References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to FinTech Acquisition Corp. 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/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 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
shares, no par value, of eToro ("eToro Common Shares"), and eToro will list as a
publicly traded company on Nasdaq and will continue to conduct the social
trading platform business conducted by eToro prior to the Business Combination.
The Merger Agreement contains customary representations, warranties and
covenants by the parties thereto and the closing is subject to certain
conditions as further described in the Merger Agreement.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to March 31, 2021 were organizational
activities, those necessary to prepare for the Initial Public Offering,
described below, and, after the Initial Public Offering, identifying a target
company for 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. 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.
For the three months ended March 31, 2021, we had a net loss of $4,963,910,
which consisted of operating expenses of $1,547,408 and a change in fair value
of warrant liabilities of $3,422,667, partially offset by interest earned on
investments held in the Trust Account of $6,165.
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.
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Simultaneously with the closing of the Initial Public Offering, we consummated
the sale of 640,000 units (the "Private Placement Units") at a price of $10.00
per Private Placement Unit in a private placement to FinTech Investor Holdings
V, LLC, that closed simultaneously with the Initial Public Offering, generating
gross proceeds of $6,400,000. The manager of FinTech Investor Holdings V, LLC is
Cohen Sponsor Interests V, LLC.
Transaction costs amounted to $15,461,590, consisting of $4,360,000 in cash
underwriting fees, $10,640,000 of deferred underwriting fees and $461,590 of
other offering costs.
For the three months ended March 31, 2021, net cash used in operating activities
was $316,871. Net loss of $4,963,910 was impacted by interest earned on
investments of $6,165 and a change in fair value of warrant liabilities of
$3,422,667. Changes in operating assets and liabilities used $1,230,537 of cash
from operating activities.
At March 31, 2021 and December 31, 2020, we had investments held in the Trust
Account of $250,007,741 and $250,001,576, respectively. 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 months ended
March 31, 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 March 31, 2021 and December 31, 2020, we had cash of $737,340 and $1,054,211
respectively, 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
March 31, 2021, no such Working Capital Loans were outstanding.
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 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.
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 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 shares 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 shares). The holders 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.
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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 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 statement 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 warrants and a binomial / lattice model 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 Shares Subject to Possible Redemption
We account for our Class A common shares subject to possible redemption in
accordance with the guidance in Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Class A common shares subject to
mandatory redemption is classified as a liability instrument and is measured at
fair value. Conditionally redeemable common shares (including common shares that
feature 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
shares are classified as stockholders' equity. Our Class A common shares feature
certain redemption rights that are considered to be outside of our control and
subject to occurrence of uncertain future events. Accordingly, Class A common
shares subject to possible redemption is presented as temporary equity, outside
of the stockholders' equity section of our condensed balance sheet.
Net Income (Loss) Per Ordinary 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 shares is
calculated by dividing the interest income earned on the Trust Account by the
weighted average number of Class A redeemable common shares outstanding since
original issuance. Net loss per common share, basic and diluted for Class A and
Class B non-redeemable common shares is calculated by dividing the net income
(loss), less income attributable to Class A redeemable common shares, by the
weighted average number of Class A and Class B non-redeemable common shares
outstanding for the periods presented.
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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