Item 8.01 Other Events.
As previously reported on February 11, 2021, Fusion Acquisition Corp. (the
"Company"), entered into an agreement and plan of merger (the "Merger
Agreement"), by and among the Company, ML Merger Sub Inc., a wholly owned
subsidiary of Fusion ("Merger Sub"), and MoneyLion Inc. ("MoneyLion") (the
transactions contemplated by the Merger Agreement, the "Business Combination").
In connection with the Business Combination between the Company and MoneyLion,
the Company filed a preliminary proxy statement (File No. 001-39482) (as
amended, the "Preliminary Proxy Statement") with the U.S. Securities and
Exchange Commission (the "SEC") on May 10, 2021. On September 3, 2021, the
Company filed a definitive proxy statement/prospectus (the "Definitive Proxy
Statement") relating to the Company's special meeting scheduled to be held on
September 21, 2021 (the "Special Meeting"), to, among other things, obtain the
approvals required to consummate the Business Combination.
Since the initial filing of the Preliminary Proxy Statement, purported
shareholders of the Company have sent demand letters in connection with the
Business Combination (the "Demand Letters").
The Company is including in this Current Report on Form 8-K certain supplemental
disclosures regarding the Business Combination. The Company and its board of
directors believe that the allegations and claims asserted in the Demand Letters
lack merit, and that the supplemental disclosures set forth herein are not
required or necessary under applicable laws. However, solely in order to avoid
the risk of the Demand Letters delaying or otherwise adversely affecting the
Business Combination and to minimize the costs, risks, and uncertainties
inherent in defending the claims alleged in the Demand Letters, the Company
hereby voluntarily amends and supplements the Definitive Proxy Statement, as set
forth in this Current Report on Form 8-K. The Company and the members of its
board of directors deny any liability or wrongdoing in connection with the
Definitive Proxy Statement, and nothing in this Current Report on Form 8-K
should be construed as an admission of the legal necessity or materiality under
applicable laws of any of the supplemental disclosures set forth herein.
1
SUPPLEMENT TO DEFINITIVE PROXY STATEMENT
This supplemental information should be read in conjunction with the Definitive
Proxy Statement, which should be read in its entirety and is available free of
charge on the Internet site maintained by the SEC at http://www.sec.gov. Page
references in the below disclosures are to pages in the Definitive Proxy
Statement, and defined terms used but not defined herein have the meanings set
forth in the Definitive Proxy Statement. To the extent the following information
differs from or conflicts with the information contained in the Definitive Proxy
Statement, the information set forth below shall be deemed to supersede the
respective information in the Definitive Proxy Statement. New text is
underlined, and deleted text is stricken through.
The disclosure on page 44 of the Definitive Proxy Statement under the heading
"Our business may be adversely affected by economic conditions and other factors
that we cannot control." is revised as follows:
Our business may be adversely affected by economic conditions and other factors
that we cannot control.
Uncertainty and negative trends in general economic conditions, including
significant tightening of credit markets, historically have created a difficult
operating environment for our industry. Many factors, including factors that are
beyond our control, may impact our results of operations or financial condition
and our overall success by affecting a customer's willingness and capacity to
use our products and services, including a customer's willingness to incur loan
obligations or willingness or capacity to make payments on their loans or other
services we offer. These factors include interest rates, unemployment levels,
conditions in the housing market, immigration policies, gas prices, energy
costs, government shutdowns, trade wars and delays in tax refunds, as well as
events such as natural disasters, acts of war, terrorism, catastrophes and
pandemics.
