by the initial stockholders to shares of TSIA Class A common stock.

 

  (J)

Represents the reclassification of historical TSIA’s Class A common stock subject to possible redemption from temporary equity into permanent equity immediately prior to the consummation of the Business Combination.

 

  (K)

Reflects the reclassification of TSIA’s historical retained earnings to additional paid-in-capital in connection with the consummation of the Business Combination.

 

  (L)

Reflects the maximum redemption of 30,000,000 public shares for aggregate redemption payments of $300.0 million allocated to Class A Common Stock and additional paid-in capital using par value $0.0001 per share and at a redemption price of $10.00 per share.

 

  (M)

Latch has evaluated the accounting for TSIA’s public and private placement warrants for the Post Combination Company under ASC 480 and ASC 815. Latch has concluded that the public warrants qualify as equity instruments under ASC 815 after considering among other factors that after the Business Combination, the Post-Combination Company will have a single class equity structure. Separately, Latch has concluded that the private placement warrants will continue to be accounted for as a liability under ASC 815-40. The adjustment reflects the reclassification of TSIA’s public warrants from liabilities to equity in connection with the consummation of the Business Combination.

Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations

The pro forma adjustments included in the unaudited Pro Forma Condensed Combined Statement of Operations for the year ended December 31, 2020 are as follows:

 

  (AA)

Reflects the transaction costs incurred by Latch in 2021 including, but not limited to, advisory fees, legal fees and registration fees. This is a non-recurring item.

 

  (BB)

Reflects the elimination of TSIA’s historical interest income earned on TSIA’s trust account.

 

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  (CC)

Represents the gain on the conversion of Latch’s outstanding convertible notes immediately prior to the consummation of the Business Combination into Latch common stock. The adjustment represents the difference between carrying amount of the convertible notes at conversion of $51.7 million and the outstanding principal of $50.0 million. This is a non-recurring item.

 

  (DD)

Reflects the reversal of the loss on re-measurement at fair value of the derivative liability related to Latch’s convertible notes and the liability related to Latch’s warrants recognized in Latch’s Consolidated Statement of Operations and Comprehensive Income (Loss) for the year ended December 31, 2020.

 

  (EE)

Reflects the reversal of the unrealized loss on change in fair value of warrant liabilities related to public warrants recognized in TSIA’s Historical Statement of Operations for the period from September 18, 2020 (Inception) through December 31, 2020 on the basis of Latch’s conclusion that the public warrants will be equity instruments after the Business Combination.

 

4.

Earnings per Share

Represents the net earnings per share calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2020. As the Business Combination, including related proposed equity purchases, is being reflected as if it had occurred at the beginning of the period presented, the calculation of weighted average shares outstanding for basic and diluted net income (loss) per share assumes that the shares issuable in connection with the Business Combination have been outstanding for the entire period presented. If the maximum number of shares of common stock of TSIA are redeemed, this calculation is retroactively adjusted to eliminate such shares for the entire periods.

The unaudited pro forma condensed combined financial information has been prepared assuming the no redemptions and maximum redemptions scenarios:

 

(Net loss presented in thousands of dollars)    Assuming No
Redemptions
     Assuming
Maximum
Redemptions
 
   Twelve Months
Ended
December 31,
2020
     Twelve Months
Ended
December 31,

2020
 

Pro Forma Basic and Diluted Loss Per Share

     

Pro Forma net loss attributable to shareholders

   $ (70,848    $ (70,848

Weighted average shares outstanding, basic and diluted

     155,762        125,762  

Basic and diluted net loss per share

   $ (0.45    $ (0.56
     

Pro Forma Weighted Average Shares—Basic and Diluted

     

Post-Combination Company shares issued to Latch stockholders (on a net exercise basis and assuming no cash elections by holders of Latch stock options)

     100,000,000        100,000,000  

Post-Combination Company shares issued to current TSIA public shareholders

     30,000,000        —    

Total Post-Combination Company shares issued to Subscribers

     19,000,000        19,000,000  

Total Post-Combination Company shares issued to the Sponsor and certain of TSIA’s directors

     6,762,000        6,762,000  

Pro Forma Weighted Average Shares—Basic and Diluted

     155,762,000        125,762,000  

 

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As a result of the pro forma net loss, the earnings per share amounts exclude the anti-dilutive impact from the following securities:

 

   

The 10,000,000 public warrants sold during the TSIA IPO that will be converted in the Merger into warrants to purchase up to a total of 10,000,000 Post-Combination Company shares, which are exercisable at $11.50 per share;

 

   

The 5,333,334 Private Placement Warrants that will be exercisable for one share of TSIA’s common stock at an exercise price of $11.50 per share.

