References in this report (this "Quarterly Report") to "we," "us" or the
"Company" refer to FinTech Acquisition Corp. V. References to our "management"
or our "management team" refer to our officers and certain of our directors.
References to our "sponsor" refer collectively to FinTech Investor Holdings V,
LLC, a Delaware limited liability company, and FinTech Masala Advisors V, LLC, a
Delaware limited liability company. The manager of each entity is Cohen Sponsor
Interests V, LLC, a Delaware limited liability company. The following discussion
and analysis of the Company's financial condition and results of operations
should be read in conjunction with the 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.
This Management's Discussion and Analysis of Financial Condition and Results of
Operations gives effect to the restatement of our financial statements for the
periods ended March 31, 2021, June 30, 2021 and September 30, 2021. Management
identified errors made in its historical financial statements where, at the
closing of our Initial Public Offering, we improperly valued our Class A common
stock subject to possible redemption. We previously determined the Class A
common stock subject to possible redemption to be equal to the redemption value
of $10.00 per share of Class A common stock while also taking into consideration
a redemption cannot result in net tangible assets being less than $5,000,001.
Management determined that the Class A common stock issued during the Initial
Public Offering can be redeemed or become redeemable subject to the occurrence
of future events considered outside of the Company's control. Therefore,
management concluded that the redemption value should include all Class A common
stock subject to possible redemption, resulting in the Class A common stock
subject to possible redemption being equal to their redemption value. As a
result, management has noted a reclassification error related to temporary
equity and permanent equity. This resulted in a restatement to the initial
carrying value of the Class A common stock subject to possible redemption with
the offset recorded to additional paid-in capital (to the extent available),
accumulated deficit and Class A common stock. In addition, in connection with
the change in presentation for the Class A common stock subject to possible
redemption, the Company has determined it should restate its earnings per share
calculation to allocate income and losses shared pro rata between the two
classes of shares. This presentation contemplates a Business Combination as the
most likely outcome, in which case, both classes of shares share pro rata in the
income and losses of the Company.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" 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 Risk
Factors section of the Company's Annual Report on Form 10-K/A filed with the
U.S. Securities and Exchange Commission (the "SEC"). 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 as a Delaware corporation and formed
for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, recapitalization, reorganization or similar
business combination with one or more target businesses. We intend to complete
our business combination using cash from the proceeds of the initial public
offering and the sale of the private placement units that occurred
simultaneously with the completion of the initial public offering, our capital
stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Recent Developments
On March 16, 2021, we entered into an Agreement and Plan of Merger (the "Merger
Agreement") with eToro Group Ltd., a company organized under the laws of the
British Virgin Islands ("eToro"), Buttonwood Merger Sub Corp., a Delaware
corporation and a direct, wholly-owned subsidiary of eToro ("Merger Sub"), and
the Company, which provides for, among other things, the merger of Merger Sub
with and into the Company (the "Merger"), with the Company surviving as a
wholly-owned subsidiary of eToro (the "Business Combination"). At the closing of
the Business Combination and the effective time of the Merger (the "Effective
Time"), the stockholders of the Company will receive certain of the common
stock, no par value, of eToro ("eToro Common Stock"), and eToro will list as a
publicly traded company on Nasdaq and will continue to conduct the social
trading platform business conducted by eToro prior to the Business Combination.
The Merger Agreement contains customary representations, warranties and
covenants by the parties thereto and the closing is subject to certain
conditions as further described in the Merger Agreement.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to September 30, 2021 were organizational
activities, those necessary to prepare for the Initial Public Offering,
described below, and, after the Initial Public Offering, identifying a target
company for a Business Combination and the potential acquisition, as described
above. We do not expect to generate any operating revenues until after the
completion of our Business Combination at the earliest. 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 in connection with completing a Business
Combination.
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For the three months ended September 30, 2021, we had net income of $8,701,290,
which consists of the interest earned on marketable securities held in the Trust
Account of $6,302 and change in the fair value of warrant liabilities of
$9,390,534, offset by operating expenses of $695,546.
For the nine months ended September 30, 2021, we had a net loss of $3,805,142,
which consists of the interest earned on marketable securities held in the Trust
Account of $18,700 and a change in the fair value of warrant liabilities of
$702,799, offset by operating expenses of $3,121,043.
Liquidity and Capital Resources
On December 8, 2020, we consummated the Initial Public Offering of 25,000,000
units (the "Units" and, with respect to the Class A common stock included in the
Units sold, the "Public Shares"), which includes the partial exercise by the
underwriters of their over-allotment option in the amount of 3,200,000 Units, at
$10.00 per Unit, generating gross proceeds of $250,000,000. Simultaneously with
the closing of the Initial Public Offering, we consummated the sale of 640,000
units (the "Private Placement Units") at a price of $10.00 per Private Placement
Unit in a private placement to FinTech Investor Holdings V, LLC, generating
gross proceeds of $6,400,000. The manager of FinTech Investor Holdings V, LLC is
Cohen Sponsor Interests V, LLC.
Transaction costs amounted to $15,461,590, consisting of $4,360,000 in cash
underwriting fees, $10,640,000 of deferred underwriting fees and $461,590 of
other offering costs.
For the nine months ended September 30, 2021, net cash used in operating
activities was $1,091,446. Net loss of $3,805,142 was affected by interest
earned on marketable securities held in the Trust Account of $18,700 and a
change in fair value of warrant liabilities of $702,799. Changes in operating
assets and liabilities provided $2,029,597 of cash from operating activities.
