Cayman Islands* |
6770 |
98-1550750 | ||
(State or Other Jurisdiction of Incorporation or Organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification No.) |
Joel L. Rubinstein, Esq. Elliott M. Smith, Esq. Era Anagnosti, Esq. White & Case LLP 1221 Avenue of the Americas New York, NY 10020 (212) 819-8200 |
Marc D’Annunzio Bakkt Holdings, LLC 5900 Windward Parkway, Suite 450 Alpharetta, GA 30005 (678) 534-5849 |
J. Matthew Lyons Wilson Sonsini Goodrich & Rosati, P.C. 900 South Capital of Texas Highway Las Cimas IV, Fifth Floor Austin, TX 78746 (512) 338-5400 |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ | Smaller reporting company | |||||
Emerging growth company |
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Title of each class of securities to be registered |
Amount to be Registered |
Proposed Maximum Offering Price Per Share |
Proposed Maximum Aggregate Offering Price |
Amount of Registration Fee | ||||
Class A common stock (1)(2)(3) |
25,921,502 |
$12.36 (4) |
$320,389,765 | $34,954.52 | ||||
Redeemable warrants (1)(2)(5) |
16,516,041 |
— | — | — (6) | ||||
Class A common stock issuable upon exercise of the redeemable warrants (1)(2)(7) |
16,516,041 |
$11.50 (8) |
$189,934,471.50 | $20,721.85 | ||||
Total |
$510,324,236,50 | $55,676.37 (9) | ||||||
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(1) |
Simultaneously with the completion of the Proposed Transaction described herein, the registrant, a Cayman Islands exempted company, intends to effect a deregistration under Section 206 of the Companies Act (As Revised) and a domestication under Section 388 of the Delaware General Corporation Law (the “ Domestication Bakkt Holdings, Inc. Company |
(2) |
Pursuant to Rule 416(a) of the Securities Act of 1933, as amended (the “ Securities Act |
(3) |
Represents (i) 20,737,202 of Class A Ordinary Shares (including Class A Ordinary Shares included in units) issued by the registrant in its initial public offering registered on Form S-1 (SEC File No. 333-248619) and (ii) of 5,184,300 Class B Ordinary Shares, which Class A and Class B Ordinary Shares, as a result of the Domestication, will automatically be converted by operation of law into shares of Class A common stock. |
(4) |
Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the Class A Ordinary Shares on The Nasdaq Capital Market on March 29, 2021 in accordance with Rule 457(f)(1) under the Securities Act. |
(5) |
Represents (i) 10,368,601 redeemable warrants issued by the registrant in its initial public offering registered on Form S-1 (SEC File No. 333- 248619) (including redeemable warrants included in units) and (ii) 6,147,440 warrants issued by the registrant in a private placement concurrently with the initial public offering, which warrants altogether, as a result of the Domestication, will become warrants to acquire the same number of shares of Class A common stock of the Company at the same price and on the same terms set forth in the respective warrant agreement. |
(6) |
No registration fee is required pursuant to Rule 457(g) under the Securities Act. |
(7) |
Represents the number of shares of Class A common stock issuable upon exercise of warrants pursuant to their terms. Each whole warrant will entitle the warrant holder to purchase one share of Class A common stock of the Company at a price of $11.50 per quarter share. |
(8) |
Represents the exercise price of the warrants. |
(9) |
Previously paid. |
(1) | Proposal No. 1 – The Business Combination Proposal – Merger Agreement Merger Sub Bakkt Business Combination Merger Bakkt Opco Business Combination Proposal Annex A-1 Annex A-2 |
(2) | Proposal No. 2 – The Domestication Proposal – Domestication Proposed Certificate of Incorporation de-register with the Registrar of Companies of the Cayman Islands. Upon the effectiveness of the Domestication, VIH will become a Delaware corporation and will change its corporate name to “Bakkt Holdings, Inc.” (Bakkt Holdings, Inc. and VIH following the Domestication and the Business Combination, the “Company Bakkt Pubco Domestication Proposal |
(3) | Proposal No. 3 – The Stock Issuance Proposal – Stock Issuance Proposal |
(4) | Proposal No. 4 – Organizational Documents Proposal – by-laws of Bakkt Pubco (“Proposed By-Laws Proposed Organizational Documents DGCL Organizational Documents Proposal By-Laws is attached to the accompanying proxy statement/prospectus as Annex B-1 Annex B-2 |
(5) | Proposal No. 5 – The Advisory Organizational Documents Proposals – Advisory Organizational Documents Proposals non-binding basis by special resolution the following material differences between the Cayman Constitutional Documents and the Proposed Organizational Documents: |
(A) |
Advisory Organizational Documents Proposal 5A VIH Class A Ordinary Shares VIH Class B Ordinary Shares Ordinary Shares Preference Shares Bakkt Pubco Class A Common Stock Bakkt Pubco Class V Common Stock Bakkt Pubco Common Stock Bakkt Pubco Preferred Stock Advisory Organizational Documents Proposal 5A |
(B) |
Advisory Organizational Documents Proposal 5B Advisory Organizational Documents Proposal 5B |
(C) |
Advisory Organizational Documents Proposal 5C Advisory Organizational Documents Proposal 5C |
(D) |
Advisory Organizational Documents Proposal 5D Advisory Organizational Documents Proposal 5D |
(E) |
Advisory Organizational Documents Proposal 5E Advisory Organizational Documents Proposal 5E |
(F) |
Advisory Organizational Documents Proposal 5F Advisory Organizational Documents Proposal 5F |
(G) |
Advisory Organizational Documents Proposal 5G Advisory Organizational Documents Proposal 5G |
(6) | Proposal No. 6 – The Bakkt Pubco Equity Incentive Plan Proposal – Bakkt Pubco Equity Incentive Plan Proposal |
(7) | Proposal No. 7 – The Director Election Proposal – Director Election Proposal |
(8) | Proposal No. 8 – The Shareholder Adjournment Proposal – Shareholder Adjournment Proposal |
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F-1 |
Annex A-1 |
A-1 | |||||
Annex A-2 | A-2-1 | |||||
Annex B-1 | B-1-1 | |||||
Annex B-2 | B-2-1 | |||||
Annex C | C-1 | |||||
Annex D | D-1 |
(i) |
Annex E | E-1 | |||||
Annex F | F-1 | |||||
Annex G | G-1 | |||||
Annex H | H-1 | |||||
Annex I | I-1 | |||||
Annex J | J-1 |
(ii) |
1. | No Public Shareholders exercise their Redemption Rights in connection with the Closing, and the balance of the Trust Account as of the Closing is the same as its balance on August 17, 2021 of $207,394,835.32. Please see the section entitled “ Extraordinary General Meeting of VIH—Redemption Rights |
2. | No VIH Warrants will be exercised. |
3. | All Bakkt Opco Common Units are exchanged for Bakkt Pubco Class A Shares at such time (in tandem with the cancellation of the paired Bakkt Pubco Class V Shares) (even if not yet permitted under the terms of the Exchange Agreement). Please see the section entitled “ The Business Combination Proposal—Related Agreements—Exchange Agreement |
4. | The PIPE Investment is consummated in accordance with its terms for $325 million, with Bakkt Pubco issuing 32,500,000 Bakkt Pubco Class A Shares to the PIPE Investors. Please see the section entitled “ The Business Combination Proposal—Related Agreements—Subscription Agreements |
5. | Other than the PIPE Investment, there are no other issuances of equity securities of the Company prior to or in connection with the Closing, including any equity awards that may be issued under the Bakkt Pubco Equity Incentive Plan following the Business Combination. |
• | the benefits of the Proposed Transaction; |
• | the ability to consummate the Business Combination; |
• | the future financial performance of the Company following the Proposed Transaction; |
• | changes in the market for Bakkt’s products and services; and |
• | expansion plans and opportunities. |
• | the occurrence of any event, change or other circumstances that could delay the Proposed Transaction or give rise to the termination of the Merger Agreement; |
• | the outcome of any legal proceedings that may be instituted against Bakkt or VIH following announcement of the Proposed Transaction and transactions contemplated thereby; |
• | the inability to complete the Proposed Transaction due to the failure to obtain approval of the VIH shareholders, the inability to complete the PIPE Investment, the failure of VIH to satisfy the Available Cash Condition or the failure to meet other conditions to closing in the Merger Agreement; |
• | the inability to maintain the listing of the Bakkt Pubco Class A Common Stock on the NYSE following the Proposed Transaction; |
• | the risk that the Proposed Transaction disrupts current plans and operations; |
• | the ability to recognize the anticipated benefits of the Proposed Transaction, which may be affected by, among other things, competition, and the ability of the Company to grow and manage growth profitably; |
• | costs related to the Proposed Transaction; |
• | changes in the market in which Bakkt competes, including with respect to its competitive landscape, technology evolution or changes in applicable laws or regulations; |
• | the impact of the novel coronavirus (“ COVID-19 |
• | changes in the vertical markets that Bakkt targets; |
• | changes to Bakkt’s relationships within the payment ecosystem; |
• | the inability to launch new Bakkt services and products or to profitably expand into new markets; |
• | the inability to execute Bakkt’s growth strategies, including identifying and executing acquisitions; |
• | the inability to develop and maintain effective internal controls and procedures; |
• | the exposure to any liability, protracted and costly litigation or reputational damage relating to Bakkt’s data security; |
• | the possibility that Bakkt or VIH may be adversely affected by other economic, business, and/or competitive factors; and |
• | other risks and uncertainties indicated in this proxy statement/prospectus, including those set forth under the section entitled “ Risk Factors |
Q. |
Why am I receiving this proxy statement/prospectus? |
A. | VIH shareholders are being asked to consider and vote upon, among other proposals, a proposal to approve and adopt the Merger Agreement and approve the Proposed Transaction. The Merger Agreement provides for, among other things, the merger of Merger Sub with and into Bakkt, with Bakkt surviving the merger, in accordance with the terms and subject to the conditions of the Merger Agreement as more fully described elsewhere in this proxy statement/prospectus. See the section entitled “ The Business Combination Proposal |
Q. |
What proposals are shareholders of VIH being asked to vote upon? |
A. | At the extraordinary general meeting, VIH is asking holders of VIH Shares to consider and vote upon: |
• | The Business Combination Proposal; |
• | The Domestication Proposal; |
• | The Stock Issuance Proposal; |
• | The Organizational Documents Proposal; |
• | The Advisory Organizational Documents Proposals; |
• | The Bakkt Pubco Equity Incentive Plan Proposal; |
• | The Director Election Proposal; and |
• | The Shareholder Adjournment Proposal, if presented. |
Q. |
Are the proposals conditioned on one another? |
A. | Yes. The Proposed Transaction is conditioned on the approval of each of the Condition Precedent Proposals at the extraordinary general meeting. Each of the Condition Precedent Proposals is cross-conditioned on the approval of each other. The Advisory Organizational Documents Proposals, the Director Election Proposal and the Shareholder Adjournment Proposal are not conditioned upon the approval of any other proposal. |
Q. |
Why is VIH proposing the Proposed Transaction? |
A. | VIH was incorporated to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination, with one or more businesses or entities. |
Q. |
What will Bakkt Equity Holders receive in connection with the Business Combination? |
A. | As a result of the Merger, the aggregate consideration to be received in respect of the Merger by all of the Bakkt Equity Holders will be an aggregate of 208,200,000 Bakkt Opco Common Units and 208,200,000 Bakkt Pubco Class V Shares, which will be non-economic, voting shares of Bakkt Pubco, subject to the allocation of a certain portion of those Bakkt Opco Common Units and Bakkt Pubco Class V Shares to the holders of Bakkt Warrants that do not exercise such warrants prior to the Closing. See “The Business Combination Proposal—Merger Agreement—Consideration—Treatment of Bakkt Warrants |
Q. |
What equity stake will current VIH shareholders and Bakkt Equity Holders hold in Bakkt Pubco immediately after the consummation of the Proposed Transaction? |
A. | It is anticipated that, following the Proposed Transaction, (a) the Public Shareholders are expected to own approximately 8% of the outstanding Company’s Shares, (b) Bakkt Equity Holders (without taking into account any Public Shares held by Bakkt Equity Holders prior to the consummation of the Proposed Transaction or purchased in the PIPE Investment) are expected to own approximately 78% of the outstanding Company’s Shares, (c) the Sponsor and related parties are expected to collectively own approximately 2% of the outstanding Company’s Shares and (d) the PIPE Investors are expected to own approximately 12% of the outstanding Company’s Shares. These percentages assume (i) that no Public Shareholders exercise their Redemption Rights in connection with the Proposed Transaction and (ii) that Bakkt Pubco issues 32,500,000 of the Company’s Shares to the PIPE Investors pursuant to the PIPE Investment. If the actual facts are different from these assumptions, the percentage ownership retained by the Company’s existing shareholders in the Company will be different. If there are redemptions by the Public Shareholders up to the maximum level that would permit completion of the Business Combination, (a) the Public Shareholders will own approximately 4% of the outstanding Company’s Shares, (b) Bakkt |
Equity Holders (without taking into account any Public Shares held by Bakkt Equity Holders prior to the consummation of the Proposed Transaction or purchased in the PIPE Investment) will own approximately 81% of the outstanding Company’s Shares, (c) the Sponsor and related parties will own approximately 2% of the outstanding Company’s Shares and (d) the PIPE Investors will own approximately 13% of the outstanding Company’s Shares. These percentages assume (i) that 10,737,202 Public Shareholders exercise their Redemption Rights in connection with the Proposed Transaction and (ii) that Bakkt Pubco issues 32,500,000 of the Company’s Shares to the PIPE Investors pursuant to the PIPE Investment. |
Q. |
How has the announcement of the Proposed Transaction affected the trading price of the VIH Class A Ordinary Shares? |
A. | On January 7, 2021, the last trading date prior to the publication of articles speculating about the Proposed Transaction, VIH Units, VIH Class A Ordinary Shares and Public Warrants closed at $11.06, $10.41 and $1.181, respectively. On January 8, 2021, the last trading date prior to the public announcement of the Proposed Transaction, VIH Units, VIH Class A Ordinary Shares and Public Warrants closed at $18.25, $16.48 and $4.55, respectively. As of August 17, 2021, the last trading day immediately prior to the date of this proxy statement/prospectus, the closing price for each VIH Unit, VIH Class A Ordinary Share and Public Warrant was $10.31, $9.88, and $1.00, respectively. |
Q. |
Will the Company obtain new financing in connection with the Proposed Transaction? |
A. | Yes. The PIPE Investors have agreed to purchase in the aggregate 32,500,000 shares of Bakkt Pubco Common Stock, for $325,000,000 of gross proceeds, in the PIPE Investment. See “ The Business Combination Proposal—Related Agreements—Subscription Agreements |
Q. |
Why is VIH proposing the Domestication? |
A. | The VIH Board believes that there are significant advantages to us that will arise as a result of a change of VIH’s domicile to the State of Delaware. Further, the VIH Board believes that any direct benefit that the DGCL provides to a corporation also indirectly benefits its stockholders, who are the owners of the corporation. The VIH Board believes that there are several reasons why a reincorporation in the State of Delaware is in the best interests of VIH and its shareholders, including (a) the prominence, predictability and flexibility of the DGCL, (b) Delaware’s well-established principles of corporate governance and (c) the increased ability for Delaware corporations to attract and retain qualified directors. Each of the foregoing are discussed in greater detail in the section entitled “ The Domestication Proposal—Reasons for the Domestication |
Q. |
What amendments will be made to the Cayman Constitutional Documents? |
A. | The consummation of the Proposed Transaction is conditioned, among other things, on the Domestication. Accordingly, in addition to voting on the Proposed Transaction, VIH’s shareholders are also being asked to consider and vote upon a proposal to approve the Domestication and replace the Cayman Constitutional Documents, in each case, under the Companies Act, with the Proposed Certificate of Incorporation and the Proposed By-Laws, in each case, under the DGCL, which differ materially from the Cayman Constitutional Documents. These differences are discussed in greater detail in the section entitled “The Domestication Proposal |
Q. |
How will the Domestication affect my VIH Class A Ordinary Shares, VIH Warrants and VIH Units? |
A. | As a result of and upon the effective time of the Domestication, (a) each VIH Unit issued and outstanding immediately prior to the Domestication will automatically be separated into the underlying VIH Class A Ordinary Share and one-half of a VIH Warrant, (b) each VIH Class A Ordinary Share issued and outstanding immediately prior to the Domestication will remain outstanding and will automatically convert into one Bakkt Pubco Class A Share (provided that each VIH Class A Ordinary Share owned by Public Shareholders who have validly elected to redeem their VIH Class A Ordinary Shares will be converted, but will be redeemed for cash in an amount equal to the Redemption Price), (c) each VIH Class B Ordinary Share issued and outstanding immediately prior to the Domestication will be automatically converted into one Bakkt Pubco Class A Share, (d) each VIH Warrant will be automatically converted into a redeemable Bakkt Pubco Warrant on the same terms as the VIH Warrants, and (e) each Private Placement Warrant issued and outstanding prior to the Domestication will be automatically converted into a warrant exercisable for one Bakkt Pubco Class A Share on the terms and subject to the conditions set forth in the applicable warrant agreement. |
Q. |
What are the material U.S. federal income tax considerations of the Domestication? |
A. | As discussed more fully under “ U.S. Federal Income Tax Considerations Code PFIC U.S. Federal Income Tax Considerations—U.S. Holders—Tax Effects of the Domestication to U.S. Holders—PFIC Considerations U.S. Federal Income Tax Considerations |
• | a U.S. Holder who beneficially owns (directly, indirectly or constructively) 10% or more of the total combined voting power of all classes of VIH Shares entitled to vote or 10% or more of the total value of all classes of VIH Shares (a “ 10% U.S. Shareholder |
• | a U.S. Holder whose VIH Class A Ordinary Shares have a fair market value of $50,000 or more and who, on the date of the Domestication, is not a 10% U.S. Shareholder will recognize gain (but not loss) with respect to its VIH Class A Ordinary Shares in the Domestication or, in the alternative, may elect to recognize the “all earnings and profits” amount attributable to such U.S. Holder’s VIH Class A Ordinary Shares; and |
• | A U.S. Holder whose VIH Class A Ordinary Shares have a fair market value of less than $50,000 on the date of the Domestication and who, on the date of the Domestication, is not a 10% U.S. Shareholder, should not be required to recognize any gain or loss or include any part of the “all earnings and profits amount” in income under Section 367 of the Code in connection with the Domestication. |
Q. |
Do I have Redemption Rights? |
A. | If you are a holder of Public Shares, you have the right to request that we redeem all or a portion of your Public Shares for cash provided that you follow the procedures and deadlines described elsewhere in this proxy statement/prospectus. Public Shareholders may elect to redeem all or a portion of the Public Shares held by them regardless of if or how they vote in respect of the Business Combination Proposal. If you wish to exercise your Redemption Rights, please see the answer to the next question: “ How do I exercise my Redemption Rights? |
Q. |
How do I exercise my Redemption Rights? |
A. | If you are a Public Shareholder and wish to exercise your right to redeem the Public Shares, you must: |
Q. |
If I am a holder of VIH Units, can I exercise Redemption Rights with respect to my VIH Units? |
A. | No. Holders of issued and outstanding VIH Units must elect to separate the VIH Units into the underlying Public Shares and Public Warrants prior to exercising Redemption Rights with respect to the Public Shares. If you hold your VIH Units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the VIH Units into the underlying Public Shares and Public Warrants, or if you hold VIH Units registered in your own name, you must contact the Transfer Agent, directly and instruct them to do so. You are requested to cause your Public Shares to be separated and delivered to the Transfer Agent, along with the redemption forms by p.m., Eastern Time, on , 2021 (two business days before the extraordinary general meeting) in order to exercise your Redemption Rights with respect to your Public Shares. |
Q. |
What are the U.S. federal income tax consequences of exercising my Redemption Rights? |
A. | The U.S. federal income tax consequences of exercising your Redemption Rights with respect to your Public Shares to receive cash from the Trust Account in exchange for Public Shares depend on your particular facts and circumstances. It is possible that you may be treated as selling such Public Shares and, as a result, recognize capital gain or capital loss. It is also possible that the Redemption may be treated as a distribution for U.S. federal income tax purposes depending on the amount of Public Shares that you own or are deemed to own (including through the ownership of VIH Warrants). For a more complete discussion of the U.S. federal income tax considerations of an exercise of Redemption Rights, see “ U.S. Federal Income Tax Considerations |
Q. |
What happens to the funds deposited in the Trust Account after consummation of the Proposed Transaction? |
A. | Following the closing of the IPO (including partial exercise of the over-allotment option by the underwriters of the IPO), an amount equal to $207,372,020 ($10.00 per VIH Unit) of the net proceeds from the IPO and |
the sale of the Private Placement Warrants was placed in the Trust Account. As of August 17, 2021, funds in the Trust Account totaled $207,394,835.32 and were comprised entirely of U.S. government treasury obligations with a maturity of 185 days or less or of money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act of 1940, as amended (the “Investment Company Act |
Q. |
Did the VIH Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Proposed Transaction? |
A. | The VIH Board did not obtain a third-party valuation or fairness opinion in connection with the determination to approve the Proposed Transaction. The VIH Board believes that based upon a thorough due diligence review by the VIH management and VIH Board, as well as the financial skills and background of its directors, it was qualified to conclude that the Proposed Transaction was fair from a financial perspective to the VIH shareholders. The VIH Board also determined, without seeking a valuation from a financial advisor, that Bakkt’s fair market value was at least 80% of the balance in the Trust Account (less any deferred underwriting commissions and taxes payable on interest earned) at the time of the signing of the Merger Agreement. Accordingly, investors will be relying on the judgment of the VIH Board in valuing Bakkt’s business, and assuming the risk that the VIH Board may not have properly valued such business. See “ Risk Factors—Risks Related to the Domestication and the Business Combination |
Q. |
What happens if a substantial number of the Public Shareholders vote in favor of the Business Combination Proposal and exercise their Redemption Rights? |
A. | Our Public Shareholders are not required to vote in respect of the Proposed Transaction in order to exercise their Redemption Rights. Accordingly, the Proposed Transaction may be consummated even though the funds available from the Trust Account and the number of Public Shareholders are reduced as a result of Redemptions by Public Shareholders. |
Q. |
What conditions must be satisfied to complete the Proposed Transaction? |
A. | In addition to the Domestication and the Available Cash Condition noted above, the Merger Agreement is subject to the satisfaction or waiver of the following other customary closing conditions: (a) approval of the Proposed Transaction and related agreements and transactions by the respective shareholders of VIH and members of Bakkt (including approval of the Condition Precedent Proposals by the shareholders of VIH); (b) effectiveness of the registration statement on Form S-4 filed by VIH in connection with the Domestication; (c) all specified authorizations, consents, orders, regulatory approvals, non-objections, declarations, filings or waiting periods having been made, received or expired; (d) delivery of closing deliverables and documentation; (e) absence of a material adverse effect in respect of Bakkt, VIH and Merger Sub; (f) accuracy of the applicable representations, warranties and covenants, each to an applicable standard; (g) the Bakkt Pubco Class A Shares having been listed on a national stock exchange and being eligible for continued listing on a national stock exchange immediately following the closing; (h) the PIPE Investment having been completed; (i) the existing members of the VIH Board having resigned as of the Closing and the post-Closing directors having been appointed to serve on the Company Board effective as of the Closing; (j) the existing officers of VIH having resigned as of the Closing and the post-Closing officers having been appointed to serve effective as of the Closing; and (k) the absence of any injunctions or restraints in respect of consummation of the Proposed Transaction. For more information about conditions to the consummation of the Proposed Transaction, see “The Business Combination Proposal—Merger Agreement |
Q. |
When do you expect the Proposed Transaction to be completed? |
A. | It is currently expected that the Proposed Transaction will be consummated in the third quarter of 2021. This date depends, among other things, on the approval of the proposals to be put to VIH shareholders at the extraordinary general meeting. However, such meeting could be adjourned if the Shareholder Adjournment Proposal is adopted by VIH’s shareholders at the extraordinary general meeting and VIH elects to adjourn the extraordinary general meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for the approval of one or more proposals at the extraordinary general meeting. For a description of the conditions for the completion of the Proposed Transaction, see “ The Business Combination Proposal—Merger Agreement |
Q. |
What happens if the Proposed Transaction is not consummated? |
A. | VIH will not complete the Domestication to the State of Delaware unless all other conditions to the consummation of the Proposed Transaction have been satisfied or waived by the parties in accordance with the terms of the Merger Agreement. If VIH is not able to complete the Proposed Transaction with Bakkt by September 25, 2022 and is not able to complete another business combination by such date, in each case, as such date may be extended pursuant to the Cayman Constitutional Documents, VIH will: (a) cease all operations except for the purpose of winding up; (b) as promptly as reasonably possible, but not more than 10 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 (less up to $100,000 of interest to pay dissolution expenses and which interest will be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (c) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and the VIH Board, dissolve and liquidate, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. |
Q. |
Following the Proposed Transaction, will VIH’s securities continue to trade on a stock exchange? |
A. | Yes. VIH intends to apply to list the Bakkt Pubco Class A Common Stock and Bakkt Pubco Warrants on the NYSE under the proposed symbols “BKKT” and “BKKT WS”, respectively, upon the Closing. The VIH |
Units will automatically separate into the component securities prior to the Domestication, and, as a result, will no longer trade as a separate security following the Closing. Neither the Bakkt Pubco Class V Common Stock nor the Bakkt Opco Common Units will be publicly traded. |