 

   

The 24,178,872 options outstanding in Latch as of December 31, 2020, of which 14,558,680 are vested and 9,620,192 are unvested.

 

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COMPARATIVE PER SHARE DATA

The following table sets forth selected historical comparative unit and share information for TSIA and Latch, respectively, and unaudited pro forma condensed combined per share information of TSIA after giving effect to the Business Combination, assuming two redemption scenarios as follows:

 

   

Assuming No Redemptions: This presentation assumes that no TSIA stockholders exercise redemption rights with respect to their Public Shares

 

   

Assuming Maximum Redemptions: This presentation assumes that TSIA stockholders holding 30.0 million Public Shares, will exercise their redemption rights for the $300.0 million of funds in TSIA’s trust account

The pro forma book value, weighted average shares outstanding, and net earnings per share information reflects the Business Combination, assuming the Post-Combination Company shares were outstanding since January 1, 2020.

This information is only a summary and should be read together with the selected historical financial information summary included elsewhere in this proxy statement/prospectus, and the audited financial statements of TSIA and Latch and related notes that are included elsewhere in this proxy statement/prospectus. The unaudited TSIA and Latch pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this proxy statement/prospectus.

The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of TSIA and Latch would have been had the companies been combined during the period presented.

 

     Historical     Pro Forma Combined     Equivalent Pro Forma Combined  
     Latch     TSIA (1)     Assuming No
Redemptions
    Assuming
Maximum
Redemptions
    Assuming No
Redemptions
    Assuming
Maximum
Redemptions
 

As of and for the Year Ended December 31, 2020

            

Book value per share – basic and diluted

   $ (16.94 )(2)    $ 0.43 (2)    $ 3.18 (3)    $ 1.56 (3)    $ 2.84 (4)    $ 1.39 (4) 

Weighted average shares outstanding – basic and diluted

     8,069                155,762       125,762       155,762       125,762  

Net loss per share – basic and diluted

   $ (8.18   $ (—   $ (0.45   $ (0.56   $ (0.45   $ (0.56

Cash dividends declared per share

     —         —         —         —         —         —    

 

(1) 

TSIA values are presented as of December 31, 2020 and from September 18, 2020 (inception) to December 31, 2020

(2) 

Historical book value per share is equal to total stockholders’ equity divided by common stock shares outstanding

(3) 

Pro forma book value per share is equal to pro forma total stockholders’ equity divided by pro forma common stock shares outstanding

(4) 

Equivalent pro forma book value is equal to pro forma book value multiplied by the Exchange Ratio (0.8908)

 

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TSIA’S SPECIAL MEETING OF STOCKHOLDERS

General

TSIA is furnishing this proxy statement/prospectus to TSIA’s stockholders as part of the solicitation of proxies by the TSIA Board for use at the Special Meeting of TSIA stockholders in lieu of the 2021 annual meeting of TSIA stockholders to be held on June 3, 2021, and at any adjournment or postponement thereof. This proxy statement/prospectus provides TSIA’s stockholders with information they need to know to be able to vote or instruct their vote to be cast at the Special Meeting.

Date, Time and Place of Special Meeting

The Special Meeting in lieu of the 2021 annual meeting of stockholders will be held on June 3, 2021, at 10 a.m., prevailing Eastern Time, in virtual format.

Voting Power; Record Date

You will be entitled to vote or direct votes to be cast at the Special Meeting if you owned shares of common stock at the close of business on May 11, 2021, which is the record date for the Special Meeting. You are entitled to one vote for each share of common stock that you owned as of the close of business on the TSIA Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the TSIA Record Date, there were 37,500,000 shares of common stock outstanding, of which 30,000,000 were Public Shares and 7,500,000 were Founder Shares.