Many new customers on our platform have limited or no credit history and limited
financial resources, including limited savings. Accordingly, such customers have
historically been, and may in the future become, disproportionately affected by
adverse macroeconomic conditions, such as the disruption and uncertainty caused
by the COVID-19 pandemic. In addition, major medical expenses, divorce, death or
other issues that affect customers, such as having access to limited amounts of
personal savings, could affect a customer's willingness or ability to make
payments on their loans or advances or engage in investing activities, or make
it less likely that our customers can afford certain of the other products or
services we offer. If borrowers default on loans facilitated on our platform,
the cost to service these loans may also increase without a corresponding
increase in revenue earned from lending operations, and the value of the loans
could decline. Higher default rates by these borrowers may lead to lower demand
by our funding sources and institutional investors to fund loans and other
receivables facilitated by our platform, which would adversely affect our
business, financial condition and results of operations.
During periods of economic slowdown or recession, our current and potential
investors in our special purpose financing structure may reduce the number of
loans or other receivables they are willing to finance or demand terms that are
less favorable to us, to compensate for any increased risks. A reduction in the
volume of the loans and other receivables we are able to finance through this
structure would negatively impact our ability to maintain or increase the level
of our lending and provision of other services to customers. Any sustained
decline in demand for loans or other services we offer, or any increase in
delinquencies or defaults that result from economic downturns, may harm our
ability to maintain robust volumes for our lending operations and other
services, which would adversely affect our business, financial condition and
results of operations. For the year ended December 31, 2020, for secured
personal loans provided through our Credit Builder Plus membership program, the
average 30+ day delinquency rate was 4.2% and the average monthly default rate
was 1.4%. For the year ended December 31, 2020, the non-repayment rate for
advances provided through our Instacash product was 4.8%. See "Business of New
MoneyLion - Our Product Platform."
For example, the COVID-19 pandemic and other related adverse economic events led
to a significant increase in unemployment, comparable, and at times surpassing,
the unemployment rates during the peak of the financial crisis in 2008. There
can be no assurance that levels of unemployment or underemployment will improve
in the near term. The increase in the unemployment rate could increase the
non-repayment rate on our loans and advance products, increase the rate of
customers declaring bankruptcy or decrease our customers' use of our investment
and other products and services, any of which could adversely affect the
attractiveness of our loans and other receivables to our financing sources. If
we are unable to adjust our platform to account for events like the COVID-19
pandemic and the resulting rise in unemployment, or if our platform is unable to
more successfully predict the creditworthiness of potential borrowers compared
to other lenders, then our business, financial condition and results of
operations could be adversely affected.
Furthermore, the COVID-19 pandemic has caused some borrowers on our platform to
request a temporary extension or modification of the payment schedules of their
loans under our temporary relief or loan modification programs, or hardship
programs. If a large number of borrowers seek to participate in such hardship
programs, the investment returns of our financing sources could decline.
Further, if the rate of borrowers that participate in such hardship programs is
greater than those experienced by our competitors, then our financing sources
may become less interested providing financing for our loans and other consumer
receivables, which could negatively impact our funding strategy or significantly
increase the cost of obtaining funding. Any of the foregoing could adversely
affect our business, financial condition and results of operations.
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If there is an economic downturn that affects our current and prospective
customers or our financing sources, or if we are unable to address and mitigate
the risks associated with any of the foregoing, our business, financial
condition and results of operations could be adversely affected.
The disclosure on page 50 of the Definitive Proxy Statement under the heading
"Many of our investment advisory customers are first-time investors and our
revenues could be reduced if these customers stop investing altogether or stop
using our platform for their investing activities." is hereby revised as
follows:
Many of our investment advisory customers are first-time investors and our
revenues could be reduced if these customers stop investing altogether or stop
using our platform for their investing activities.
