NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Organization and General
Netfin Acquisition Corp. (the “Company”)
was incorporated as a Cayman Islands exempted company on April 24, 2019. 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
(the “Business Combination”). Although the Company is not limited to a particular industry or sector for purposes of
consummating a Business Combination, the Company intends to focus its search for targets in the financial technology, technology
and financial services industries, including those engaged in commercial, online and mobile banking and payments, trade finance
and telecommunications, that offer a differentiated technology platform and product suite for interfacing with the financial services
sector. The Company is an emerging growth company and, as such, the Company is subject to all of the risks associated with emerging
growth companies.
As of June 30, 2020, the Company had not
commenced any operations. All activity for the period from April 24, 2019 (inception) through June 30, 2020 relates to the Company’s
formation, its initial public offering (the “Initial Public Offering”) described below and, since the closing of the
Initial Public Offering, the search for a prospective initial Business Combination. The Company will not generate any operating
revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income
in the form of interest income on investments held in trust from the proceeds derived from the Initial Public Offering.
Sponsor and Initial Public Offering
The Company’s sponsor is MVR Netfin
LLC, a Nevada limited liability company (the “Sponsor”). The registration statement for the Initial Public Offering
was declared effective on July 30, 2019. On August 2, 2019, the Company consummated the Initial Public Offering of 25,300,000 units
(the “Units” and, with respect to the Class A ordinary shares included in the Units, the “Public Shares”),
including the issuance of 3,300,000 Units as a result of the underwriters’ exercise of their over-allotment option in full,
at $10.00 per Unit, generating gross proceeds of $253.0 million and incurring offering costs of approximately $14.6 million, inclusive
of approximately $8.9 million in deferred underwriting commissions (Note 5).
Simultaneously with the closing of the
Initial Public Offering, the Company consummated a private placement (the “Private Placement”) of 681,000 units (the
“Private Placement Units”) to the Sponsor at $10.00 per Private Placement Unit, generating gross proceeds to the Company
of $6.81 million (Note 4).
Trust Account
Upon the closing of the Initial Public
Offering and the Private Placement, $253.0 million, made up of the net proceeds of the Initial Public Offering and certain of the
proceeds of the Private Placement, was placed in a trust account (the “Trust Account”), located in the United States
at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee, and was invested only in
U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, having a maturity of
185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act
which invest only in direct U.S. government treasury obligations. These funds will be held in the Trust Account until the earlier
of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as described below.
Initial Business Combination
The Company’s 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 Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must
complete an initial Business Combination having an aggregate fair market value of at least 80% of the assets held in the Trust
Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of
the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if
the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act 1940, as amended (the “Investment Company Act”).
NETFIN ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Company will provide the public holders
(the “Public Shareholders”) of its Public Shares with the opportunity to redeem all or a portion of their Public Shares
upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business
Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business
Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled
to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (initially $10.00 per Public Share).
The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the deferred
underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). The Company will proceed with a Business
Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and
the approval of an ordinary resolution.
The Public Shares subject to possible redemption
were classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting
Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing
Liabilities from Equity.”
If a shareholder vote is not required by
law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant
to its Amended and Restated Memorandum and Articles of Association (the “Amended and Restated Memorandum and Articles of
Association”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission
(the “SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, shareholder
approval of the transactions is required by law, or the Company decides to obtain shareholder approval for business or legal reasons,
the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to
the tender offer rules. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of whether they
vote for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination,
the initial shareholders (as defined below) have agreed to vote their Founder Shares (as defined below in Note 4), the Class A
ordinary shares underlying the Private Placement Units (the “Private Placement Shares”) and any Public Shares purchased
during or after the Initial Public Offering in favor of a Business Combination. In addition, the initial shareholders have agreed
to waive their redemption rights with respect to their Founder Shares, Private Placement Shares and Public Shares in connection
with the completion of a Business Combination.
Notwithstanding the foregoing, the Amended
and Restated Memorandum and Articles of Association provides that a Public Shareholder, together with any affiliate of such shareholder
or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares
with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.