Purpose of the Special Meeting

At the Special Meeting, TSIA is asking holders of TSIA common stock to vote on the following proposals:

 

   

The Business Combination Proposal—To consider and vote upon a proposal to approve the Merger Agreement and the transactions contemplated thereby;

 

   

The Charter Approval Proposal—To consider and vote upon a proposal to adopt the Proposed Charter in the form attached hereto as Annex B;

 

   

The Governance Proposal—To consider and act upon, on a non-binding advisory basis, a separate proposal with respect to certain governance provisions in the Proposed Charter in accordance with SEC requirements;

 

   

The Director Election Proposal—To consider and vote upon a proposal to elect seven directors to serve on the Board until the 2022 annual meeting of stockholders, in the case of Class I directors, the 2023 annual meeting of stockholders, in the case of Class II directors, and the 2024 annual meeting of stockholders, in the case of Class III directors, and, in each case, until their respective successors are duly elected and qualified;

 

   

The NASDAQ Proposal—To consider and vote upon a proposal to approve, for purposes of complying with applicable listing rules of the NASDAQ: (i) the issuance of shares of TSIA Class A common stock to the Latch stockholders pursuant to the Merger Agreement; (ii) the issuance of shares of TSIA Class A common stock pursuant to the Subscription Agreements; and (iii) the issuance of shares of TSIA Class A common stock pursuant to the conversion of TSIA Class B common stock;

 

   

The Incentive Award Plan Proposal—To consider and vote upon a proposal to approve and adopt the Incentive Plan; and

 

   

The Adjournment Proposal—To consider and vote upon a proposal to approve the adjournment of the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies

 

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in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Business Combination Proposal, the Charter Approval Proposal, the Director Election Proposal, the NASDAQ Proposal or the Incentive Award Plan Proposal.

Vote of TSIA’s Sponsor, Directors and Officers

TSIA has entered an agreement with the Sponsor and TSIA’s directors and officers, pursuant to which each agreed to vote any shares of common stock owned by them in favor of each of the proposals presented at the Special Meeting.

The Sponsor and TSIA’s directors and officers have waived any redemption rights, including with respect to any Public Shares purchased in the TSIA IPO or in the aftermarket, in connection an initial business combination. The Founder Shares held by the Initial Stockholders have no redemption rights upon our liquidation and will be worthless if no business combination is effected by us within the Completion Window. However, the Sponsor and TSIA’s directors and officers are entitled to redemption rights upon our liquidation with respect to any Public Shares they may own.

Quorum and Required Vote for Proposals for the Special Meeting

A quorum of TSIA stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if a majority of the voting power of all outstanding shares of capital stock of TSIA entitled to vote at the Special Meeting as of the TSIA Record Date is represented in person (which would include presence at a virtual meeting) or by proxy. Abstentions and broker non-votes will be counted as present for the purpose of determining a quorum. The Initial Stockholders, who currently own 20% of the issued and outstanding shares of common stock, will count towards this quorum. As of the TSIA Record Date, 18,750,001 shares of common stock would be required to achieve a quorum.

The approval of each of the Business Combination Proposal, Governance Proposal, the NASDAQ Proposal, the Award Incentive Plan Proposal and the Adjournment Proposal, if presented, requires the affirmative vote (in person or by proxy) of the holders of a majority of the shares of Class A common stock and Class B common stock entitled to vote and actually cast thereon at the Special Meeting, voting as a single class. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to each of the Business Combination Proposal, the Governance Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal or the Adjournment Proposal, if presented, will have no effect on the Business Combination Proposal, the Governance Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal or the Adjournment Proposal. TSIA’s Sponsor and its directors and officers have agreed to vote their shares of common stock in favor of each of the proposals presented at the Special Meeting.

The approval of the Charter Approval Proposal requires the affirmative vote of (i) the holders of a majority of the Founder Shares then outstanding, voting separately as a single class, and (ii) the holders of a majority of the outstanding shares of common stock on the TSIA Record Date, voting together as a single class. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to the Charter Approval Proposal, will have the same effect as a vote “AGAINST” such proposal.