Q. |
What is an “Up-C” structure? |
A. |
The Business Combination Proposal—Merger Agreement—Structure of the Merger partnership-C corporation (or “Up-C Up-C structure will allow Bakkt Opco or certain of its beneficial owners to continue to realize tax benefitsUp-C structure also provides the Bakkt Equity Holders with potential liquidity that is not generally available to holders of non-publicly traded companies treated as partnerships for U.S. federal income tax purposes. See the sections entitled “The Business Combination Proposal” “Description of VIH’s and the Company’s Securities” |
Q. |
Do I have appraisal rights in connection with the Proposed Transaction? |
A. | Neither VIH’s shareholders nor VIH’s warrant holders have appraisal rights in connection with the Proposed Transaction or the Domestication under Cayman Islands law or under the DGCL. |
Q. |
What do I need to do now? |
A. | VIH urges you to read this proxy statement/prospectus, including the Annexes and the documents referred to herein, carefully and in their entirety and to consider how the Proposed Transaction will affect you as a shareholder or warrant holder. VIH’s shareholders should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card. |
Q. |
How do I vote? |
A. | If you are a holder of record of VIH Shares on the Record Date for the extraordinary general meeting, you may vote in person at the extraordinary general meeting or by submitting a proxy for the extraordinary general meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage-paid envelope. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or nominee, you should contact your broker, bank or nominee to ensure that votes related to the shares you beneficially own are |
properly counted. In this regard, you must provide the broker, bank or nominee with instructions on how to vote your shares or, if you wish to attend the extraordinary general meeting and vote in person, obtain a valid proxy from your broker, bank or nominee. |
Q. |
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me? |
A. | No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” If this is the case, this proxy statement/prospectus may have been forwarded to you by your brokerage firm, bank or other nominee, or its agent, and you may need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker, bank or nominee as to how to vote your shares. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe all the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. As the beneficial holder, you have the right to direct your broker, bank or other nominee as to how to vote your shares and you should instruct your broker to vote your shares in accordance with directions you provide. If you do not provide voting instructions to your broker on a particular proposal on which your broker does not have discretionary authority to vote, your shares will not be voted on that proposal. This is called a “broker non-vote.” Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the extraordinary general meeting, and otherwise will have no effect on a particular proposal. |
Q. |
When and where will the extraordinary general meeting be held? |
A. |
The extraordinary general meeting will be held virtually at a.m. Eastern Time, on , COVID-19 |
Q. |
Who is entitled to vote at the extraordinary general meeting? |
A. | VIH has fixed June 28, 2021 as the Record Date for the extraordinary general meeting. If you were a shareholder of VIH at the close of business on the Record Date, you are entitled to vote on matters that come before the extraordinary general meeting. However, a shareholder may only vote his or her shares if he or she is present in person or is represented by proxy at the extraordinary general meeting. |
Q. |
How many votes do I have? |
A. | With the exception of the holders of the VIH Class B Ordinary Shares, who are entitled to ten votes for each VIH Class B Ordinary Share they hold for the purposes of voting on the Domestication Proposal, VIH shareholders are entitled to one vote at the extraordinary general meeting for each VIH Share held of record as of the Record Date. As of the close of business on the Record Date for the extraordinary general meeting, there were 25,921,502 VIH Shares issued and outstanding, of which 20,737,202 were issued and outstanding Public Shares. |
Q. |
What constitutes a quorum? |
A. | A quorum of VIH shareholders is necessary to hold a valid meeting. A quorum will be present at the extraordinary general meeting if the holders of a majority of the issued and outstanding VIH Shares entitled |
to vote at the extraordinary general meeting are represented in person or by proxy. As of the Record Date for the extraordinary general meeting, 12,960,752 VIH Shares would be required to achieve a quorum. |
Q. |
What vote is required to approve each proposal at the extraordinary general meeting? |
A. | Business Combination Proposal |
Q. |
What are the recommendations of the VIH Board? |
A. | The VIH Board believes that the Business Combination Proposal and the other proposals to be presented at the extraordinary general meeting are in the best interest of VIH’s shareholders and unanimously recommends that its shareholders vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Domestication Proposal, “FOR” the approval of the Stock Issuance Proposal, “FOR” the approval of the Organizational Documents Proposal, “FOR” the approval, on an advisory basis, of each of the separate Advisory Organizational Documents Proposals, “FOR” the approval of the Bakkt Pubco Equity Incentive Plan Proposal, “FOR” the approval of the Director Election Proposal and “FOR” the approval of the Shareholder Adjournment Proposal, in each case, if presented to the extraordinary general meeting. |
Q. |
How does the Sponsor intend to vote its shares? |
A. | The Sponsor has agreed to vote all the Founder Shares and any other Public Shares it may hold in favor of all the proposals being presented at the extraordinary general meeting. As of the date of this proxy statement/prospectus, the Sponsor and certain members of the VIH Board own 20% of the issued and outstanding VIH Shares. |
Q. |
What happens if I sell my VIH Shares before the extraordinary general meeting? |
A. | The Record Date for the extraordinary general meeting is earlier than the date of the extraordinary general meeting and earlier than the date that the Proposed Transaction is expected to be completed. If you transfer your Public Shares after the applicable Record Date, but before the extraordinary general meeting, unless you grant a proxy to the transferee, you will retain your right to vote at the extraordinary general meeting but the transferee, and not you, will have the ability to redeem such shares, so long as such transferee takes the required steps to elect to redeem such shares at least two business days prior to the extraordinary general meeting. |
Q. |
How can I vote my shares without attending the extraordinary general meeting? |
A. | If you are a shareholder of record of our VIH Shares as of the close of business on the Record Date, you can vote by proxy by mail by following the instructions provided in the enclosed proxy card or at the extraordinary general meeting. Please note that if you are a beneficial owner of VIH Shares, you may vote by submitting voting instructions to your broker, bank or nominee, or otherwise by following instructions provided by your broker, bank or nominee. Telephone and internet voting will be available to beneficial owners. Please refer to the vote instruction form provided by your broker, bank or nominee. |
Q. |
May I change my vote after I have mailed my signed proxy card? |
A. | Yes. Shareholders may send a later-dated, signed proxy card to VIH’s Chairman at VIH’s address set forth below so that it is received by VIH’s Chairman prior to the vote at the extraordinary general meeting (which is scheduled to take place on , 2021) or attend the extraordinary general meeting in person and vote. Shareholders also may revoke their proxy by sending a notice of revocation to VIH’s Chairman, which must be received by VIH’s Chairman prior to the vote at the extraordinary general meeting. However, if your shares are held in “street name” by your broker, bank or another nominee, you must contact your broker, bank or other nominee to change your vote. |
Q. |
What happens if I fail to take any action with respect to the extraordinary general meeting? |
A. | If you fail to take any action with respect to the extraordinary general meeting and the Proposed Transaction is approved by shareholders and the Proposed Transaction is consummated, you will become a stockholder or warrant holder of Bakkt Pubco. If you fail to take any action with respect to the extraordinary general meeting and the Proposed Transaction is not approved, you will remain a shareholder or warrant holder of VIH. However, if you fail to vote with respect to the extraordinary general meeting, you will nonetheless be able to elect to redeem your Public Shares in connection with the Proposed Transaction, so long as you take the required steps to elect to redeem your shares at least two business days prior to the extraordinary general meeting. |
Q. |
What happens if I vote against the Business Combination Proposal? |
A. | If you vote against the Business Combination Proposal, but the Business Combination Proposal still obtains the requisite shareholder approval described in this proxy statement/prospectus, then the Business Combination Proposal will be approved and, assuming the approval of the Domestication Proposal, the Organizational Documents Proposal, the Advisory Organizational Documents Proposals, the Bakkt Pubco Equity Incentive Plan Proposal, the Director Election Proposal, the Stock Issuance Proposal and the Shareholder Adjournment Proposal and the satisfaction or waiver of the other conditions to the closing of the Merger, the Business Combination will be consummated in accordance with the terms of the Merger Agreement. |
Q. |
What should I do with my share certificates, warrant certificates or unit certificates? |
A. | Our shareholders who exercise their Redemption Rights must deliver (either physically or electronically) their share certificates (if any) along with the redemption forms to the Transfer Agent, prior to the extraordinary general meeting. |
Q. |
What should I do if I receive more than one set of voting materials? |
A. | Shareholders may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your VIH Shares. |
Q. |
Who will solicit and pay the cost of soliciting proxies for the extraordinary general meeting? |
A. | VIH will pay the cost of soliciting proxies for the extraordinary general meeting. VIH has engaged Morrow Sodali LLC to assist in the solicitation of proxies for the extraordinary general meeting. VIH has agreed to pay Morrow Sodali LLC a fee of $25,000, plus disbursements. VIH will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of VIH Class A Ordinary Shares for their expenses in forwarding soliciting materials to beneficial owners of VIH Class A Ordinary Shares |
and in obtaining voting instructions from those owners. VIH’s directors and officers may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies. |
Q. |
Where can I find the voting results of the extraordinary general meeting? |
A. | The preliminary voting results will be expected to be announced at the extraordinary general meeting. VIH will publish final voting results of the extraordinary general meeting in a Current Report on Form 8-K within four business days after the extraordinary general meeting. |
Q. |
Who can help answer my questions? |
A. | If you have questions about the Business Combination or if you need additional copies of the proxy statement/prospectus or the enclosed proxy card, you should contact: |
(1) | The term Bakkt Equity Holders includes ICE. Although ICE will beneficially own greater than 50% of Bakkt Pubco Common Stock, Bakkt Pubco will not be able to avail itself of any “controlled company” exemptions provided under the applicable rules of the NYSE due to the limitations imposed by the Voting Agreement that ICE and the Company will enter into at Closing. |
• | If your shares are registered in your name with the Transfer Agent and you wish to attend the online-only meeting, go to https://www.cstproxy.com/vih/sm2021, enter the 12-digit control number included |
on your proxy card or notice of the extraordinary general meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the extraordinary general meeting you will need to log back into the extraordinary general meeting site using your control number. Pre-registration is recommended, but is not required in order to attend. |
• | Beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the extraordinary general meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial shareholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the online extraordinary general meeting. After contacting the Transfer Agent, a beneficial holder will receive an e-mail prior to the extraordinary general meeting with a link and instructions for entering the extraordinary general meeting online. Beneficial shareholders should contact Continental Stock Transfer & Trust Company at least five business days prior to the extraordinary general meeting date in order to ensure access. |
• | Business Combination Proposal |
• | Domestication Proposal two-thirds of the VIH Shares, who, being present in person or by proxy and entitled to vote at the extraordinary |
general meeting, vote at the extraordinary general meeting. Because the Domestication Proposal involves a vote to continue VIH outside the jurisdiction of the Cayman Islands, holders of the VIH Class B Ordinary Shares will have ten votes per VIH Class B Ordinary Share and holders of VIH Class A Ordinary Shares will have one vote per VIH Class A Ordinary Share for the purposes of the Domestication Proposal. Holders of VIH Class B Ordinary Shares and VIH Class A Ordinary Shares will have one vote per share on all other proposals. |
• | Stock Issuance Proposal |
• | Organizational Documents Proposal two-thirds of the VIH Shares who, being in person or by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. |
• | Advisory Organizational Documents Proposals non-binding vote, requires a special resolution under the Companies Act, being the affirmative vote of holders of a majority of at least two-thirds of the VIH Shares who, being in person or by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting. |
• | Bakkt Pubco Equity Incentive Plan Proposal |
• | Director Election Proposal |
• | Shareholder Adjournment Proposal |
• | hold Public Shares or if you hold Public Shares through VIH Units, you elect to separate your VIH Units into the underlying Public Shares and Public Warrants prior to exercising your Redemption Rights with respect to the Public Shares; |
• | submit a written request to the Transfer Agent, that Bakkt Pubco redeem all or a portion of your Public Shares for cash; and |
• | deliver the certificates for your Public Shares (if any) along with the redemption forms to the Transfer Agent physically or electronically through DTC. |
• | Prior to the IPO, the Sponsor purchased 5,750,000 VIH Class B Ordinary Shares for an aggregate purchase price of $25,000, or approximately $0.004 per share. As a result of the significantly lower investment per share of our Sponsor as compared with the investment per share of the Public Shareholders, a transaction which results in an increase in the value of the investment of the Sponsor may result in a decrease in the value of the investment of our Public Shareholders. In addition, if VIH does not consummate a business combination by September 25, 2022 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding Public Shares for cash and, subject to the approval of its remaining shareholders and the VIH Board, liquidating and dissolving, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such event, the 5,184,300 VIH Class B Ordinary Shares owned by the Sponsor and the members of the VIH Board would be worthless because following the redemption of the Public Shares, VIH would likely have few, if any, net assets and because the Sponsor and VIH’s directors and officers have agreed to waive their respective rights to liquidating distributions from the Trust Account in respect of any VIH Class A Ordinary Shares and VIH Class B Ordinary Shares held by it or them, as applicable, if VIH fails to complete a business combination within the required period. Additionally, in such event, the Private Placement Warrants purchased by the Sponsor simultaneously with the consummation of the IPO (including in relation to exercise of the over-allotment option by the underwriters) for an aggregate purchase price of $6,147,440 will also expire worthless. VIH’s directors and executive officers, John Martin, Gordon Watson, Olibia Stamatoglou, also have a direct or indirect economic interest in such Private Placement Warrants and in the 5,124,300 VIH Class B Ordinary Shares owned by the Sponsor, and directors Adrienne Harris, Kai Schmitz and Kurt Summers each own 20,000 VIH Class B Ordinary Shares. The 5,184,300 Bakkt Pubco Class A Shares into which the 5,184,300 VIH Class B Ordinary Shares held by the Sponsor and the directors will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $51,220,884.00 based upon the closing price of $9.88 per Public Share on Nasdaq on August 17, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. However, given that such Bakkt Pubco Class A Shares will be subject to certain restrictions, including those described elsewhere in this proxy statement/prospectus, VIH |
believes such shares have less value. The 6,147,440 Bakkt Pubco Warrants into which the 6,147,440 Private Placement Warrants held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of $6,147,400 based upon the closing price of $1.00 per Public Warrant on Nasdaq on August 17, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. |
• | VIH’s existing directors and officers will be eligible for continued indemnification and continued coverage under VIH’s directors’ and officers’ liability insurance after the Merger and pursuant to the Merger Agreement. |
• | In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to VIH if and to the extent any claims by a third party for services rendered or products sold to VIH, 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) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, less taxes payable, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. |
• | VIH’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket |
• | Pursuant to the Registration Rights Agreement, the Sponsor and certain of the directors will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect to the shares of Bakkt Pubco Class A Common Stock and Warrants held by such parties following the consummation of the Proposed Transaction. |
• | The Proposed Certificate of Incorporation will contain a provision expressly electing that Bakkt Pubco will not to be governed by Section 203 (Delaware’s “interested stockholder” statute) of the DGCL, although it will provide other restrictions regarding takeovers by interested stockholders. |
Sources |
Uses |
|||||||||||||
($ in millions) |
($ in millions) |
|||||||||||||
Cash and investments held in the Trust Account (1) |
$ | 207 | Bakkt Equity Holders consideration (2) |
$ | 2,082 | |||||||||
Issuance to Bakkt Equity Holders (2) |
2,082 | Transaction fees (3) |
59 | |||||||||||
PIPE Investment |
325 | Cash to balance sheet | 473 | |||||||||||
|
|
|
|
|||||||||||
Total sources |
$ |
2,614 |
Total uses |
$ |
2,614 |
Sources |
Uses |
|||||||||||||
($ in millions) |
($ in millions) |
|||||||||||||
Cash and investments held in the Trust Account (1) |
$ | 207 | Bakkt Equity Holders consideration (2) |
$ | 2,082 | |||||||||
Issuance to Bakkt Equity Holders (2) |
2,082 | Transaction fees (3) |
59 | |||||||||||
Redemptions by Public Shareholders (4) |
107 | |||||||||||||
PIPE Investment |
325 | Cash to balance sheet | 366 | |||||||||||
|
|
|
|
|||||||||||
Total sources |
$ |
2,614 |
Total uses |
$ |
2,614 |
(1) | Calculated as of June 30, 2021. |
(2) | Bakkt Pubco Class A Shares to be issued at a deemed value of $10.00 per share. |
(3) | Includes deferred underwriting commission of approximately $7 million and estimated transaction expenses. |
(4) | Assumes that the maximum number of Public Shares that can be redeemed are redeemed, while still satisfying the Available Cash Condition. |
• | Bakkt’s business model is newly developed, untested and continually evolving and may encounter additional risks and challenges as it grows and changes. |
• | Bakkt’s platform is still under development and is largely untested. Any failure by Bakkt to successfully execute on the development of its platform would have an adverse effect on its business, financial condition and results of operations. |
• | If Bakkt is unable to add additional functionalities to its platform, Bakkt’s prospects for future growth may be adversely affected. |
• | Bakkt has a limited operating history and a history of operating losses, which makes it difficult to forecast Bakkt’s future results of operations. Further, Bakkt may not achieve or sustain profitability in the future. |
• | If the Business Combination is not consummated and Bakkt is not able to obtain sufficient additional capital from other sources, its business, prospects, financial condition and results of operations will be harmed and it may be unable to continue as a going concern. |
• | The estimates of market opportunity and forecasts of market growth included in this proxy statement/prospectus and elsewhere, may prove to be inaccurate and even if the market in which Bakkt competes in achieves the forecast growth, Bakkt’s business could fail to grow at similar rates, or at all. |
• | Substantially all of Bakkt’s net revenues each quarter come primarily from transactions during that quarter, which may result in significant fluctuations in Bakkt’s operating results that could adversely affect Bakkt’s business, financial condition, results of operations, and cash flows and may not fully reflect the underlying performance of its business. |
• | Sales efforts to large loyalty sponsors and merchant partners involve risks that may not be present or that are present to a lesser extent with respect to sales to smaller organizations. If Bakkt is unable to attract additional loyalty sponsors or merchant partners and retain and grow its relationships with its existing loyalty sponsors and merchant partners, Bakkt’s business, results of operations, financial condition, and future prospects would be materially and adversely affected. |
• | Bakkt faces substantial and increasingly intense competition worldwide in the global loyalty, rewards, payment and investment industries. |
• | If Bakkt fails to promote, protect, and maintain its brand in a cost-effective manner, Bakkt may lose market share and Bakkt’s revenue may decrease. |
• | If Bakkt fails to maintain a consistently high level of consumer satisfaction and trust in its brand, its business, results of operations, financial condition, and future prospects would be materially and adversely affected. |
• | Bakkt relies on ICE in several aspects of its business, which creates additional risks for Bakkt. |
• | Cryptoasset custodial solutions and related technology, including Bakkt’s systems and custodial arrangements, are subject to risks related to a loss of funds due to theft of cryptoassets, employee or vendor sabotage, security and cybersecurity risks, system failures and other operational issues, the loss, destruction or other compromise of Bakkt’s private keys and a lack of sufficient insurance, which could cause damage to Bakkt’s reputation and brand. |
• | Bakkt’s cryptoasset business’s pricing model and incentive arrangements may create conflicts of interest and affect Bakkt’s revenues. |
• | There may be a general perception among regulators and others that cryptoassets are used to facilitate illegal activity such as fraud, money laundering, tax evasion and ransomware scams. Because Bakkt provides the ability to buy, sell, convert, spend and send certain cryptoassets, any negative perceptions associated with cryptoassets could harm Bakkt’s reputation and brand. |
• | Cryptoassets, such as bitcoin, were only introduced within the past decade and distributed ledger technology continues to rapidly evolve. The unique characteristics of these digital assets present risks and challenges to Bakkt that could have a material adverse effect on its business. |
• | Bakkt’s business is subject to extensive government regulation, oversight, licensure and approvals. Bakkt’s failure to comply with extensive, complex, uncertain, overlapping, and frequently changing rules, regulations, and legal interpretations could materially harm Bakkt’s business. |
• | The U.S. state and federal regulatory regime governing blockchain technologies and cryptocurrencies is uncertain, and new regulations or policies may alter Bakkt’s business practices with respect to cryptocurrencies. |
• | Transactions involving loyalty points may become subject to U.S. federal income taxation and information reporting obligations. |
• | Because there is limited guidance for tax reporting or accounting of bitcoin and other cryptoasset transactions, the determination that Bakkt has made for how to account for or report the tax treatment of cryptoasset transactions may be subject to change and challenge by relevant tax authorities in various countries, including the United States. Failure to properly report activity related to cryptoassets for tax or accounting purposes may have negative regulatory or legal outcomes and harm the Company’s reputation. |
• | Bakkt is subject to significant litigation risk and regulatory liability and penalties. Any future litigation against Bakkt could be costly and time-consuming to defend. |
• | Cyberattacks and security vulnerabilities could result in serious harm to Bakkt’s reputation, business, and financial condition. |
• | Systems failures and resulting interruptions in the availability of Bakkt’s websites, applications, products, or services could harm its business. |
• | Bakkt’s financial condition and results of operations may be adversely affected by the impact of the global outbreak of the coronavirus. |
• | Recent market volatility could impact the stock price and trading volume of the Bakkt Pubco Class A Common Stock. |
• | Since the Sponsor and VIH’s directors and officers have interests that are different, or in addition to (and which may conflict with), the interests of VIH’s shareholders, a conflict of interest may have existed in determining whether the Proposed Transaction with Bakkt is appropriate as our initial business combination. Such interests include that Sponsor will lose its entire investment in us if VIH does not complete an initial business combination. |
• | The Public Shareholders will experience immediate dilution as a consequence of the issuance of Bakkt Pubco Common Stock as consideration in the Proposed Transaction and the PIPE Investment and due to future issuances pursuant to the Bakkt Pubco Equity Incentive Plan. Having a minority share position may reduce the influence that VIH’s current shareholders have on the management of Bakkt Pubco. |
• | The acquisition of Bakkt by VIH, resulting reorganization into an umbrella partnership C corporation structure, and other agreements entered into as part of the Merger Agreement; and |
• | The acquisition of Bridge2 Solutions, LLC and its related companies (“ Bridge2 Solutions B2S Acquisition |
• | Assuming No Redemptions: This presentation assumes that no Public Shareholders exercise their right to have their Public Shares converted into their pro rata share of the Trust Account; and |
• | Assuming Maximum Redemptions: This presentation assumes that 10.7 million Public Shares, the maximum redemption of the outstanding Public Shares, are redeemed, resulting in an aggregate payment of $107.0 million out of the Trust Account, which is derived from the number of shares that could be redeemed in connection with the Business Combination at an assumed Redemption Price of $10.00 per share based on the Trust Account balance as of June 30, 2021 in order to satisfy the Available Cash Condition after giving effect to the PIPE Financing and settlement of the VIH transaction costs. |
• | Bakkt Pubco will be the sole managing member of Bakkt Opco, the managing member has full and complete charge of all affairs of Bakkt Opco and the existing non-managing member equity holders of Bakkt Opco do not have substantive participating or kick out rights; |
• | The Sponsor and Bakkt Opco will jointly designate seven of the initial nine members of the Company Board, at least the majority of whom will qualify as independent within the meaning of the independent director guidelines of the NYSE; and |