The Sponsor, officers and directors (the
“initial shareholders”) have agreed not to propose an amendment to the Amended and Restated Memorandum and Articles
of Association that would modify the substance or timing of the Company’s obligation to provide for the redemption of the
Public Shares in connection with an initial Business Combination or to redeem 100% of its Public Shares if the Company does not
complete a Business Combination within 18 months from the closing of the Initial Public Offering, or February 2, 2021, (the “Combination
Period”), unless the Company provides the Public Shareholders with the opportunity to redeem their Class A ordinary shares
in conjunction with any such amendment.
If the Company is unable to complete a
Business Combination within the Combination Period, the Company 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 earned on the funds
held in the Trust Account and not previously released to the Company (less taxes payable and up to $100,000 of interest to pay
dissolution expenses), divided by the number of then 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 Company’s remaining shareholders
and the Company’s board of directors, liquidate and dissolve, subject, in the case of clauses (ii) and (iii), to the Company’s
obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable
law.
NETFIN ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Sponsor, officers and directors have
agreed to waive their liquidation rights with respect to the Founder Shares and Private Placement Shares if the Company fails to
complete a Business Combination within the Combination Period. However, if the initial shareholders or members of the Company’s
management team acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions
from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination
Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 5) held in the Trust
Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such
amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public
Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for
distribution (including Trust Account assets) will be only $10.00 per share initially held in the Trust Account. In order to protect
the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to the Company if and to the extent any claims
by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company
has entered into a written letter of intent, confidentiality or other similar agreement or business combination agreement, reduce
the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public
Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per share due to reductions
in the value of the trust assets, less taxes payable, provided that such liability will not apply to any claims by a third party
or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or
not such waiver is enforceable) nor will it apply to any claims under the Company’s indemnity of the underwriters of the
Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities
Act”). The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims
of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which
the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to
monies held in the Trust Account.
Going Concern Consideration
As of June 30, 2020, the Company had approximately
$261,000 in its operating bank account, working capital deficit of approximately $557,000 (including approximately $852,000 in
accrued legal fees that will be due at the earlier of the consummation of the initial Business Combination or the liquidation date),
and approximately $4.2 million of interest income available in the Trust Account to pay for the Company’s tax obligations,
if any.
Prior to the completion of the Initial
Public Offering, the Company’s liquidity needs have been satisfied through an advance of $25,000 from the Sponsor to cover
for certain offering costs in exchange for the issuance of the Founder Shares, a $300,000 promissory note (the “Note”)
issued to the Sponsor and approximately $167,000 in advances from the Sponsor. The Company fully repaid the Note and the advances
to the Sponsor on August 2, 2019. Subsequent to the consummation of the Initial Public Offering and Private Placement, the Company’s
liquidity needs have been satisfied with the proceeds from the consummation of the Private Placement not held in the Trust Account.
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the
Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital
Loans (see Note 4). As of June 30, 2020, there were no amounts outstanding under any Working Capital Loan.
In connection with the Company’s
assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards
Updated (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going
Concern”, management has determined that the working capital deficit raises substantial doubt about the Company’s ability
to continue as a going concern until the earlier of the consummation of the Business Combination or the date the Company is required
to liquidate, February 2, 2021. The financial statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.
NETFIN ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The
accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally
accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations
of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management,
the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary
for the fair statement of the balances and results for the periods presented. Operating results for the period for the three and
six months ended June 30, 2020 are not necessarily indicative of the results that may be expected through December 31, 2020.
The accompanying
unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto
included in the annual report on Form 10-K filed by the Company with the SEC on March 11, 2020.
Emerging Growth Company
The Company is an “emerging growth
company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012
(the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable
to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with
the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure
obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously
approved.
Further, Section 102(b)(1) of the JOBS
Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private
companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of
securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The
JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements
that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to
opt out of such extended transition period, which means that when a standard is issued or revised and it has different application
dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the
time private companies adopt the new or revised standard.
This may make comparison of the Company’s
financial statements with another public company that is neither an emerging growth company nor an emerging growth company that
has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting
standards used.
Concentrations of Credit Risk
Financial instruments that potentially
subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may
exceed the Federal Depository Insurance Coverage of $250,000, and cash held in the Trust Account. At June 30, 2020, the Company
has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Cash and Cash Equivalents
The Company considers all short-term investments
with an original maturity of three months or less when purchased to be cash equivalents. The Company had approximately $25,000
and $50,000 in cash equivalents held in the Trust Account as of June 30, 2020 and December 31, 2019, respectively.