Directors are elected by a plurality of all of the votes cast by the stockholders present in person (which would include presence at a virtual meeting) or represented by proxy at the Special Meeting and entitled to vote thereon. This means that the seven director nominees who receive the most affirmative votes will be elected. Stockholders may not cumulate their votes with respect to the election of directors. Accordingly, a stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting, as well as an abstention from voting and a broker non-vote with regard to election of directors, will have no effect on the election of directors.

 

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Consummation of the Business Combination is conditioned on the approval of the Business Combination Proposal, the Charter Approval Proposal, the NASDAQ Proposal and the Incentive Award Plan Proposal at the Special Meeting, subject to the terms of the Merger Agreement. The Merger is not conditioned on the Governance Proposal, the Director Election Proposal or the Adjournment Proposal. If the Business Combination Proposal is not approved, the other proposals (except the Adjournment Proposal) will not be presented to the stockholders for a vote.

It is important for you to note that in the event that the Business Combination Proposal, the Charter Approval Proposal, the NASDAQ Proposal or the Incentive Award Plan Proposal do not receive the requisite vote for approval, TSIA will not consummate the Business Combination. If TSIA does not consummate the Business Combination and fails to complete an initial business combination within the Completion Window, it will be required to dissolve and liquidate the Trust Account by returning the then remaining funds in such account to its public stockholders.

Recommendation of TSIA Board of Directors

The TSIA Board unanimously determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, were advisable, fair to, and in the best interests of, TSIA and its stockholders. Accordingly, the TSIA Board unanimously recommends that its stockholders vote “FOR” each of the Business Combination Proposal, the Charter Approval Proposal, the Governance Proposal, the Director Election Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal.

In considering the recommendation of the TSIA Board to vote in favor of approval of the proposals, stockholders should keep in mind that the Sponsor and TSIA’s directors and officers have interests in such proposals that are different from or in addition to (and which may conflict with) those of TSIA stockholders. Stockholders should take these interests into account in deciding whether to approve the proposals presented at the Special Meeting, including the Business Combination Proposal. These interests include, among other things:

 

   

If the Business Combination with Latch or another business combination is not consummated within the Completion Window, TSIA will cease all operations except for the purpose of winding up, redeeming 100% of the outstanding Public Shares for cash and, subject to the approval of its remaining stockholders and the TSIA Board, dissolving and liquidating. In such event, the 7,500,000 Founder Shares held by the Initial Stockholders which were acquired for an aggregate purchase price of $25,000 prior to the TSIA IPO, would be worthless because the Initial Stockholders are not entitled to participate in any redemption or distribution with respect to such shares. Such shares had an aggregate market value of $75,000,000 based upon the closing price of $10.00 per share of Class A common stock on the NASDAQ on May 11, 2021, the TSIA Record Date. Certain Founder Shares are subject to certain time- and performance-based vesting provisions as described under “Other Agreements—Sponsor Agreement.

 

   

The Sponsor purchased an aggregate of 5,333,334 Private Placement Warrants from TSIA for an aggregate purchase price of $8,000,000 (or $1.50 per warrant). These purchases took place on a private placement basis simultaneously with the consummation of the TSIA IPO. A portion of the proceeds TSIA received from these purchases were placed in the Trust Account. Such warrants had an aggregate market value of $10,506,668 based upon the closing price of $1.97 per public warrant on the NASDAQ on May 11, 2021, the TSIA Record Date. The Private Placement Warrants will become worthless if TSIA does not consummate a business combination within the Completion Window.

 

   

Robert J. Speyer will become a director of the Post-Combination Company after the closing of the Business Combination. As such, in the future he will receive any cash fees, stock options or stock awards that the Board determines to pay to its directors.

 

   

TSIA’s directors and officers, and their affiliates are entitled to reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on TSIA’s behalf, such as identifying

 

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and investigating possible business targets and business combinations. However, if TSIA fails to consummate a business combination within the Completion Window, they will not have any claim against the Trust Account for reimbursement. Accordingly, TSIA may not be able to reimburse these expenses if the Business Combination or another business combination is not consummated within the Completion Window. Additionally, the Sponsor is entitled to $10,000 per month for office space, secretarial and administrative services provided to TSIA’s management team, commencing on November 9, 2020 through the earlier of consummation of the Business Combination and liquidation.

