References in this report (this "Quarterly Report") to "we," "us" or the
"Company" refer to FinTech Acquisition Corp. III; references to our "management"
or our "management team" refer to our officers and directors; and references to
the "Sponsors" refers to FinTech Investor Holdings III, LLC, FinTech Masala
Advisors, LLC and 3FIII, LLC. 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" 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 Risk
Factors section of this Quarterly Report and the Company's Annual Report on Form
10-K for the year ended December 31, 2019 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.
Recent Developments
On August 3, 2020, we entered into an Agreement and Plan of Merger (the "Merger
Agreement") with GTCR-Ultra Holdings, LLC ("Seller"), GTCR Ultra-Holdings II,
LLC ("Holdings"), FinTech Acquisition Corp. III Parent Corp. ("Parent"), the
Company, FinTech III Merger Sub Corp. ("Merger Sub"), GTCR/Ultra Blocker, Inc.
("Blocker"), and GTCR Fund XI/C LP ("Blocker Seller"), as described in Item 1,
Note 6, above.
Overview
We are a blank check company incorporated on March 20, 2017 in Delaware 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 effectuate
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.
The issuance of additional shares of our stock in a Business Combination:
? may significantly dilute the equity interest of investors in the Company;
? may subordinate the rights of holders of common stock if preferred stock is
issued with rights senior to those afforded our common stock;
? could cause a change in control if a substantial number of shares of our
common stock is issued, which may affect, among other things, our ability to
use our net operating loss carry forwards, if any, and could result in the
resignation or removal of our present officers and directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the stock ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our common stock and/or
warrants.
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Similarly, if we issue debt securities or otherwise incur significant
indebtedness, it could result in:
? default and foreclosure on our assets if our operating revenues after an
initial Business Combination are insufficient to repay our debt obligations;
? acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
? our immediate payment of all principal and accrued interest, if any, if the
debt security is payable on demand and the lender demands payment;
? limitations on our ability to obtain additional financing if the debt security
contains covenants restricting our ability to incur debt;
? our inability to pay dividends on our common stock due to covenants limiting
or prohibiting dividends;
? using a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce, or possibly eliminate, the funds available for
use as dividends on our common stock, expenses, capital expenditures,
acquisitions and other general corporate purposes;
? limitations on our flexibility in planning for and reacting to changes in our
business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation; and
? limitations on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our
competitors who have less debt.
In March 2020, the COVID-19 outbreak was declared a National Public Health
Emergency that continues to spread throughout the world and has adversely
impacted global activity and contributed to significant declines and volatility
in financial markets. The outbreak could have a continued material adverse
impact on economic and market conditions and trigger a period of global economic
slowdown. The rapid development and fluidity of this situation precludes any
prediction as to the ultimate material adverse impact of the coronavirus
outbreak. Nevertheless, the outbreak presents uncertainty and risk with respect
to the Company and its ability to successfully complete a Business Combination.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from inception to September 30, 2020 were organizational
activities, those necessary to prepare for the Initial Public Offering,
described below, and identifying a target company for a Business Combination and
the potential acquisition, as more fully described in Item 1, Note 6, 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 investments held after the Initial Public Offering. We are
incurring 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 September 30, 2020, we had net loss of $1,501,582,
which consisted of operating costs of $1,469,109 and franchise taxes of $50,000,
offset by interest income on investments held in the Trust Account of $8,895 and
a benefit from income taxes of $8,632.
For the nine months ended September 30, 2020, we had net loss of $903,187, which
consisted of operating costs of $2,245,989, franchise taxes of $150,000 and a
provision for income taxes of $356,947, offset by interest income on investments
held in the Trust Account of $1,849,749.
For the three months ended September 30, 2019, we had net income of $1,095,316,
which consisted of interest income on marketable securities held in the Trust
Account of $2,035,795, offset by operating costs of $473,462, franchise taxes of
$50,000 and a provision for income taxes of $417,017.
For the nine months ended September 30, 2019, we had net income of $3,471,540,
which consisted of interest income on marketable securities held in the Trust
Account of $6,230,060, offset by operating costs of $1,328,166, franchise taxes
of $150,000 and a provision for income taxes of $1,280,354.
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Liquidity and Capital Resources
On November 20, 2018, we consummated the Initial Public Offering of 34,500,000
Units at a price of $10.00 per Unit, which included the full exercise by the
underwriters of their over-allotment option in the amount of 4,500,000 Units at
$10.00 per Unit, generating gross proceeds of $345,000,000. Simultaneously with
the closing of the Initial Public Offering, we consummated the sale of 930,000
Placement Units to the sponsors and Cantor at a price of $10.00 per Unit,
generating gross proceeds of $9,300,000.
