References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to FinTech Acquisition Corp. IV. References to our "management"
or our "management team" refer to our officers and directors, references to the
"Sponsor" refer to FinTech Investor Holdings IV, LLC and FinTech Masala Advisors
IV, LLC. The following discussion and analysis of the Company's financial
condition and results of operations should be read in conjunction with the
unaudited condensed financial statements and the notes thereto contained
elsewhere in this Quarterly Report. Certain information contained in the
discussion and analysis set forth below includes forward-looking statements that
involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
are not historical facts and involve risks and uncertainties that could cause
actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Quarterly
Report including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the Company's financial position, business strategy and the plans and
objectives of management for future operations, are forward-looking statements.
Words such as "expect," "believe," "anticipate," "intend," "estimate," "seek"
and variations and similar words and expressions are intended to identify such
forward-looking statements. Such forward-looking statements relate to future
events or future performance, but reflect management's current beliefs, based on
information currently available. A number of factors could cause actual events,
performance or results to differ materially from the events, performance and
results discussed in the forward-looking statements. For information identifying
important factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer to the Annual
Report on Form 10-K/A filed with the SEC on May 4, 2021. The Company's
securities filings can be accessed on the EDGAR section of the SEC's website at
www.sec.gov. Except as expressly required by applicable securities law, the
Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company incorporated on November 20, 2018 as a Delaware
corporation and formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar Business
Combination with one or more businesses. We intend to effectuate our initial
Business Combination using cash from the proceeds of our Initial Public Offering
and the private placement of the Private Placement Units, the proceeds of the
sale of our shares in connection with our initial Business Combination, shares
issued to the owners of the target, debt issued to bank or other lenders or the
owners of the target, or a combination of the foregoing.
We expect to continue to incur significant costs in the pursuit of our initial
Business Combination. We cannot assure you that our plans to complete our
initial Business Combination will be successful.
Recent Developments
On December 29, 2020, we entered into a Business Combination Agreement (the
"Business Combination Agreement"), dated as of December 29, 2020, by and among
the Company, FinTech Investor Holdings IV, LLC, a Delaware limited liability
company, Fintech Masala Advisors, LLC, a Delaware limited liability company
(together with FinTech Investor Holdings IV, LLC, the "Sponsor"), PWP, PWP GP
LLC, a Delaware limited liability company and the general partner of PWP ("PWP
GP"), PWP Professional Partners LP, a Delaware limited partnership and a limited
partner of PWP ("Professionals"), and Perella Weinberg Partners LLC, a Delaware
limited liability company and the general partner of Professionals
("Professionals GP") pursuant to which, among other things, the Company will
acquire interests in PWP, which will become jointly-owned by the Company,
Professionals, and certain existing partners of PWP and following the Closing
will serve as the Company's operating partnership as part of an umbrella limited
partnership C-corporation (Up-C) structure.
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Pursuant to the Business Combination Agreement, subject to certain conditions
set forth therein, in connection with the closing of the transactions
contemplated by the Business Combination Agreement (the "Closing"):
(i) the Company will acquire newly-issued common units of PWP in exchange for
cash in an amount equal to the outstanding excess cash balances of the
Company (including the proceeds from the PIPE Investment (as defined below))
as of Closing net of redemptions elected by the Company's public stockholders
pursuant to their redemption rights described below (such aggregate
outstanding cash balances, "Company Cash"), with the number of such interests
to be issued to be calculated based on the formula set forth on Schedule C to
the Business Combination Agreement;
(ii) Professionals will contribute the equity interests of PWP GP, the general
partner of PWP, to the Company;
(iii) the Company will issue (A) to Professionals, new shares of Class B-1 common
stock, which will have 10 votes per share (for so long as Professionals or
its limited partners as of the Closing maintain ownership of at least 10%
of the issued and outstanding Class A common units of PWP, otherwise such
Class B-1 common stock shall have one vote per share) and (B) to investor
limited partners of PWP, new shares of Class B-2 common stock, which will
have one vote per share, with the number of shares of such common stock to
be issued to equal the number of common units of PWP that will be held by
Professionals and such investor limited partners, respectively, following
the Closing; and
(iv) the Company will repay certain indebtedness of PWP, pay certain expenses,
retain up to $10 million of cash on its balance sheet, and subject to the
availability of transaction proceeds, the Company will first redeem certain
limited partnership interests held by certain electing third party investor
limited partners of PWP and second redeem certain electing non-working
limited partners of Professionals (collectively with the other transactions
contemplated by the Business Combination Agreement, the "Business
Combination").
