Item 1.01. Entry into a Material Definitive Agreement.
On December 3, 2021, Fusion Acquisition Corp. II (the "Company" or "we") issued
an unsecured convertible promissory note (the "Convertible Note") to John James,
the Company's Chief Executive Officer, pursuant to which the Company may borrow
up to $300,000 from Mr. James for ongoing expenses reasonably related to the
business of the Company and the consummation of the Business Combination, as
defined below. All unpaid principal under the Convertible Note will be due and
payable in full on the earlier of (i) March 2, 2023 and (ii) the effective date
of a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination, involving the Company and one or
more businesses (the "Business Combination") (such earlier date, the "Maturity
Date"). Mr. James will have the option, at any time on or prior to the Maturity
Date, to convert any amounts outstanding under the Convertible Note into
warrants to purchase shares of the Company's Class A common stock, par value
$0.0001 per share ("Class A common stock"), at a conversion price of $1.50 per
warrant, with each warrant entitling the holder to purchase one share of Class A
common stock at a price of $11.50 per share, subject to the same adjustments
applicable to the private placement warrants sold concurrently with the
Company's initial public offering; provided, that Mr. James' optional conversion
shall be reduced by the amount of principal in excess of $1,200,000 that Fusion
Sponsor LLC II (the "Sponsor") converts under that certain Convertible
Promissory Note, dated as of March 5, 2021, by and between the Sponsor and the
Company.
The foregoing description of the Convertible Note does not purport to be
complete and is qualified in its entirety by the provisions of the Convertible
Note, which is attached hereto as Exhibit 10.1 and incorporated by reference
herein.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K
is incorporated by reference herein.
Item 3.02 Unregistered Sales of Equity Securities.
The disclosure set forth above in Item 1.01 of this Current Report on Form 8-K
is incorporated by reference herein.
The issuance of the Convertible Note was made pursuant to the exemption from
registration contained in Section 4(a)(2) of the Securities Act of 1933, as
amended.
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Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
In connection with the preparation of its financial statements as of and for the
periods ended September 30, 2021, the Company reevaluated the classification of
its shares of Class A common stock (the "Public Shares") issued as part of the
units sold in the Company's initial public offering (the "IPO") on March 2,
2021, and concluded that it is appropriate to restate the presentation of the
shares of Class A common stock subject to possible redemption to reflect all
Public Shares as temporary equity. The Company previously recorded the Public
Shares subject to possible redemption to be equal to the redemption value of
such shares, while also taking into consideration the requirement in the
Company's second amended and restated certificate of incorporation that
redemptions cannot result in net tangible assets falling below $5,000,001 (the
"Minimum Net Tangible Assets Requirement"). The Company had therefore recorded a
portion of the Public Shares as permanent equity. Upon further evaluation, the
Company has determined that the Public Shares include certain redemption
features that are not solely within the control of the Company. Under Accounting
Standards Codification ("ASC") 480-10-S99, Distinguishing Liabilities from
Equity, redemption provisions not solely within the control of the Company
require shares of common stock subject to redemption to be classified as
temporary equity, regardless of the Minimum Net Tangible Assets Requirement.
This reclassification of equity was reflected in the Company's Quarterly Report
on Form 10-Q for the quarterly period ended September 30, 2021, filed with the
U.S. Securities and Exchange Commission (the "SEC") on November 15, 2021 as a
revision and not a restatement.
On December 2, 2021, the Company's management and the audit committee of the
Company's board of directors (the "Audit Committee") concluded that the
Company's previously issued (i) audited balance sheet as of March 2, 2021, (ii)
the unaudited interim financial statements included in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2021, filed with
the SEC on June 25, 2021, (iii) the unaudited interim financial statements
included in the Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2021, filed with the SEC on August 13, 2021 and (iii) the
unaudited interim financial statements included in the Company's Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 2021, filed
with the SEC on November 15, 2021 (collectively, the "Affected Periods"), should
be restated to report all Public Shares as temporary equity and should no longer
be relied upon. As such, the Company intends to restate its financial statements
for the Affected Periods in a Quarterly Report on Form 10-Q/A for the quarterly
period ended September 30, 2021, to be filed with the SEC (the "Q3 Form
10-Q/A").
The Company does not expect any of the above changes will have any impact on its
cash position and cash held in the trust account established in connection with
the IPO (the "Trust Account").
The Company's management has concluded that in light of the classification error
described above, a material weakness exists in the Company's internal control
over financial reporting and that the Company's disclosure controls and
procedures were not effective. The Company's remediation plan with respect to
such material weakness will be described in more detail in the Q3 Form 10-Q/A.
The Company's management and the Audit Committee have discussed the matters
disclosed in this Current Report on Form 8-K pursuant to this Item 4.02 with
WithumSmith+Brown, PC, the Company's independent registered public accounting
firm.
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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. Certain of these forward-looking statements can
be identified by the use of words such as "believes," "expects," "intends,"
"plans," "estimates," "assumes," "may," "should," "will," "seeks," or other
similar expressions. Such statements may include, but are not limited to,
statements regarding the impact of the Company's restatement of certain
historical financial statements, the Company's cash position and cash held in
the Trust Account and any proposed remediation measures with respect to
identified material weaknesses. These statements are based on current
expectations on the date of this Current Report on Form 8-K and involve a number
of risks and uncertainties that may cause actual results to differ
significantly. The Company does not assume any obligation to update or revise
any such forward-looking statements, whether as the result of new developments
or otherwise. Readers are cautioned not to put undue reliance on forward-looking
statements.
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