• | Bakkt Equity Holders will not hold a controlling interest in Bakkt Pubco or Bakkt Opco due to (1) the limitation imposed by the Voting Agreement on ICE and its affiliates’ voting power to 30% of the total voting power of all Bakkt Pubco Class A Shares and Bakkt Pubco Class V Shares that are issued and outstanding and entitled to vote as of the relevant record date so long as it owns shares of Bakkt Pubco Common Stock representing more than 50% of the total voting power of Bakkt Pubco, and (2) ICE and its affiliates do not unilaterally control the Board of Directors of Bakkt Pubco, as, in accordance with Section 5.12 of the Merger Agreement, only one out of the nine members of the Board of Directors of Bakkt Pubco will be affiliated with ICE, and the majority of the Board of Directors of Bakkt Pubco must be independent directors not affiliated with ICE. For additional information, see the section entitled “Voting Agreement” beginning on page 146 of this proxy statement/prospectus. |
Assuming No Redemptions |
Assuming Maximum Redemptions (1) |
|||||||||||||||
Equity Capitalization Summary (shares in millions) |
Shares |
% |
Shares |
% |
||||||||||||
VIH Public Shareholders |
20.7 | 35.5 | 10.0 | 21.0 | ||||||||||||
Founder Shares (2) |
5.2 | 8.9 | 5.2 | 10.9 | ||||||||||||
PIPE Investors (3) |
32.5 | 55.6 | 32.5 | 68.1 | ||||||||||||
Bakkt Equity Holders interest in VIH (4) |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Class A common stock in VIH |
58.4 |
100.0 |
47.7 |
100.0 |
(1) | Assumes that 10,737,202 Public Shares (the VIH Shares issued and outstanding that could be redeemed in connection with the Business Combination based on a per share Redemption Price of $10.00 per share) are redeemed in connection with the Business Combination. Existing Bakkt Equity Holders have only voting power in Bakkt Pubco. The voting power of the existing Bakkt Equity Holders would increase proportionally following the Closing. Under the maximum redemptions scenario, noncontrolling interest increases from 77.1% to 80.4%. |
(2) | Represents 5,184,300 shares of Bakkt Pubco Class A Common Stock issued upon conversion of the existing VIH Class B ordinary shares. Shares of Bakkt Pubco Class A Common Stock are issued upon the automatic conversion of the Class B ordinary shares concurrently with the consummation of the Business Combination. |
(3) | Represents the PIPE Investment pursuant to which VIH entered into Subscription Agreements with certain PIPE Investors whereby such investors have agreed to subscribe for shares of Bakkt Pubco Class A Common Stock at a purchase price of $10.00 per share. The PIPE Investors participating in the PIPE Investment, have agreed to purchase an aggregate of 32,500,000 shares of Bakkt Pubco Class A Common Stock. |
(4) | The Equity Capitalization Summary table excludes Bakkt Equity Holders’ noncontrolling economic interest in Bakkt Opco Common Units, which will be exchangeable (together with the cancellation of an equal number of shares of voting, non-economic Bakkt Pubco Class V Common Stock) into Bakkt Pubco Class A Common Stock on a 1-for-1 |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||
Shares (1) |
% |
Shares (1) |
% |
|||||||||||||
Bakkt Equity Holders’ noncontrolling interest (shares in millions) |
196.3 | 77.1 | % | 196.3 | 80.4 | % |
(1) |
Represents the 208.2 million Bakkt Opco Common Units to be issued to Bakkt Equity Holders, net of 11.9 million Bakkt Incentive Units, which vest on each of the first and second anniversaries of the effective time of the Merger as if the Merger constituted an initial public offering under the Bakkt Plan. |
As of June 30, 2021 |
Pro Forma as of June 30, 2021 |
|||||||||||||||
Unaudited Pro Forma Condensed Balance Sheet Data ($ in millions) |
VIH |
Bakkt |
No Redemptions |
Maximum Redemptions |
||||||||||||
Total current assets |
$ | 1.0 | $ | 85.0 | $ | 564.2 | $ | 457.2 | ||||||||
Total assets |
208.4 | 422.9 | 2,622.8 | 2,515.8 | ||||||||||||
Total liabilities |
42.7 | 71.6 | 95.4 | 95.4 | ||||||||||||
Total mezzanine equity |
160.7 | 23.2 | — | — | ||||||||||||
Total members’ or shareholders’ equity |
5.0 | 328.1 | 564.4 | 457.4 | ||||||||||||
Total noncontrolling interest |
— | — | 1,963.0 | 1,963.0 |
For the Six Months Ended June 30, 2021 |
Pro Forma for the Six Months Ended June 30, 2021 |
|||||||||||||||
Unaudited Pro Forma Condensed Combined Statement of Operations Data ($ in millions, except per share data) |
VIH |
Bakkt |
No Redemptions |
Maximum Redemptions |
||||||||||||
Total revenue |
$ | — | $ | 16.6 | $ | 16.6 | $ | 16.6 | ||||||||
Loss from operations |
(3.6 | ) | (59.8 | ) | (76.8 | ) | (76.8 | ) | ||||||||
Net loss |
(12.4 | ) | (60.7 | ) | (82.6 | ) | (83.2 | ) | ||||||||
Loss per Class A share (basic) |
$ | — | N/A | $ | (0.28 | ) | $ | (0.30 | ) | |||||||
Loss per Class A share (diluted) |
$ | — | N/A | $ | (0.28 | ) | $ | (0.30 | ) | |||||||
Loss per Class B share (basic) |
$ | (2.40 | ) | N/A | N/A | N/A | ||||||||||
Loss per Class B share (diluted) |
$ | (2.40 | ) | N/A | N/A | N/A |
Unaudited Pro Forma Condensed Combined Statement of Operations Data ($ in millions, except per share data) |
For the Year Ended December 31, 2020 |
For the Period January 1, 2020 through February 21, 2020 |
For the Year Ended December 31, 2020 |
Pro Forma for the Year Ended December 31, 2020 |
||||||||||||||||||||
VIH |
Bakkt |
B2S |
Combined Bakkt |
No Redemptions |
Maximum Redemptions |
|||||||||||||||||||
Total revenue |
$ | — | $ | 28.5 | $ | 5.7 | $ | 34.2 | $ | 34.1 | $ | 34.1 | ||||||||||||
Loss from operations |
(1.0 | ) | (79.1 | ) | (0.2 | ) | (79.3 | ) | (146.9 | ) | (146.9 | ) | ||||||||||||
Net loss |
(4.9 | ) | (79.6 | ) | (0.4 | ) | (80.0 | ) | (144.7 | ) | (145.7 | ) | ||||||||||||
Loss per Class A share (basic) |
$ | — | N/A | N/A | N/A | $ | (0.48 | ) | $ | (0.51 | ) | |||||||||||||
Loss per Class A share (diluted) |
$ | — | N/A | N/A | N/A | $ | (0.48 | ) | $ | (0.51 | ) | |||||||||||||
Loss per Class B share (basic) |
$ | (0.94 | ) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Loss per Class B share (diluted) |
$ | (0.94 | ) | N/A | N/A | N/A | N/A | N/A |
($ in millions, except per share data) |
Historical |
Pro Forma Combined (2) |
Equivalent Pro Forma Per Share Data (3) |
|||||||||||||||||||||
VIH |
Bakkt |
No Redemptions |
Maximum Redemptions |
No Redemptions |
Maximum Redemptions |
|||||||||||||||||||
As of and for the Six Months ended June 30, 2021 |
||||||||||||||||||||||||
Net loss per Class A common share, basic and diluted |
$ | — | N/A | $ | (0.28 | ) | $ | (0.30 | ) | $ | (0.28 | ) | $ | (0.30 | ) | |||||||||
Weighted average shares of Class A outstanding, basic and diluted. . . . . . . . . . . . |
20,737,202 | N/A | 58,421,502 | 47,721,502 | 58,421,502 | 47,721,502 | ||||||||||||||||||
Net loss per Class B common share, basic and diluted |
$ | (2.40 | ) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Weighted average shares of Class B outstanding, basic and diluted. . . . . . . . . . . . |
5,184,300 | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||||
Book value per share (1) |
$ | 0.19 | N/A | $ | 9.66 | $ | 9.58 | $ | 9.66 | $ | 9.58 | |||||||||||||
As of and for the Year Ended December 31, 2020 |
||||||||||||||||||||||||
Net loss per Class A common share, basic and diluted . |
$ | — | N/A | $ | (0.48 | ) | $ | (0.51 | ) | $ | (0.48 | ) | $ | (0.51 | ) | |||||||||
Weighted average shares of Class A outstanding, basic and diluted. . . . . . . . . . . . |
20,737,202 | N/A | 58,421,502 | 47,721,502 | 58,421,502 | 47,721,502 |
($ in millions, except per share data) |
Historical |
Pro Forma Combined (2) |
Equivalent Pro Forma Per Share Data (3) |
|||||||||||||||||||||
VIH |
Bakkt |
No Redemptions |
Maximum Redemptions |
No Redemptions |
Maximum Redemptions |
|||||||||||||||||||
Net loss per Class B common share, basic and diluted |
$ | (0.94 | ) | N/A | N/A | N/A | N/A | N/A | ||||||||||||||||
Weighted average shares of Class B outstanding, basic and diluted. . . . . . . . . . . . |
5,184,300 | N/A | N/A | N/A | N/A | N/A |
(1) | Book value per share is computed as total members’ or shareholders’ equity divided by common shares outstanding. |
(2) | Net loss per common share — basic and diluted and book value per share in these columns are computed on a pro forma combined basis assuming no redemptions or maximum redemptions. See section titled “ Unaudited Pro Forma Condensed Combined Financial Information |
(3) | Equivalent net income (loss) per common share — basic and diluted and equivalent book value per share information is computed by multiplying the combined pro forma per share data by the exchange rate, which will initially be one-for-one, and is subject to adjustment per the terms of the Exchange Agreement. The purpose of equivalent pro forma per share data is to equate the respective per share values to one share of Bakkt. |
• | any warrants or options to purchase the Bakkt Pubco Class A Common Stock that will be outstanding following the Merger; |
• | any equity awards that may be issued under the proposed Bakkt Pubco Equity Incentive Plan following the Merger, including approximately 8.7 million shares of restricted Bakkt Pubco Class A Common Stock currently expected to be issued to Company executives shortly after the Closing, which number of restricted shares represents approximately 30.7% of the total number of shares currently expected to be authorized for issuance under the Bakkt Pubco Equity Incentive Plan using the assumptions described under the section entitled “ Frequently Used Terms —Share Calculations and Ownership Percentages The Bakkt Pubco Equity Incentive Plan Proposal Executive Compensation of Bakkt |
• | any adjustments to the Merger Consideration pursuant to the Merger Agreement not reflected in our assumptions described above and in the section entitled “ Frequently Used Terms—Share Calculations and Ownership Percentages |
• | a limited availability of market quotations for its securities; |
• | reduced liquidity for its securities; |
• | a determination that the Bakkt Pubco Class A Common Stock is a “penny stock” which will require brokers trading in the common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for the Company’s securities; |
• | a limited amount of news and analyst coverage; and |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
• | a U.S. Holder who beneficially owns (directly, indirectly or constructively) 10% or more of the total combined voting power of all classes of VIH stock entitled to vote or 10% or more of the total value of all classes of VIH stock (a “ 10% U.S. Shareholder |
• | a U.S. Holder whose VIH Class A Ordinary Shares have a fair market value of $50,000 or more and who, on the date of the Domestication, is not a 10% U.S. Shareholder will recognize gain (but not loss) with respect to its VIH Class A Ordinary Shares in the Domestication or, in the alternative, may elect to recognize the “all earnings and profits” amount attributable to such U.S. Holder’s VIH Class A Ordinary Shares; and |
• | A U.S. Holder whose VIH Class A Ordinary Shares have a fair market value of less than $50,000 on the date of the Domestication and who, on the date of the Domestication, is not a 10% U.S. Shareholder, should not be required to recognize any gain or loss or include any part of the “all earnings and profits amount” in income under Section 367 of the Code in connection with the Domestication. |
• | a classified board of directors with three-year staggered terms, which could delay the ability of stockholders to change the membership of a majority of the Company Board; |
• | the ability of the Company Board to issue shares of Bakkt Pubco Preferred Stock, including “blank check” preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; |
• | the limitation of the liability of, and the indemnification of, the Company’s directors and officers; |
• | the right of the Company Board to elect a director to fill a vacancy created by the expansion of the Company Board or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on the Company Board; |
• | the requirement that directors may only be removed from the Company Board for cause and upon the affirmative vote of the holders of at least 66 2/3% of the total voting power of then outstanding Bakkt Pubco Common Stock; |
• | a prohibition on stockholder action by written consent (except for actions by the holders of Bakkt Pubco Class V Common Stock or as required for holders of future series of Bakkt Pubco Preferred Stock), which forces stockholder action to be taken at an annual or special meeting of stockholders and could delay the ability of stockholders to force consideration of a stockholder proposal or to take action, including the removal of directors; |
• | the requirement that a special meeting of stockholders may be called only by the Company Board, the chairman of the Company Board or the Company’s chief executive officer, which could delay the ability of stockholders to force consideration of a proposal or to take action, including the removal of directors; |
• | controlling the procedures for the conduct and scheduling of the Company Board and stockholder meetings; |
• | the requirement for the affirmative vote of holders of at least 66 2/3% of the total voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend, alter, change or repeal certain provisions in the Proposed Certificate of Incorporation which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Company Board and also may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt; |
• | the ability of the Company Board to amend the Proposed By-Laws, which may allow the Company Board to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the Proposed By-Laws to facilitate an unsolicited takeover attempt; and |
• | advance notice procedures with which stockholders of the Company must comply to nominate candidates to the Company Board or to propose matters to be acted upon at a stockholders’ meeting, which could preclude stockholders from bringing matters before annual or special meetings of stockholders and delay changes in the Company Board and also may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of Company. |
• | the number and variety of digital assets that users may buy, sell, convert, spend and send through Bakkt’s platform; |
• | Bakkt’s brand and reputation, as well as users’ experience and satisfaction with and trust and perception of, Bakkt’s solutions; |
• | technological innovation; and |
• | services and products offered by competitors. |
• | manage the complexity of its business model to stay current with the industry and new technologies; |
• | successfully enter new categories, markets and jurisdictions in which it may have limited or no prior experience; |
• | integrate into multiple distributed ledger technologies as they currently exist and as they evolve; |
• | successfully develop and integrate products, systems and personnel into its business operations; and |
• | obtain and maintain required licenses and regulatory approvals for its business. |
• | Bakkt’s ability to retain and attract new users; |
• | transaction volume and mix; |
• | rates of repeat transaction and fluctuations in usage of Bakkt’s platform, including seasonality; |
• | the amount and timing of Bakkt’s expenses related to acquiring users, and the maintenance and expansion of its business, operations, and infrastructure; |
• | changes to Bakkt’s relationships with its enterprise and loyalty partners; |
• | general economic, industry, and market conditions, including the COVID-19 pandemic; |
• | Bakkt’s emphasis on user experience instead of near-term growth; |
• | competitive dynamics in the industry in which Bakkt operates; |
• | the amount and timing of stock-based compensation expenses; |
• | network outages, cyber-attacks, or other actual or perceived security breaches or data privacy violations; |
• | changes in laws and regulations that impact Bakkt’s business; |
• | the cost of and potential outcomes of potential claims or litigation; and |
• | the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired technologies or businesses. |
• | ability to attract, retain, and engage users on its platform; |
• | ability to demonstrate to enterprise and loyalty partners that they may achieve incremental sales by using and offering Bakkt’s services to consumers; |
• | the strength of Bakkt’s integrated solution over other potential coalitions of disparate point solutions; |
• | consumers’ confidence in the safety, security, privacy and control of their information on Bakkt’s platform; |
• | ability to develop products and services across multiple commerce channels, including mobile payments, payments at the retail point of sale, cryptoassets, and loyalty/rewards points; and |
• | system reliability, regulatory compliance and data security. |
• | ICE provides Bakkt market credibility and regulatory and industry expertise and infrastructure support; |
• | ICE provides critical infrastructure for the custody of cryptoassets by Bakkt; and |
• | ICE provides institutional-grade services to support Bakkt’s custody arrangements that leverages ICE’s robust platform of security protocols. |
• | increasing the number of consumers on, and the volume of transactions facilitated through, Bakkt’s platform; |
• | maintaining and developing relationships with existing and new enterprise and loyalty partners and financial institutions; |
• | securing funding to maintain its operations and future growth; |
• | maintaining adequate financial, business, and risk controls; |
• | implementing new or updated information and financial and risk controls and procedures; |
• | navigating complex and evolving regulatory and competitive environments; |
• | attracting, integrating and retaining an appropriate number and technological skill level of qualified employees; |
• | particularly in the COVID-19 environment, training, managing, and appropriately sizing its workforce and other components of its business on a timely and cost-effective basis; |
• | expanding within existing markets; |
• | entering new markets and introducing new solutions; |
• | continuing to develop, maintain, protect, and scale Bakkt’s platform; |
• | effectively using limited personnel and technology resources; and |
• | maintaining the security of Bakkt’s platform and the confidentiality of the information (including personally identifiable information) provided and utilized across its platform. |
• | Bakkt Pubco’s existing stockholders’ proportionate ownership interest will decrease; |
• | the amount of cash available per share, including for payment of dividends in the future, may decrease; |
• | the relative voting strength of each previously outstanding share of Bakkt Pubco Common Stock may be diminished; and |
• | the market price of its common stock may decline. |
• | money transmission; |
• | virtual currency business activity; |
• | prepaid access; |
• | consumer protection; |
• | anti-money laundering; |
• | counter-terrorist financing; |
• | privacy and data protection; |
• | cybersecurity; |
• | economic and trade sanctions; |
• | commodities; |
• | derivatives; and |
• | securities. |
• | In January 2020, the California Consumer Privacy Act (“ CCPA |
• | The United States government is considering regulating artificial intelligence and machine learning. |
• | The certifications Bakkt maintains and standards it complies with, including PCI-DSS, among others, are becoming more stringent. |
• | Bakkt’s products and services continue to expand in scope and complexity and to converge with technologies not previously associated with the payments and loyalty points space; |
• | Bakkt’s products and services may be designed, developed and delivered without thorough due diligence of prior works covered by legitimate patent protections; |
• | Bakkt’s products and services may be designed, developed or delivered by bad actors knowingly using intellectual property from a previous employer or vendor; |
• | Bakkt may continue to expand into new business areas, including through acquisitions; and |
• | the number of patent owners who may claim that Bakkt, any of the companies that it has acquired, or Bakkt’s enterprise or loyalty partners infringe their patents, and the aggregate number of patents controlled by such patent owners, continues to increase. |
• | interrupt Bakkt’s operations; |
• | result in Bakkt’s systems or services being unavailable; |
• | result in improper disclosure of data and violations of applicable privacy and other laws; |
• | materially harm Bakkt’s reputation and brand; |
• | result in significant regulatory scrutiny, investigations, fines, penalties and other legal and financial exposure; |
• | cause Bakkt to incur significant remediation costs; |
• | lead to loss or theft of user digital assets, such as rewards points; |
• | lead to loss of user confidence in, or decreased use of, Bakkt’s products and services; |
• | divert the attention of management from the operation of Bakkt’s business; |
• | result in significant compensation or contractual penalties from Bakkt to Bakkt’s users as a result of losses to them or claims by them; and |
• | adversely affect Bakkt’s business and results of operations. |
• | changes in the industries in which Bakkt operates; |
• | developments involving Bakkt’s competitors; |
• | changes in laws and regulations affecting Bakkt’s business; |
• | variations in Bakkt’s operating performance and the performance of its competitors in general; |
• | actual or anticipated fluctuations in Bakkt’s quarterly or annual operating results; |
• | publication of research reports by securities analysts about Bakkt or its competitors or its industry; |
• | the public’s reaction to Bakkt’s press releases, its other public announcements and its filings with the SEC; |
• | actions by stockholders, including the sale by the PIPE Investors of any of their Bakkt Pubco Class A Shares; |
• | additions and departures of key personnel; |
• | commencement of, or involvement in, litigation involving the combined companies; |
• | changes in Bakkt’s capital structure, such as future issuances of securities or the incurrence of debt; |
• | the volume of Bakkt Pubco Class A Shares available for public sale; and |
• | general economic and political conditions, such as the effects of the COVID-19 outbreak, recessions, volatility in the markets, interest rates, local and national elections, fuel prices, international currency fluctuations, corruption, political instability, and acts of war or terrorism. |
• | the Business Combination Proposal. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A-1 Annex A-2 |
• | the Domestication Proposal. The Proposed Certificate of Incorporation is attached to this proxy statement/prospectus as Annex B-1 |
• | the Stock Issuance Proposal; |
• | the Organizational Documents Proposal. The Proposed Certificate of Incorporation and the Proposed By-Laws are attached to this proxy statement/prospectus as Annex B-1 Annex B-2 , |
• | the Advisory Organizational Documents Proposals; |
• | the Bakkt Pubco Equity Incentive Plan Proposal (collectively with the Business Combination Proposal, the Domestication Proposal, the Stock Issuance Proposal and the Organizational Documents Proposal, the “Condition Precedent Proposals” Annex C ; |
• | the Director Election Proposal; and |
• | the Shareholder Adjournment Proposal. |
• | If your shares are registered in your name with the Transfer Agent and you wish to attend the extraordinary general meeting, go to https://www.cstproxy.com/vih/sm2021, enter the 12-digit control number included on your proxy card or notice of the extraordinary general meeting and click on the “Click here to preregister for the online meeting” link at the top of the page. Just prior to the start of the extraordinary general meeting you will need to log back into the extraordinary general meeting site using your control number. Pre-registration is recommended but is not required in order to attend. |
• | Beneficial shareholders (those holding shares through a stock brokerage account or by a bank or other holder of record) who wish to attend the extraordinary general meeting must obtain a legal proxy by contacting their account representative at the bank, broker, or other nominee that holds their shares and e-mail a copy (a legible photograph is sufficient) of their legal proxy to proxy@continentalstock.com. Beneficial shareholders who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the extraordinary general meeting. After contacting the Transfer Agent, a beneficial holder will receive an e-mail prior to the extraordinary general meeting with a link and instructions for entering the extraordinary general meeting. Beneficial shareholders should contact the Transfer Agent Company at least five business days prior to the extraordinary general meeting date in order to ensure access. |
• | you may send another proxy card with a later date; |
• | you may notify John Martin, Chairman of VIH, in writing before the extraordinary general meeting that you have revoked your proxy; or |
• | you may attend the extraordinary general meeting, revoke your proxy, and vote, as indicated above. |
• | hold Public Shares, you elect to separate your VIH Units into the underlying Public Shares and Public Warrants prior to exercising your Redemption Rights with respect to the Public Shares; |
• | submit a written request to the Transfer Agent, that Bakkt Pubco redeem all or a portion of your Public Shares for cash; and |
• | deliver the certificates for your Public Shares (if any) along with the redemption forms, which must identify the beneficial owner of the shares to be redeemed, to the Transfer Agent, physically or electronically through DTC. |
(a) | any change affecting generally the industries or markets in which the Target Companies operate, including in any change in the financial markets, credit markets or capital markets in the United States or any other country or region in the world; |
(b) | acts of God, including pandemics (including the COVID-19 virus or any mutation thereof) and the impact of such pandemics on the health of any officer, employee or consultant of Bakkt and the actions of governmental authorities in response thereto; |
(c) | any change in national or international political or social conditions, including (1) the engagement by the United States or any other country or group in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States or any other country, or any of their respective territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States or any other country or group, or (2) social unrest, including protests, demonstrations, riots, arson, conflagration, looting, boycotts, or the response of any governmental authorities or their authorized or unauthorized representatives to such actions; |
(d) | any change in GAAP (or the interpretation thereof); |
(e) | any change in law, rules, regulations, orders, or other binding directives issued by any governmental authority (or the interpretation thereof); |
(f) | any failure by Bakkt to meet any internal or external operating projections or forecasts or revenue or earnings predictions (provided, that the underlying cause of any such failure may be considered in determining whether a Bakkt Material Adverse Effect has occurred or would reasonably be expected to occur to the extent not excluded by another exception); |
(g) | the taking of any action expressly required by the Merger Agreement; or |
(h) | the public announcement or pendency of the Merger Agreement or any of the transactions contemplated by the Merger Agreement or the other Transaction Documents (including but not limited to any impact on the relationships of the Target Companies with customers, vendors, or employees, including voluntary departures of employees in anticipation of such transactions). |
(a) | any change affecting generally the industries or markets in which VIH and Merger Sub operate, including in any change in the financial markets, credit markets or capital markets in the United States or any other country or region in the world; |
(b) | acts of God, including pandemics (including the COVID-19 virus or any mutation thereof) and the actions of governmental authorities in response thereto which are binding on VIH and Merger Sub; |
(c) | any change in national or international political or social conditions, including the engagement by the United States or any other country or group in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence of any military or terrorist attack upon the United States or any other country, or any of their respective territories, possessions, or diplomatic or consular offices or upon any military installation, equipment or personnel of the United States or any other country or group; |
(d) | any change in GAAP (or the interpretation thereof); |
(e) | any change in law, rules, regulations, orders, or other binding directives issued by any governmental authority (or the interpretation thereof); |
(f) | the taking of any action expressly required by the Merger Agreement; |