Our business model focuses on making the financial markets accessible to a broad
demographic of retail investors. In each of the years ended December 31, 2020,
2019 and 2018, over half of our customers for the applicable period were
first-time investors. In addition, in the first half of 2020, we saw a
significant increase in the number of new accounts opened by first-time
investors, largely as a result of economic and social conditions driven by the
COVID-19 pandemic. Our success, and our ability to increase revenues and operate
profitably, depends in part on such customers continuing to utilize our
platform, even as global social and economic conditions shift. However, our
customers do not have long-term contractual arrangements with us and can utilize
our platform on a transaction-by-transaction basis and may also cease to use our
platform at any time or use a competitor's platform. We may face particular
challenges in retaining these investors as customers, for example as a result of
a return to pre-COVID-19 behaviors, increased volatility in the financial
markets or increasing availability of competing products that seek to target the
same demographic. In particular, a broad decline in the equity or other
financial markets, especially if it impacted the amount of available savings of
individuals in our target market, could result in some of these investors
exiting the markets and leaving our platform. Any significant loss of these
customers or a significant reduction in their use of our platform could have a
material impact on our investment volumes and revenues, and materially adversely
affect our business, financial condition and results of operations.
The disclosure on page 93 of the Definitive Proxy Statement is hereby
supplemented by adding in an additional paragraph, following the paragraph
regarding five potential targets, as follows:
The discussions with the aforementioned potential targets did not progress
further for a variety of reasons, including but not limited to, (i) the
potential target company not being ready for the public market, (ii) the
commercial plans of a target not aligning with Fusion's business strategy, (iii)
upon further diligence of the target, the view that such target's potential
product would not be competitive with products already on the market or with
other similar products that were in development, (iv) the view that a target's
management team would not be able to successfully run a public company, (v) the
conclusion that a target's stage of development presented too much risk for
public market investors, (vi) the target company decided to pursue a different
strategic path that did not include Fusion or (vii) the inherent risk associated
with certain technology or operational sector.
The disclosure on page 93 of the Definitive Proxy Statement regarding a
conversation facilitated by Ron Suber is hereby supplemented as follows:
Mr. Suber was engaged by Fusion on July 8, 2020, as an independent consultant
providing market intelligence and introductions to relevant companies and
advisors within the global financial technology (i.e. Fintech) sector and such
other similar services as reasonably requested by the Company from time to time.
Mr. Suber made numerous introductions to advisors, bankers, company founders and
management and private equity and venture capital investors as part of his
engagement.
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The disclosure on pages 93 and 94 of the Definitive Proxy Statement regarding
the July 18, 2020 phone call with the following is hereby supplemented as
follows:
Mr. Gary explained to Mr. Sugden that Fusion may be interested in pursuing
discussions with MoneyLion and that Fusion wanted to have further discussions
with MoneyLion's management and obtain access to additional financial
information to perform due diligence on MoneyLion. Mr. Sugden agreed that this
may be of interest to MoneyLion.
The disclosure on pages 97 and 98 of the Definitive Proxy Statement regarding
J.P. Morgan's involvement is hereby supplemented by adding an additional
paragraph as follows:
In January of 2021, the Company retained J.P. Morgan to act as its financial
advisor and assist the Company with certain aspects of investor outreach in
connection with the Business Combination. J.P. Morgan will receive customary
advisory fees for its role as the Company's financial advisor. The Company also
retained J.P. Morgan to act as its placement agent in connection with the PIPE
financing transaction. J.P. Morgan will receive customary fees for its role as
the Company's placement agent. The aforementioned fees are contingent on the
closing of the Business Combination and the PIPE financing transaction. J.P.
Morgan does not have an investment in MoneyLion or the MoneyLion Private
Investors.
The disclosures on page 99 of the Definitive Proxy Statement is hereby
supplemented by adding an additional paragraph as follows:
The Fusion Board was informed of certain investigative subpoenas against
MoneyLion by the SEC regarding its source of funding for originated receivables.
After further discussion with Fusion's management team and information on how
the MoneyLion team was dealing with the potential issue, the Board concluded
that this would not materially affect the business of MoneyLion or Fusion's
valuation thereof.
