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.
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 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, the Company entered into an Agreement and Plan of Merger (the
"Merger Agreement") with eToro Group Ltd., a company organized under the laws of
the British Virgin Islands ("eToro"), Buttonwood Merger Sub Corp., a Delaware
corporation and a direct, wholly owned subsidiary of eToro ("Merger Sub"), and
the Company, which provided 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.
On July 1, 2022, the Company and eToro entered into a Termination Agreement
pursuant to which the parties agreed to mutually terminate the Merger Agreement,
effective immediately. Pursuant to the Merger Agreement, the proposed merger was
conditioned on the satisfaction of certain closing conditions, including
relating to eToro's registration statement, within the timeframe outlined by the
Merger Agreement, as amended to date. Despite the parties' best efforts, such
conditions were not satisfied within such time frame and the parties were unable
to complete the transaction by the June 30, 2022 deadline.
As a result of the Termination, the Merger Agreement will be of no further force
and effect, and certain transaction agreements entered into in connection with
the Merger Agreement, including, but not limited to, the Lock-Up Agreements, the
Sponsor Agreement, the Sponsor Commitment Letter and the Voting Agreements, will
automatically either terminate in accordance with their terms or be of no
further force and effect. Neither party will be required to pay the other any
fees or expenses as a result of the Termination. The Company and eToro have also
agreed, on behalf of themselves and their respective related parties, to a
release of claims relating to the transactions contemplated under the Merger
Agreement.
Results of Operations
We have neither engaged in any operations (other than searching for a Business
Combination after our Initial Public Offering) nor generated any revenues to
date. Our only activities from inception to June 30, 2022 were organizational
activities, those necessary to prepare for the Initial Public Offering,
described below, and, after the Initial Public Offering, and identifying a
target company for a Business Combination. 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 June 30, 2022, we had net income of $7,661,770, which
consists of the interest earned on marketable securities held in the Trust
Account of $317,437 and change in the fair value of warrant liabilities of
$7,595,467, partially offset by operating expenses of $216,646 and provision for
income taxes of $34,488.
For the six months ended June 30, 2022, we had net income of $11,615,987, which
consists of the interest earned on marketable securities held in the Trust
Account of $339,724 and change in the fair value of warrant liabilities of
$12,020,534, partially offset by operating expenses of $709,783 and provision
for income taxes of $34,488.
For the three months ended June 30, 2021, we had a net loss of $7,542,522, which
consists of the operating expenses of $878,089 and a change in the fair value of
warrant liabilities of $6,670,666, partially offset by interest earned on
marketable securities held in the Trust Account of $6,233.
For the six months ended June 30, 2021, we had a net loss of $12,506,432, which
consists of the operating expenses of $2,425,497 and a change in the fair value
of warrant liabilities of $10,093,333, partially offset by interest earned on
marketable securities held in the Trust Account of $12,398.
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.
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 six months ended June 30, 2022, net cash used in operating activities
was $764,687. Net income of $11,615,987 was affected by interest earned on
marketable securities held in the Trust Account of $339,724 and a change in fair
value of warrant liabilities of $12,020,534. Changes in operating assets and
liabilities used $20,416 of cash from operating activities.
For the six months ended June 30, 2021, net cash used in operating activities
was $743,659. Net loss of $12,506,432 was affected by interest earned on
marketable securities held in the Trust Account of $12,398 and a change in fair
value of warrant liabilities of $10,093,333. Changes in operating assets and
liabilities provided $1,681,838 of cash from operating activities.
At June 30, 2022, we had investments held in the Trust Account of $250,164,438.
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 six months ended June 30, 2022, we withdrew $183,644 of 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 June 30, 2022, we had cash of $304,998 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 June
30, 2022 and December 31, 2021, $1,150,000 and $300,000 of Working Capital Loans
were outstanding, respectively. As of October 26, 2021, the Company amended the
Working Capital Loans to remove the conversion feature.
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We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a Business Combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our Business Combination. Moreover, we may need to obtain additional
financing either to complete our Business Combination or because we become
obligated to redeem a significant number of our Public Shares upon consummation
of our Business Combination, in which case we may issue additional securities or
incur debt in connection with such Business Combination. Subject to compliance
with applicable securities laws, we would only complete such financing
simultaneously with the completion of our Business Combination.
Going Concern
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 beyond December 8, 2022, the mandatory liquidation date, if a Business
Combination is not consummated. These condensed 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 June 30, 2022. We do not participate in
transactions that create relationships with unconsolidated entities or financial
partnerships, often referred to as variable interest entities, which would have
been established for the purpose of facilitating off-balance sheet arrangements.
We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of
other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay the sponsor
or an affiliate of the sponsor a monthly fee of $20,000 for office space,
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 condensed 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.
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Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in
accordance with the guidance in ASC Topic 480, "Distinguishing Liabilities from
Equity." Class A common stock subject to mandatory redemption is classified as a
liability instrument and is measured at fair value. Conditionally redeemable
common stock (including common stock that features redemption rights that are
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' deficit section of
our condensed balance sheets. Under ASC 480-10-S99, the Company has elected to
recognize changes in the redemption value immediately as they occur and adjust
the carrying value of the security to equal the redemption value at the end of
each reporting period. This method would view the end of the reporting period as
if it were also the redemption date for the security.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of shares of common stock outstanding for the
period. The Company applies the two-class method in calculating earnings per
share. Accretion associated with the redeemable shares of Class A common stock
is excluded from earnings per share as the redemption value approximates fair
value.
Recent Accounting Standards
Management does not believe that any 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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