(g) | the public announcement or pendency of the Merger Agreement or any of the transactions contemplated by the Merger Agreement or the other Transaction Documents; or |
(h) | the consummation and effects of Redemptions. |
• | change or amend the governing documents of the Target Companies; |
• | issue, deliver or sell, or authorize or propose the issuance, delivery or sale of any securities (including any debt securities and including any options, warrants, calls, conversion rights, commitments or other securities convertible into or otherwise relating to such securities) or authorize or propose any change in its equity capitalization or capital structure, or enter into any agreement, understanding or arrangement with respect to the voting of equity securities of Bakkt ( provided , however , that exercises or conversions of currently outstanding rights shall not be prohibited), or grant any additional equity or equity-based compensation (including Bakkt Incentive Units and Bakkt Participation Units under the Bakkt Plan); |
• | declare or pay any distribution in respect of the limited liability company interests of Bakkt (other than ordinary and regular tax distributions or distributions made to or by wholly-owned subsidiaries) or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any of its securities or purchase, redeem or otherwise acquire or retire for value any of its securities; |
• | make a loan or advance to or investment in any third party; |
• | sell, assign, lease, sublease, exclusively license, exclusively sublicense, pledge, fail to renew, or otherwise transfer or dispose of or grant any option or exclusive rights in, to or under, any material assets of the Target Companies (other than any such actions performed by any of the Target Companies in the ordinary course of business); |
• | disclose any material trade secrets, material software or material confidential intellectual property of the Target Companies (including the source code for any proprietary software) to any Person who has not entered into a reasonably protective confidentiality agreement; |
• | acquire (whether by merger, consolidation, acquisition of stock or assets or any other form of business combination) any non-natural Person or business or initiate the start-up of any new business, non-wholly-owned subsidiary or joint venture or otherwise acquire any securities or material assets; |
• | incur, create, assume, guarantee or otherwise become liable for any indebtedness (directly, contingently or otherwise) except for (a) advances of any kind under any credit facilities or other debt instrument (including under any applicable credit line) of Bakkt existing as of the date of the Merger Agreement not to exceed $1,000,000, (b) any such indebtedness among Bakkt and its wholly-owned subsidiaries or among Bakkt’s wholly-owned subsidiaries, (c) guarantees by Bakkt of existing indebtedness of subsidiaries of Bakkt, and (d) the accrual of interest on indebtedness outstanding as of the date of the Merger Agreement or incurred in compliance with clauses (a)-(c); |
• | withdraw any license application except as agreed to by the parties with respect to governmental consents and notice filings; |
• | enter into any material contract or amend, modify, terminate or waive any material right under any material contract or any material permit (other than in the ordinary course of business); |
• | other than matters arising in the ordinary course of business or with a value of less than $250,000, commence a material lawsuit or settle, compromise, release or waive its rights under any claim or litigation, other than for routine collection and settlement matters of accounts payable; |
• | enter into, amend or terminate (other than terminations in accordance with their terms) any contract or transaction with any related party, or waive any material right in connection therewith; |
• | announce, implement or effect any reduction in force, mass lay off, early retirement program, severance program, or other program or effort concerning the termination of more than 10 employees, including, but not limited to, any reduction in force, mass lay off, early retirement program, severance program or other program or effort concerning the termination of employees, in |
each case which would trigger any liability or advance notice requirements under the Workers Adjustment Retraining and Notification Act of 1988, as amended, or any similar state, local or foreign law or regulation; |
• | except as otherwise required by law, existing Bakkt Benefit Plans or Bakkt Benefit Arrangements (as each is defined in the Merger Agreement) listed in the Bakkt Disclosure Letter or as would not be material to the Target Companies taken as a whole, and only with respect to officers of Bakkt, (a) grant any severance, retention, change in control or termination or similar pay, (b) terminate, adopt, enter into or materially amend or grant any new awards under any Bakkt Benefit Plan or Bakkt Benefit Arrangement (including the Bakkt Plan) or any plan, policy, practice, program, agreement or other arrangement that would be deemed a Bakkt Benefit Plan or Bakkt Benefit Arrangement as of the date of the Merger Agreement, (c) materially increase the cash compensation or bonus opportunity, except in the ordinary course of business consistent with past practice, (d) take any action to amend or waive any performance or vesting criteria or to accelerate the payment or vesting of any compensation or benefit payable by the Target Companies, (e) hire or engage any new officer of Bakkt, or (f) terminate the employment or engagement, other than for cause, death or disability, of any officer of Bakkt; |
• | enter into or extend any collective bargaining agreement or similar labor agreement, other than as required by applicable law, or recognize any labor union, labor organization, or group of employees of Target Companies as the bargaining representative for any employees of the Target Companies; |
• | revalue any of its material assets or make any change in accounting methods, principles or practices (including cash management practices), except to the extent required to comply with GAAP or to upgrade its practices to those suitable for a public company or as may be necessary in order to give effect to de-consolidation from the parent company of ICEH’s GAAP financial statements; |
• | make, change or rescind any material election relating to taxes, settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy with a governmental authority relating to a material amount of taxes, consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment arising outside the ordinary course of business (except to the extent notice of such extension or waiver is provided to VIH), file any materially amended tax return or claim for refund of a material amount of taxes, or make any material change to a method of accounting for tax purposes, in each case, except in the ordinary course of business, as required by applicable law (or a change in applicable law), or as contemplated by the Merger Agreement; |
• | agree to or adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization; |
• | fail to comply in any material respect with a material law applicable to its business; |
• | accelerate or delay, other than in the ordinary course of business, consistent with past practice, the collection of any trade receivables or the payment of trade payables or any other liability or other material amounts; or |
• | authorize or agree (in writing or otherwise) to take any of the actions described in the foregoing. |
• | change or amend any of the organizational documents of VIH or Merger Sub, or authorize or propose the same, except pursuant to the transactions contemplated by the Transaction Documents; |
• | other than pursuant to the PIPE Investment, issue, deliver or sell, or authorize or propose the issuance, delivery or sale of any securities (including any debt securities and including any options, warrants, calls, conversion rights, commitments or other securities convertible into or otherwise relating to such securities) or authorize or propose any change in the equity capitalization or capital structure of VIH or Merger Sub, or enter into any agreement, understanding or arrangement with respect to the voting of equity securities of VIH; |
• | declare or pay any distribution in respect of the equity interests of VIH or Merger Sub or authorize the issuance of any other securities in respect of, in lieu of or in substitution for any of the securities of VIH or Merger Sub or purchase, redeem or otherwise acquire or retire for value any of the securities of VIH or Merger Sub; |
• | incur, create, assume, guarantee or otherwise become liable for any indebtedness for borrowed money or guarantee any indebtedness of another Person (directly, contingently or otherwise), other than (i) as contemplated by the PIPE Investment, or (ii) working capital loans made by Sponsor necessary to finance VIH’s ordinary course administrative costs and expenses and expenses incurred in connection with the consummation of the Merger and the other transactions pursuant to the Transaction Documents; |
• | make a loan or advance to or investment in any third party; |
• | make or agree to make any capital expenditures; |
• | sell, assign, lease, sublease, exclusively license, exclusively sublicense, pledge or otherwise transfer or dispose of or grant any option or exclusive rights in, to or under, any material assets of VIH or Merger Sub; |
• | acquire (whether by merger, consolidation, acquisition of stock or assets or any other form of business combination) any non-natural Person or business or initiate the start-up of any new business, non-wholly owned subsidiary or joint venture or otherwise acquire any securities or material assets; |
• | enter into, amend, or terminate (other than terminations in accordance with their terms) any contract with any related party, or waive any material right in connection therewith (other than working capital loans made by Sponsor in accordance with the Merger Agreement); |
• | hire any employee or adopt or enter into any Benefit Plan (as such meaning is given in Section 3(3) of the Employee Retirement Income Security Act of 1974, together with plans or arrangements that would be so defined if they were not otherwise exempt from the Employee Retirement Income Security Act of 1974 by that or another section); |
• | adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization; |
• | make any change in accounting methods, principles or practices, except to the extent required by changes in Law or to comply with GAAP; |
• | make, change or rescind any material election relating to taxes, settle or compromise any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy with a governmental authority relating to a material amount of taxes, consent to any extension or waiver of the limitation period applicable to any material tax claim or assessment arising outside the ordinary course of business (except to the extent notice of such extension or waiver is provided to Bakkt), file any materially amended tax return or claim for refund of a material amount of taxes, or make any material change to a method of accounting for tax purposes, in each case except in the ordinary course of business, as required by applicable law (or a change in applicable law) or as contemplated by the Merger Agreement; |
• | amend, waive or otherwise change the Trust Agreement in any manner materially adverse to VIH; or |
• | authorize or agree (in writing or otherwise) to take any of the actions described in the foregoing. |
• | in connection with the access rights provided by the Target Companies during the Interim Period, VIH has agreed that it will not contact or communicate with any of the Target Companies’ customers, suppliers or employees (other than as permitted by the Merger Agreement) without Bakkt’s prior written consent; |
• | during the Interim Period, VIH will provide to Bakkt and its representatives reasonable access to (a) the financial books and records of VIH and Merger Sub and (b) such additional financial and operating data and other information relating to the business and properties of VIH and Merger Sub as Bakkt may reasonably request, subject to the limitations contained in the Merger Agreement; |
• | unless otherwise approved in writing by Bakkt (in its sole discretion), VIH will not permit any amendment or modification to be made to, any waiver of, or provide consent to modify, the applicable purchase price per share or provide the applicable PIPE Investor any material post-Closing right in respect of Bakkt Pubco under any Subscription Agreement, in each case other than by termination of such Subscription Agreement (and a withdrawal of the applicable PIPE Investor) or a reduction in the PIPE Investor’s commitment under such Subscription Agreement (in which case, VIH will provide Bakkt prompt written notice of any such termination or reduction). In the event VIH determines to permit any other amendment or modification to be made to, any other waiver (in whole or in part) of, or provide any other consent to modify, any other material provision of any Subscription Agreement, VIH will provide Bakkt prompt written notice of any such amendment, modification, waiver or consent to modify; |
• | as promptly as reasonably practicable after the date of the Merger Agreement, VIH will, with the assistance, cooperation and reasonable best efforts of Bakkt, prepare and file the Registration Statement with all other applicable regulatory bodies; |
• | comply in all material respects with all applicable laws, any applicable rules and regulations of the applicable national stock exchange, the Cayman Constitutional Documents and the Merger Agreement in the preparation, filing and distribution of the Registration Statement, any solicitation of proxies thereunder, the holding of the extraordinary general meeting of the VIH shareholders and the Redemption; |
• | permit Bakkt and its counsel to review and comment on the Registration Statement, consider such comments in good faith, and not file the Registration Statement without the prior written consent of Bakkt, not to be unreasonably withheld, conditioned or delayed; |
• | use its reasonable best efforts to cause the Registration Statement to comply with the rules and regulations promulgated by the SEC, to “clear” comments from the SEC and become effective as promptly as reasonably practicable; |
• | to include in the proxy statement/prospectus the recommendation of the VIH Board that the VIH Shareholders vote in favor of adoption and approval of the Merger Agreement and the other shareholder proposals set forth in the proxy statement/prospectus and to otherwise use its reasonable best efforts to obtain the VIH Shareholders’ Approval; and neither the VIH Board nor any committee or agent or representative thereof may withdraw (or modify in a manner adverse to Bakkt), or propose to withdraw (or modify in a manner adverse to Bakkt), the VIH Board’s recommendation that the VIH Shareholders vote in favor of adoption and approval of the Merger Agreement and the other shareholder proposals; |
• | use its reasonable best efforts to obtain all necessary state securities law or “Blue Sky” permits and approvals required to carry out the transactions contemplated by the Merger Agreement; |
• | as soon as reasonably practicable following the declaration of effectiveness of the Registration Statement, VIH will distribute the proxy statement and other proxy materials included in the Registration Statement to the holders of VIH Shares to call the extraordinary general meeting and solicit proxies of such parties; |
• | use its reasonable best efforts to cause the Bakkt Pubco Class A Shares to be approved for listing on the NYSE as of the Closing; |
• | cause the Trust Account to be disbursed to VIH pursuant to the Merger Agreement concurrently with the Closing upon the terms set forth in the Trust Agreement; |
• | prior to the Closing, the VIH Board, or an appropriate committee thereof, will adopt a resolution so that the acquisition of VIH and/or Bakkt Pubco equity securities, as applicable, by any person owning securities of the Target Companies who is expected to become a director or officer of Bakkt Pubco will be an exempt transaction for purposes of Section 16(b) of the Exchange Act; |
• | promptly following the execution of the Merger Agreement, VIH, in consultation with Bakkt, will work in good faith with ICE to memorialize a cooperation agreement (the “ Cooperation Agreement |
• | prior to the Closing, holders of VIH Shares will approve the Bakkt Pubco Equity Incentive Plan (with such changes as may be mutually agreed in writing by VIH and Bakkt); and |
• | promptly notify Bakkt of, and give Bakkt the opportunity to participate in (but not control) (subject to a customary joint defense agreement), the defense or settlement of any shareholder litigation against VIH or its directors or officers relating to the transactions contemplated by the Transaction Documents; provided, however, that no such settlement will be agreed to without Bakkt’s consent (not to be unreasonably withheld, conditioned or delayed). |
• | that during the Interim Period, Bakkt will and will cause its subsidiaries to, upon reasonable notice and during regular business hours and at VIH’s sole expense, for any purpose reasonably related to the transactions contemplated by the Transaction Documents or to VIH’s prospective interest in any of the Target Companies, afford to the authorized representatives of VIH reasonable access to (a) the financial books and records of the Target Companies and (b) such additional financial and operating data and other information relating to the business and properties of the Target Companies as VIH may reasonably request; provided, that such access will not materially disrupt or burden the operations of the Target Companies and VIH and its authorized representatives will use their respective |
commercially reasonable efforts to minimize any such disruption; and, provided, further, that all such access will be done in compliance with applicable laws and the social distancing requirements applicable to Bakkt personnel. Notwithstanding anything to the contrary contained in the Merger Agreement, none of the Target Companies will be required to provide (a) any information or access that Bakkt reasonably believes would violate applicable law, including antitrust laws and data protection laws, rules or regulations or the terms of any applicable confidentiality obligation or cause forfeiture of attorney/client privilege, (b) if Bakkt or any of its affiliates, on the one hand, and VIH or any of its affiliates, on the other hand, are adverse parties in a litigation, any information that is reasonably pertinent thereto or (c) any information or access to the extent that it relates to interactions with other prospective buyers of the Target Companies prior to the date of the Merger Agreement or the negotiation of the Transaction Documents. |
• | to cause its appropriate officers and employees, to use reasonable best efforts to cooperate in connection with (a) the arrangement of the PIPE Investment and (b) the marketing of the transactions contemplated by the Transaction Documents in the public markets and/or with existing holders of VIH Shares, in each case as may be reasonably requested by VIH. |
• | to provide VIH as promptly as reasonably practicable prior to the filing of the Registration Statement (or the Form 8-K announcing the Closing, together with, or incorporating by reference, the required pro forma financial statements and the historical financial statements prepared by Bakkt and its accountant and the other “Form 10” information required to be filed therein (the “Completion 8-K S-X of the SEC and in each case, audited in accordance with the standards of the PCAOB (the “PCAOB Financial Statements 8-K (including pro forma financial information), (c) all selected financial data of Bakkt required by Item 301 of Regulation S-K, as necessary for inclusion in the Registration Statement and Completion 8-K and (d) management’s discussion and analysis of financial conditions and results of operations prepared in accordance with Item 303 of Regulation S-K of the SEC with respect to the periods described in clauses (a) and (b), above, as necessary for inclusion in the Registration Statement and Completion 8-K (including pro forma financial information). |
• | that during the Interim Period, Bakkt will use commercially reasonable efforts to obtain any consents that are listed in the Bakkt Disclosure Letter. |
• | to advise VIH in writing of any event occurring following the date of the Merger Agreement that would render any representation or warranty of Bakkt contained in the Merger Agreement to be untrue or inaccurate in any material respect such that the condition with respect to the accuracy of Bakkt’s representations or warranties set forth in the Merger Agreement would not be satisfied. |
• | Whenever any event occurs which would reasonably be expected to result in the Registration Statement containing any untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, VIH or Bakkt, as the case may be, must promptly inform the other party of such |
occurrence and cooperate in filing with the SEC or its staff or any other government officials, and/or mailing to the holders of VIH Shares, an amendment or supplement to the Registration Statement. |
• | Each is aware, and each of their respective controlled affiliates is aware (or upon receipt of any material nonpublic information of the other party, will be advised), of the restrictions imposed by the United States federal securities laws and other applicable foreign and domestic laws on parties possessing material nonpublic information about a public company. |
• | During the Interim Period, except in connection with or support of the transactions contemplated by the Merger Agreement (including any communications with potential PIPE Investors), while any of them are in possession of such material nonpublic information, none of such parties will, directly or indirectly (through its affiliates or otherwise), acquire, offer or propose to acquire, agree to acquire, sell or transfer or offer or propose to sell or transfer any securities of VIH or ICEH, communicate such information to any other party or cause or encourage any party to do any of the foregoing; provided that, in respect of VIH, the foregoing only applies to VIH and its controlled affiliates, agents, professional advisors, employees and officers. |
• | During the Interim Period, each party to the Merger Agreement will give prompt notice (and, in any event, within five business days) to the other parties of any event which would reasonably be expected to cause any of the closing conditions in the Merger Agreement not to be fulfilled or the fulfillment of those conditions to be materially delayed. |
• | Subject to the Merger Agreement, (a) Bakkt will, and Bakkt will cause its subsidiaries to use reasonable best efforts to cause each of its closing conditions of the Merger Agreement to be satisfied at or prior to the Closing (see “The Business Combination Proposal—Merger Agreement— Closing Conditions—Conditions to the Obligations of Each Party The Business Combination Proposal—Merger Agreement— Closing Conditions—Conditions to the Obligations of VIH and Merger Sub The Business Combination Proposal—Merger Agreement— Closing Conditions—Conditions to the Obligations of Each Party Closing Conditions—Conditions to the Obligations of Bakkt |
• | Each party to the Merger Agreement will, as promptly as reasonably practicable, use reasonable best efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all governmental authorities that may be or become necessary for its execution and delivery of the Merger Agreement and the performance of its obligations pursuant to the Transaction Documents (the “ Regulatory Filings |
• | Each party to the Merger Agreement will use reasonable best efforts to cooperate fully with the other party and its affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals and effect any such filing, withdrawal or amendment. With respect to the Regulatory Filings, each of Bakkt and VIH agrees to use its reasonable best efforts and cooperate with the other parties (a) in timely making inquiries with governmental authorities regarding the Regulatory Filings, (b) in determining if any Regulatory Filings are required by governmental authorities, and (c) in timely making all Regulatory Filings (except with respect to such jurisdictions where the parties agree that a Regulatory Filing is not required). The parties to the Merger Agreement will not willfully take any action that will have the effect of delaying, impairing or impeding in any material respect the receipt of any Regulatory Filings or any other required consents, authorizations, orders and approvals that, if not received, would have a material adverse impact on the business of the Target Companies, taken as a whole. |
• | Except as otherwise provided by the Merger Agreement or as required by applicable law, none of the parties to the Merger Agreement will make any disclosure or permit any of their respective affiliates to |
make any public disclosure (whether or not in response to an inquiry) of the subject matter of the Merger Agreement unless previously approved by VIH and Bakkt in writing, which approval will not be unreasonably conditioned, withheld or delayed. |
• | VIH and Bakkt will mutually agree upon and, as promptly as practicable after the execution of the Merger Agreement, issue a press release announcing the execution of the Merger Agreement. VIH, Bakkt Pubco and Bakkt will cooperate in good faith with respect to the prompt preparation of, and, as promptly as practicable after the execution of the Merger Agreement VIH will file with the SEC, a Current Report on Form 8-K pursuant to the Exchange Act to report the execution of the Merger Agreement. |
• | Prior to Closing, VIH and Bakkt will mutually agree upon and prepare the press release announcing the consummation of the transactions contemplated by the Merger Agreement (“ Closing Press Release 8-K. |
• | During the Interim Period, neither Bakkt nor VIH will, and each will cause its representatives to not, directly or indirectly, (a) take any action to solicit, assist, initiate or facilitate the making, submission or announcement of, or encourage, any sale or other disposition of any of the Target Companies’ equity or any other transaction that would impede, delay, interfere with or prevent the consummation of the transactions contemplated by the Transaction Documents or proposal to do the same, (b) furnish, or afford access to, (including through any virtual data room) any information regarding such party or its affiliates or their respective businesses, operations, assets, liabilities, financial condition, books and records, prospects or employees to any party (other than a party to the Merger Agreement or their respective representatives (other than ICEH)) in all cases for the purpose of assisting with or facilitating, or that would otherwise reasonably be expected to lead to, such a transaction or proposal, (c) enter into, continue, engage or participate in discussions or negotiations with any party with respect to, or that would reasonably be expected to lead to, such transaction or proposal, (d) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any such transaction or proposal, (e) enter into such transaction or negotiate or enter into any agreement, arrangement or understanding (including any letter of intent or term sheet) relating to such or publicly announce an intention to do so, or (f) release any third Person from, or waive any provision of, any confidentiality agreement to which such party is a party. Each party to the Merger Agreement will notify the others as reasonably promptly as practicable (and in any event within 48 hours) in writing of the receipt by such party or any of its representatives of (a) any inquiries, proposals or offers, requests for information or requests for discussions or negotiations regarding or constituting any such proposal or any inquiries, proposals or offers, requests for information or requests for discussions or negotiations that could reasonably be expected to result in such proposal, and (b) any request for information relating to such party or its affiliates, specifying in each case, the material terms and conditions thereof (including a copy thereof if in writing or a written summary thereof if oral) and the identity of the party making such inquiry, proposal, offer or request for information. Each party to the Merger Agreement will keep the others promptly informed of the status of any such inquiries, proposals, offers or requests for information. During the Interim Period, each party to the Merger Agreement will, and will cause its representatives to, immediately cease and cause to be terminated any solicitations, discussions or negotiations with any party with respect to any such proposal. |