The on page 99 of the Definitive Proxy Statement is hereby supplemented by
adding an additional paragraph as follows:
The Risks of Regulatory Examinations, Investigations and Other Matters
The Fusion Board considered the potential impact of certain regulatory
examinations, investigations and other matters of which it was informed,
including but not limited to, a report of examination from the California
Department of Financial Protection and Innovation (the "CA DFPI") and a
memorandum of understanding MoneyLion had been asked to enter into with the CA
DFPI, as well as information requests from the Minnesota Department of Commerce
and Civil Investigative Demands from the Consumer Financial Protection Bureau
("CFPB"). The Fusion Board concluded after some discussion that these matters
would not materially affect the valuation of MoneyLion, as MoneyLion was
cooperating with the applicable regulatory agencies in relation to these matters
and any corresponding corrective actions, and the amounts in question were not
material enough to materially alter the valuation of MoneyLion. Since entering
into the Transaction, the Fusion Board was also informed of, and also
considered, the potential impact of a report of examination from the Colorado
Department of Law's Consumer Protection Unit, and reached the same conclusion
with respect to that matter.
The disclosure on page 101 of the Definitive Proxy Statement in relation to the
comparable companies table is supplemented with the following footnotes:
(1) Firm Value/2021E Revenue for the individual comparable companies identified
in the Core Peer Group Companies were as follows: Affirm 38.5x, Afterpay 34.7x,
Open Lending 21.9x, Square 21.9x, SoFi 19.0x, and Upstart 16.0x; values for the
High-Growth FinTech/Payments Companies were as follows: Adyen 61.5x, bill.com
48.2x, Shopify 34.5x, and Lightspeed 28.1x; and values for the High-Growth
Financial SaaS Companies were as follows: Coupa 45.2x, nCino 28.2x, Duck Creek
Technologies 24.1x, Avalara 22.2x, Anaplan 20.3x and Q2 Holdings, Inc. 16.7x.
(2) Firm Value/2022E Revenue for the individual comparable companies identified
in the Core Peer Group Companies were as follows: Affirm 30.4x, Afterpay 23.5x,
Open Lending 15.8x, Square 17.1x, SoFi 12.4x, and Upstart 12.0x; values for the
High-Growth FinTech/Payments Companies were as follows: Adyen 44.2x, bill.com
36.1x, Shopify 25.1x, and Lightspeed 19.6x; and values for the High-Growth
Financial SaaS Companies were as follows: Coupa 35.9x, nCino 23.5x, Duck Creek
Technologies 20.5x, Avalara 18.1x, Anaplan 16.2x and Q2 Holdings, Inc. 13.7x.
4
(3) Firm Value/2021E Revenue/2021E growth for the individual comparable
companies identified in the Core Peer Group Companies were as follows: Affirm
1.1x, Afterpay 0.5x, Open Lending 0.2x, Square 0.6x, SoFi 0.3x, and Upstart
0.5x; values for the High-Growth FinTech/Payments Companies were as follows:
Adyen 1.1x, bill.com 1.1x, Shopify 0.7x, and Lightspeed 0.5x; and values for the
High-Growth Financial SaaS Companies were as follows: Coupa 1.4x, nCino 1.2x,
Duck Creek Technologies 1.2x, Avalara 0.8x, Anaplan 0.6x and Q2 Holdings, Inc.
0.6x.
(6) 2020P to 2020E Revenue CAGR for the individual comparable companies
identified in the Core Peer Group Companies were as follows: Affirm 31%,
Afterpay 56%, Open Lending 71%, Square 33%, SoFi 55%, and Upstart 47%; values
for the High-Growth FinTech/Payments Companies were as follows: Adyen 40%,
bill.com 30%, Shopify 35%, and Lightspeed 56%; and values for the High-Growth
Financial SaaS Companies were as follows: Coupa 27%, nCino 22%, Duck Creek
Technologies 18%, Avalara 25%, Anaplan 25% and Q2 Holdings, Inc. 22%.
The disclosure on page 175 of the Definitive Proxy Statement under the heading
"Continue penetrating our large addressable market" is hereby supplemented to
read as follows:
Continue penetrating our large addressable market: Our target market is the 100
million middle-class Americans whose needs are not well-addressed by the current
financial system. We define this market as individuals with household incomes up
to $150,000 and FICO scores up to 750. While we have achieved significant growth
and scale to date through developing We have designed an all-in-one, digital
financial platform to meet the needs of our customers target market customers,
including those who might live paycheck-to-paycheck with limited or no savings.