 

   

The continued indemnification of current directors and officers and the continuation of directors’ and officers’ liability insurance.

Abstentions and Broker Non-Votes

Abstentions are considered present for the purposes of establishing a quorum and will have the same effect as a vote “AGAINST” the Charter Approval Proposal. Broker non-votes are considered present for the purposes of establishing a quorum and will have the effect of a vote “AGAINST” the Charter Approval Proposal. Abstentions and broker non-votes will have no effect on the Business Combination Proposal, the Governance Proposal, the Director Election Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal.

In general, if your shares are held in “street” name and you do not instruct your broker, bank or other nominee on a timely basis on how to vote your shares, your broker, bank or other nominee, in its sole discretion, may either leave your shares unvoted or vote your shares on routine matters, but not on any non-routine matters. None of the proposals at the Special Meeting are routine matters. As such, without your voting instructions, your brokerage firm cannot vote your shares on any proposal to be voted on at the Special Meeting.

Certain Engagements in Connection with the Business Combination and Related Transactions

Goldman Sachs was engaged by Latch to act as financial advisor to Latch in connection with the Business Combination, and will receive compensation in connection therewith. TSIA engaged Goldman Sachs to act as co-placement agent with Allen and BofA Securities on the PIPE Transaction. Goldman Sachs will receive fees and expense reimbursements in connection therewith. Goldman Sachs did not provide any advice to TSIA, including, but not limited to, regarding the valuation of Latch or the terms of the business combination with Latch. TSIA and Latch have each signed a consent letter with Goldman Sachs acknowledging Goldman Sachs’ roles as financial advisor to Latch in connection with the Business Combination and as co-placement agent to TSIA in connection with the PIPE and waiving any potential conflicts in connection with such dual roles.

In addition, Goldman Sachs (together with its affiliates) is a full service financial institution engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investing, hedging, market making, brokerage and other financial and non-financial activities and services. In addition, Goldman Sachs and its affiliates may provide investment banking and other commercial dealings to TSIA, Latch and their respective affiliates in the future, for which they would expect to receive customary compensation.

In addition, in the ordinary course of its business activities, Goldman Sachs and its affiliates, officers, directors and employees may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers. Such investments and securities activities may involve securities and/or instruments of TSIA or Latch, or their respective affiliates. Goldman Sachs and its affiliates may also make investment recommendations and/or publish or express independent research views in respect of such securities or financial instruments and may hold, or recommend to clients that they acquire, long and/or short positions in such securities and instruments.

 

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Voting Your Shares—Stockholders of Record

TSIA stockholders may vote electronically at the Special Meeting by visiting or by proxy. TSIA recommends that you submit your proxy even if you plan to attend the Special Meeting. If you vote by proxy, you may change your vote by submitting a later dated proxy before the deadline or by voting electronically at the Special Meeting.

If your shares are owned directly in your name with our transfer agent, Continental, you are considered, with respect to those shares, the “stockholder of record.” If your shares are held in a stock brokerage account or by a bank or other nominee or intermediary, you are considered the beneficial owner of shares held in “street name” and are considered a “non-record (beneficial) stockholder.”

If you are a TSIA stockholder of record you may use the enclosed proxy card to tell the persons named as proxies how to vote your shares. If you properly complete, sign and date your proxy card, your shares will be voted in accordance with your instructions. The named proxies will vote all shares at the Special Meeting for which proxies have been properly submitted and not revoked. If you sign and return your proxy card but do not mark your card to tell the proxies how to vote, your shares will be voted “FOR” each of the proposals presented at the Special Meeting.

Your shares will be counted for purposes of determining a quorum if you vote:

 

   

via the Internet;

 

   

by telephone;

 

   

by submitting a properly executed proxy card or voting instruction form by mail; or

 

   

electronically at the Special Meeting.

Abstentions will be counted for determining whether a quorum is present for the Special Meeting.

Voting instructions are printed on the proxy card or voting information form you received. Either method of submitting a proxy will enable your shares to be represented and voted at the Special Meeting.