Financial Instruments
The fair value of the Company’s assets
and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates
the carrying amounts represented in the balance sheet.
As of June 30, 2020, the carrying values
of cash, accounts payable and accrued expenses approximate their fair values due to the short-term nature of the instruments. The
Company’s portfolio of marketable securities held in the Trust Account is comprised of investments in U.S. Treasury securities
with an original maturity of 185 days or less and of money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government treasury obligations.
NETFIN ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Marketable Securities Held in Trust
Account
The Company’s portfolio of marketable
securities is comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment
Company Act, with a maturity of 185 days or less or of money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act which invest only in direct U.S. government treasury obligations.
Use of Estimates
The preparation of the financial statements
in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date the financial statements and
the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.
Offering Costs Associated with the
Initial Public Offering
Offering costs consist of legal, accounting,
underwriting fees and other costs incurred through the balance sheet date that are directly related to the Initial Public Offering
and that were charged to shareholders’ equity upon the completion of the Initial Public Offering.
Class A Ordinary Shares Subject to
Possible Redemption
The Company accounts for its ordinary shares
subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.”
Class A ordinary shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair
value. Conditionally redeemable 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
shareholders’ 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 occurrence of uncertain future events. Accordingly, Class A ordinary shares
subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity
section of the Company’s balance sheets.
Net Loss Per Ordinary Share
Net loss per share is computed by dividing
net loss by the weighted-average number of ordinary shares outstanding during the period. An aggregate of 23,874,970 Class A ordinary
shares subject to possible redemption at June 30, 2020 was excluded from the calculation of basic loss per ordinary share since
such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered
the effect of the warrants sold in the Initial Public Offering and Private Placement to purchase an aggregate of 25,981,000 shares
of the Company’s Class A ordinary shares in the calculation of diluted loss per share, since they are not yet exercisable.
Reconciliation of net loss per ordinary
share
The Company’s net income is adjusted
for the portion of income that is attributable to Class A ordinary shares subject to redemption, as these shares only participate
in the earnings of the Trust Account and not the income or losses of the Company. Accordingly, basic and diluted loss per ordinary
share is calculated as follows:
|
|
For the
Three
Months
Ended
June 30,
2020
|
|
|
For the Six
Months
Ended
June 30,
2020
|
|
|
For the
Period
From
April 24,
2019
(Inception)
Through
June 30,
2019
|
|
Net income (loss)
|
|
$
|
(153,137
|
)
|
|
$
|
1,295,604
|
|
|
$
|
(5,305
|
)
|
Less: Income attributable to Class A ordinary shares subject to possible redemption
|
|
|
(50,799
|
)
|
|
|
(2,021,334
|
)
|
|
|
-
|
|
Adjusted net loss
|
|
$
|
(203,936
|
)
|
|
$
|
(725,730
|
)
|
|
$
|
(5,305
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average Class A and Class B ordinary shares outstanding, basic and diluted
|
|
|
8,392,883
|
|
|
|
8,369,891
|
|
|
|
5,500,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per Class A and Class B ordinary share
|
|
$
|
(0.02
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.00
|
)
|
NETFIN ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Income Taxes
The Company follows the asset and liability
method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing
assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included
the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected
to be realized.
FASB ASC 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken
in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination
by taxing authorities. There were no unrecognized tax benefits as of June 30, 2020 and December 31, 2019. The Company’s management
determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest
and penalties related to unrecognized tax benefits as income tax expense. No amounts were accrued for the payment of interest and
penalties as of June 30, 2020 and December 31, 2019. The Company is currently not aware of any issues under review that could result
in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by
major taxing authorities since inception.
The Company is considered an exempted Cayman
Islands company and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United
States. As such, the Company’s tax provision is zero as of June 30, 2020 and December 31, 2019.
Recent Accounting Standards
The Company’s 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 unaudited condensed financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
On August 2, 2019, the Company sold 25,300,000
Units, including the issuance of 3,300,000 Units as a result of the underwriters’ exercise of their over-allotment option
in full, at $10.00 per Unit, in the Initial Public Offering.
Each Unit consists of one Class A ordinary
share, and one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase one
Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 6).
