References to the "Company," "our," "us" or "we" refer to Portage Fintech
Acquisition Corporation. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the unaudited condensed financial statements and the notes thereto contained
elsewhere in this report. Certain information contained in the discussion and
analysis set forth below includes forward-looking statements that involve risks
and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions
about us that may cause our actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Form 10-Q. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described in our other
Securities and Exchange Commission ("SEC") filings.
Overview
Portage Fintech Acquisition Corporation is a blank check company incorporated as
a Cayman Islands exempted company on March 17, 2021 (inception). The Company was
incorporated for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar business combination with
one or more businesses that the Company has not yet identified ("Business
Combination"). The Company is an early stage and emerging growth company and, as
such, the Company is subject to all of the risks with early stage and emerging
growth companies.
As of September 30, 2021, the Company had not yet commenced operations. All
activity for the period from March 17, 2021 (inception) through September 30,
2021 related to the Company's formation and the initial public offering (the
"Initial Public Offering"), which is described below. The Company will not
generate any operating revenues until after the completion of its initial
Business Combination, at the earliest. The Company expects to generate
non-operating income in the form of interest income from the proceeds derived
from the Initial Public Offering (as defined below). The Company has selected
December 31 as its fiscal year end.
The Company's sponsor is PFTA I LP, an Ontario limited partnership (the
"Sponsor"). The registration statement for the Company's Initial Public Offering
was declared effective on July 20, 2021. On July 23, 2021, the Company
consummated its Initial Public Offering of 24,000,000 units (the "Units" and,
with respect to the Class A ordinary shares included in the Units being offered,
the "Public Shares"), at $10.00 per Unit, generating gross proceeds of $240.0
million, and incurring offering costs of approximately $14.4 million, of which
$8.4 million was for deferred underwriting commissions. The Company granted the
underwriter a 45-day option to purchase up to an additional 3,600,000 Units at
the Initial Public Offering price to cover over-allotments. On August 5, 2021,
the underwriters partially exercised the over-allotment option to purchase an
additional 1,911,379 Units generating gross proceeds of approximately $19.1
million (the "Over-Allotment"). The underwriters forfeited the balance of the
option. The Company incurred additional offering costs of approximately $1.1
million in connection with the Over-Allotment (of which approximately $0.7
million was for deferred underwriting fees).
Simultaneously with the closing of the Initial Public Offering, the Company
consummated the private placement ("Private Placement") of 6,333,334 warrants
(each, a "Private Placement Warrant" and collectively, the "Private Placement
Warrants") at a price of $1.50 per Private Placement Warrant to the Sponsor,
generating proceeds of $9.5 million. On August 5, 2021, simultaneously with the
issuance and sale of the Over-Allotment Units, the Company consummated the sale
of an additional 254,850 Private Warrants at $1.50 per Private Placement Warrant
(the "Additional Private Placement Warrants"), generating additional gross
proceeds of approximately $382,275.
Upon the closing of the Initial Public Offering, the Over-Allotment and the
Private Placement, $259.1 million ($10.00 per Unit) of the net proceeds of the
sale of the Units in the Initial Public Offering and of the Private Placement
Warrants in the Private Placement were placed in a trust account ("Trust
Account") with Continental Stock Transfer & Trust Company acting as trustee and
will be invested in United States government treasury bills with a maturity of
185 days or less or in money market funds investing solely in U.S. Treasuries
and meeting certain conditions under Rule 2a-7 under the Investment Company Act
of 1940, as amended, or the Investment Company Act, as determined by the
Company, until the earlier of: (i) the completion of a Business Combination and
(ii) the distribution of the Trust Account as described below.
Our management has broad discretion with respect to the specific application of
the net proceeds of the Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended
to be applied generally toward consummating a Business Combination.
If we are unable to complete a Business Combination within 24 months from the
closing of the Initial Public Offering, or July 23, 2023 (the "Combination
Period"), we will (i) cease all operations except for the purpose of winding up,
(ii) as promptly as reasonably possible but not more than ten business days
thereafter, redeem the Public Shares, at a per-share price, payable in cash,
equal to the aggregate amount then on deposit in the Trust Account, including
interest (which interest shall be net of taxes payable and up to $100,000 of
interest to pay dissolution expenses), divided by the number of then issued and
outstanding Public Shares, which redemption will completely extinguish Public
Shareholders' rights as shareholders (including the right to receive further
liquidation distributions, if any) and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the remaining shareholders
and the board of directors, liquidate and dissolve, subject in each case to our
obligations under Cayman Islands law to provide for claims of creditors and
other requirements of applicable law.