While we have achieved significant growth and scale to date through our
financial platform, the addressable market is vast, and we have a long runway
for future growth. With the over $500 million in cash raised from the Business
Combination (including approximately $350 million in cash held in the Trust
Account immediately prior to Closing and an additional $250 million in cash
proceeds received at Closing from the PIPE Investment, less, among other things,
transaction expenses, redemptions, repayment of all or a portion of MoneyLion's
outstanding indebtedness and, if elected by MoneyLion, cash consideration paid
at Closing to the MoneyLion stockholders of up to the lower of (A) the amount
(which may be zero) by which the Parent Closing Cash (as defined in the merger
agreement) exceeds $260,000,000.00 and (B) $100,000,000.00), we will have the
ability to substantially increase our marketing spend versus our historical
expenditure levels. We believe we have developed a highly efficient customer
acquisition approach that will allow us to effectively deploy the expanded
marketing spend and drive new customer growth
5
The disclosure on page 258 of the Definitive Proxy Statement under the heading
"Related Party Loans" is hereby supplemented by adding in an additional sentence
as follows:
To date, there have not been any out-of-pocket expenses incurred by our
directors that would require reimbursement.
Important Information About the Business Combination and Where to Find It
The proposed Business Combination will be submitted to stockholders of Fusion
for their consideration. Fusion has filed a registration statement on Form S-4
(the "Registration Statement") with the SEC which includes a definitive proxy
statement to be distributed to Fusion's stockholders in connection with Fusion's
solicitation for proxies for the vote by Fusion's stockholders in connection
with the proposed Business Combination and other matters as described in the
Registration Statement, as well as the prospectus relating to the offer of the
securities to be issued to MoneyLion's shareholders in connection with the
completion of the proposed Business Combination. The Registration Statement has
been declared effective and Fusion will mail the definitive proxy statement and
other relevant documents to its stockholders as of the record date established
for voting on the proposed Business Combination. Fusion's stockholders and other
interested persons are advised to read the definitive proxy statement /
prospectus, in connection with Fusion's solicitation of proxies for its special
meeting of stockholders to be held to approve, among other things, the proposed
Business Combination, because these documents contain important information
about Fusion, MoneyLion and the proposed Business Combination. Stockholders may
also obtain a copy of the definitive proxy statement, as well as other documents
filed with the SEC regarding the proposed Business Combination and other
documents filed with the SEC by Fusion, without charge, at the SEC's website
located at www.sec.gov or by directing a request to Cody Slach and Alex Kovtun,
(949) 574-3860, FUSE@gatewayir.com.
Participants in the Solicitation
Fusion, MoneyLion and certain of their respective directors, executive officers
and other members of management and employees may, under SEC rules, be deemed to
be participants in the solicitations of proxies from Fusion's stockholders in
connection with the proposed Business Combination. Information regarding the
persons who may, under SEC rules, be deemed participants in the solicitation of
Fusion's stockholders in connection with the proposed Business Combination is
set forth in the Registration Statement (and is included in the definitive proxy
statement / prospectus). You can find more information about Fusion's directors
and executive officers in Fusion's final prospectus dated June 25, 2020, filed
with the SEC on June 29, 2020. Additional information regarding the participants
in the proxy solicitation and a description of their direct and indirect
interests is included in the Registration Statement (and the definitive proxy
statement / prospectus) and other relevant documents filed with the SEC.
Stockholders, potential investors and other interested persons should read the
definitive proxy statement / prospectus carefully before making any voting or
investment decisions. You may obtain free copies of these documents from the
sources indicated above.
