Special Note Regarding Forward-Looking Statements
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our audited financial statements
and the notes related thereto contained elsewhere in this Annual Report. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
All statements other than statements of historical fact included in this Annual
Report including, without limitation, statements under "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. When used in
this Annual Report, words such as "anticipate," "believe," "estimate," "expect,"
"intend" and similar expressions, as they relate to us or the Company's
management, identify forward-looking statements. Such forward-looking statements
are based on the beliefs of management, as well as assumptions made by, and
information currently available to, the Company's management. Actual results
could differ materially from those contemplated by the forward-looking
statements as a result of many factors, including those set forth under
"Cautionary Note Regarding Forward-Looking Statements," "Item 1A. Risk Factors"
and elsewhere in this Annual Report.
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.
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 April 22, 2019 (inception) through December 31,
2020 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 an initial Business Combination. We do not
expect to generate any operating revenues until after the completion of our
Business Combination. We expect to generate non-operating income in the form of
interest earned on investments held after the Initial Public Offering. 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.
For the year ended December 31, 2020, we had a net loss of $104,184, which
consists of operating costs of $105,760, offset by interest income on
investments held in the Trust Account of $1,576.
For the period from April 22, 2019 (inception) through December 31, 2019, we had
a net loss of $1,425, which consists of operating costs of $1,425.
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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, 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. In addition, as of December 31, 2020, cash of $1,054,211
was held outside of the Trust Account and is available for working capital
purposes.
For the year ended December 31, 2020, cash used in operating activities was
$548,774. Net loss of $104,184 was affected by interest earned on investments
held in the Trust Account of $1,576, payments of operating costs through
promissory notes of $425, and changes in operating assets and liabilities, which
used $443,439 of cash from operating activities.
For the period from April 22, 2019 (inception) through December 31, 2019, cash
used in operating activities was $0. Net loss of $1,425 was affected by
formation costs and expenses paid by sponsor, which provided $1,425 of cash from
operating activities.
As of December 31, 2020, we had cash and investments held in the Trust Account
of $250,001,576. 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. During the period ended December 31, 2020, 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.
As of December 31, 2020, we had $1,054,211 of cash 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, plants 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 finance transaction costs in connection with a Business Combination,
the Sponsor, members of the Company's management team or any of their respective
affiliates or other third parties may, but are not obligated to, loan the
Company funds as may be required ("Working Capital Loans"), which will be repaid
only upon the consummation of a Business Combination. If the Company does not
consummate a Business Combination, the Company may use a portion of any funds
held outside the Trust Account to repay the Working Capital Loans; however, no
proceeds from the Trust Account may 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 December 31, 2020, 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 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 December 31, 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.
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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,
utilities, 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, placement units (including securities
contained therein) and the units that may be issued upon conversion of the
Working Capital Loans (and any shares of Class A common stock issuable upon the
exercise of the placement warrants or the warrants included in the units issued
upon conversion of the Working Capital Loans) will be entitled to registration
rights requiring us to register such securities for resale (in the case of the
founder shares, only after conversion to Class A common stock). The holders of
these securities will be entitled to make up to three demands, excluding short
form demands, that we register such securities. In addition, the holders will
have certain "piggy-back" registration rights with respect to registration
statements filed subsequent to the completion of a business combination and
rights to require us to register for resale such securities pursuant to Rule 415
under the Securities Act. 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 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.
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 Accounting Standards Codification ("ASC") Topic
480 "Distinguishing Liabilities from Equity." Shares of 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 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 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,
shares of Class A common stock subject to possible redemption are presented as
temporary equity, outside of the stockholders' equity section of our balance
sheet.
Net Income (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 shares
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 net income less income attributable to Class A
redeemable common stock, by the weighted average number of shares of Class A and
Class B non-redeemable common stock outstanding for the period presented.
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
financial statements.
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