NOTE 4. RELATED PARTY TRANSACTIONS
Founder Shares
In April 2019, the Sponsor purchased 6,325,000
Class B ordinary shares, par value $0.0001 (the “Founder Shares”), for an aggregate price of $25,000. The Sponsor agreed
to forfeit up to 825,000 Founder Shares to the extent that the over-allotment option was not exercised in full by the underwriters.
On August 2, 2019, the over-allotment option was exercised in full. Accordingly, no Founder Shares were forfeited.
The initial shareholders agreed, subject
to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (i) six months
after the completion of the initial Business Combination, or (ii) the date on which the Company completes a liquidation, merger,
share exchange or other similar transaction after the initial Business Combination that results in all of the Company’s shareholders
having the right to exchange their Class A ordinary shares for cash, securities or other property; except to certain permitted
transferees and under certain circumstances (the “lock-up”). Notwithstanding the foregoing, if the closing price of
Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share capitalizations, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the
initial Business Combination, the Founder Shares will be released from the lock-up.
Private Placement Units
Simultaneously with the closing of the
Initial Public Offering, the Sponsor purchased an aggregate of 681,000 Private Placement Units at a price of $10.00 per Private
Placement Unit in a Private Placement. A portion of the proceeds from the Private Placement Units were added to the proceeds from
the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination
Period, the private placement warrants underlying the Private Placement Units (the “Private Placement Warrants”) will
expire worthless.
NETFIN ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Sponsor and the Company’s officers
and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Units (or the
securities underlying the Private Placement Units) until 30 days after the completion of the initial Business Combination.
Related Party Loans
The Sponsor paid an aggregate of approximately
$7,000 and approximately $160,000 on behalf of the Company for general and administrative expenses and offering costs, respectively.
In addition, the Sponsor also loaned the Company an aggregate of $300,000 to cover expenses related to the Initial Public Offering
pursuant to the Note. This loan was non-interest bearing and payable on completion of the Initial Public Offering. The Company
fully repaid the Note and the advances to the Sponsor on August 2, 2019.
In addition, in order to finance transaction
costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors may, but are not obligated to, loan the Company funds as may be required (the “Working Capital Loans”).
If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust
Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust
Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust
Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital
Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements
exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination,
without interest, or at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into
private placement-equivalent units at a price of $10.00 per unit. As of June 30, 2020, the Company had no Working Capital Loans.
Administrative Support Agreement
Commencing on the date that the securities
of the Company were first listed on Nasdaq, the Company agreed to pay the Sponsor a total of $10,000 per month for office space,
utilities, secretarial and administrative support services. Upon completion of the Initial Business Combination or the Company’s
liquidation, the Company will cease paying these monthly fees. The Company incurred $30,000 and $60,000 in expenses in connection
with such services during the three and six months ended June 30, 2020, as reflected in the accompanying statement of operations.
NOTE 5. COMMITMENTS & CONTINGENCIES
Registration Rights
The holders of Founder Shares, Private
Placement Units (including the underlying securities), and securities that may be issued upon conversion of Working Capital Loans,
if any, will be entitled to registration rights pursuant to a registration rights agreement. These holders will be entitled to
certain demand and “piggyback” registration rights. The Company 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 from the date of the final prospectus relating to the Initial Public Offering to purchase up to 3,300,000 additional
Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. The
underwriters fully exercised their over-allotment option on August 2, 2019.
The underwriters were entitled to an underwriting
discount of $0.20 per unit, or $5.06 million in the aggregate, paid upon the closing of the Initial Public Offering. In addition,
$0.35 per unit, or up to approximately $8.9 million in the aggregate will be payable to the underwriters for deferred underwriting
commissions. The deferred fee is 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.
NETFIN ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Financial Advisory and Private Placement
Agreement
On December 19, 2019, the Company entered
into a financial advisory agreement with an advisor in connection with a potential Business Combination. Pursuant to the agreement,
the Company agreed to pay the advisor a cash fee of $1.0 million if the Business Combination is consummated. Fifty percent (50%)
of the advisory fee shall be credited to the Company by the advisor against fees earned by the advisor on or before December 31,
2021 in connection with capital raising activities occurring subsequent to the date of the agreement, where the advisor acts as
a placement agent, initial purchaser or underwriter in connection with the private placement or public offering of securities for
the Company. The fees are payable upon the closing of the Business Combination, and the Company is not obligated to pay these fees
if no Business Combination is consummated. These fees are an unrecognized contingent liability, as closing of a potential Business
Combination was not considered probable as of June 30, 2020.