Voting Your Shares—Beneficial Owners

If your shares are held in an account at a brokerage firm, bank or other nominee, then you are the beneficial owner of shares held in “street name” and this proxy statement/prospectus is being sent to you by that broker, bank or other nominee. The broker, bank or other nominee holding your account is considered to be the stockholder of record for purposes of voting at the Special Meeting. As a beneficial owner, you have the right to direct your broker, bank or other nominee regarding how to vote the shares in your account by following the instructions that the broker, bank or other nominee provides you along with this proxy statement/prospectus. Your broker, bank or other nominee may have an earlier deadline by which you must provide instructions to it as to how to vote your shares. As a beneficial owner, if you wish to vote at the Special Meeting, you will need to bring to the Special Meeting a legal proxy from your broker, bank or other nominee authorizing you to vote those shares. That is the only way we can be sure that the broker, bank or nominee has not already voted your shares of common stock.

Revoking Your Proxy

If you are a stockholder and you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:

 

  1.

you may send another proxy card with a later date;

 

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  2.

you may notify TSIA’s Secretary in writing before the Special Meeting that you have revoked your proxy; or

 

  3.

you may attend the Special Meeting and vote electronically by visiting and entering the control number found on your proxy card, instruction form or notice you previously received. Attendance at the Special Meeting will not, in and of itself, revoke a proxy.

If your shares are held in “street name” or are in a margin or similar account, you should contact your broker for information on how to change or revoke your voting instructions.

No Additional Matters

The Special Meeting has been called only to consider the approval of the Business Combination Proposal, the Charter Approval Proposal, the Governance Proposal, the Director Election Proposal, the NASDAQ Proposal, the Incentive Award Plan Proposal and the Adjournment Proposal. Under TSIA’s bylaws, other than procedural matters incident to the conduct of the Special Meeting, no other matters may be considered at the Special Meeting if they are not included in this proxy statement/prospectus, which serves as the notice of the Special Meeting.

Who Can Answer Your Questions About Voting Your Shares

If you are a stockholder and have any questions about how to vote or direct a vote in respect of your shares of TSIA common stock, you may call Morrow Sodali LLC, TSIA’s proxy solicitor, at (800) 662-5200.

Redemption Rights

Holders of Public Shares may seek to redeem their shares for cash, regardless of whether they vote for or against, or abstain from voting on, the Business Combination Proposal. Any stockholder holding Public Shares may demand that TSIA redeem such shares for a pro rata portion of the Trust Account (which, for illustrative purposes, was $10.00 per share as of May 11, 2021, the TSIA Record Date), calculated as of two business days prior to the anticipated consummation of the Business Combination. If a holder properly seeks redemption as described in this section and the Business Combination with Latch is consummated, TSIA will redeem these shares for a pro rata portion of funds deposited in the Trust Account and the holder will no longer own these shares following the Business Combination.

Notwithstanding the foregoing, a holder of Public Shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act), will be restricted from seeking redemption rights with respect to more than 15% of the Public Shares without the consent of TSIA. Accordingly, all Public Shares in excess of 15% held by a public stockholder, together with any affiliate of such holder or any other person with whom such holder is acting in concert or as a “group,” will not be redeemed for cash without the consent of TSIA.

The Sponsor and TSIA’s directors and officers will not have redemption rights with respect to any shares of common stock owned by them, directly or indirectly in connection with the Business Combination.

TSIA public stockholders may seek to redeem their shares for cash, regardless of whether they vote for or against, or abstain from voting on, the Business Combination Proposal. Holders may demand redemption by delivering their stock, either physically or electronically using Depository Trust Company’s DWAC System, to TSIA’s transfer agent no later than the second business day preceding the vote on the Business Combination Proposal. If you hold the shares in street name, you will have to coordinate with your broker to have your shares certificated or delivered electronically. Certificates that have not been tendered (either physically or electronically) in accordance with these procedures will not be redeemed for cash. There is a nominal cost

 

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associated with this 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 $80.00 and it would be up to the broker whether or not to pass this cost on to the redeeming stockholder. In the event the proposed Business Combination is not consummated this may result in an additional cost to stockholders for the return of their shares.