On December 29, 2020, concurrently with the execution of the Business
Combination Agreement, we also entered into subscription agreements
("Subscription Agreements") with certain investors (collectively, the "PIPE
Investors") pursuant to, and on the terms and subject to the conditions of
which, the PIPE Investors have collectively subscribed for 12,500,000 shares of
the Company's Class A common stock for an aggregate purchase price equal to
$125,000,000 (the "PIPE Investment"), a portion of which is expected to be
funded by one or more affiliates of Sponsor. The PIPE Investment will be
consummated substantially concurrently with the closing of the Business
Combination.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception through March 31, 2021 were organizational
activities, those necessary to prepare for our Initial Public Offering,
described below, and, after our Initial Public Offering, identifying a target
company for an initial Business Combination and activities in connection with
the proposed acquisition of PWP. We do not expect to generate any operating
revenues until after the completion of our initial Business Combination. We
generate non-operating income in the form of interest income on marketable
securities held in the Trust Account. We incur expenses as a result of being a
public company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses.
For the three months ended March 31, 2021, we had net income of $4,903,480 which
consists of $5,756,700 from change in fair value of warrant liabilities,
interest income of $5,672, partially offset by operating expenses of $858,892.
Liquidity and Capital Resources
Until the consummation of the Initial Public Offering, the Company's only source
of liquidity was an initial purchase of shares of Class B common stock by our
Sponsor and loans from our Sponsor.
On September 29, 2020, we consummated our Initial Public Offering of 23,000,000
Units at a price of $10.00 per Unit, generating gross proceeds of $230,000,000.
Simultaneously with the closing of our Initial Public Offering, we consummated
the sale of 610,000 Private Placement Units to the Sponsor at a price of $10.00
per Unit, generating gross proceeds of $6,100,000.
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Following our Initial Public Offering and the sale of the Private Placement
Units, a total of $230,000,000 was placed in the Trust Account. We incurred
$14,255,791 in transaction costs, including $4,000,000 of underwriting fees,
$9,800,000 of deferred underwriting fees and $455,791 of other costs.
For the three months ended March 31, 2021, cash used in operating activities was
$334,852. Net income of $4,903,480 was reduced by an increase in fair value of
warrant liabilities of $5,756,705, interest earned on marketable securities held
in the Trust Account of $5,672 and changes in operating assets and liabilities
of $524,040.
As of March 31, 2021, we had cash and marketable securities of $230,011,533 held
in the Trust Account. We intend to use substantially all of the funds held in
the Trust Account, including any amounts representing interest earned on the
Trust Account (less taxes paid and deferred underwriting commissions) to
complete our initial Business Combination. We may withdraw interest to pay
taxes. During the three months ended March 31, 2021, we did not withdraw any
interest earned on the Trust Account. To the extent that our capital stock or
debt is used, in whole or in part, as consideration to complete our initial
Business Combination, the remaining proceeds held in the Trust Account will be
used as working capital to finance the operations of the target business or
businesses, make other acquisitions and pursue our growth strategies.
As of March 31, 2021, we had cash of $824,082 held outside of the Trust Account.
We intend to use the funds held outside the Trust Account primarily to identify
and evaluate target businesses, perform business due diligence on prospective
target businesses, travel to and from the offices, plants or similar locations
of prospective target businesses or their representatives or owners, review
corporate documents and material agreements of prospective target businesses,
and structure, negotiate and complete our initial Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with our initial Business Combination, our Sponsor or an affiliate of
our Sponsor or certain of our officers and directors may, but are not obligated
to, loan us funds as may be required. If we complete our initial Business
Combination, we would repay such loaned amounts. In the event that our initial
Business Combination does not close, we may use a portion of the working capital
held outside the Trust Account to repay such loaned amounts but no proceeds from
our Trust Account would be used for such repayment. Up to $1,500,000 of such
loans may be convertible into units identical to the Private Placement Units, at
a price of $10.00 per unit at the option of the lender.