• | The parties to the Merger Agreement will take all necessary action, including causing the members of the VIH Board to resign, so that effective as of the Closing, the Company Board will consist of five to nine members, with one designated by Bakkt, one designated by the Sponsor, and the remaining members to appointed jointly by Bakkt and the Sponsor. The directors to be designated jointly by Bakkt and the Sponsor will include (a) a majority of “independent” directors for purposes of the listing rules of the exchange on which the Bakkt Pubco Class A Shares will be traded and (ii) at least three qualified members of the audit committee of the Company Board (with one of such persons being an audit committee financial expert). In accordance with the Proposed Organizational Documents, the |
parties have agreed that the Company Board will be a classified board with three classes of directors, with: |
(i) | one class of directors (the “Class I Directors |
(ii) | a second class of directors (the “ Class II Directors |
(iii) | a third class of directors (the “ Class III Directors |
• | The parties to the Merger Agreement will take all action necessary, including causing the executive officers of VIH to resign, so that the individuals serving as executive officers of Bakkt Pubco immediately after the Closing (other than the Chief Executive Officer or as otherwise approved by VIH) will be the persons who were serving as officers of Bakkt immediately prior to Closing. The Chief Executive Officer of Bakkt Pubco and Bakkt Opco will be the individual appointed by the Company Board. |
• | During the Interim Period, except as otherwise expressly contemplated by the Merger Agreement, (a) Bakkt will not, and will cause its representatives and subsidiaries not to, engage in any transactions involving the equity interests of VIH (including, without limitation, the VIH Class A Ordinary Shares) without the prior written consent of VIH and (b) VIH will not, and will cause its controlled affiliates, agents, professional advisors, employees and officers not to, engage in any transactions involving the equity interests of ICE without the prior written consent of ICE. |
• | no law will be in effect that prohibits, makes illegal, enjoins or prevents the consummation of the transactions contemplated by the Merger Agreement and the other Transaction Documents; |
• | the approval of the Condition Precedent Proposals by VIH’s shareholders will have been obtained (the “ VIH Shareholder Approval |
• | the approval by Bakkt Equity Holders that hold, in the aggregate, Bakkt Interests which constitute not less than the requisite number of then outstanding Bakkt Interests necessary to approve the Proposed Transaction under the current Bakkt operating agreement (the “ Bakkt Equity Holders Approval |
• | the authorizations, consents, orders, approvals, non-objections, declarations, filings or waiting periods from state banking authorities or money transmitter licensing authorities in states in which two of Bakkt’s subsidiaries (i.e., Bakkt Trust and Bakkt Marketplace) hold licenses (solely to the extent required by such state banking authorities or money transmitter licensing authorities for the transactions contemplated by the Merger Agreement), including all required Regulatory Filings, will have been made, received or expired, as applicable; |
• | the Registration Statement will have been declared effective by the SEC and no stop order suspending the effectiveness of the Registration Statement will have been issued and no proceedings for that purposes will have been initiated or threatened by the SEC or any other governmental authority; |
• | the Bakkt Fundamental Representations will be true and correct in all respects (except for inaccuracies that, individually or in the aggregate, are de minimis de minimis Bakkt Fundamental Representations Closing Condition |
• | the regulatory matters representations and warranties made by Bakkt will be true and correct in all material respects as of the date of the Merger Agreement and as of the Closing as if made as of the Closing ((a) provided, that representations and warranties qualified by Bakkt Material Adverse Effect or other materiality qualifications will be true and correct in all respects as of the date of the Merger Agreement and as of the Closing as if made as of the Closing; and (b) provided, further that representations and warranties made as of a specific date will be true and correct in all material respects as of such date (except that representations and warranties qualified by Bakkt Material Adverse Effect or other materiality qualifications will be true and correct in all respects as of such date)) (the “ Bakkt Regulatory Representations Closing Condition |
• | the remaining representations and warranties of Bakkt contained in the Merger Agreement will be true and correct as of the date of the Merger Agreement and as of the Closing as if made as of the Closing (except for representations and warranties made as of a specific date, which will be true and correct as of such date) (in each case, without giving effect to any Bakkt Material Adverse Effect or other materiality qualifications contained therein), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, have a Bakkt Material Adverse Effect (together with the Bakkt Fundamental Representations Closing Condition and the Bakkt Regulatory Representations Closing Condition, the “ Bakkt Representations Closing Conditions |
• | Bakkt will have performed or complied in all material respects with all obligations, agreements and covenants contained in the Merger Agreement to be performed or complied with by Bakkt prior to the Closing (the “ Bakkt Covenants Closing Condition |
• | since the date of the Merger Agreement, there will not have occurred a Bakkt Material Adverse Effect; and |
• | VIH will have received the deliverables required to be delivered by Bakkt upon Closing under the Merger Agreement. |
• | the VIH Fundamental Representations will be true and correct in all respects (except for inaccuracies that, individually or in the aggregate, are de minimis de minimis VIH Fundamental Representations Closing Condition |
• | the regulatory representations and warranties made by VIH and Merger Sub will be true and correct in all material respects as of the date of the Merger Agreement and as of the Closing as if made as of the Closing ((a) provided, that representations and warranties qualified by VIH Material Adverse Effect or other materiality qualifications will be true and correct in all respects as of the date of the Merger Agreement and as of the Closing as if made as of the Closing; and (b) provided, further that representations and warranties made as of a specific date will be true and correct in all material respects as of such date (except that representations and warranties qualified by VIH Material Adverse Effect or other materiality qualifications will be true and correct in all respects as of such date)) (the “ VIH Regulatory Representations Closing Condition |
• | the remaining representations and warranties of VIH and Merger Sub contained in the Merger Agreement will be true and correct as of the date of the Merger Agreement and as of the Closing as if made as of the Closing (except for representations and warranties made as of a specific date, which will be true and correct as of such date) (in each case, without giving effect to any VIH Material Adverse Effect or other materiality qualifications contained therein), except where the failure of such representations and warranties to be so true and correct would not, individually or in the aggregate, have a VIH Material Adverse Effect (together with the VIH Fundamental Representations Closing Condition and the VIH Regulatory Representations Closing Condition, the “ VIH Representations Closing Conditions |
• | VIH and Merger Sub will have performed or complied in all material respects with all obligations, agreements and covenants contained in the Merger Agreement to be performed or complied with by VIH and Merger Sub (as applicable) prior to the Closing (the “ VIH Covenants Closing Condition |
• | since the date of the Merger Agreement, there will not have occurred a VIH Material Adverse Effect; |
• | the Bakkt Pubco Class A Shares (including the Bakkt Pubco Class A Shares to be issued in connection with the Domestication, the Bakkt Pubco Class A Shares to be issued in the PIPE Investment and the Bakkt Pubco Class A Shares issuable upon exchange of Bakkt Opco Common Units in accordance with the Exchange Agreement (as more fully discussed in “ The Business Combination Proposal—Related Agreements—Exchange Agreement |
• | the existing members of the VIH Board will have resigned effective as of the Closing, and the post-Closing directors on the Company Board (as named in the “ The Director Election Proposal The Organizational Documents Proposal The Director Election Proposal |
• | the existing officers of VIH will have resigned effective as of the Closing, and the post-Closing officers of Bakkt Pubco (which would be Bakkt’s current officers) will have been appointed in accordance with |
the DGCL, the Proposed Organizational Documents and the Stockholders Agreement (see “ The Organizational Documents Proposal Management of the Company Following the Business Combination |
• | the Domestication will be consummated immediately prior to the Closing (for additional information, see “ The Domestication Proposal |
• | the PIPE Investment will have been consummated; |
• | the Available Cash Condition discussed above will have been satisfied (for additional information, see “ The Business Combination Proposal—Merger Agreement—Closing Conditions—Available Cash Condition |
• | Bakkt will have received the deliverables required to be delivered by VIH and Merger Sub upon Closing pursuant to the Merger Agreement. |
• | by written consent of VIH and Bakkt; |
• | by either VIH or Bakkt, if the Closing has not occurred by September 30, 2021 (the “ Termination Date |
• | by either VIH or Bakkt, if any governmental authority having competent jurisdiction has issued a final, non-appealable order, decree or ruling, or there exists any law, in each case that permanently prohibits, makes illegal, enjoins or prevents the consummation of the transactions contemplated by the Merger Agreement and the other Transaction Documents, unless such party’s failure to materially fulfil any representation, warranty, covenant or obligation under the Merger Agreement or other material action has been the actual or proximate cause of such order, decree, ruling or law; |
• | by either VIH or Bakkt, if the extraordinary general meeting discussed in “ Extraordinary General Meeting of VIH |
• | by VIH (if neither it nor Merger Sub is in material breach of their respective representations, warranties, covenants and obligations under the Merger Agreement) if there has been a breach of, or inaccuracy in, any representation, warranty, covenant or agreement of Bakkt set forth in the Merger Agreement, which breach or inaccuracy would cause the Bakkt Covenants Closing Condition or any of the Bakkt Representations Closing Conditions not to be satisfied if it remained uncured as of the Termination Date (and such breach or inaccuracy has not been cured or such condition has not been satisfied within 20 business days after the receipt by Bakkt of written notice thereof from VIH); |
• | by Bakkt (if it is not in material breach of its representations, warranties, covenants and obligations under the Merger Agreement) if there has been a breach of, or inaccuracy in, any representation, warranty, covenant or agreement of VIH or Merger Sub set forth in the Merger Agreement, which breach or inaccuracy would cause the VIH Covenants Closing Condition or any of the VIH Representations Closing Conditions not to be satisfied if it remained uncured as of the Termination Date (and such breach or inaccuracy has not been cured or such condition has not been satisfied within 20 business days after the receipt by VIH of written notice thereof from Bakkt); |
• | by Bakkt if (a) all of the conditions discussed above under “ The Business Combination Proposal The Merger Agreement—Closing Conditions—Conditions to the Obligations of Each Party |
“ The Business Combination Proposal The Merger Agreement—Closing Conditions—Conditions to the Obligations of VIH and Merger Sub The Business Combination Proposal The Merger Agreement—Closing The Business Combination Proposal The Merger Agreement—Closing Conditions—Conditions to the Obligations of Bakkt The Business Combination Proposal The Merger Agreement—Closing |
• | by Bakkt, if Available Cash set forth on the closing statement, to be prepared by Bakkt and VIH following the date on which the Redemption Rights expire, is less than $425,000,000 (see “ The Business Combination Proposal— Merger Agreement—Closing Conditions—Available Cash Condition |
• | by VIH, if (a) the Bakkt Equity Holders Support Agreement (defined below) (including the written consents contemplated therein) was not executed and delivered by ICEH within 24 hours following the execution of the Merger Agreement and (b) the Bakkt Equity Holders Approval was not obtained within seven days following the execution of the Merger Agreement. |
• | the timing of exchanges—for instance, the increase in any tax deductions will vary depending on the fair market value, which may fluctuate over time, of the depreciable or amortizable assets of Bakkt Opco at the time of each exchange; |
• | the price of Bakkt Pubco Class A Shares at the time of each exchange—the increase in any tax deductions, as well as the tax basis increase in other assets of Bakkt Opco, is directly proportional to the price of Bakkt Pubco Class A Shares at the time of each exchange; |
• | the extent to which such exchanges are taxable—if an exchange is not taxable for any reason, increased deductions may not be available; and |
• | the amount and timing of Bakkt Pubco’s income—Bakkt Pubco will be required to pay 85% of certain net income tax benefits as and when realized, under the terms of the Tax Receivable Agreement. Except as discussed above with respect to a material breach of a material obligation under the Tax Receivable Agreement, a change of control, or other circumstances requiring an early termination of the Tax Receivable Agreement, if Bakkt Pubco does not have taxable income, it generally will not be required to make payments under the Tax Receivable Agreement for that taxable year because no tax benefits will have actually been realized. However, any tax benefits that do not result in realized benefits in a given tax year will likely generate tax attributes that may be utilized to generate benefits in previous or future tax years. The utilization of such tax attributes will result in payments under the Tax Receivable Agreement. |
• | high-growth financial technology (“ fintech |
• | of meaningful scale and whose products and/or services are materially differentiated from competitors creating meaningful barriers to entry for new competitors; |
• | operate a superior unit economic model which either currently or over time are expected to generate profitable, stable and predictable cash flow generation for the business; |
• | at a capital inflection point where significant risk-adjusted shareholder value can be generated through a business combination and resulting access to the broader equity capital markets to drive growth; |
• | possess a best-in-class |
• | maintain superior and scalable risk management, underwriting, data analytics, monitoring and reporting processes; and |
• | promote financial inclusion and provide significant value to the underlying end consumer or enterprise through a lowering of transaction costs or through providing access to high-quality financial services. |
• | Public research on the digital assets industry and related industries, its prospects, a review of Bakkt’s historical financial performance and forecasts including revenues, sale projections and merchant onboarding pipeline, capital expenditures, cash flow and other relevant financial and operating metrics; |
• | Extensive conference call meetings with Bakkt’s management team and representatives regarding operations, company products and services, intellectual property, key merchant partners, end market industries, total available market for each industry and growth prospects, among other customary due diligence matters; |
• | Review of Bakkt’s material business contracts, corporate books and records, government regulations and filings, intellectual property and information technology and certain other legal due diligence; |
• | Financial and accounting due diligence; and |
• | The prospective financial information of Bakkt set forth in the Projections. |
• | Prior to the IPO, the Sponsor purchased 5,750,000 VIH Class B Ordinary Shares (565,700 of which were forfeited in connection with the exercise of the over-allotment option granted to the underwriters in the IPO) for an aggregate purchase price of $25,000, or approximately $0.004 per share, and the Sponsor transferred 20,000 of its VIH Class B Ordinary Shares to each of Adrienne Harris, Kai Schmitz and Kurt Summers, who are all independent directors on the VIH Board, at the same price per share as paid by the Sponsor. As a result of the significantly lower investment per share of our Sponsor and such independent directors as compared with the investment per share of the Public Shareholders, a transaction which results in an increase in the value of the investment of the Sponsor and such independent directors may result in a decrease in the value of the investment of the Public Shareholders. In addition, if VIH does not consummate a business combination by September 25, 2022 (or if such date is extended at a duly called extraordinary general meeting, such later date), it would cease all operations except for the purpose of winding up, redeeming all of the outstanding Public Shares for cash and, subject to the approval of its remaining shareholders and the VIH Board, |
liquidating and dissolving, subject in each case to its obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such event, the 5,124,300 VIH Class B Ordinary Shares owned by the Sponsor (this is the amount of shares owned by the Sponsor following the forfeiture of 565,700 VIH Class B Ordinary Shares and the transfer of 20,000 VIH Class B Ordinary Shares to each of Adrienne Harris, Kai Schmitz and Kurt Summers), and the 20,000 VIH Class B Ordinary Shares owned by each of Adrienne Harris, Kai Schmitz and Kurt Summers, would be worthless because following the redemption of the Public Shares, VIH would likely have few, if any, net assets and because the Sponsor and VIH’s directors and officers (including the independent directors) have agreed to waive their respective rights to liquidating distributions from the Trust Account in respect of any VIH Class A Ordinary Shares and VIH Class B Ordinary Shares held by it or them, as applicable, if VIH fails to complete a business combination within the required period. Additionally, in such event, the 6,147,440 Private Placement Warrants purchased by the Sponsor simultaneously with the consummation of the IPO and the exercise of the over-allotment option by the underwriters for an aggregate purchase price of $6,147,440 will also expire worthless. VIH’s directors and executive officers, John Martin, Gordon Watson, and Olibia Stamatoglou, also may have a direct or indirect economic interest in such Private Placement Warrants and in the 5,124,300 VIH Class B Ordinary Shares owned by the Sponsor. The 5,184,300 of Bakkt Pubco Class A Shares into which the 5,184,300 VIH Class B Ordinary Shares held by the Sponsor, Adrienne Harris, Kai Schmitz and Kurt Summers will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of approximately $51,220,884.00 based upon the closing price of $9.88 per VIH Class A Ordinary Share on the Nasdaq on August 17, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. However, given that such Bakkt Pubco Class A Shares will be subject to certain restrictions, including those described elsewhere in this proxy statement/prospectus, VIH believes such shares have less value. The 6,147,440 Bakkt Pubco Warrants into which the 6,147,440 Private Placement Warrants held by the Sponsor will automatically convert in connection with the Merger (including after giving effect to the Domestication), if unrestricted and freely tradable, would have had an aggregate market value of approximately $6,147,440.00 based upon the closing price of $1.00 per Public Warrant on the Nasdaq on August 17, 2021, the most recent practicable date prior to the date of this proxy statement/prospectus. |
• | Gordon Watson, a current director of VIH, is expected to be a director of Bakkt Pubco after the Closing. As such, in the future, Mr. Watson may receive fees for his service as a director, which may consist of cash or stock-based awards, and any other remuneration that the Company Board determines to pay to its non-employee directors. |
• | VIH’s existing directors and officers will be eligible for continued indemnification and continued coverage under VIH’s directors’ and officers’ liability insurance policy after the Closing and pursuant to the Merger Agreement and indemnification agreements entered into with such directors and officers in connection with the IPO. |
• | In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to VIH if and to the extent any claims by a third party (other than VIH’s independent registered public accounting firm) for services rendered or products sold to VIH, or a prospective target business with which VIH has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below the lesser of (a) $10.00 per Public Share and (b) 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 Public Share, due to reductions in value of the trust assets, in each case net of the interest that may be withdrawn to pay taxes. This liability will not apply to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and as to any claims under the indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act. |
• | VIH’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket |
combination. However, if VIH fails to consummate a business combination by September 25, 2022, they will not have any claim against the Trust Account for reimbursement. Accordingly, VIH may not be able to reimburse these expenses if the Business Combination or another business combination is not completed by such date. |
• | VIH’s officers and directors and their affiliates are entitled to reimbursement of out-of-pocket |
• | Pursuant to the Registration Rights Agreement, the Sponsor and certain members of the Sponsor will have customary registration rights, including demand and piggy-back rights, subject to cooperation and cut-back provisions with respect to the Bakkt Pubco Common Stock and Bakkt Pubco Warrants held by such parties following the Closing. |
• | The Proposed Certificate of Incorporation will contain a provision expressly electing that Bakkt Pubco will not to be governed by Section 203 (Delaware’s “interested stockholder” statute) of the DGCL, although it will provide other restrictions regarding takeovers by interested stockholders. See the section entitled “ The Organizational Documents Proposal The Advisory Organizational Documents Proposals |
• | Bakkt’s Differentiation and Platform Scalability |
• | Bakkt’s Business and Market Share |
• | Bakkt’s Diverse Revenue Generation Model and Unit Economics |
• | Bakkt’s Tangible Growth Opportunities Outperforming Competitors |
• | Superior Technology Compared to Alternatives |
• | a closing date of the Business Combination of January 1, 2021 and related funding for execution of Bakkt’s growth strategy; |
• | general launch of the first consumer-focused iteration of the Bakkt Platform, our consumer app, in the first quarter of 2021; |
• | continued acquisition of partnerships with digital asset content providers; and |
• | expansion of the number and type of digital assets offered on the Bakkt Platform including, but not limited to additional cryptoassets, in-game assets, equity securities and additional loyalty and rewards points/miles; and |
• | with respect to the projected revenue to be generated from crypto trades, among other things, an increasing number of active users, with the largest increase occurring between 2021 and 2022 following the initial engagement and integration of enterprise partners on the Bakkt platform, and maintaining a certain level of monthly crypto purchases and crypto sales within the app. |
($ in millions) |
2021E |
2022E |
2023E |
2024E |
2025E |
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Transaction (1) |
$ | 16 | $ | 137 | $ | 234 | $ | 294 | $ | 351 | ||||||||||
Crypto Trades (2) |
849 | 2,863 | 4,413 | 5,410 | 6,206 | |||||||||||||||
Subscription, Services and Other |
23 | 30 | 35 | 37 | 40 | |||||||||||||||
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Revenue |
$ | 889 | $ | 3,030 | $ | 4,681 | $ | 5,741 | $ | 6,597 | ||||||||||
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Transaction-Based Expenses (3) |
(834 | ) | (2,806 | ) | (4,325 | ) | (5,302 | ) | (6,082 | ) | ||||||||||
Revenue Less Transaction-Based Expenses (4) |
$ | 55 | $ | 224 | $ | 357 | $ | 439 | $ | 515 | ||||||||||
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EBITDA (5) |
$ | (184 | ) | $ | (46 | ) | $ | 79 | $ | 181 | $ | 242 | ||||||||
Adjustments (6) |
15 | 23 | 32 | 39 | 43 | |||||||||||||||
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Adjusted EBITDA (7) |
$ | (169 | ) | $ | (23 | ) | $ | 111 | $ | 221 | $ | 285 | ||||||||
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(1) | Transaction revenue is shown net of certain contra-revenue items. |
(2) | Consists of the gross revenue from sales of cryptocurrency, in which Bakkt acts as the principal in transactions with its third-party trading relationships and consumers using its app. The projected revenue assumes, among other things, (i) an increasing number of active users, with the largest increase occurring between 2021 and 2022 following the initial engagement and integration of enterprise partners on the Bakkt platform, (ii) a certain level of monthly crypto purchases and crypto sales within the consumer app, and (iii) that the app would become available in the first quarter of 2021. |
(3) | Consists of estimated cost of cryptocurrency sold. |
(4) | Revenue Less Transaction-Based Expenses is calculated as revenue (which substantially consists of the gross revenue from sales of cryptocurrency (see footnote 2 above)) less the estimated cost of cryptocurrency sold (see footnote 3 above). |
(5) | EBITDA is a non-GAAP financial measure and is defined as earnings before interest, income taxes, depreciation and amortization. |
(6) | Adjustments reflect certain non-cash and/or non-recurring items that are added to EBITDA to calculate Adjusted EBITDA, including non-cash compensation (which does not reflect the anticipated non-cash compensation granted to the then-incoming chief executive officer) and parent equity contribution amortization (which is a contra-revenue item). |
(7) | Adjusted EBITDA is a non-GAAP financial measure and is defined as earnings before interest, income taxes, depreciation, amortization and certain non-cash and/or non-recurring items that do not contribute directly to Bakkt’s evaluation of its operating results. These items include, among others, acquisition costs, restructuring and certain severance costs, strategic initiative and other charges, unit-based compensation, parent equity contribution (a contra-revenue item), and the impact of certain other period specific non-recurring transactions. |
• | Prominence, Predictability and Flexibility of Delaware Law |
and business needs of corporations organized under its laws. Many corporations have chosen Delaware initially as a state of incorporation or have subsequently changed corporate domicile to Delaware. Because of Delaware’s prominence as the state of incorporation for many major corporations, both the legislature and courts in Delaware have demonstrated the ability and a willingness to act quickly and effectively to meet changing business needs. The DGCL is frequently revised and updated to accommodate changing legal and business needs and is more comprehensive, widely used and interpreted than other state corporate laws. This favorable corporate and regulatory environment is attractive to businesses such as ours. |
• | Well-Established Principles of Corporate Governance |
• | Increased Ability to Attract and Retain Qualified Directors |
Provision |
Delaware |
Cayman Islands | ||
Applicable legislation |
General Corporation Law of the State of Delaware | The Companies Act (As Revised) of the Cayman Islands | ||
General Vote Required for Combinations with Interested Stockholders/Shareholders |