In addition, on December 19, 2019, the
Company also entered into a private placement agreement with an agent in connection with a potential Business Combination. Pursuant
to the agreement, the Company agreed to pay the advisor a placement agent fee of up to 4.5% of the gross proceeds raised in the
private placement, if the Business Combination is consummated. The fees are payable upon the closing of the Business Combination,
and the Company is not obligated to pay these fees if no Business Combination is consummated. These fees are an unrecognized contingent
liability, as closing of a potential Business Combination was not considered probable as of June 30, 2020.
Risk and Uncertainties
On January 30, 2020, the World Health Organization
(“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”).
In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full
impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19 outbreak on the Company’s results of operations,
financial position and cash flows will depend on future developments, including the duration and spread of the outbreak and related
advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall
economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended
period, the Company’s results of operations, financial position and cash flows may be materially adversely affected. Additionally,
the Company’s ability to complete an Initial Business Combination may be materially adversely affected due to significant
governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the
shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential
investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and
consummate an Initial Business Combination in a timely manner. The Company’s ability to consummate an Initial Business Combination
may also be dependent on the ability to raise additional equity and debt financing, which may be impacted by the COVID-19 outbreak
and the resulting market downturn.
NOTE 6. SHAREHOLDERS’ EQUITY
Class A Ordinary Shares —
The Company is authorized to issue 200,000,000 Class A ordinary shares with a par value of $0.0001 per share. As of June 30, 2020
and December 31, 2019, there were 25,981,000 Class A ordinary shares outstanding, including 23,874,970 and 23,959,607 Class A ordinary
shares subject to possible redemption which were classified as temporary equity in the accompanying balance sheets, respectively.
Class B Ordinary Shares —
The Company is authorized to issue 20,000,000 Class B ordinary shares with a par value of $0.0001 per share. Holders of Class B
ordinary shares are entitled to one vote for each Class B ordinary share held. As of June 30, 2020 and December 31, 2019, there
were 6,325,000 Class B ordinary shares outstanding. Of the 6,325,000 Class B ordinary shares, an aggregate of up to 825,000 shares
were subject to forfeiture to the Company by the Sponsor for no consideration to the extent that the underwriters’ over-allotment
option was not exercised in full or in part, so that the initial shareholders would collectively own 20% of the Company’s
issued and outstanding ordinary shares after the Initial Public Offering (excluding the Private Placement Shares). On August 2,
2019, the over-allotment option was exercised in full. Accordingly, no Class B ordinary shares were forfeited.
Holders of the Class A ordinary shares
and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of the Company’s
shareholders, except as required by law or stock exchange rule; provided that only holders of the Class B ordinary shares have
the right to vote on the election of the Company’s directors prior to the initial Business Combination.
NETFIN ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Class B ordinary shares will automatically
convert into Class A ordinary shares at the time of the initial Business Combination on a one-for-one basis (as adjusted). In the
case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued in connection with the initial
Business Combination, the number of Class A ordinary shares issuable upon conversion of all Founder Shares will equal, in the aggregate,
20% of the total number of Class A ordinary shares outstanding after such conversion (excluding the private placement shares underlying
the private placement units and after giving effect to any redemptions of Class A ordinary shares by public shareholders), including
the total number of Class A ordinary shares issued, or deemed issued or issuable upon conversion or exercise of any equity-linked
securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial
Business Combination, excluding any Class A ordinary shares or equity-linked securities exercisable for or convertible into Class
A ordinary shares issued, or to be issued, to any seller in the initial Business Combination and any private placement-equivalent
units issued to the Sponsor, officers or directors upon conversion of Working Capital Loans; provided that such conversion of Founder
Shares will never occur on a less than one-for-one basis.
Preferred Shares —
The Company is authorized to issue 1,000,000 preferred shares with such designations, voting and other rights and preferences as
may be determined from time to time by the Company’s board of directors. As of June 30, 2020 and December 31, 2019, there
were no preferred shares issued or outstanding.