We do not currently believe we will need to raise additional funds in order to
meet the expenditures required for operating our business. However, if our
estimate of the costs of identifying a target business, undertaking in-depth due
diligence and negotiating our initial Business Combination are less than the
actual amount necessary to do so, we may have insufficient funds available to
operate our business prior to our initial Business Combination. Moreover, we may
need to obtain additional financing either to complete our initial Business
Combination or because we become obligated to redeem a significant number of our
Public Shares upon consummation of our initial Business Combination, in which
case we may issue additional securities or incur debt in connection with such
Business Combination. Subject to compliance with applicable securities laws, we
would only complete such financing simultaneously with the completion of our
initial Business Combination. If we are unable to complete our initial Business
Combination because we do not have sufficient funds available to us, we will be
forced to cease operations and liquidate the Trust Account. In addition,
following our initial Business Combination, if cash on hand is insufficient, we
may need to obtain additional financing in order to meet our obligations.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of March 31, 2021. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the Sponsor
or an affiliate of the Sponsor a monthly fee up to $20,000 for office space,
utilities and shared personnel support services. We began incurring these fees
on September 25, 2020 and will continue to incur these fees monthly until the
earlier of the completion of the Business Combination and our liquidation.
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Pursuant to a registration rights agreement entered into on September 24, 2020,
the holders of the Founder Shares, Private Placement Units (including securities
contained therein) and the units that may be issued upon conversion of the
Working Capital Loans (and any shares of Class A common stock issuable upon the
exercise of the Private Placement Warrants or the warrants included in the units
issued upon conversion of the Working Capital Loans) will be entitled to
registration rights requiring us to register such securities for resale (in the
case of the Founder Shares, only after conversion to Class A common stock). The
holders of these securities will be entitled to make up to three demands,
excluding short form demands, that we register such securities. In addition, the
holders will have certain "piggy-back" registration rights with respect to
registration statements filed subsequent to the completion of a Business
Combination and rights to require us to register for resale such securities
pursuant to Rule 415 under the Securities Act. We will bear the expenses
incurred in connection with the filing of any such registration statements.
Cantor Fitzgerald & Co. and Wells Fargo Securities, LLC, as representatives of
the several underwriters, are entitled to a deferred fee of $9,800,000. The
deferred fee will become payable to the representatives from the amounts held in
the Trust Account solely in the event that the Company completes a Business
Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of unaudited condensed financial statements and related
disclosures in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities at the date of the financial statements, and
income and expenses during the periods reported. Actual results could materially
differ from those estimates. We have identified the following critical
accounting policies:
Warrant Liabilities
We account for the warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in ASC 815 under which the
warrants do not meet the criteria for equity treatment and must be recorded as
liabilities. Accordingly, we classify the warrants as liabilities at their fair
value and adjust the warrants to fair value at each reporting period. This
liability is subject to re-measurement at each balance sheet date until
exercised, and any change in fair value is recognized in our statement of
operations. The fair value of the warrants was estimated using a Monte Carlo
simulation approach.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Class A common stock subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable common stock (including common stock that
features redemption rights that are either within the control of the holder or
subject to redemption upon the occurrence of uncertain events not solely within
our control) is classified as temporary equity. At all other times, common stock
is classified as stockholders' equity. Our common stock features certain
redemption rights that are considered to be outside of our control and subject
to occurrence of uncertain future events. Accordingly, the Class A common stock
subject to possible redemption is presented as temporary equity, outside of the
stockholders' equity section of our unaudited condensed balance sheet.
Net Income per Common Share
We apply the two-class method in calculating earnings per share. Net income per
common share, basic and diluted for Class A redeemable common stock is
calculated by dividing the interest income earned on the Trust Account, net of
applicable taxes, by the weighted average number of shares of Class A redeemable
common stock outstanding for the periods. Net income per common share, basic and
diluted for Class A and Class B non-redeemable common stock is calculated by
dividing net income less income attributable to Class A redeemable common stock,
by the weighted average number of shares of Class A and Class B non-redeemable
common stock outstanding for the periods presented.
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Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. The ASU also removes certain settlement conditions
that are required for equity-linked contracts to qualify for the derivative
scope exception, and it simplifies the diluted earnings per share calculation in
certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of
the ASU did not impact the Company's financial position, results of operations
or cash flows.
Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our unaudited condensed financial statements.
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