Generally, a corporation may not engage in a business combination with an interested stockholder for a period of three years after the time of the transaction in which the person became an interested stockholder, unless the corporation opts out of the statutory provision. | No similar provision |
Provision |
Delaware |
Cayman Islands | ||
Appraisal Rights |
Generally, a stockholder of a publicly traded corporation does not have appraisal rights in connection with a merger. Stockholders of a publicly traded corporation do, however, generally have appraisal rights in connection with a merger if they are required by the terms of a merger agreement to accept for their shares anything except: (a) shares or depository receipts of the corporation surviving or resulting from such merger; (b) shares of stock or depository receipts that will be either listed on a national securities exchange or held of record by more than 2,000 holders; (c) cash in lieu of fractional shares or fractional depository receipts described in (a) and (b) above; or (d) any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in (a), (b) and (c) above. | Under the Companies Act, minority shareholders that dissent to a merger are entitled to be paid the fair market value of their shares, which, if necessary, may ultimately be determined by the courts of the Cayman Islands. | ||
Requirements for Stockholder/Shareholder Approval |
Subject to the certificate of incorporation, stockholder approval of mergers, a sale of all or substantially all the assets of the corporation, dissolution and amendments of constitutional documents require a majority of outstanding shares; most other stockholder approvals require a majority of those present and voting, provided a quorum is present. | Subject to the articles of association, matters which require shareholder approval, whether under Cayman Islands statute or the company’s articles of association, are determined (subject to quorum requirements, the Companies Act, applicable law and the relevant articles of association) by ordinary resolution, being the approval of the holders of a majority of the shares, who, being present in person or proxy and entitled to vote, vote at the meeting of shareholders or by special resolution (such as the amendment of the company’s constitutional documents), being the approval of the holders of a majority of not less than two-thirds of the shares, who, being present in person or by proxy and entitled to vote, vote at the meeting of shareholders. |
Provision |
Delaware |
Cayman Islands | ||
Requirement for Quorum |
Quorum is a majority of shares entitled to vote at the meeting unless otherwise set in the constitutional documents, but cannot be less than one-third of shares entitled to vote at the meeting. |
Quorum is set in the company’s memorandum and articles of association. | ||
Stockholder/Shareholder Consent to Action Without Meeting |
Unless otherwise provided in the certificate of incorporation, stockholders may act by written consent. | Shareholder action by written resolutions (whether unanimous or otherwise) may be permitted by the articles of association. The articles of association may provide that shareholders may not act by written resolutions. | ||
Inspection of Books and Records |
Any stockholder may inspect the corporation’s books and records for a proper purpose during the usual hours for business. | Shareholders generally do not have any rights to inspect or obtain copies of the register of members or other corporate records of a company. | ||
Stockholder/Shareholder Lawsuits |
A stockholder may bring a derivative suit subject to procedural requirements (including adopting Delaware as the exclusive forum as per the Advisory Organizational Documents Proposal 5B). | In the Cayman Islands, the decision to institute proceedings on behalf of a company is generally taken by the company’s board of directors. A shareholder may be entitled to bring a derivative action on behalf of the company only in certain limited circumstances. | ||
Removal of Directors |
Any director or the entire board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors, except as follows: (a) unless the certificate of incorporation otherwise provides, in the case of a corporation with a classified board, stockholders may effect such removal only for cause; or (b) in the case of a corporation having cumulative voting, if less than the entire board is to be removed, no director may be removed without cause if the votes cast against such director’s removal would be sufficient to elect such director if then cumulatively voted at an election of the entire board. However, because the Company Board will be classified after the Closing, pursuant to the Proposed | A company’s memorandum and articles of association may provide that a director may be removed for any or no reason and that, in addition to shareholders, boards may be granted the power to remove a director. |
Provision |
Delaware |
Cayman Islands | ||
Certificate of Incorporation, a director may be removed from office only for cause and only by the affirmative vote of at least 66 2/3% of the total voting power of the outstanding shares of capital stock of the corporation entitled to vote in any annual election of directors or class of directors, voting together as a single class. | ||||
Number of Directors |
The number of directors is fixed by the by-laws, unless the certificate of incorporation fixes the number of directors, in which case a change in the number of directors will be made only by amendment of the certificate of incorporation. The by-laws may provide that the board may increase the size of the board and fill any vacancies. |
Subject to the memorandum and articles of association, the board may increase the size of the board and fill any vacancies. | ||
Classified or Staggered Boards |
Classified boards are permitted. | Classified boards are permitted. | ||
Fiduciary Duties of Directors |
Directors must exercise a duty of care and duty of loyalty and good faith to the company and its stockholders. | A director owes fiduciary duties to a company, including to exercise loyalty, honesty and good faith to the company as a whole. | ||
In addition to fiduciary duties, directors owe a duty of care, diligence and skill. | ||||
Such duties are owed to the company, but may be owed directly to creditors or shareholders in certain limited circumstances. | ||||
Indemnification of Directors and Officers |
A corporation is generally permitted to indemnify any person who was or is a party to any proceeding because such person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another entity against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred if the person acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal | A Cayman Islands exempted company generally may indemnify its directors or officers, except with regard to fraud or willful default. |
Provision |
Delaware |
Cayman Islands | ||
proceeding, had no reasonable cause to believe their conduct was unlawful. If the action was brought by or on behalf of the corporation, no indemnification is made when a person is adjudged liable to the corporation unless a court determines such person is fairly and reasonably entitled to indemnity for expenses the court deems proper. | ||||
Limited Liability of Directors |
Permits the limiting or eliminating of the monetary liability of a director to a corporation or its stockholders, except with regard to breaches of duty of loyalty, intentional misconduct, unlawful stock repurchases or dividends, or improper personal benefit. | Liability of directors may be limited, except with regard to their own fraud or willful default. |
• | To change the corporate name from “VPC Impact Acquisition Holdings” to “Bakkt Holdings, Inc.”; |
• | To increase the total number of shares of our capital stock from (a) 200,000,000 VIH Class A Ordinary Shares, 20,000,000 VIH Class B Ordinary Shares and 1,000,000 preference shares, par value $0.0001 per share, of VIH to (b) 1,000,000,000 shares of Bakkt Pubco Common Stock, which consists of (A) 750,000,000 Bakkt Pubco Class A Shares, and (B) 250,000,000 Bakkt Pubco Class V Shares, and 1,000,000 shares of Bakkt Pubco Preferred Stock; and |
• | To authorize all other changes in connection with the replacement of the Cayman Constitutional Documents with the Proposed Certificate of Incorporation and Proposed By-Laws in connection with the consummation of the Business Combination (copies of which are attached to this proxy statement/prospectus as Annex B-1 Annex B-2 |
Cayman Constitutional Documents |
Proposed Organizational Documents | |||
Authorized Shares (Advisory Organizational Documents Proposal 5A) |
The Cayman Constitutional Documents authorize 221,000,000 VIH shares, consisting of 200,000,000 VIH Class A Ordinary Shares, 20,000,000 Class B Ordinary Shares and 1,000,000 VIH preference shares. See paragraph 5 of the Existing Memorandum. |
The Proposed Organizational Documents authorize 1,001,000,000 shares, consisting of 1,000,000,000 shares of Bakkt Pubco Common Stock (consisting further of (a) 750,000,000 Bakkt Pubco Class A Shares, and (b) 250,000,000 Bakkt Pubco Class V Shares) and 1,000,000 shares of Bakkt Pubco Preferred Stock. See Article IV of the Proposed Certificate of Incorporation. | ||
Exclusive Forum Provision (Advisory Organizational Documents Proposal 5B) |
The Cayman Constitutional Documents do not contain a provision adopting an exclusive forum for certain shareholder litigation. | The Proposed Organizational Documents adopt (a) Delaware as the exclusive forum for certain stockholder litigation and (b) the federal district courts of the United States of America as the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. These provisions will not address or apply to claims that arise under the Exchange Act; however, Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. See Article XII of the Proposed Certificate of Incorporation |
Cayman Constitutional Documents |
Proposed Organizational Documents | |||
Takeovers by Interested Stockholders (Advisory Organizational Documents Proposal 5C) |
The Cayman Constitutional Documents do not provide restrictions on takeovers of VIH by a related shareholder following a business combination. | The Proposed Organizational Documents will have Bakkt Pubco elect not to be governed by Section 203 of the DGCL relating to takeovers by interested stockholders, but will provide other similar restrictions regarding takeovers by interested stockholders. See Article IX of the Proposed Certificate of Incorporation. | ||
Adoption of Supermajority Vote Requirement to Amend the Proposed Organizational Documents (Advisory Organizational Documents Proposal 5D) |
The Cayman Constitutional Documents provide that amendments may be made by a special resolution under Cayman Islands law, being the affirmative vote of holders of a majority of at least two-thirds of the VIH Shares represented in person or by proxy and entitled to vote at a general meeting and who vote at a general meeting.See Article 18 of the Cayman Constitutional Documents. |
The Proposed Certificate of Incorporation requires the affirmative vote of at least 66 2/3 % of the voting power of the outstanding shares to amend, alter, repeal or rescind Article V, Article VI, Article VII, Article VIII, Article IX, Article X, Article XII and Article XIII of the Proposed Certificate of Incorporation. For amendments to other provisions of the Proposed Certificate of Incorporation, the DGCL requires the affirmative vote of a majority of the outstanding shares entitled to vote thereon. See Article XIII of the Proposed Certificate of Incorporation. The Proposed Certificate of Incorporation permits the Company Board to amend, alter, repeal or rescind the Proposed By-Laws without the consent or vote of the stockholders of the Company.See Article V of the Proposed Certificate of Incorporation. | ||
Removal of Directors (Advisory Organizational Documents Proposal 5E) |
The Cayman Constitutional Documents provide that prior to the closing of an initial business combination, holders of VIH Class B Ordinary Shares may remove any director, and that after the closing of an initial business combination, shareholders may by an ordinary resolution remove any director. See Article 31 of the Cayman Constitutional Documents. |
The Proposed Organizational Documents permit the removal of a director only for cause and only by the affirmative vote of the holders of at least 66 2/3% of the total voting power of all then-outstanding shares of the Company. See Article VI, subsection (C) of the Proposed Certificate of Incorporation. | ||
Action by Written Consent of Stockholders (Advisory Organizational Documents Proposal 5F) |
The Cayman Constitutional Documents permit shareholders to approve matters by unanimous written resolution of all of the shareholders entitled to receive notice of and to attend and vote at general meetings. See Article 23.3 of the Cayman Constitutional Documents. |
The Proposed Organizational Documents require stockholders to take action at an annual or special meeting and prohibit stockholder action by written consent in lieu of a meeting; provided that any action required or permitted to be taken by the holders of Bakkt Pubco Class V Shares, voting separately as a class or by the holders of Bakkt Pubco Preferred Stock, voting separately as a class or separately as a class with one or more other such series, may be taken without a meeting if signed by the holders having not less than the minimum number of votes necessary to authorize such action at a meeting at which |
Cayman Constitutional Documents |
Proposed Organizational Documents | |||
all shares entitled to vote thereon were present and voted in compliance with the DGCL. See Section 7.1 of the Proposed Certificate of Incorporation and Section 2.9 of the Proposed By-Laws. | ||||
Other Changes In Connection With Adoption of the Proposed Organizational Documents (Advisory Organizational Documents Proposal 5G) |
The Cayman Constitutional Documents include provisions related to VIH’s status as a blank check company prior to the consummation of an initial business combination. See Article 51 of the Cayman Constitutional Documents. |
The Proposed Organizational Documents do not include such provisions related to VIH’s status as a blank check company, which will no longer apply upon consummation of the Merger, as VIH will cease to be a blank check company at such time. |
Name |
Age |
Position | ||
Gavin Michael | 56 | Chief Executive Officer; Class I Director | ||
Michelle Goldberg | 52 | Class I Director | ||
Adrienne Harris | 40 | Class I Director | ||
David C. Clifton | 44 | Class II Director | ||
Kristyn Cook | 45 | Class II Director | ||
Gordon Watson | 42 |
Class II Director | ||
Sean Collins | 41 | Chairman and Class III Director | ||
Richard Lumb | 60 | Class III Director | ||
Andrew A. Main | 56 | Class III Director |
• | financial institutions or financial services entities; |
• | broker-dealers; |
• | taxpayers that are subject to the mark-to-market |
• | tax-exempt entities; |
• | governments or agencies or instrumentalities thereof; |
• | insurance companies; |
• | regulated investment companies or real estate investment trusts; |
• | partnerships (including entities or arrangements treated as partnerships for U.S. federal income tax purposes); |
• | U.S. expatriates or former long-term residents of the United States; |
• | persons that actually or constructively own five percent or more (by vote or value) of VIH Class A Ordinary Shares (except as specifically provided below); |
• | the Sponsor or its affiliates, officers or directors; |
• | persons that acquired their VIH Securities pursuant to an exercise of employee share options, in connection with employee share incentive plans or otherwise as compensation; |
• | persons that hold their VIH Securities as part of a straddle, constructive sale, hedging, wash sale, conversion or other integrated or similar transaction; |
• | U.S. Holders (as defined below) whose functional currency is not the U.S. dollar; or |
• | “specified foreign corporations” (including “controlled foreign corporations”), “passive foreign investment companies” or corporations that accumulate earnings to avoid U.S. federal income tax. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation that is created or organized (or treated as created or organized) in or under the laws of the United States or any state thereof or the District of Columbia; |
• | an estate whose income is subject to U.S. federal income tax regardless of its source; or |
• | a trust if (1) a U.S. court can exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a United States person. |
(i) | a statement that the Domestication is a Section 367(b) exchange (within the meaning of the applicable Treasury Regulations); |
(ii) | a complete description of the Domestication; |
(iii) | a description of any stock, securities or other consideration transferred or received in the Domestication; |
(iv) | a statement describing the amounts required to be taken into account for U.S. federal income tax purposes; |
(v) | a statement that the U.S. Holder is making the election that includes (A) a copy of the information that the U.S. Holder received from VIH establishing and substantiating the U.S. Holder’s “all earnings and profits amount” with respect to the U.S. Holder’s VIH Class A Ordinary Shares and (B) a representation that the U.S. Holder has notified VIH (or Bakkt Pubco) that the U.S. Holder is making the election; and |
(vi) | certain other information required to be furnished with the U.S. Holder’s tax return or otherwise furnished pursuant to the Code or the Treasury Regulations. |
(i) | VIH were classified as a PFIC at any time during such U.S. Holder’s holding period in such VIH Class A Ordinary Shares or VIH Warrants; and |
(ii) | the U.S. Holder had not timely made (a) a QEF Election (as defined below) for the first taxable year in which the U.S. Holder owned such VIH Class A Ordinary Shares or in which VIH was a PFIC, whichever is later (or a QEF Election along with a purging election), or (b) an MTM Election (as defined below) with respect to such VIH Class A Ordinary Shares. Currently, applicable Treasury Regulations provide that neither a QEF Election nor an MTM Election can be made with respect to warrants. |
• | the U.S. Holder’s gain will be allocated ratably over the U.S. Holder’s holding period for such U.S. Holder’s VIH Class A Ordinary Shares or VIH Warrants; |
• | the amount of gain allocated to the U.S. Holder’s taxable year in which the U.S. Holder recognized the gain, or to the period in the U.S. Holder’s holding period before the first day of the first taxable year in which VIH was a PFIC, will be taxed as ordinary income; |
• | the amount of gain allocated to other taxable years (or portions thereof) of the U.S. Holder and included in such U.S. Holder’s holding period would be taxed at the highest tax rate in effect for that year and applicable to the U.S. Holder; and |
• | an additional tax equal to the interest charge generally applicable to underpayments of tax will be imposed on the U.S. Holder in respect of the tax attributable to each such other taxable year (described in the third bullet above) of such U.S. Holder. |
• | a non-resident alien individual, other than certain former citizens and residents of the United States subject to U.S. tax as expatriates; |
• | a foreign corporation; or |
• | an estate or trust that is not a U.S. Holder. |
(a) | the gain is effectively connected with the conduct by the Non-U.S. Holder of a trade or business within the United States (and, under certain income tax treaties, is attributable to a United States permanent establishment or fixed base maintained by the Non-U.S. Holder); |
(b) | such Non-U.S. Holder is an individual who was present in the United States for 183 days or more in the taxable year of such disposition and certain other requirements are met; or |
(c) | Bakkt Pubco is or has been a “United States real property holding corporation” for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the Non-U.S. Holder held Bakkt Pubco Common Stock and, in the case where shares of Bakkt Pubco Common Stock are regularly traded on an established securities market, the Non-U.S. Holder has owned, directly or constructively, more than five percent (5%) of Bakkt Pubco Common Stock at any time within the shorter of the five-year period preceding the disposition or such Non-U.S. Holder’s holding period for the shares of Bakkt Pubco Common Stock. There can be no assurance that Bakkt Pubco Common Stock is or has been treated as regularly traded on an established securities market for this purpose. |
• | The acquisition of Bakkt by VIH, resulting reorganization into an umbrella partnership C corporation structure, and other agreements entered into as part of the Merger Agreement; and |
• | The B2S Acquisition. |
• | Assuming No Redemptions: This presentation assumes that no Public Shareholders exercise their right to have their Public Shares converted into their pro rata share of the Trust Account; and |
• | Assuming Maximum Redemptions: This presentation assumes that 10.7 million Public Shares, the maximum redemption of the outstanding Public Shares, are redeemed, resulting in an aggregate payment of $107.0 million out of the Trust Account, which is derived from the number of shares that could be redeemed in connection with the Business Combination at an assumed Redemption Price of $10.00 per share based on the Trust Account balance as of June 30, 2021 in order to satisfy the Available Cash Condition after giving effect to the PIPE Financing and settlement of the VIH transaction costs. |
• | Bakkt Pubco will be the sole managing member of Bakkt Opco, the managing member has full and complete charge of all affairs of Bakkt Opco and the existing non-managing member equity holders of Bakkt Opco do not have substantive participating or kick out rights; |
• | The Sponsor and Bakkt Opco will jointly designate seven of the initial nine members of the Company Board, at least the majority of whom will qualify as independent within the meaning of the independent director guidelines of the NYSE; and |
• | Bakkt Equity Holders will not hold a controlling interest in Bakkt Pubco or Bakkt Opco due to (1) the limitation imposed by the Voting Agreement on ICE and its affiliates’ voting power to 30% of the total voting power of all Bakkt Pubco Class A Shares and Bakkt Pubco Class V Shares that are issued and outstanding and entitled to vote as of the relevant record date so long as it owns shares of Bakkt Pubco |
Common Stock representing more than 50% of the total voting power of Bakkt Pubco, and (2) ICE and its affiliates do not unilaterally control the Board of Directors of Bakkt Pubco, as, in accordance with Section 5.12 of the Merger Agreement, only one out of the nine members of the Board of Directors of Bakkt Pubco will be affiliated with ICE, and the majority of the Board of Directors of Bakkt Pubco must be independent directors not affiliated with ICE. For additional information, see the section entitled “Voting Agreement” beginning on page 146 of this proxy statement/prospectus. |
Assuming No Redemptions |
Assuming Maximum Redemptions (1) |
|||||||||||||||
Equity Capitalization Summary (shares in millions) |
Shares |
% |
Shares |
% |
||||||||||||
VIH Public Shareholders |
20.7 | 35.5 | 10.0 | 21.0 | ||||||||||||
Founder Shares (2) |
5.2 | 8.9 | 5.2 | 10.9 | ||||||||||||
PIPE Investors (3) |
32.5 | 55.6 | 32.5 | 68.1 | ||||||||||||
Bakkt Equity Holders interest in VIH (4) |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Class A common stock in VIH |
58.4 |
100.0 |
47.7 |
100.0 |
(1) | Assumes that 10,737,202 Public Shares (the VIH Shares issued and outstanding that could be redeemed in connection with the Business Combination based on a per share Redemption Price of $10.00 per share) are redeemed in connection with the Business Combination. Existing Bakkt Equity Holders have only voting power in Bakkt Pubco. The voting power of the existing Bakkt Equity Holders would increase proportionally following the Closing. Under the maximum redemptions scenario, noncontrolling interest increases from 77.1% to 80.4%. |
(2) | Represents 5,184,300 shares of Bakkt Pubco Class A Common Stock issued upon conversion of the existing VIH Class B ordinary shares. Shares of Bakkt Pubco Class A Common Stock are issued upon the automatic conversion of the Class B ordinary shares concurrently with the consummation of the Business Combination. |
(3) | Represents the PIPE Investment pursuant to which VIH entered into Subscription Agreements with certain PIPE Investors whereby such investors have agreed to subscribe for shares of Bakkt Pubco Class A Common Stock at a purchase price of $10.00 per share. The PIPE Investors participating in the PIPE Investment, have agreed to purchase an aggregate of 32,500,000 shares of Bakkt Pubco Class A Common Stock. |
(4) | The Equity Capitalization Summary table excludes Bakkt Equity Holders’ noncontrolling economic interest in Bakkt Opco Common Units, which will be exchangeable (together with the cancellation of an equal number of shares of voting, non-economic Bakkt Pubco Class V Common Stock) into Bakkt Pubco Class A Common Stock on a 1-for-1 |
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||||||||||
Shares (1) |
% |
Shares (1) |
% |
|||||||||||||
Bakkt Equity Holders’ noncontrolling interest (shares in millions) |
196.3 | 77.1 | % | 196.3 | 80.4 | % |
(1) | Represents the 208.2 million Bakkt Opco Common Units to be issued to Bakkt Equity Holders, net of 11.9 million Bakkt Incentive Units, which vest on each of the first and second anniversaries of the effective time of the Merger as if the Merger constituted an initial public offering under the Bakkt Plan. |
Historical Financials |
Assuming No Redemptions Scenario |
Assuming Maximum Redemptions Scenario |
||||||||||||||||||||||||||||||
($ in millions) |
VIH (Historical as of 6/30/21) |
Bakkt (Historical as of 6/30/21) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Transaction Accounting Adjustments |
Pro Forma Combined |
||||||||||||||||||||||||||
Cash and equivalents |
$0.8 | $50.1 | $478.2 | A |
$ | 529.1 | $ | (107.0 | ) | F |
$422.1 | |||||||||||||||||||||
Restricted cash |
— | 16.5 | — | 16.5 | — | 16.5 | ||||||||||||||||||||||||||
Customer funds |
— | 0.3 | — | 0.3 | — | 0.3 | ||||||||||||||||||||||||||
Accounts receivable, net |
— | 11.9 | — | 11.9 | — | 11.9 | ||||||||||||||||||||||||||
Other current assets |
0.2 | 6.2 | — | 6.4 | — | 6.4 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Current assets |
1.0 |
85.0 |
478.2 |
564.2 |
(107.0 |
) |
457.2 |
|||||||||||||||||||||||||
Cash and investments held in Trust Account |
207.4 | — | (207.4 | ) | B |
— | — | — | ||||||||||||||||||||||||
Property, equipment and software, net |
— | 26.0 | — | 26.0 | — | 26.0 | ||||||||||||||||||||||||||
Goodwill |
— | 233.4 | 1,205.1 | C |
1,438.5 | — | 1,438.5 | |||||||||||||||||||||||||
Intangible assets, net |
— | 59.0 | 515.6 | C |
574.6 | — | 574.6 | |||||||||||||||||||||||||
Deposits with clearinghouse affiliate, noncurrent |
— | 15.2 | — | 15.2 | — | 15.2 | ||||||||||||||||||||||||||
Other assets |
— | 4.3 | — | 4.3 | — | 4.3 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Non-current assets |
207.4 |
337.9 |
1,513.3 |
2,058.6 |
— |
2,058.6 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total assets |
$ |
208.4 |
$ |
422.9 |
$ |
1,991.5 |
$ |
2,622.8 |
$ |
(107.0 |
) |
$ |
2,515.8 |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Accounts payable and accrued liabilities |
$4.1 | $57.8 | $(11.4 | ) | E |
$50.5 | $— | $50.5 | ||||||||||||||||||||||||
Customer funds payable |
— | 0.3 | — | 0.3 | — | 0.3 | ||||||||||||||||||||||||||
Deferred revenue, current |
— | 4.2 | (0.1 | ) | D |
4.1 | — | 4.1 | ||||||||||||||||||||||||
Due to affiliates |
— | 0.6 | — | 0.6 | — | 0.6 | ||||||||||||||||||||||||||
Other current liabilities |
— | 2.0 | — | 2.0 | — | 2.0 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Current liabilities |
4.1 |
64.9 |
(11.5 |
) |
57.5 |
— |
57.5 |
|||||||||||||||||||||||||
Deferred revenue, noncurrent |
— | 3.6 | (0.1 | ) | D |
3.5 | — | 3.5 | ||||||||||||||||||||||||
Warrant liability |
31.3 | — | — | 31.3 | — | 31.3 | ||||||||||||||||||||||||||
Deferred underwriting fee payable |
7.3 | — | (7.3 | ) | E |
— | — | — | ||||||||||||||||||||||||
Deferred tax liabilities, net |
— | 0.1 | — | 0.1 | — | 0.1 | ||||||||||||||||||||||||||
Other liabilities |
— | 3.0 | — | 3.0 | — | 3.0 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Non-current liabilities |
38.6 |
6.7 |
7.4 |
37.9 |
— |
37.9 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total liabilities |
42.7 |
71.6 |
18.9 |
95.4 |
— |
95.4 |
||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Class A ordinary shares subject to possible redemption |
160.7 | — | (160.7 | ) | G |
— | — | — | ||||||||||||||||||||||||
Incentive units |
— | 23.2 | (23.2 | ) | G |
— | — | — | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Mezzanine equity |
160.7 |
23.2 |
(183.9 |
) |
— |