Any request to redeem such shares, once made, may be withdrawn at any time up to the vote on the Business Combination Proposal. Furthermore, if a holder of a Public Share delivered its certificate in connection with an election of its redemption and subsequently decides prior to the applicable date not to elect to exercise such rights, it may simply request that the transfer agent return the certificate (physically or electronically).

If the Business Combination is not approved or completed for any reason, then TSIA’s public stockholders who elected to exercise their redemption rights will not be entitled to redeem their shares for a pro rata portion of the Trust Account, as applicable. In such case, TSIA will promptly return any shares delivered by public stockholders.

The closing price of TSIA Class A common stock on May 11, 2021, the TSIA Record Date, was $10.00. The cash held in the Trust Account on such date was approximately $300,008,817.60 ($10.00 per Public Share). Prior to exercising redemption rights, stockholders should verify the market price of TSIA common stock as they may receive higher proceeds from the sale of their common stock in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. TSIA cannot assure its stockholders that they will be able to sell their shares of TSIA common stock in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in its securities when its stockholders wish to sell their shares.

If a holder of Public Shares exercises its redemption rights, then it will be exchanging its shares of TSIA common stock for cash and will no longer own those shares. You will be entitled to receive cash for these shares only if you properly demand redemption no later than the second business day preceding the vote on the Business Combination Proposal by delivering your stock certificate (either physically or electronically) to TSIA’s transfer agent prior to the vote at the Special Meeting, and the Business Combination is consummated.

Appraisal Rights

Neither stockholders, unitholders nor warrant holders of TSIA have appraisal rights in connection the Business Combination under the DGCL.

Proxy Solicitation Costs

TSIA is soliciting proxies on behalf of the TSIA Board. This solicitation is being made by mail but also may be made by telephone or in person. TSIA and its directors, officers and employees may also solicit proxies in person, by telephone or by other electronic means. TSIA will bear the cost of the solicitation.

TSIA has hired Morrow Sodali LLC to assist in the proxy solicitation process. TSIA will pay that firm a fee of $30,000 plus disbursements. Such payment will be made from non-trust account funds.

TSIA will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. TSIA will reimburse them for their reasonable expenses.

The Initial Stockholders

As of May 11, 2021, the TSIA Record Date, the Initial Stockholders of record were entitled to vote an aggregate of 7,500,000 Founder Shares that were issued prior to the TSIA IPO. Such shares currently constitute

 

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20% of the outstanding shares of TSIA’s common stock. The Initial Stockholders have agreed to vote the Founder Shares, as well as any shares of common stock acquired in the aftermarket, in favor of each of the proposals presented at the Special Meeting. The Founder Shares have no right to participate in any redemption distribution and will be worthless if no business combination is effected by TSIA.

Upon consummation of the Business Combination, under the Sponsor Agreement, certain Founder Shares (or shares of common stock issuable upon conversion thereof) will be subject to (i) certain lock-up restrictions and (ii) certain time and performance-based vesting provisions. See “Other Agreements—Sponsor Agreement” for more information.

Purchases of TSIA Shares

At any time prior to the Special Meeting, during a period when they are not then aware of any material nonpublic information regarding TSIA or its securities, the Sponsor, Latch, the Company Owners and/or their respective affiliates may purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Business Combination Proposal, or execute agreements to purchase shares from such investors in the future, or they may enter into transactions with such investors and others to provide them with incentives to acquire shares of TSIA’s common stock or vote their shares in favor of the Business Combination Proposal. The purpose of such share purchases and other transactions would be to increase the likelihood of satisfaction of the requirements to consummate the Business Combination where it appears that such requirements would otherwise not be met. While the exact nature of any such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such investors or holders against potential loss in value of their shares, including the granting of put options and, with Latch’s consent, the transfer to such investors or holders of shares or warrants owned by the Sponsor for nominal value.

Entering into any such arrangements may have a depressive effect on TSIA common stock. For example, as a result of these arrangements, an investor or holder may have the ability to effectively purchase shares at a price lower than market and may therefore be more likely to sell the shares he owns, either prior