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Results of Operations
Our entire activity from March 17, 2021 (inception) through September 30, 2021
was related to organizational activities and those necessary to prepare for the
Initial Public Offering. Although we consummated the Initial Public Offering, we
will not be generating any operating revenues until the closing and completion
of our initial Business Combination.
For the three months ended September 30, 2021, we had net income of $5,449,673,
which consisted of $1,053,608 general and administrative expenses, $1,272 of
investment income, $16,027 of unrealized gain on investments held in Trust
Account, and $6,485,982 of other income due to change in the fair value of the
warrant liabilities.
For the period from March 17, 2021 (inception) through September 30, 2021, we
had net income of $5,286,489, which consisted of $1,216,792 general and
administrative expenses, $1,272 of investment income, $16,027 of unrealized gain
on investments held in Trust Account, and $6,485,982 of other income due to
change in the fair value of the warrant liabilities.
Liquidity and Capital Resources
As of September 30, 2021, we had approximately $1.6 million in our operating
bank account and working capital of approximately $2.4 million.
Our liquidity needs through September 30, 2021 were satisfied through the
payment of $25,000 from our Sponsor to cover certain expenses in exchange for
the issuance of the Founder Shares, a loan of approximately $182,000 pursuant to
the Note issued to our Sponsor, pre-IPO expenses advanced by our Sponsor of
approximately $433,000, for which approximately $272,000 was related to offering
costs, and the net proceeds from the consummation of the Private Placement not
held in the Trust Account. The Company fully repaid the Note and expenses
advanced by our Sponsor on August 31, 2021. In addition, in order to finance
transaction costs in connection with a Business Combination, our officers,
directors and Initial Shareholders may, but are not obligated to, provide the
Company Working Capital Loans. To date, there were no amounts outstanding under
any Working Capital Loans.
Based on the foregoing, management believes that we will have sufficient working
capital and borrowing capacity to meet its needs through the earlier of the
consummation of a Business Combination or one year from this filing. Over this
time period, we will be using these funds for paying existing accounts payable,
identifying and evaluating prospective initial Business Combination candidates,
performing due diligence on prospective target businesses, paying for travel
expenditures, selecting the target business to merge with or acquire, and
structuring, negotiating and consummating the Business Combination.
Contractual Obligations
Administrative Support Agreement
Commencing on July 20, 2021, we agreed to pay our Sponsor a total of $10,000 per
month for office space, utilities, secretarial and administrative support
services provided to members of our management team. Upon completion of the
initial Business Combination or our liquidation, we will cease paying these
monthly fees. We recognized approximately $23,000 in connection with such
services for the three months September 30, 2021 and for the period from March
17, 2021 (inception) through September 30, 2021, respectively, in general and
administrative expenses in the accompanying statement of operations.
Registration Rights
The holders of Founder Shares, Private Placement Warrants, and securities that
may be issued upon conversion of Working Capital Loans, if any, are entitled to
registration rights pursuant to a registration rights agreement. These holders
will be entitled to make up to three demands, excluding short form demands, that
we register such securities. In addition, these holders will have certain
"piggy-back" registration rights with respect to registration statements filed
subsequent to the completion of the initial Business Combination. We will bear
the expenses incurred in connection with the filing of any such registration
statements.
Underwriting Agreement
The Company granted the underwriters a 45-day option to purchase up to 3,600,000
additional Units to cover over-allotments at the Initial Public Offering price,
less the underwriting discounts and commissions. On August 5, 2021, the
underwriters partially exercised the over-allotment option to purchase an
additional 1,911,379 Units.
The underwriters were paid a cash underwriting discount of 2.00% of the gross
proceeds of the Initial Public Offering, or $5,182,275. In addition, the
underwriters are entitled to a deferred fee of three and half percent (3.50%) of
the gross proceeds of the Initial Public Offering, or $9,068,983. The deferred
fee will become payable to the underwriters 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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Risk and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the
industry and has concluded that while it is reasonably possible that the virus
could have a negative effect on the Company's financial position, results of its
operations, and/or search for a target company, the specific impact is not
readily determinable as of the date of the unaudited condensed financial
statements. The unaudited condensed financial statements does not include any
adjustments that might result from the outcome of this uncertainty.