— |
— |
|||||||||||||||||||||||||
Class A common stock, par value $0.0001 |
— | — | 0.1 | G |
0.1 | — | 0.1 | |||||||||||||||||||||||||
Class A voting units |
— | 2.9 | (2.9 | ) | G |
— | — | — | ||||||||||||||||||||||||
Class B voting units |
— | 187.9 | (187.9 | ) | G |
— | — | — | ||||||||||||||||||||||||
Class C voting units |
— | 310.1 | (310.1 | ) | G |
— | — | — | ||||||||||||||||||||||||
Additional paid in capital |
22.3 | — | 581.8 | G |
604.1 | (107.0 | ) | F |
497.1 | |||||||||||||||||||||||
Accumulated other comprehensive income |
— | 0.4 | (0.4 | ) | G |
— | — | — | ||||||||||||||||||||||||
Accumulated deficit |
(17.3 | ) | (173.2 | ) | 150.7 | G |
(39.8 | ) | — | (39.8 | ) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total shareholders’ equity |
5.0 |
328.1 |
231.3 |
564.4 |
(107.0 |
) |
457.4 |
|||||||||||||||||||||||||
Noncontrolling interest |
— | — | 1,963.0 | H |
1,963.0 | — | 1,963.0 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total equity |
5.0 |
328.1 |
2,194.3 |
2,527.4 |
(107.0 |
) |
2,420.4 |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total liabilities & equity |
$ |
208.4 |
$ |
422.9 |
$ |
1,991.5 |
$ |
2,622.8 |
$ |
(107.0 |
) |
$ |
2,515.8 |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Historical Financials |
Assuming No Redemptions |
Assuming Maximum Redemptions |
||||||||||||||||||||||||||
($ in millions, except per share data) |
VIH (Historical Six Months Ended 6/30/21) |
Bakkt (Historical Six Months Ended 6/30/21) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Transaction Accounting Adjustments |
Pro Forma Combined |
||||||||||||||||||||||
Revenue |
$— |
$16.6 |
$— | $16.6 |
$— |
$16.6 |
||||||||||||||||||||||
Operating expenses |
||||||||||||||||||||||||||||
Compensation and benefits |
— | 35.2 | 4.7 | DDD |
39.9 | — | 39.9 | |||||||||||||||||||||
Professional services |
— | 1.7 | — | 1.7 | — | 1.7 | ||||||||||||||||||||||
Technology and communication |
— | 6.7 | — | 6.7 | — | 6.7 | ||||||||||||||||||||||
Selling, general and administrative |
3.6 | 15.1 | — | 18.7 | — | 18.7 | ||||||||||||||||||||||
Acquisition-related expenses |
— | 10.3 | — | 10.3 | — | 10.3 | ||||||||||||||||||||||
Depreciation and amortization |
— | 5.8 | 8.7 | AAA |
14.5 | — | 14.5 | |||||||||||||||||||||
Affiliate expenses |
— | 0.9 | — | 0.9 | — | 0.9 | ||||||||||||||||||||||
Impairment of long-lived assets |
— | — | — | — | — | — | ||||||||||||||||||||||
Other operating costs |
— | 0.7 | — | 0.7 | — | 0.7 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total operating expenses |
3.6 |
76.4 |
13.4 |
93.4 |
— |
93.4 |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Loss from operations |
(3.6 |
) |
(59.8 |
) |
(13.4 |
) |
(76.8 |
) |
— |
(76.8 |
) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Interest income, net |
— | (0.1 | ) | — | (0.1 | ) | — | (0.1 | ) | |||||||||||||||||||
Loss on warrant liability |
(8.8 | ) | — | — | (8.8 | ) | — | (8.8 | ) | |||||||||||||||||||
Other income, net |
— | (0.6 | ) | — | (0.6 | ) | — | (0.6 | ) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Total interest and other income, net |
(8.8 |
) |
(0.7 |
) |
— |
(9.5 |
) |
— |
(9.5 |
) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Loss before income taxes |
(12.4 |
) |
(60.5 |
) |
(13.4 |
) |
(86.3 |
) |
— |
(86.3 |
) | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Income tax (expense) benefit |
— | (0.2 | ) | 3.9 | BBB |
3.7 | (0.6 | ) | BBB |
3.1 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net loss |
$(12.4 |
) |
$(60.7 |
) |
$(9.5 |
) |
$(82.6 |
) |
$(0.6 |
) |
$(83.2 |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Net loss attributable to noncontrolling interest |
— | — | (66.3 | ) | CCC |
(66.3 | ) | (2.8 | ) | EEE |
(69.1 | ) | ||||||||||||||||
Net loss attributable to controlling interest |
(12.4 | ) | (60.7 | ) | 56.8 | CCC |
(16.3 | ) | 2.2 | EEE |
(14.1 | ) | ||||||||||||||||
Earnings per share (Note 5) |
||||||||||||||||||||||||||||
Weighted average shares of Class A outstanding, basic |
20,737,202 | 58.4 | 47.7 | |||||||||||||||||||||||||
Loss per share of Class A (basic) |
$ | — | $ | (0.28 | ) | $ | (0.30 | ) | ||||||||||||||||||||
Weighted average shares of Class A outstanding, diluted |
20,737,202 | 58.4 | 47.7 | |||||||||||||||||||||||||
Loss per share of Class A (diluted) |
$ | — | $ | (0.28 | ) | $ | (0.30 | ) | ||||||||||||||||||||
Weighted average shares of Class B outstanding, basic |
5,184,300 | |||||||||||||||||||||||||||
Loss per share of Class B (basic) |
$ | (2.40 | ) | |||||||||||||||||||||||||
Weighted average shares of Class B outstanding, diluted |
5,184,300 | |||||||||||||||||||||||||||
Loss per share of Class B (diluted) |
$ | (2.40 | ) |
Historical Financials |
Assuming No Redemptions |
Assuming Maximum Redemptions |
||||||||||||||||||||||||||||||||||
($ in millions, except per share data) |
VIH (Historical from 7/31/20 through 12/31/20) |
Bakkt (Historical from 1/1/20 through 12/31/20) |
B2S (Historical from 1/1/20 through 2/21/20) |
Combined Bakkt (Historical from 1/1/20 through 12/31/20) |
Transaction Accounting Adjustments |
Pro Forma Combined |
Transaction Accounting Adjustments |
Pro Forma Combined |
||||||||||||||||||||||||||||
Revenue |
$— |
$28.5 |
$5.7 |
$34.2 |
$(0.1 |
) |
AA |
$34.1 | $— |
$34.1 | ||||||||||||||||||||||||||
Operating expenses |
||||||||||||||||||||||||||||||||||||
Compensation and benefits |
— | 43.1 | 3.2 | 46.3 | 23.4 | FF |
69.7 | — | 69.7 | |||||||||||||||||||||||||||
Professional services |
— | 5.7 | 1.0 | 6.7 | — | 6.7 | — | 6.7 | ||||||||||||||||||||||||||||
Technology and communication |
— | 9.7 | 0.4 | 10.1 | — | 10.1 | — | 10.1 | ||||||||||||||||||||||||||||
Selling, general and administrative |
1.0 | 8.2 | 0.3 | 8.5 | — | 9.5 | — | 9.5 | ||||||||||||||||||||||||||||
Acquisition-related expenses |
— | 13.4 | — | 13.4 | 22.5 | CC |
35.9 | — | 35.9 | |||||||||||||||||||||||||||
Depreciation and amortization |
— | 8.2 | 1.0 | 9.2 | 20.6 | BB |
29.8 | — | 29.8 | |||||||||||||||||||||||||||
Affiliate expenses |
— | 3.1 | — | 3.1 | — | 3.1 | — | 3.1 | ||||||||||||||||||||||||||||
Impairment of long-lived assets |
— | 15.3 | — | 15.3 | — | 15.3 | — | 15.3 | ||||||||||||||||||||||||||||
Other operating costs |
— | 0.9 | — | 0.9 | — | 0.9 | — | 0.9 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total operating expenses |
1.0 |
107.6 |
5.9 |
113.5 |
66.5 |
181.0 |
— |
181.0 |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Loss from operations |
(1.0 |
) |
(79.1 |
) |
(0.2 |
) |
(79.3 |
) |
(66.6 |
) |
(146.9 |
) |
— |
(146.9 |
) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Interest income, net |
— | 0.1 | (0.2 | ) | (0.1 | ) | — | (0.1 | ) | — | (0.1 | ) | ||||||||||||||||||||||||
Loss on warrant liability |
(0.9 | ) | — | — | — | — | (0.9 | ) | — | (0.9 | ) | |||||||||||||||||||||||||
Transaction costs - warrants |
(0.8 | ) | — | — | — | — | (0.8 | ) | — | (0.8 | ) | |||||||||||||||||||||||||
Compensation expense - warrants |
(2.2 | ) | — | — | — | — | (2.2 | ) | — | (2.2 | ) | |||||||||||||||||||||||||
Other income, net |
— | (0.2 | ) | — | (0.2 | ) | — | (0.2 | ) | — | (0.2 | ) | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Total interest and other income, net |
(3.9 |
) |
(0.1 |
) |
(0.2 |
) |
(0.3 |
) |
— | (4.2 |
) |
— |
(4.2 |
) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Loss before income taxes |
(4.9 |
) |
(79.2 |
) |
(0.4 |
) |
(79.6 |
) |
(66.6 |
) |
(151.1 |
) |
— |
(151.1 |
) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Income tax (expense) benefit |
— | (0.4 | ) | — | (0.4 | ) | 6.8 | DD |
6.4 | (1.0 | ) | DD |
5.4 | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net loss |
$(4.9 |
) |
$(79.6 |
) |
$(0.4 |
) |
$(80.0 |
) |
$(59.8 |
) |
$(144.7 |
) |
$(1.0 |
) |
$(145.7 |
) | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
Net loss attributable to noncontrolling interest |
— | — | — | — | (116.5 | ) | EE |
(116.5 | ) | (5.1 | ) | GG |
(121.6 | ) | ||||||||||||||||||||||
Net loss attributable to controlling interest |
(4.9 | ) | (79.6 | ) | (0.4 | ) | (80.0 | ) | 56.7 | EE |
(28.2 | ) | 4.1 | GG |
(24.1 | ) | ||||||||||||||||||||
Earnings per share (Note 5) |
||||||||||||||||||||||||||||||||||||
Weighted average shares of Class A outstanding, basic |
20,737,202 | 58.4 | 47.7 | |||||||||||||||||||||||||||||||||
Loss per share of Class A (basic) |
$ | — | $ | (0.48 | ) | $ | (0.51 | ) | ||||||||||||||||||||||||||||
Weighted average shares of Class A outstanding, diluted |
20,737,202 | 58.4 | 47.7 | |||||||||||||||||||||||||||||||||
Loss per share of Class A (diluted) |
$ | — | $ | (0.48 | ) | $ | (0.51 | ) | ||||||||||||||||||||||||||||
Weighted average shares of Class B outstanding, basic |
5,184,300 | |||||||||||||||||||||||||||||||||||
Loss per share of Class B (basic) |
$ | (0.94 | ) | |||||||||||||||||||||||||||||||||
Weighted average shares of Class B outstanding, diluted |
5,184,300 | |||||||||||||||||||||||||||||||||||
Loss per share of Class B (diluted) |
$ | (0.94 | ) |
1. |
Basis of Pro Forma Presentation |
2. |
Description of the Business Combination |
3. |
Transaction Accounting Adjustments to Pro Forma Condensed Combined Balance Sheet |
(A) | Represents adjustments to cash due to the following inflows and outflows as a result of the Business Combination. |
($ in millions) |
||||
VIH trust account |
$ | 207.4 | ||
PIPE investment |
325.0 | |||
Buyer transaction costs (1) |
(36.0 | ) | ||
Seller expenses (2) |
(18.2 | ) | ||
|
|
|||
Total |
$ |
478.2 |
(1) |
Includes $13.0 million PIPE fees that will be netted against the proceeds from the equity issuance. |
(2) |
Excludes $4.8 million seller’s merger costs that were paid as of June 30, 2021. |
(B) | Reflects the release of $207.4 million of cash and cash equivalents held in the Trust Account that become available for transaction consideration, transaction expenses, underwriting commission, redemption of VIH Public Shares, and the operating activities of VIH following the Business Combination. |
(C) | Represents the adjustment for the estimated preliminary purchase price allocation for the Bakkt business resulting from the Business Combination. The preliminary calculation of total consideration and allocation of the purchase price to the fair value of Bakkt’s assets acquired and liabilities assumed is presented below as if the Business Combination was consummated on June 30, 2021. The Company’s evaluation of the fair value of assets acquired and the liabilities assumed is preliminary and, accordingly, the adjustments to record the assets acquired and liabilities assumed at fair value reflect the best estimates of the Company based on the information currently available and are subject to change once additional analyses are completed. Potential differences may include, but are not limited to, changes in balance sheet as of the Business Combination date which may change the allocation to intangible assets and change in fair value of property, plant, and equipment. |
($ in millions) |
Pro Forma |
|||
Equity consideration paid to existing Bakkt ownership in Bakkt Opco (Common Units) and Bakkt Pubco (Class V Shares), net of $32.8 million post combination expense (1) |
$ | 2,049.2 | ||
Cash paid for seller transaction costs |
23.0 | |||
Total consideration |
$ |
2,072.2 |
||
Current assets |
85.0 | |||
Property, equipment and software, net |
26.0 | |||
Non-current assets |
19.5 | |||
Intangible assets |
574.6 | |||
Goodwill |
1,438.5 | |||
Current liabilities |
(60.7 | ) | ||
Deferred revenue, current |
(4.1 | ) | ||
Non-current liabilities |
(3.1 | ) | ||
Deferred revenue, noncurrent |
(3.5 | ) | ||
|
|
|||
Net assets acquired |
$ |
2,072.2 |
(1) |
Represents the fair value of the 208.2 million Bakkt Opco Common Units to be issued to Bakkt Equity Holders based on the Redemption Price of $10.00 per share, excluding $32.8 million attributable to the Bakkt Incentive Units, which vest on each of the first and second anniversaries of the effective time of the Merger and will be reflected in post-combination compensation expense over the remaining two-year vesting period. |
($ in millions, except per share data) |
Pro Forma |
|||||||||||
Change in Price Per Share |
Price Per Share |
Estimated Purchase Price |
Estimated Goodwill |
|||||||||
Increase of 30% |
$ | 13.00 | $ | 2,658.7 | $ | 2,025.0 | ||||||
Increase of 20% |
12.00 | 2,463.2 | 1,829.5 | |||||||||
Increase of 10% |
11.00 | 2,267.7 | 1,634.0 | |||||||||
As presented in pro forma |
10.00 | 2,072.2 | 1,438.5 | |||||||||
Decrease of 10% |
9.00 | 1,876.7 | 1,243.0 | |||||||||
Decrease of 20% |
8.00 | 1,681.2 | 1,047.5 | |||||||||
Decrease of 30% |
7.00 | 1,485.8 | 852.1 |
($ in millions) |
Weighted average useful life (years) |
Fair value |
||||||
Indefinite-lived |
||||||||
Trademark / Trade Names |
n/a | $26.3 | ||||||
Licenses – MTL and BIT |
n/a | 272.8 | ||||||
Licenses – Trust |
n/a | 25.5 | ||||||
Definite-lived |
||||||||
Customer Relationship – Consumer |
8.5 | 9.0 | ||||||
Customer Relationship – Loyalty |
11.0 | 40.5 | ||||||
Developed Technology – Consumer |
6.0 | 57.7 | ||||||
Developed Technology – Loyalty |
6.0 | 10.0 | ||||||
Developed Technology – Markets |
4.0 | 1.8 | ||||||
Access to Exchanges |
12.0 | 131.0 | ||||||
|
|
|||||||
Total |
$ |
574.6 |
(D) | Reflects a reduction in deferred revenues related to the estimated fair value of the acquired deferred revenue related to the Business Combination. The adjustment is based on fair value estimates for deferred revenue, adjusted for costs to fulfill the liabilities assumed, plus normal profit margin. The difference between this adjusted deferred revenue at fair value and Bakkt’s historical deferred revenue results in a revenue reduction on a pro forma basis. |
(E) | Reflects the payment of $11.4 million of acquisition-related expenses and $7.3 million of deferred underwriters’ and legal fees payable incurred by Bakkt and the Company, respectively. |
(F) | Represents the pro forma adjustment for the 10.7 million shares of Bakkt Pubco Class A common stock with a par value of $0.0001 per share that are assumed to be redeemed under the maximum redemptions scenario at an estimated per share redemption price of $10.00. Under the maximum redemption scenario, $107.0 million in cash will be paid to redeeming shareholders with the offset to additional paid in capital. |
(G) | The following table summarizes the pro forma adjustments impacting equity ($ in millions): |
Adjustments to historical mezzanine equity and equity |
New equity structure (Assuming No Redemptions) |
Other items |
Pro Forma Transaction Accounting Adjustments (Assuming No Redemptions) |
Additional Pro Forma Transaction Accounting Adjustments (Assuming Maximum Redemptions) |
||||||||||||||||
VIH shareholders’ mezzanine equity and equity: |
||||||||||||||||||||
Class A ordinary shares subject to possible redemption |
$ | (160.7 | ) | $ | — | $ | — | $ | (160.7 | ) | $ | — | ||||||||
Class A common stock, par value $0.0001 |
— | 0.1 | — | 0.1 | — | |||||||||||||||
Additional paid in capital |
— | 584.1 | (2.3 | ) | 581.8 | (107.0 | ) | |||||||||||||
Bakkt members’ mezzanine equity and equity: |
||||||||||||||||||||
Incentive units |
(23.2 | ) | — | — | (23.2 | ) | — | |||||||||||||
Class A voting units |
(2.9 | ) | — | — | (2.9 | ) | — | |||||||||||||
Class B voting units |
(187.9 | ) | — | — | (187.9 | ) | — | |||||||||||||
Class C voting units |
(310.1 | ) | — | — | (310.1 | ) | — | |||||||||||||
Accumulated other comprehensive income |
(0.4 | ) | — | — | (0.4 | ) | — | |||||||||||||
Combined equity: |
||||||||||||||||||||
Accumulated deficit |
173.2 | — | (22.5 | ) | 150.7 | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Total members’ or shareholders’ mezzanine equity and equity |
$ |
(512.0 |
) |
$ |
584.2 |
$ |
(24.8 |
) |
$(47.4 |
) |
$ |
(107.0 |
) |
(H) | Represents the pro forma adjustment to record noncontrolling interest in Bakkt Opco of 77.1% under the no redemptions scenario. |
4. |
Transaction Accounting Adjustments to Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2020 |
(AA) | Reflects a reduction in revenues related to the estimated fair value of the acquired deferred revenue related to the Business Combination. The adjustment is based on fair value estimates for deferred revenue, adjusted for costs to fulfill the liabilities assumed, plus normal profit margin. The difference between this adjusted deferred revenue at fair value and Bakkt’s historical deferred revenue results in a revenue reduction on a pro forma basis. |
(BB) | Represents adjustments to incorporate estimated additional tangible and intangible assets depreciation and amortization for the step-up basis from purchase price accounting (“PPA”) at the closing of the Business Combination. This pro forma adjustment has been proposed assuming the Business Combination happened on January 1, 2020. The following table is a summary of information related to certain intangible assets acquired, including information used to calculate the pro forma change in amortization expenses that is adjusted to administrative expenses: |
($ in millions) |
Weighted Average Useful Life (Years) |
Fair Value |
Amortization Expense for the Twelve Months Ended December 31, 2020 |
|||||||||
Trademarks / Trade Names – Bakkt |
n/a | $ | 26.3 | n/a | ||||||||
Licenses – MTL and BIT |
n/a | 272.8 | n/a | |||||||||
Licenses – Trust |
n/a | 25.5 | n/a | |||||||||
Customer Relationship Consumer Application |
8.5 | 9.0 | 1.1 | |||||||||
Customer Relationship – Loyalty |
11.0 | 40.5 | 3.7 | |||||||||
Developed Technology – Consumer Application |
6.0 | 57.7 | 9.6 | |||||||||
Developed Technology – Loyalty |
6.0 | 10.0 | 1.7 | |||||||||
Developed Technology – Markets |
4.0 | 1.8 | 0.4 | |||||||||
Access to Exchanges |
12.0 | 131.0 | 10.9 | |||||||||
|
|
|
|
|||||||||
Total |
$ |
574.6 |
$ |
27.4 |
||||||||
Less: Historical amortization expenses |
(6.8 |
) | ||||||||||
|
|
|||||||||||
Pro forma adjustments to amortization expenses |
$ |
20.6 |
(CC) | Reflects estimated transaction-related costs expected to be incurred by VIH and Bakkt related to the Business Combination as if it was consummated on January 1, 2020. These transaction-related costs are non-recurring. Pro forma transaction-related costs adjustment of $22.5 million excludes PIPE fees of $13.0 million netted against additional paid-in capital, $7.3 million of deferred underwriters’ and legal fees netted against additional paid-in capital, and $2.8 million of transaction-related costs already expensed in VIH’s and Bakkt’s historical statements of operations for the fiscal year ended December 31, 2020, and $13.4 million of transaction-related costs already expensed in VIH’s and Bakkt’s historical statements of operations for the six months ended June 30, 2021. |
(DD) | Represents the income tax impacts from the pro forma adjustments and estimated deferred tax liabilities and deferred tax assets related to the fair valuation of net assets reflected in the pro forma balance sheet (excluding adjustments related to goodwill, which is assumed to be non tax-deductible) under the no redemptions and maximum redemptions scenarios. The tax rates are based on preliminary assumptions related to the underlying jurisdictions in which the income or expense will be recorded. The effective tax rate of the combined company could be significantly different depending on the post-merger activities, including cash needs, geographical mix of net income and tax planning strategies. |
(EE) | Represents the adjustment to present noncontrolling interest in Bakkt Opco of 77.1% under the no redemptions scenario. The adjustment includes the estimated income tax impacts from Note 4(DD). |
(FF) | Represents post combination pro forma expense adjustment associated with Bakkt Incentive Units, one third of which vest over the first year post merger. The pro forma expense adjustment is based on the Redemption Price of $10.00 per share. |
(GG) | Represents the pro forma adjustment to record noncontrolling interest in Bakkt Opco of 80.4% under the maximum redemptions scenario. The adjustment includes the estimated income tax impacts from Note 4(DD). |
5. |
Transaction Accounting Adjustments to Pro Forma Condensed Combined Statement of Operations for the Six Months Ended June 30, 2021 |
(AAA) | Represents adjustments to incorporate estimated additional tangible and intangible assets depreciation and amortization for the step-up basis from purchase price accounting (“PPA |
($ in millions) |
Weighted Average Useful Life (Years) |
Fair Value |
Amortization Expense for the Six Months Ended June 30, 2021 |
|||||||||
Trademarks / Trade Names - Bakkt |
n/a | $ | 26.3 | n/a | ||||||||
Licenses - MTL and BIT |
n/a | 272.8 | n/a | |||||||||
Licenses - Trust |
n/a | 25.5 | n/a | |||||||||
Customer Relationship Consumer Application |
8.5 | 9.0 | 0.5 | |||||||||
Customer Relationship - Loyalty |
11.0 | 40.5 | 1.8 | |||||||||
Developed Technology - Consumer Application |
6.0 | 57.7 | 4.8 | |||||||||
Developed Technology - Loyalty |
6.0 | 10.0 | 0.9 | |||||||||
Developed Technology - Markets |
4.0 | 1.8 | 0.2 | |||||||||
Access to Exchanges |
12.0 | 131.0 | 5.5 | |||||||||
|
|
|
|
|||||||||
Total |
$ |
574.6 |
$ |
13.7 |
||||||||
Less: Historical amortization expenses |
(5.0 |
) | ||||||||||
|
|
|||||||||||
Pro forma adjustments to amortization expenses |
$8.7 |
(BBB) | Represents the income tax impacts from the pro forma adjustments and estimated deferred tax liabilities and deferred tax assets related to the fair valuation of net assets reflected in the pro forma balance sheet (excluding adjustments related to goodwill, which is assumed to be non tax-deductible) under the no redemptions and maximum redemptions scenarios. The tax rates are based on preliminary assumptions related to the underlying jurisdictions in which the income or expense will be recorded. The effective tax rate of the combined company could be significantly different depending on the post-merger activities, including cash needs, geographical mix of net income and tax planning strategies. |
(CCC) | Represents the adjustment to present noncontrolling interest in Bakkt Opco of 77.1% under the no redemptions scenario. The adjustment includes the estimated income tax impacts from Note 5(BBB). |
(DDD) | Represents post-combination pro forma expense adjustment associated with Bakkt Incentive Units, one-third of which vest over the first year post-merger. The pro forma expense adjustment is based on the Redemption Price of $10.00 per share. |
(EEE) | Represents the pro forma adjustment to record noncontrolling interest in Bakkt Opco of 80.4% under the maximum redemptions scenario. The adjustment includes the estimated income tax impacts from Note 5(BBB). |
6. |
Pro Forma Earnings Per Share Information |
Six Months Ended June 30, 2021 |
||||||||
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||
Net loss attributable to controlling interest ($ in millions) |
$ | (16.3 | ) | $ | (14.1 | ) | ||
Weighted average shares outstanding, controlling (shares in millions) |
58.4 | 47.7 | ||||||
Loss per share (basic) |
$ | (0.28 | ) | $ | (0.30 | ) | ||
Loss per share (diluted) |
$ | (0.28 | ) | $ | (0.30 | ) |
Year Ended December 31, 2020 |
||||||||
Assuming No Redemptions |
Assuming Maximum Redemptions |
|||||||
Net loss attributable to controlling interest ($ in millions) |
$ | (28.2 | ) | $ | (24.1 | ) | ||
Weighted average shares outstanding, controlling (shares in millions) |
58.4 | 47.7 | ||||||
Loss per share (basic) |
$ | (0.48 | ) | $ | (0.51 | ) | ||
Loss per share (diluted) |
$ | (0.48 | ) | $ | (0.51 | ) |
Name |
Age |
Title | ||
John Martin |
61 | Chairman and Chief Executive Officer | ||
Gordon Watson |
42 | President Chief Operating Officer and Director | ||
Olibia Stamatoglou |
42 | Chief Financial Officer | ||
Adrienne Harris |
40 | Director | ||
Kai Schmitz |
52 | Director | ||
Kurt Summers |
42 | Director |
• | assisting board oversight of (1) the integrity of VIH’s financial statements, (2) VIH’s compliance with legal and regulatory requirements, (3) VIH’s independent registered public accounting firm’s qualifications and independence, and (4) the performance of VIH’s internal audit function and independent registered public accounting firm; the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm and any other independent registered public accounting firm engaged by VIH; |
• | pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by VIH, and establishing pre-approval policies and procedures; reviewing and discussing with the independent registered public accounting firm all relationships the firm has with VIH in order to evaluate their continued independence; |
• | setting clear policies for audit partner rotation in compliance with applicable laws and regulations; obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (1) the independent auditor’s internal quality-control procedures and (2) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues; |
• | meeting to review and discuss VIH’s annual audited financial statements and quarterly financial statements with management and the independent auditor, including reviewing VIH’s specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to VIH entering into such transaction; and |
• | reviewing with management, the independent registered public accounting firm, and VIH legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding VIH’s financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
• | reviewing and approving on an annual basis the corporate goals and objectives relevant to the Chief Executive Officer’s compensation, evaluating the Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of the Chief Executive Officer’s based on such evaluation; |
• | reviewing and making recommendations to the VIH Board with respect to the compensation, and any incentive compensation and equity based plans that are subject to board approval of all other officers; |
• | reviewing executive compensation policies and plans; |
• | implementing and administering incentive compensation equity-based remuneration plans; |
• | assisting management in complying with proxy statement and annual report disclosure requirements; |
• | approving all special perquisites, special cash payments and other special compensation and benefit arrangements for officers and employees; |
• | producing a report on executive compensation to be included in the annual proxy statement; and |
• | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
• | identifying, screening and reviewing individuals qualified to serve as directors, consistent with criteria approved by the VIH Board, and recommending to the VIH Board candidates for nomination for election at the annual general meeting or to fill vacancies on the board of directors; |
• | developing and recommending to the VIH Board and overseeing implementation of corporate governance guidelines; |
• | coordinating and overseeing the annual self-evaluation of the VIH Board, its committees, individual directors and management in the governance of the company; and |
• | reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary. |
• | at any time while the VIH Warrants are exercisable; |
• | upon not less than 30 days’ prior written notice of redemption to each Public Warrant Holder; |
• | if and only if, the reported last sale price of the shares of the VIH Class A Ordinary Shares equals or exceeds $18.00 per share, for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to Public Warrant Holders; and |
• | if and only if, there is a current registration statement in effect with respect to the VIH Class A Ordinary Shares underlying such VIH Warrants at the redemption date and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
• | at any time while the VIH Warrants are exercisable; |
• | upon not less than 30 days’ prior written notice of redemption to each Public Warrant Holder; provided that |
• | if and only if, the reported last sale price of the shares of the VIH Class A Ordinary Shares equals or exceeds $10.00 per share, for any 20 trading days within a 30-day trading period ending on the third business day prior to the notice of redemption to Public Warrant Holders; |
• | if the closing price of the VIH Class A Ordinary Shares for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the notice of redemption is sent to the Public Warrant Holders is less than $18.00 per share, the Private Placement Warrants must be concurrently called for redemption on the same terms as the outstanding Public Warrants; and |
• | if and only if, there is a current registration statement in effect with respect to the VIH Class A Ordinary Shares underlying such VIH Warrants at the redemption date and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
Redemption Fair Market Value of Ordinary Shares (period to expiration of warrants) |
||||||||||||||||||||||||||||||||||||
Redemption Date |
£ $10.00 |
$11.00 |
$12.00 |
$13.00 |
$14.00 |
$15.00 |
$16.00 |
$17.00 |
³ $18.00 |
|||||||||||||||||||||||||||
60 months |
0.261 | 0.281 | 0.297 | 0.311 | 0.324 | 0.337 | 0.348 | 0.358 | 0.361 | |||||||||||||||||||||||||||
57 months |