Following the Initial Public Offering and the sale of the Placement Units, a
total of $345,000,000 was placed in the Trust Account. We incurred $21,527,278
in transaction costs related to the Initial Public Offering, including
$6,000,000 of underwriting fees, $14,700,000 of deferred underwriting fees and
$827,278 of other costs.
For the nine months ended September 30, 2020, cash used in operating activities
was $2,142,743, resulting primarily from net loss of $903,187 and interest
earned on investments held in the Trust Account of $1,849,749. Changes in
operating assets and liabilities provided $610,193 of cash from operating
activities.
For the nine months ended September 30, 2019, cash used in operating activities
was $2,829,469, resulting primarily from net income of $3,471,540 and interest
earned on marketable securities held in the Trust Account of $6,230,060. Changes
in operating assets and liabilities used $70,949 of cash from operating
activities.
At September 30, 2020, we had cash and investments held in the Trust Account of
$352,842,431. During the nine months ended September 30, 2020, we withdrew
$867,023 of interest earned on the Trust Account to pay our franchise and income
tax obligations. We intend to use substantially all of the funds held in the
Trust Account (excluding deferred underwriting commissions and interest to pay
taxes) to acquire a target business or businesses and to pay our expenses
relating thereto. To the extent that our capital stock is used in whole or in
part as consideration to effect our Business Combination, the remaining proceeds
held in the Trust Account as well as any other net proceeds not expended will be
used as working capital to finance the operations of the target business or
businesses.
At September 30, 2020, we had cash of $75,278 held outside 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, review corporate documents and material
agreements of prospective target businesses, select the target business to
acquire and structure, negotiate and complete a Business Combination.
On March 6, 2020, we entered into a convertible promissory note with our
Chairman of the Board and our Chief Executive Officer (the "Lenders") pursuant
to which the Lenders agreed to loan us up to an aggregate principal amount of
$1,500,000 (the "Promissory Note"). The Promissory Note is non-interest bearing
and due on the date on which we consummate a Business Combination. If we do not
consummate a Business Combination, we may use a portion of any funds held
outside the Trust Account to repay the Promissory Note; however, no proceeds
from the Trust Account may be used for such repayment. If such funds are
insufficient to repay the Promissory Note, the unpaid amounts would be forgiven.
Up to $1,500,000 of the Promissory Note may be converted into warrants at a
price of $1.00 per warrant at the option of the Lenders. The warrants would be
identical to the placement warrants. As of September 30, 2020, the outstanding
balance under the Promissory Note amounted to an aggregate of $900,000.
Liquidity and Going Concern
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, our sponsors, members of our management
team or any of their respective affiliates or other third parties 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 the
Trust Account would be used for such repayment. Up to $1,500,000 of such loans
may be convertible into warrants at a price of $1.00 per warrant at the option
of the lender.
As noted above, on March 6, 2020, we entered into the Promissory Note with the
Lenders pursuant to which the Lenders agreed to loan us up to an aggregate
principal amount of $1,500,000. As of September 30, 2020, the outstanding
balance under the Promissory Note amounted to an aggregate of $900,000.
If our estimate of undertaking in-depth due diligence and negotiating a Business
Combination is 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
consummate 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. Following our Business Combination, if
cash on hand is insufficient, we may need to obtain additional financing in
order to meet our obligations.
Our liquidity and mandatory liquidation date raises substantial doubt about our
ability to continue as a going concern through November 20, 2020, our scheduled
liquidation date.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2020. 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 an
affiliate of the sponsors a monthly fee of $10,000 for office space, utilities,
secretarial support and administrative services provided to us. We began
incurring these fees on November 15, 2018 and will continue to incur these fees
monthly until the earlier of the completion of the Business Combination or our
liquidation.
We have an agreement to pay the underwriters a deferred fee of $14,700,000,
which will become payable to the representative of the underwriters from the
amounts held in the Trust Account solely in the event that we complete a
Business Combination, subject to the terms of the underwriting agreement.
In addition, we have arrangements with third party consultants to provide
services to us relating to the identification of and negotiation with potential
targets, assistance with due diligence, marketing, financial analyses and
investor relations.
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:
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible redemption in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." 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, common stock subject to
possible redemption is presented as temporary equity, outside of the
stockholders' equity section of our condensed balance sheets.
Net Loss 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 franchise and income taxes, by the weighted average number of Class A
redeemable common stock outstanding for the period. Net loss per common share,
basic and diluted for Class A and Class B non-redeemable common stock is
calculated by dividing the net income, less income attributable to Class A
redeemable common stock, by the weighted average number of Class A and Class B
non-redeemable common stock outstanding for the periods.
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
condensed financial statements.
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