References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to JOFF Fintech Acquisition Corp. References to our "management"
or our "management team" refer to our officers and directors, and references to
the "Sponsor" refer to JOFF Fintech Holdings LP. 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.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this
Quarterly Report including, without limitation, statements under this "Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations" regarding our financial position, business strategy and the plans
and objectives of management for future operations, are forward- looking
statements. When used in this Report, words such as "anticipate," "believe,"
"estimate," "expect," "intend" and similar expressions, as they relate to us or
our management, identify forward-looking statements. Such forward-looking
statements are based on the beliefs of our management, as well as assumptions
made by, and information currently available to, the our management. Actual
results could differ materially from those contemplated by the forward-looking
statements as a result of certain factors detailed in our filings with the SEC.
All subsequent written or oral forward-looking statements attributable to us or
persons acting on our behalf are qualified in their entirety by this paragraph.
Overview
We are a blank check company formed under the laws of the State of Delaware on
August 11, 2020 for the purpose of effectuating a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses (the "Business Combination").
We intend to effectuate our Business Combination using cash from the proceeds of
the Initial Public Offering and the sale of the Private Placement Warrants, 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.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date.
Our only activities from August 11, 2020 (inception) through September 30, 2022
were organizational activities, those necessary to prepare for the Initial
Public Offering, described below, and identifying a target company for a
Business Combination. 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 marketable securities held in the Trust
Account. 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 three months ended September 30, 2022, we had a net income of
$2,923,876, which consists of changes in fair value of warrant liabilities of
$1,445,734, interest earned on marketable securities held in Trust Account of
$1,873,616 and unrealized gain on marketable securities held in Trust Account of
$407,993, offset by formation and operational costs of $307,699 and provision to
income taxes of $495,768.
For the nine months ended September 30, 2022, we had a net income of
$13,926,950, which consists of changes in fair value of warrant liabilities of
$13,441,105, interest earned on marketable securities held in Trust Account of
$2,514,174 and unrealized gain on marketable securities held in Trust Account of
$349,052, offset by formation and operational costs of $1,828,814 and provision
to income taxes of $548,567.
For the three months ended September 30, 2021, we had a net income of
$6,730,309, which consists of changes in fair value of warrant liability of
$7,725,727, unrealized gain on marketable securities held in Trust Account of
$22,659 and interest earned on marketable securities held in Trust Account of
$21,163, offset by formation and operational costs of $1,039,240.
For the nine months ended September 30, 2021, we had a net income of
$17,163,448, which consists of interest earned on marketable securities held in
Trust Account of $67,398 and changes in fair value of warrant liability of
$21,356,926 and unrealized gain on marketable securities held in Trust Account
of $3,336, offset by formation and operational costs of $1,802,865, transaction
costs incurred in connection with warrant liability of $1,227,747, and initial
loss on issuance of private warrants of $1,233,600.
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Liquidity and Capital Resources
On February 9, 2021, we consummated the Initial Public Offering of 41,400,000
Units, generating gross proceeds of $414,000,000. Simultaneously with the
closing of the Initial Public Offering, the Company consummated the sale of
6,853,333 Private Placement Warrants at a price of $1.50 per Private Placement
Warrant in a private placement to the Sponsor, generating gross proceeds of
$10,280,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Warrant, a total of $414,000,000
was placed in the Trust Account. We incurred $21,717,863 in Initial Public
Offering related costs, including $6,780,000 of underwriting fees, net of
$1,500,000 reimbursed from the underwriters (see Note 7), $14,490,000 of
deferred underwriting fees and $447,863 of other offering costs.
For the nine months ended September 30, 2022, cash used in operating activities
was $635,154. Net income of $13,926,950 was affected by the change in the fair
value of Warrants of $13,441,105, interest earned on marketable securities held
in the Trust Account of $2,514,174 and an unrealized loss on marketable
securities held in the Trust Account of $349,052. Changes in operating assets
and liabilities provided $1,742,227 of cash for operating activities.
For the nine months ended September 30, 2021, cash used in operating activities
was $1,856,387. Net income of $17,163,448 was affected by the change in the fair
value of Warrants of $21,356,926, transaction costs incurred in connection with
warrant liability of $1,227,747, initial loss on issuance of private warrants
$1,233,600, interest earned on marketable securities held in the Trust Account
of $67,398 and an unrealized gain on marketable securities held in the Trust
Account of $3,336. Changes in operating assets and liabilities used $53,522 of
cash for operating activities.