Critical Accounting Policies and Estimates
This management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed financial statements, which
have been prepared in accordance with U.S. GAAP. The preparation of these
unaudited condensed financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of contingent assets and liabilities in our
unaudited condensed financial statements. On an ongoing basis, we evaluate our
estimates and judgments, including those related to fair value of financial
instruments and accrued expenses. We base our estimates on historical
experience, known trends and events and various other factors that we believe to
be reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. We have identified the
following as our critical accounting policies:
Warrant Liabilities
The Company accounts for warrants for shares of the Company's Class A ordinary
shares that are not indexed to its own stock as liabilities at fair value on the
balance sheet in accordance with ASC 815-40, Derivatives and Hedging: Contracts
in Entity's Own Equity. The warrants are subject to re-measurement at each
balance sheet date and any change in fair value is recognized as a component of
other income (expense), net on the statement of operations. The Company will
continue to adjust the liability for changes in fair value until the earlier of
the exercise or expiration of the ordinary share warrants.
Class A Ordinary Shares Subject to Possible Redemption
We account for its Class A ordinary shares subject to possible redemption in
accordance with the guidance in FASB ASC Topic 480 "Distinguishing Liabilities
from Equity." The Class A ordinary shares subject to mandatory redemption (if
any) are classified as liability instruments and are measured at fair value.
Conditionally redeemable shares of Class A ordinary shares (including Class A
ordinary 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 the Company's control) are classified as temporary
equity. At all other times, Class A ordinary shares are classified as
stockholders' equity. The Company's Class A ordinary shares feature certain
redemption rights that are considered to be outside of the Company's control and
subject to the occurrence of uncertain future events. Accordingly, as of
September 30, 2021, 25,911,379 shares of Class A ordinary shares subject to
possible redemption are presented as temporary equity, outside of the
stockholders' deficit section of the Company's balance sheet.
Net income per ordinary share
Net income per share is computed by dividing net income by the weighted-average
number of ordinary shares outstanding during the periods. We have not considered
the effect of the warrants sold in the Initial Public Offering and the Private
Placement to purchase an aggregate of 25,911,379 of the Company's Class A
ordinary shares in the calculation of diluted income per share.
We apply the two-class method in calculating earnings per share. The contractual
formula utilized to calculate the redemption amount approximates fair value. The
Class feature to redeem at fair value means that there is effectively only one
class of stock. Changes in fair value are not considered a dividend for the
purposes of the numerator in the earnings per share calculation. Net income per
ordinary share is computed by dividing the pro rata net loss between the
redeemable shares and the non-redeemable shares by the weighted average number
of ordinary shares outstanding for each of the periods. The calculation of
diluted income per ordinary stock does not consider the effect of the warrants
issued in connection with the IPO since the exercise of the warrants are
contingent upon the occurrence of future events and the inclusion of such
warrants would be anti-dilutive.
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Recent accounting standards
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 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) ("ASU 2020-06") to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06
would have on its financial position, results of operations or cash flows.
Management does not believe that any recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
the Company's financial statements.
Off-Balance Sheet Arrangements
As of September 30, 2021, we did not have any off-balance sheet arrangements as
defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments
or contractual obligations.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains
provisions that, among other things, relax certain reporting requirements for
qualifying public companies. We will qualify as an "emerging growth company" and
under the JOBS Act will be allowed to comply with new or revised accounting
pronouncements based on the effective date for private (not publicly traded)
companies. We are electing to delay the adoption of new or revised accounting
standards, and as a result, we may not comply with new or revised accounting
standards on the relevant dates on which adoption of such standards is required
for non-emerging growth companies. As such, our unaudited condensed financial
statements may not be comparable to companies that comply with public company
effective dates.
Additionally, we are in the process of evaluating the benefits of relying on the
other reduced reporting requirements provided by the JOBS Act. Subject to
certain conditions set forth in the JOBS Act, if, as an "emerging growth
company," we choose to rely on such exemptions we may not be required to, among
other things, (i) provide an auditor's attestation report on our system of
internal controls over financial reporting pursuant to Section 404, (ii) provide
all of the compensation disclosure that may be required of non-emerging growth
public companies under the Dodd-Frank Wall Street Reform and Consumer Protection
Act, (iii) comply with any requirement that may be adopted by the PCAOB
regarding mandatory audit firm rotation or a supplement to the auditor's report
providing additional information about the audit and the unaudited condensed
financial statements (auditor discussion and analysis) and (iv) disclose certain
executive compensation related items such as the correlation between executive
compensation and performance and comparisons of the CEO's compensation to median
employee compensation. These exemptions will apply for a period of five years
following the completion of our Initial Public Offering or until we are no
longer an "emerging growth company," whichever is earlier.
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