Warrants — The Public
Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from
the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under
the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants and a current prospectus relating
to them is available (or the Company permits holders to exercise their warrants on a cashless basis and such cashless exercise
is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later
than 15 business days after the closing of the initial Business Combination, the Company will use its best efforts to file with
the SEC and have an effective registration statement covering the Class A ordinary shares issuable upon exercise of the warrants
and to maintain a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified
in the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants
is not effective by the 60th business day after the closing of the initial Business Combination, warrant holders may,
until such time as there is an effective registration statement and during any period when the Company will have failed to maintain
an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of
the Securities Act or another exemption. Notwithstanding the above, if the Company’s Class A ordinary shares are at the time
of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition of a “covered
security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants
who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act
and, in the event the Company so elect, the Company will not be required to file or maintain in effect a registration statement,
and in the event the Company does not so elect, the Company will use its best efforts to register or qualify the shares under applicable
blue sky laws to the extent an exemption is not available.
The warrants will expire five years after
the completion of a Business Combination or earlier upon redemption or liquidation.
The Private Placement Warrants are identical
to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and
the ordinary shares issuable upon exercise of the Private Placement Warrants, so long as they are held by the Sponsor or its permitted
transferees, (i) will not be redeemable by the Company, (ii) may not (including the Class A ordinary shares issuable upon exercise
of these warrants), subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after
the completion of the initial Business Combination, (iii) may be exercised by the holders on a cashless basis and (iv) will be
entitled to registration rights. If the Private Placement Warrants are held by holders other than the Sponsor or its permitted
transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by the holders on the same basis
as the Public Warrants.
NETFIN ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
The Company may call the Public Warrants
for redemption (except with respect to the Private Placement Warrants):
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●
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in whole and not in part;
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●
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at a price of $0.01 per
warrant;
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●
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upon a minimum of 30 days’
prior written notice of redemption; and
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●
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if, and only if, the last
reported closing price of the Class A ordinary shares equals or exceeds $18.00 per share for any 20 trading days within a 30-trading
day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant
holders.
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If the Company calls the Public Warrants
for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a
“cashless basis,” as described in the warrant agreement.
In addition, if (x) the Company issues
additional Class A ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of the
initial Business Combination at an issue price or effective issue price of less than $9.20 per Class A ordinary share (with such
issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case
of any such issuance to the Company’s initial shareholders or their affiliates, without taking into account any Founder Shares
held by the initial shareholders or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from
such issuances represent more than 50% of the total equity proceeds, and interest thereon, available for the funding of the Company’s
initial Business Combination, and (z) the volume weighted average trading price of Class A ordinary shares during the 10 trading
day period starting on the trading day after the day on which the Company consummates the initial Business Combination (such price,
the “Market Value”) is below $9.20 per share, the exercise price of the warrants will be adjusted (to the nearest cent)
to be equal to 115% of the Market Value, and the $18.00 per share redemption trigger will be adjusted (to the nearest cent) to
be equal to 180% of the Market Value.
Additionally, in no event will the Company
be required to net cash settle any Warrants. If the Company is unable to complete the Initial Business Combination within the combination
period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with
respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account
with the respect to such warrants. Accordingly, the warrants may expire worthless.
NOTE 7. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC
820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial
assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial
assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with
the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants
at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize
the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal
assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify
assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
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Level 1: Quoted prices
in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions
for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
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●
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Level 2: Observable inputs
other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities
and quoted prices for identical assets or liabilities in markets that are not active.
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Level 3: Unobservable inputs
based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability.
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NETFIN ACQUISITION CORP.
NOTES TO UNAUDITED
CONDENSED FINANCIAL STATEMENTS
Description
|
|
Level
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
|
Assets:
|
|
|
|
|
|
|
|
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Cash and marketable securities held in Trust Account
|
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1
|
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$
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257,220,012
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$
|
255,080,087
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|
Approximately $25,000 and $50,000 of the
balance held in Trust Account was held in cash equivalents as of June 30, 2020 and December 31, 2019, respectively.