As of September 30, 2022, we had cash and marketable securities held in the
Trust Account of $416,762,224 (including $2,762,224 of interest income)
consisting of U.S. Treasury Bills with a maturity of 185 days or less. Interest
income on the balance in the Trust Account may be used by us to pay taxes.
Through September 30, 2022, we withdrew $182,088 of interest earned from the
Trust Account. The Company is permitted to use interest earned by the Trust
Account to pay for income tax and Delaware tax obligations.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
income taxes payable), to complete our Business Combination. 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 September 30, 2022, we had cash of $207,471. 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 fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates 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 our Trust Account would be used for
such repayment. Up to $2,000,000 of such loans may be convertible into warrants
at a price of $1.50 per warrant, at the option of the lender. The warrants would
be identical to the Private Placement Warrants.
If the Business Combination is not consummated, the Company will need to raise
additional capital through loans or additional investments from its Sponsor,
stockholders, officers, directors, or third parties. The Company's officers,
directors and Sponsor may, but are not obligated to, loan the Company funds,
from time to time or at any time, in whatever amount they deem reasonable in
their sole discretion, to meet the Company's working capital needs. Accordingly,
the Company may not be able to obtain additional financing. If the Company is
unable to raise additional capital, it may be required to take additional
measures to conserve liquidity, which could include, but not necessarily be
limited to, curtailing operations, suspending the pursuit of a potential
transaction, and reducing overhead expenses. The Company cannot provide any
assurance that new financing will be available to it on commercially acceptable
terms, if at all. These conditions raise substantial doubt about the Company's
ability to continue as a going concern through one year from the date of these
financial statements. These financial statements do not include any adjustments
relating to the recovery of the recorded assets or the classification of the
liabilities that might be necessary should the Company be unable to continue as
a going concern.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of September 30, 2022. 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
a monthly fee of $5,000 per month for office space, administrative and support
services. We began incurring these fees on February 4, 2021 and will continue to
incur these fees monthly until the earlier of the completion of the Business
Combination and our liquidation.
The underwriter is entitled to a deferred fee of $0.35 per Unit, or $14,490,000
in the aggregate. The deferred fee will become payable to 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.
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:
Warrant Liabilities
We account for the warrants issued in connection with our Initial Public
Offering in accordance with the guidance contained in ASC 815 under which the
warrants do not meet the criteria for equity treatment and must be recorded as
liabilities. Accordingly, we classify the warrants as liabilities at their fair
value and adjust the warrants to fair value at each reporting period. This
liability is subject to re-measurement at each balance sheets date until
exercised, and any change in fair value is recognized in our statements of
operations. The fair value of the warrants was estimated using a binomial
lattice model. Subsequent to their detachment from the units, Public Warrants
are valued based on the publicly traded value.
Class A Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion 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 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' (deficit) 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 at redemption value as temporary equity,
outside of the stockholders' (deficit) equity section of our condensed balance
sheets.
Net Income Per Common Share
Net income per common stock is computed by dividing net income by the weighted
average number of common stock outstanding for the period. The Company applies
the two-class method in calculating earnings per share. Remeasurement associated
with the redeemable shares of Class A common stock is excluded from earnings per
share as the redemption value approximates fair value.
The calculation of diluted income per share does not consider the effect of the
warrants issued in connection with the (i) Initial Public Offering, and (ii) the
private placement since the exercise of the warrants is contingent upon the
occurrence of future events. The warrants are exercisable to purchase 20,653,333
Class A common stock in the aggregate. As of September 30, 2022 and 2021, the
Company did not have any dilutive securities or other contracts that could,
potentially, be exercised or converted into common stock and then share in the
earnings of the Company. As a result, diluted net income per common stock is the
same as basic net income per common stock for the periods presented.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 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): Accounting for Convertible Instruments
and Contracts in an Entity's Own Equity" ("ASU 2020-06"), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. The Company is currently evaluating the impact of the
changes.
Management does not believe that any other 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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Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete a Business Combination may
be adversely affected by various factors that could cause economic uncertainty
and volatility in the financial markets, many of which are beyond our control.
Our business could be impacted by, among other things, downturns in the
financial markets or in economic conditions, increases in oil prices, inflation,
increases in interest rates, supply chain disruptions, declines in consumer
confidence and spending, the ongoing effects of the COVID-19 pandemic, including
resurgences and the emergence of new variants, and geopolitical instability,
such as the military conflict in the Ukraine. We cannot at this time fully
predict the likelihood of one or more of the above events, their duration or
magnitude or the extent to which they may negatively impact our business and our
ability to complete a Business Combination.
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JOFF FINTECH ACQUISITION CORP. 