6
Forward-Looking Statements
This Current Report on Form 8-K includes "forward-looking statements" within the
meaning of the "safe harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be identified by
the use of words such as "estimate," "plan," "project," "forecast," "intend,"
"will," "expect," "anticipate," "believe," "seek," "target" or other similar
expressions that predict or indicate future events or trends or that are not
statements of historical matters. These forward-looking statements include, but
are not limited to, statements regarding MoneyLion's expectations with respect
to the closing of the Business Combination transaction between the MoneyLion and
Fusion Acquisition Corp. ("Fusion"); the impacts of the proposed Business
Combination, the satisfaction of the closing conditions to the proposed
transaction, the timing of the completion of the proposed transaction and the
products and markets and expected future performance and market opportunities of
MoneyLion. These statements are based on various assumptions, whether or not
identified in this Current Report on Form 8-K, and on the current expectations
of MoneyLion's and Fusion's management and are not predictions of actual
performance. These forward-looking statements are provided for illustrative
purposes only and are not intended to serve as, and must not be relied on by any
investor as, a guarantee, an assurance, a prediction or a definitive statement
of fact or probability. Actual events and circumstances are difficult or
impossible to predict and will differ from assumptions. Many actual events and
circumstances are beyond the control of MoneyLion and Fusion. These
forward-looking statements are subject to a number of risks and uncertainties,
including changes in domestic and foreign business, market, financial, political
and legal conditions; the inability of the parties to successfully or timely
consummate the proposed Business Combination, including the risk that any
required regulatory approvals are not obtained, are delayed or are subject to
unanticipated conditions that could adversely affect the combined company or the
expected benefits of the proposed Business Combination or that the approval of
the stockholders of Fusion or MoneyLion is not obtained; failure to realize the
anticipated benefits of the proposed Business Combination; risks relating to the
uncertainty of the projected financial information with respect to MoneyLion;
future global, regional or local economic and market conditions; the
development, effects and enforcement of laws and regulations; MoneyLion's
ability to manage future growth; MoneyLion's ability to develop new products and
solutions, bring them to market in a timely manner, and make enhancements to its
platform; the effects of competition on MoneyLion's future business; the amount
of redemption requests made by Fusion's public stockholders; the ability of
Fusion or the combined company to issue equity or equity-linked securities in
connection with the proposed Business Combination or in the future; the outcome
of any potential litigation, government and regulatory proceedings,
investigations and inquiries; and those factors discussed in Fusion's final
prospectus dated June 25, 2020, Annual Report on Form 10-K for the fiscal period
ended December 31, 2020 and registration statement on Form S-4, in each case,
under the heading "Risk Factors," and other documents of Fusion filed, or to be
filed, with the Securities and Exchange Commission ("SEC"). If any of these
risks materialize or our assumptions prove incorrect, actual results could
differ materially from the results implied by these forward-looking statements.
There may be additional risks that neither MoneyLion nor Fusion presently know
or that MoneyLion and Fusion currently believe are immaterial that could also
cause actual results to differ from those contained in the forward-looking
statements. In addition, forward-looking statements reflect MoneyLion's and
Fusion's expectations, plans or forecasts of future events and views as of the
date of this Current Report on Form 8-K. MoneyLion and Fusion anticipate that
subsequent events and developments will cause MoneyLion's and Fusion's
assessments to change. However, while MoneyLion and Fusion may elect to update
these forward-looking statements at some point in the future, MoneyLion and
Fusion specifically disclaim any obligation to do so. These forward-looking
statements should not be relied upon as representing MoneyLion's and Fusion's
assessments as of any date subsequent to the date of this Current Report on Form
8-K. Accordingly, undue reliance should not be placed upon the forward-looking
statements.
No Offer or Solicitation
This Current Report on Form 8-K shall not constitute a solicitation of a proxy,
consent or authorization with respect to any securities or in respect of the
Business Combination. This Current Report on Form 8-K shall also not constitute
an offer to sell or the solicitation of an offer to buy any securities, nor
shall there be any sale of securities in any states or jurisdictions in which
such offer, solicitation or sale would be unlawful prior to registration or
. . .
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