NOTE 8. SUBSEQUENT EVENTS
On July 29, 2020, the Company entered into
a business combination agreement (the “Business Combination Agreement”) with Netfin Holdco, a Cayman Islands exempted
company (“Holdco”), Netfin Merger Sub, a Cayman Islands exempted company (“Merger Sub”), MVR Netfin LLC,
a Nevada limited liability company, as the representative of Netfin (the “Netfin Representative), Symphonia Strategic Opportunities
Limited, a Mauritius private company limited by shares (“SSOL”) and IKON Strategic Holdings Fund, a Cayman Islands
exempted company (“IKON” and together with SSOL, the “Sellers”), pursuant to which (i) Merger Sub will
merge with and into the Company, with the Company continuing as the surviving company, as a result of which (a) the Company will
become a wholly-owned subsidiary of Holdco, (b) each issued and outstanding unit of the Company, consisting of one Class A ordinary
share and one warrant, shall be automatically detached and the holder thereof shall be deemed to hold one Class A ordinary share
and one warrant of the Company, (c) each issued and outstanding Class A ordinary share and Class B ordinary share (together with
the Class A ordinary shares, the “Ordinary Shares”) will be cancelled and cease to exist and the holders thereof will
receive one ordinary share of Holdco (the “Holdco Ordinary Shares”) for each Ordinary Share and (d) each outstanding
warrant to purchase a Class A ordinary share will become exercisable for one ordinary share of Holdco on identical terms (the “Holdco
Warrants”), and (ii) Holdco will acquire all of the issued and outstanding ordinary shares of Triterras Fintech Pte. Ltd,
a Singapore private company limited by shares (the “Target”), from the Sellers. Upon consummation of the transactions
contemplated by the Business Combination Agreement (the “Business Combination”), the Target will become a wholly-owned
subsidiary of Holdco, which will subsequently be renamed as “Triterras.”
The aggregate value of the consideration to be paid to Sellers
in the Business Combination is approximately $585,000,000, of which (i) approximately $525,000,000 will be paid in the form of
Holdco Ordinary Shares, valued at $10.17 per Holdco Ordinary Share and (ii) $60 million will be paid in cash (the “Cash Consideration”).
In addition, the Sellers will be entitled to receive earnout consideration of up to an additional 5,000,000 Holdco Ordinary Shares
upon Holdco meeting certain financial or share price thresholds. The Cash Consideration will come from the proceeds available from
the Trust Account, after giving effect to any and all redemptions.
The parties to the Business Combination
Agreement have made customary representations, warranties and covenants in the Business Combination Agreement, including, among
others, covenants with respect to the conduct of the Company, the Sellers, the Target and their respective subsidiaries prior to
the closing of the Business Combination. Each of the Company, the Netfin Representative, Merger Sub and the Sellers have agreed
to use their reasonable best efforts to cause the Business Combination to be consummated.
The closing of the Business Combination
(the “Closing”) is subject to certain conditions, including, among other things, (i) approval of the Business Combination
by holders of the Ordinary Shares, (ii) approval of the listing of the Holdco Ordinary Shares to be issued in connection with the
Business Combination on the Nasdaq Stock Market (“Nasdaq”), (iii) the Company having at least $5,000,001 in net tangible
assets at the closing of the Business Combination after giving effect to redemptions of Class A ordinary shares, if any, and (iv)
the effectiveness of the Registration Statement (as defined below).
The Business Combination Agreement may
be terminated under certain circumstances, including, among others, (i) by mutual written consent of the Sellers and the Company,
(ii) if the Closing has not occurred on or prior to July 28, 2021 for any reason other than delay and/or non-performance of the
party seeking such termination, (iii) a breach of the terms of the Business Combination Agreement that is not capable of being
cured or is not cured by the breaching party within 30 days and (iv) if the Company’s shareholders do not approve the Business
Combination.
Other Agreements to be Executed at
Closing
The Business Combination Agreement also
contemplates the execution by the parties of various agreements at the Closing, including, among others, the below.
Lock-Up Agreement
At the Closing, Holdco will enter into
a lock-up agreement with IKON and SSOL pursuant to which they will agree to not transfer, sell, assign or otherwise dispose of
the Holdco Ordinary Shares they receive in the Business Combination prior to three and six months, respectively, subject to certain
exceptions set forth therein.
Registration Rights Agreement
At the Closing, Holdco will enter into a registration rights
agreement with the Company, the Netfin Representative and the Sellers, pursuant to which they will be granted certain resale registration
rights with respect to any Holdco Ordinary Shares or Holdco Warrants (including the underlying Holdco Ordinary Shares issued upon
the exercise of such warrants) held by them on or prior to the date of Closing.