At September 30, 2021, we had investments held in the Trust Account of
$250,020,276. We intend to use substantially all of the funds held in the Trust
Account, including any amounts representing interest earned on the Trust Account
to complete our Business Combination. We may withdraw interest to pay taxes. For
the three and nine months ended September 30, 2021, we did not withdraw any
interest income from the Trust Account. To the extent that our capital stock or
debt is used, in whole or in part, as consideration to complete our Business
Combination, the remaining proceeds held in the Trust Account will be used as
working capital to finance the operations of the target business or businesses,
make other acquisitions and pursue our growth strategies.
At September 30, 2021, we had cash of $262,765 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, properties or
similar locations of prospective target businesses or their representatives or
owners, review corporate documents and material agreements of prospective target
businesses, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a 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 a Business Combination, we
would repay such loaned amounts. In the event that a 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. If such funds are insufficient to repay the
Working Capital Loans, the unpaid amounts would be forgiven. The Working Capital
Loans may be converted into units at a price of $10.00 per unit at the option of
the lender. The units would be identical to the Private Placement Units. At
September 30, 2021, $300,000 of Working Capital Loans were outstanding. As of
October 26, 2021, the Company amended the Working Capital Loans to remove the
conversion feature.
However, if our estimate of the costs of identifying a target business,
undertaking in-depth due diligence and negotiating and consummating a Business
Combination are less than the actual amount necessary to do so, we may have
insufficient funds available to operate our business prior to our Business
Combination. Moreover, we may need to obtain additional financing either to
complete our Business Combination or because we become obligated to redeem a
significant number of our public shares upon consummation of our Business
Combination, in which case we may issue additional securities or incur debt in
connection with such Business Combination. Subject to compliance with applicable
securities laws, we would only complete such financing simultaneously with the
completion of our Business Combination.
If we are unable to complete our Business Combination because we do not have
sufficient funds available to us, we will be forced to cease operations and
liquidate the Trust Account. In addition, following our Business Combination, if
cash on hand is insufficient, we may need to obtain additional financing in
order to meet our obligations. If the Company is unable to raise additional
capital, it may be required to take additional measures to conserve liquidity,
which could include, but not necessarily be limited to, curtailing operations,
suspending the pursuit of a potential transaction, and reducing overhead
expenses. The Company cannot provide any assurance that new financing will be
available to it on commercially acceptable terms, if at all. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern through one year from the date of these financial statements if a
Business Combination is not consummated. These financial statements do not
include any adjustments relating to the recovery of the recorded assets or the
classification of the liabilities that might be necessary should the Company be
unable to continue as a going concern.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 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.
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Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the sponsor
or an affiliate of the sponsor a monthly fee of $20,000 for office space,
administrative and shared personnel support services. We began incurring these
fees on December 4, 2020 and will continue to incur these fees monthly until the
earlier of the completion of the business combination or the Company's
liquidation.
Pursuant to a registration rights agreement entered into on December 3, 2020,
the holders of the Founder Shares, Private Placement Units (including securities
contained therein) and warrants that may be issued upon conversion of Working
Capital Loans (and any Class A common stock issuable upon the exercise of the
Private Placement Warrants and warrants that may be issued upon conversion of
Working Capital Loans) are entitled to registration rights to require us to
register a sale of any securities held by them (in the case of the Founder
Shares, only after conversion to Class A common stock). The holders of a
majority of these securities will be entitled to make up to three demands,
excluding short form demands, that we register such securities for sale under
the Securities Act. In addition, these holders will have "piggy-back"
registration rights to include such securities in other registration statements
filed by us and rights to require us to register for resale such securities
pursuant to Rule 415 under the Securities Act. However, the registration rights
agreement provides that we will not permit any registration statement filed
under the Securities Act to become effective until termination of the applicable
lock-up period. We will bear the expenses incurred in connection with the filing
of any such registration statements.
Cantor Fitzgerald & Co., as representative of the several underwriters, is
entitled to a deferred fee of $10,640,000. The deferred fee will become payable
to the representative from the amounts held in the trust account solely in the
event that the Company completes a business combination, subject to the terms of
the underwriting agreement.
Critical Accounting Policies
The preparation of 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 do not use derivative instruments to hedge exposures to cash flow, market, or
foreign currency risks. We evaluate all of our financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives
or contain features that qualify as embedded derivatives, pursuant to Accounting
Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from
Equity" and ASC 815. We account for the Warrants in accordance with the guidance
contained in ASC 815-40 under which the Warrants do not meet the criteria for
equity treatment and must be recorded as liabilities. Accordingly, we classify
the Warrants as liabilities at their fair value and adjust them to fair value at
each reporting period. This liability is subject to re-measurement at each
balance sheet date until exercised, and any change in fair value is recognized
in our statements of operations. The Warrants for periods where no observable
trading price was available are valued using a Modified Black-Scholes Option
Pricing model for the Private Placement Warrants and a Monte Carlo simulation
methodology for the Public Warrants. For periods subsequent to the detachment of
the Public Warrants from the Units, the Public Warrant quoted market price was
used as the fair value as of each relevant date.
Common stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC 480 "Distinguishing Liabilities from
Equity." Class A common stock subject to mandatory redemption is classified as a
liability instrument and is measured at fair value. Conditionally redeemable
common stock (including common stock that features redemption rights that are
either within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within our control) is classified as
temporary equity. At all other times, common stock is classified as
stockholders' equity. Our Class A common stock features certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, Class A common stock subject
to possible redemption is presented as temporary equity, outside of the
stockholders' equity section of our condensed balance sheets.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of shares of common stock outstanding for the
period. The Company applies the two-class method in calculating earnings per
share. Accretion associated with the redeemable shares of Class A common stock
is excluded from earnings per share as the redemption value approximates fair
value.
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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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