0.257 | 0.277 | 0.294 | 0.310 | 0.324 | 0.337 | 0.348 | 0.358 | 0.361 | |||||||||||||||||||||||||||
54 months |
0.252 | 0.272 | 0.291 | 0.307 | 0.322 | 0.335 | 0.347 | 0.357 | 0.361 | |||||||||||||||||||||||||||
51 months |
0.246 | 0.268 | 0.287 | 0.304 | 0.320 | 0.333 | 0.346 | 0.357 | 0.361 | |||||||||||||||||||||||||||
48 months |
0.241 | 0.263 | 0.283 | 0.301 | 0.317 | 0.332 | 0.344 | 0.356 | 0.361 | |||||||||||||||||||||||||||
45 months |
0.235 | 0.258 | 0.279 | 0.298 | 0.315 | 0.330 | 0.343 | 0.356 | 0.361 | |||||||||||||||||||||||||||
42 months |
0.228 | 0.252 | 0.274 | 0.294 | 0.312 | 0.328 | 0.342 | 0.355 | 0.361 | |||||||||||||||||||||||||||
39 months |
0.221 | 0.246 | 0.269 | 0.290 | 0.309 | 0.325 | 0.340 | 0.354 | 0.361 | |||||||||||||||||||||||||||
36 months |
0.213 | 0.239 | 0.263 | 0.285 | 0.305 | 0.323 | 0.339 | 0.353 | 0.361 | |||||||||||||||||||||||||||
33 months |
0.205 | 0.232 | 0.257 | 0.280 | 0.301 | 0.320 | 0.337 | 0.352 | 0.361 | |||||||||||||||||||||||||||
30 months |
0.196 | 0.224 | 0.250 | 0.274 | 0.297 | 0.316 | 0.335 | 0.351 | 0.361 | |||||||||||||||||||||||||||
27 months |
0.185 | 0.214 | 0.242 | 0.268 | 0.291 | 0.313 | 0.332 | 0.350 | 0.361 | |||||||||||||||||||||||||||
24 months |
0.173 | 0.204 | 0.233 | 0.260 | 0.285 | 0.308 | 0.329 | 0.348 | 0.361 | |||||||||||||||||||||||||||
21 months |
0.161 | 0.193 | 0.223 | 0.252 | 0.279 | 0.304 | 0.326 | 0.347 | 0.361 | |||||||||||||||||||||||||||
18 months |
0.146 | 0.179 | 0.211 | 0.242 | 0.271 | 0.298 | 0.322 | 0.345 | 0.361 | |||||||||||||||||||||||||||
15 months |
0.130 | 0.164 | 0.197 | 0.230 | 0.262 | 0.291 | 0.317 | 0.342 | 0.361 | |||||||||||||||||||||||||||
12 months |
0.111 | 0.146 | 0.181 | 0.216 | 0.250 | 0.282 | 0.312 | 0.339 | 0.361 | |||||||||||||||||||||||||||
9 months |
0.090 | 0.125 | 0.162 | 0.199 | 0.237 | 0.272 | 0.305 | 0.336 | 0.361 | |||||||||||||||||||||||||||
6 months |
0.065 | 0.099 | 0.137 | 0.178 | 0.219 | 0.259 | 0.296 | 0.331 | 0.361 | |||||||||||||||||||||||||||
3 months |
0.034 | 0.065 | 0.104 | 0.150 | 0.197 | 0.243 | 0.286 | 0.326 | 0.361 | |||||||||||||||||||||||||||
0 months |
— | — | 0.042 | 0.115 | 0.179 | 0.233 | 0.281 | 0.323 | 0.361 |
• | the right of Public Shareholders to exercise Redemption Rights and redeem or have repurchased their shares in lieu of participating in a proposed business combination; |
• | a prohibition against completing a business combination unless VIH has net tangible assets of at least $5,000,001 upon completion of such business combination (or if the Advisory Organizational Documents Proposals are approved, immediately prior to the completion of such business combination without regard to the assets or liabilities of the target company of such business combination and its subsidiaries); |
• | a requirement that if VIH seeks shareholder approval of any business combination, the affirmative vote must be obtained of the holders of a majority of the outstanding VIH Shares, who, being present in person or by proxy and entitled to vote at the extraordinary general meeting, vote at the extraordinary general meeting; |
• | a requirement that directors may call general meetings on their own accord; |
• | a prohibition, prior to a business combination, against VIH issuing (a) any VIH Shares or (b) any other securities which participate in or are otherwise entitled in any manner to any of the proceeds in the Trust Account or which vote as a class with the Public Shares on a business combination; and |
• | a limitation on shareholders’ rights to receive a portion of the Trust Account. |
• | 1,000,000 shares of preferred stock, par value $0.0001 per share (“ Bakkt Pubco Preferred Stock |
• | 1,000,000,000 shares of Bakkt Pubco Common Stock, which consists of (a) 750,000,000 Bakkt Pubco Class A Shares, and (b) 250,000,000 Bakkt Pubco Class V Shares. |
• | prior to such time, the Company Board approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; |
• | upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the Company outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by (a) persons who are directors and also officers and (b) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or |
• | at or subsequent to such time, the business combination is approved by the Company Board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock of the Company which is not owned by the interested stockholder. |
• | the provision regarding the Company Board being authorized to amend the Proposed By-Laws without a stockholder vote; |
• | the provisions providing for a classified Company Board (the election and term of directors); |
• | the provisions regarding filling vacancies on the Company Board and newly created directorships; |
• | the provisions regarding resignation and removal of directors; |
• | the provisions regarding calling special meetings of stockholders; |
• | the provisions regarding stockholder action by written consent; |
• | the provisions eliminating monetary damages for breaches of fiduciary duty by a director; |
• | the provisions regarding the election not to be governed by Section 203 of the DGCL; |
• | the provisions regarding competition and corporate opportunities; |
• | the provisions regarding exclusivity of forum; and |
• | the amendment provision requiring that the above provisions be amended only with a 66 2/3% supermajority vote. |
• | each person known by VIH to be the beneficial owner of more than 5% of the VIH Shares on July 30, 2021 (pre-Business Combination) or the beneficial owner of more than 5% of the shares of Bakkt Pubco Common Stock upon Closing; |
• | each of VIH’s officers and directors; |
• | each person who will become an officer or is nominated to become a director of the Company upon the Closing; and |
• | all officers and directors of the Company as a group following the Closing. |
• | For purposes of approving the Domestication Proposal as disclosed on page 247 under “Description of VIH’s and the Company’s Securities” a holder of VIH Class B Shares shall have ten votes for every VIH Class B Share of which he is the holder and a holder of VIH Class A Shares shall have one vote for every VIH Class A Share of which he is the holder; and |
• | Prior to the closing of a Business Combination, holders of VIH Class A Shares shall have no right to vote on the appointment or removal of any VIH director. |
Bakkt Pubco Common Stock Post-Business Combination (2)(3) |
||||||||||||||||||||||||||||||||
VIH Shares |
Assuming No Redemption |
Assuming Redemption of 10,737,202 Shares |
||||||||||||||||||||||||||||||
Name and Address of Beneficial Owner |
Number of Shares Beneficially Owned (1) |
% of Voting Control |
Bakkt Pubco Class A Shares |
Bakkt Pubco Class V Shares (2) |
% of Total Voting Power (3) |
Bakkt Pubco Class A Shares |
Bakkt Pubco Class V Shares (2) |
% of Total Voting Power (3) |
||||||||||||||||||||||||
VPC Impact Acquisition Holdings Sponsor, LLC (4) |
5,124,300 |
19.8 |
% |
5,124,300 |
— |
2 |
% |
5,124,300 |
— |
2 |
% | |||||||||||||||||||||
John Martin |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||
Gordon Watson |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||
Olibia Stamatoglou |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Adrienne Harris |
20,000 | * | 20,000 | — | * | 20,000 | — | * | ||||||||||||||||||||||||
Kai Schmitz |
20,000 | * | 20,000 | — | * | 20,000 | — | * | ||||||||||||||||||||||||
Kurt Summers |
20,000 | * | 20,000 | — | * | 20,000 | — | * | ||||||||||||||||||||||||
All pre-Business Combination directors and officers as a group (6 individuals) |
60,000 | 0.2 | % | 60,000 | — | * | 60,000 | — | * | |||||||||||||||||||||||
Greater than Five Percent Holders: |
||||||||||||||||||||||||||||||||
Invesco Ltd. (5) |
3,612,829 |
13.9 |
% |
3,612,829 |
— |
1.4 |
% |
3,612,829 |
(10) |
— |
1.4 |
% | ||||||||||||||||||||
Millennium Management LLC (6) |
1,600,000 |
6.2 |
% |
1,600,000 |
— |
* |
1,600,000 |
(10) |
— |
* |
||||||||||||||||||||||
Corbin Capital Partners Group, LLC (7) |
1,500,000 |
5.8 |
% |
4,500,000 |
— |
1.7 |
% |
4,500,000 |
(10) |
— |
1.8 |
% | ||||||||||||||||||||
Sculptor Capital LP (8) |
1,404,800 |
5.4 |
% |
1,404,800 |
— |
* |
1,404,800 |
(10) |
— |
* |
||||||||||||||||||||||
Citadel Advisors LLC and related persons and entities (9) |
1,790,975 |
6.8 |
% |
1,790,975 |
— | * |
1,475,000 |
(10) |
— |
* |
||||||||||||||||||||||
Director Nominees and Named Executive Officers of the Company Post-Business Combination ( 16 ) |
||||||||||||||||||||||||||||||||
Gavin Michael (13) |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Gordon Watson (13) |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
David Clifton (15) |
— | — | — | 71,363 | — | — | 71,363 | — | ||||||||||||||||||||||||
Michelle Goldberg (13) |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Adrienne Harris (13) |
20,000 | * | 20,000 | — | * | 20,000 | — | * | ||||||||||||||||||||||||
Kristyn Cook (13) |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Sean Collins (13) (14) |
— | — | 500,000 | 2,900,494 | 1.3 | % | 500,000 | 2,900,494 | 1.3 | % | ||||||||||||||||||||||
Andrew Main (13) |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Richard Lumb (13) |
— | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Nicholas Cabrera |
— | — | — | 226,825 | * | — | 226,825 | * | ||||||||||||||||||||||||
Marc D’Annunzio |
— | — | — | 585,543 | * | — | 585,543 | * | ||||||||||||||||||||||||
Matthew Johnson |
— | — | — | 186,202 | * | — | 186,202 | * | ||||||||||||||||||||||||
Adam White |
— | — | — | 1,372,368 | * | — | 1,372,368 | * | ||||||||||||||||||||||||
Andrew LaBenne |
10 | |
* |
|
10 | — | * | 10 | — | * | ||||||||||||||||||||||
All post-Business Combination Director Nominees and Executive Officers as a Group (17 persons): (16) |
20,010 | * | 520,010 | 2,442,303 | 1.1 | % | 520,010 | 2,442,303 | 1.2 | % | ||||||||||||||||||||||
Greater than Five Percent Holders |
||||||||||||||||||||||||||||||||
Intercontinental Exchange Holdings, Inc. (11)(12) (15) |
— |
— |
5,000,000 |
169,634,118 |
30 |
% |
5,000,000 |
169,634,118 |
30 |
% |
* | less than one percent. |
(1) | Interests shown include Founder Shares, which are VIH Class B Ordinary Shares. Such shares will automatically convert into Bakkt Pubco Class A Shares as a result of and upon the effective time of the Domestication on a one-for-one |
(2) | Each Bakkt Opco Common Unit, when coupled with one Bakkt Pubco Class V Share may be exchanged for one Bakkt Pubco Class A Share or the Cash Amount in accordance with and subject to the terms of the Surviving Company LLC Agreement and the Exchange Agreement. Post-Business Combination, Bakkt Pubco Class V Shares includes the shares to be received by the Bakkt Equity Holders as consideration in the Merger, assuming a conversion ratio of approximately 0.2196 Bakkt Pubco Class V Shares for each share held in Bakkt by the Bakkt Equity Holders. The exact conversion ratio will be determined at closing of the Business Combination and may vary based on the number of Bakkt Opco Common Units then outstanding. |
(3) | Represents percentage of voting power of the holders of Bakkt Pubco Class A Shares and Bakkt Pubco Class V Shares voting together as a single class. |
(4) | VPC Impact Acquisition Holdings Sponsor, LLC is the record holder of such shares. Richard Levy, as Chief Executive Officer and Founder of Victory Park Capital Advisors, LLC, has voting and investment discretion over these shares and therefore may be deemed to beneficially own such shares. Richard Levy disclaims any beneficial ownership of the securities held by VPC Impact Acquisition Holdings Sponsor, LLC other than to the extent of any pecuniary interest he may have therein, directly or indirectly. |
(5) | According to a Schedule 13G/A filed on April 12, 2021, Invesco Ltd. in its capacity as a parent holding company to its investment advisers, may be deemed to beneficially own 3,612,829 Class A ordinary shares which are held of record by clients of Invesco Ltd. The address of Invesco Ltd. is 1555 Peachtree Street NE, Suite 1800, Atlanta, GA 30309. |
(6) | According to a Schedule 13G/A filed on February 1, 2021, (i) Millennium Management LLC, a Delaware limited liability company (“ Millennium Management Millennium Group Management Millennium International Management Integrated Core Strategies ICS Opportunities |
(7) | According to a Schedule 13G filed on February 12, 2021, Corbin Capital Partners Group, LLC (“CCPG”) and Corbin Capital Partners, L.P. (“ CCP CEOF COF |
(8) | According to a Schedule 13G/A filed on February 5, 2021, Sculptor Capital LP (“ Sculptor Sculptor Accounts SCHC SCU SCMF |
Funding, LP (“ NRMD |
(9) | According to a Schedule 13G filed with the SEC on July 19, 2021 on behalf of Citadel Advisors LLC (“Citadel Advisors”), Citadel Advisors Holdings LP (“CAH”), Citadel GP LLC (“CGP”), Citadel Securities LLC (“Citadel Securities”), CALC IV LP (“CALC4”), Citadel Securities GP LLC (“CSGP”) and Mr. Kenneth Griffin (collectively with Citadel Advisors, CAH, CGP, Citadel Securities, CALC4 and CSGP, the “Reporting Persons”) with respect to Class A ordinary shares owned by Citadel Equity Fund Ltd., a Cayman Islands company (“CEFL”), Citadel Multi-Strategy Equities Master Fund Ltd., a Cayman Islands company (“CM”), and Citadel Securities. Citadel Advisors is the portfolio manager for CEFL and CM. CAH is the sole member of Citadel Advisors. CGP is the general partner of CAH. CALC4 is the non-member manager of Citadel Securities. CSGP is the general partner of CALC4. Mr. Griffin is the President and Chief Executive Officer of CGP, and owns a controlling interest in CGP and CSGP. Each of Citadel Advisors, CAH and CGP may be deemed to beneficially own 1,475,000 Class A ordinary shares. Each of Citadel Securities, CALC4 and CSGP may be deemed to beneficially own 315,975 Class A ordinary shares. Mr. Griffin may be deemed to beneficially own 1,790,975 Class A ordinary shares. The principal business address of each Reporting Person is 131 S. Dearborn Street, 32nd Floor, Chicago, Illinois 60603. |
(10) | Assuming no redemptions by the holder. |
(11) | Post-Business Combination amounts include 32,500,000 shares of Bakkt Pubco Class A Common Stock to be purchased by the PIPE Investors including Intercontinental Exchange Holdings, Inc. in the PIPE Investment (up to 500,000 of which may be allocated to other Bakkt Equity Holders). |
(12) | The business address of Intercontinental Exchange Holdings, Inc. and David Clifton is 5660 New Northside Drive, Atlanta, Georgia 30328. |
(13) | The business address of each of Gavin Michael, David Clifton, Michelle Goldberg, Kristyn Cook, Sean Collins, Andrew Main, and Richard Lumb is 5900 Windward Parkway, Suite 450, Alpharetta, GA 30005. |
(14) | Includes shares to be held by certain limited partnerships whose general partner is Goldfinch Co-Invest I GP LLC. Sean Collins, as a Managing Partner of Goldfinch Co-Invest I GP LLC, has voting and investment discretion over these shares and therefore may be deemed to beneficially own such shares. |
(15) | Concurrently with the Closing, ICEH and Bakkt Pubco will enter into the Voting Agreement, pursuant to which, to the extent that ICEH’s voting power as jointly calculated by ICEH and Bakkt Pubco and represented by the ICE Shares as of any record date for a Stockholder Matter exceeds 30% of the total voting power of all Bakkt Pubco Class A Shares and Bakkt Pubco Class V Shares that are issued and outstanding and entitled to vote as of the relevant record date, ICEH will irrevocably appoint a proxy, designated by the Company Board, to vote the Excess Shares in the same percentages for and against such Stockholder Matter as votes were cast for and against such Stockholder Matter by all stockholders of Bakkt Pubco other than ICEH. For additional information see “ The Business Combination Proposal—Related Agreements—Voting Agreement |
(16) | Includes one-third of the Bakkt Incentive Units held by the Director Nominees and Executive Officers as a group, in each case through Bakkt Management, that will become vested as of the Closing, a portion of which may be redeemed by any or all such Director Nominees and Executive Officers individually, effective as of immediately prior to the Closing, for the receipt, as of the Closing, of a cash payment. For additional information, please see “ The Business Combination Proposal—Treatment of Bakkt Incentive Units and Bakkt Participation Units” |
• | Surviving Company LLC Agreement (see the section entitled “ The Business Combination Proposal—Related Agreements—Surviving Company LLC Agreement |
• | Exchange Agreement (see the section entitled “ The Business Combination Proposal—Related Agreements—Exchange Agreement |
• | Tax Receivable Agreement (see the section entitled “ The Business Combination Proposal—Related Agreements—Tax Receivable Agreement |
• | Voting Agreement (see the section entitled “ The Business Combination Proposal—Related Agreements—Voting Agreement |
• | Support Agreement (see the section entitled “ The Business Combination Proposal—Related Agreements—Bakkt Equity Holders Support Agreement |
• | Insider Letter Agreement (see the section entitled “ The Business Combination Proposal—Related Agreements—Insider Letter Agreement |
• | Subscription Agreements (see the section entitled “ The Business Combination Proposal—Related Agreements—Subscription Agreements |
• | Stockholders Agreement (see the section entitled “ The Business Combination Proposal—Related Agreements—Stockholders Agreement |
• | Registration Rights Agreement (see the section entitled “ The Business Combination Proposal—Related Agreements —Registration Rights Agreement |
• | Cooperation Agreement (see the section entitled “ The Business Combination proposal—Merger Agreement—Covenants of VIH |
• | Consumers |
• | Enterprises. |
• | Financial Institutions. |
• | Broad redemption options |
• | Access to exclusive brands |
• | Balance sheet optimization |
• | Lower cost of acceptance |
• | Reduced checkout abandonment and increased conversions |
• | Increased ability to reach new consumers |
• | Hyper-personalized offers |
• | Easy integration |
• | Standalone custody |
• | Regulated futures and options end-to-end |
• | Institutional-grade pricing execution engine |
• | Personal, intuitive consumer experience end-to-end |
• | Seamlessly transact across asset classes |
• | Enabling the use of digital assets for everyday spending |
• | Ability to send and receive digital assets |
• | Increased value in loyalty |
• | As loyalty partners seek new ways to deepen consumer relationships, we believe that they will choose our platform and co-market our platform to their consumers. |
• | The more options there are in our digital asset marketplace, the more liquidity opportunities consumers will have, and the more reasons they will have to engage with the platform. |
• | The larger the consumer base on our app becomes, the more instant liquidity will be available, and the more attractive the platform and payment method will become for merchants. |
• | The more merchants there are on our platform, the more opportunities consumers will have to transact on the platform. |
• | ability to attract, retain, and engage loyalty partners, institutions, merchants and consumers on our platform; |
• | ability to demonstrate to loyalty partners and merchants that they may achieve incremental sales by using and offering our services to consumers; |
• | the strength of our integrated solution over other potential coalitions of disparate point solutions; |
• | consumer confidence in the safety, security, privacy and control of their information on our platform; |
• | ability to develop products and services across multiple commerce channels, including mobile payments, payments at the retail point of sale, cryptoassets, and loyalty/rewards points; and |
• | system reliability, regulatory compliance and data security. |
• | Digital Asset Marketplace. end-to-end net-worth individuals on a standalone basis as approved by the NYSDFS. |
Our custodian also operates as the backbone of many of our consumer- and enterprise- focused offerings. For example, it enables consumers to use our app to transact in bitcoin in real-time, and we expect to enable transactions in other cryptocurrencies in the fourth quarter of 2021, subject to necessary regulatory approvals from the NYSDFS, as described further below. In addition, in the future, contingent upon achieving the necessary regulatory approvals and/or partnering with an existing licensed broker-dealer, we plan to add the ability to transact in securities such as equities, derivatives, and ETFs. We believe that our institutional-grade infrastructure underpins our ability to expand and scale consumer solutions. We earn revenue in the Digital Asset Marketplace by providing standalone custody services for warehousing cryptocurrency assets for our institutional customers, which we recognize on a pro rata basis over the term of the custody contract. Our standalone custody revenue is currently immaterial. Separately, as a result of our Triparty Agreement with IFUS and ICUS, we earn the net revenues for providing stand ready custody and warehousing services to IFUS and ICUS in connection with the offering of PDF Contracts. With respect to our provision of custody and warehousing services that are necessary to support the trading and clearing services provided by IFUS and ICUS for the PDF Contracts, our customers are IFUS and ICUS, who are related parties. We recognize this revenue on a straight-line basis over the average obligation period, beginning at trade execution until the PDF Contract is settled by the PDF Contract Trader, which is generally no longer than a month as less than 1% of PDF Contracts go to expiration, thus not requiring physical delivery. In 2019 and 2020, PDF Contract Traders were offered significant rebates and incentives to increase trading volume of PDF Contracts covered by the Triparty Agreement. This resulted in negative revenues from the Triparty Agreement of $2.0 million and $0.8 million in the year ended December 31, 2020 and 2019, respectively. In the six months ended June 30, 2021, the rebates and incentives were reduced and negative revenue under the Triparty Agreement during such period was approximately $43,000. For more information, see Note 2 to Bakkt’s unaudited interim consolidated financial statements and audited consolidated financial statements included elsewhere in this proxy statement/prospectus. |
• | Loyalty Redemption loyalty partners |
• | Alternative Payment Method |
our alternative payment method can displace transactions off existing payment card infrastructure, which results in significant reductions in payment fees and, over time, faster settlement. We earn and recognize Alternative Payment Method revenue through a merchant discount rate (or percent of the transaction tender) at the time of each transaction and these transaction fees are reduced by consideration payable to a customer under the strategic alliance agreement with such customer (the “ Strategic Alliance Agreement |
Three Months Ended June 30, |
Six Months Ended June 30, |
Year Ended December 31, |
||||||||||||||||||||||
2021 |
2020 |
2021 |
2020 |
2020 |
2019 |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Revenues: |
||||||||||||||||||||||||
Net revenues (1) |
$ | 8,486 | $ | 8,908 | (2) |
$ | 16,631 | $ | 12,438 | (3) |
$ | 28,495 | (4) |
$ | (881 | ) | ||||||||
Other |
— | — | — | — | — | 17 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total revenues |
$ | 8,486 | $ | 8,908 | (2) |
$ | 16,631 | $ | 12,438 | (3) |
$ | 28,495 | (4) |
$ | (864 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating expenses: |
||||||||||||||||||||||||
Compensation and benefits |
19,916 | 10,411 | 35,150 | 17,870 | 43,141 | 23,237 | ||||||||||||||||||
Professional services |
760 | 1,248 | 1,673 | 2,265 | 5,751 | 4,150 | ||||||||||||||||||
Technology and communication |
3,916 | 2,630 | 6,702 | 4,646 | 9,741 | 4,256 | ||||||||||||||||||
Selling, general and administrative |
8,956 | 1,028 | 15,065 | 1,808 | 8,219 | 2,617 | ||||||||||||||||||
Acquisition-related expenses |
2,489 | 335 | 10,309 | 11,477 | 13,372 | 731 | ||||||||||||||||||
Depreciation and amortization |
3,034 | 2,205 | 5,828 | 3,303 | 8,159 | 324 | ||||||||||||||||||
Affiliate expenses |
471 | 1,070 | 942 | 2,140 | 3,082 | 500 | ||||||||||||||||||
Impairment of long-lived assets |
— | — | — | 1,393 | 15,292 | — | ||||||||||||||||||
Other operating expenses |
269 | 177 | 697 | 209 | 857 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total operating expenses |
39,811 | 19,104 | 76,366 | 45,111 | 107,614 | 35,815 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Operating loss |
(31,325 | ) | (10,196 | ) | (59,735 | ) | (32,673 | ) | (79,119 | ) | (36,679 | ) | ||||||||||||
Interest income, net |
(94 | ) | (2 | ) | (143 | ) | 424 | 123 | 3,280 | |||||||||||||||
Other income (expense), net |
(311 | ) | (166 | ) | (649 | ) | 229 | (218 | ) | 224 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss before income taxes |
(31,730 | ) | (10,364 | ) | (60,527 | ) | (32,020 | ) | (79,214 | ) | (33,175 | ) | ||||||||||||
Income tax (expense) benefit |
(161 | ) | 12 | (184 | ) | (25 | ) | (391 | ) | 199 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss |
$ | (31,891 | ) | $ | (10,352 | ) | $ | (60,711 | ) | $ | (32,045 | ) | $ | (79,605 | ) | $ | (32,976 | ) | ||||||
Currency translation adjustment, net of tax |
94 | 129 | 173 | 167 | 191 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Comprehensive loss |
$ | (31,797 | ) | $ | (10,223 | ) | $ | (60,538 | ) | $ | (32,212 | ) | $ | (79,414 | ) | $ | (32,976 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | The three and six months ended June 30, 2021 include net revenues from affiliate of $(17,000) and $(43,000), respectively. The three and six months ended June 30, 2020 include net revenues from affiliate of |
$(639,000) and $(1,004,000), respectively. The years ended December 31, 2020 and 2019 include net revenues from affiliate of $(2,007,000) and $(881,000), respectively. |
(2) | The three months ended June 30, 2020 includes revenue of approximately $9.3 million from Bridge2 Solutions and approximately $0.5 million from Bakkt, partially offset by approximately $0.9 million in contra-revenue from Bakkt. |
(3) | The six months ended June 30, 2020 includes revenue of approximately $13.4 million from Bridge2 Solutions and approximately $0.6 million from Bakkt, partially offset by approximately $1.6 million in contra-revenue from Bakkt. |
(4) | The year ended December 31, 2020 includes revenue of approximately $30.8 million from Bridge2 Solutions and approximately $2.2 million from Bakkt, partially offset by approximately $4.5 million in contra-revenue from Bakkt. |
Three Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Net revenues (includes net revenues from affiliate of $(17) and $(639), respectively) |
$ | 8,486 | $ | 8,908 | (1) |
$ | (422 | ) | (4.7 | )% |
(1) | The three months ended June 30, 2020 includes revenue of approximately $9.3 million from Bridge2 Solutions and approximately $0.5 million from Bakkt, partially offset by approximately $0.9 million in contra-revenue from Bakkt. |
Three Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Compensation and benefits |
$ | 19,916 | $ | 10,411 | $ | 9,505 | 91.3 | % |
Three Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Professional services |
$ | 760 | $ | 1,248 | $ | (488 | ) | (39.1 | %) |
Three Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Technology and communication |
$ | 3,916 | $ | 2,630 | $ | 1,286 | 48.9 | % |
Three Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Selling, general and administrative |
$ | 8,956 | $ | 1,028 | $ | 7,928 | 771.2 | % |
Three Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Acquisition-related cost |
$ | 2,489 | $ | 335 | $ | 2,154 | 643.0 | %) |
Three Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Depreciation and amortization |
$ | 3,034 | $ | 2,205 | $ | 829 | 37.6 | % |
Three Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Affiliate expenses |
$ | 471 | $ | 1,070 | $ | (599 | ) | (56.0 | %) |
Three Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Impairment of long-lived assets |
— | $ | 1,393 | $ | (1,393 | ) | (100.0 | %) |
Six Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Net revenues (includes net revenues from affiliate of $(43) and $(1,004), respectively) |
$ | 16,631 | $ | 12,438 | (1) |
$ | 4,193 | 33.7 | % |
(1) | The six months ended June 30, 2020 includes revenue of approximately $13.4 million from Bridge2 Solutions and approximately $0.6 million from Bakkt, partially offset by approximately $1.6 million in contra-revenue from Bakkt. |
Six Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Compensation and benefits |
$ | 35,150 | $ | 17,870 | $ | 17,280 | 96.7 | % |
Six Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Professional services |
$ | 1,673 | $ | 2,265 | $ | (592 | ) | (26.1 | )% |
Six Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Technology and communication |
$ | 6,702 | $ | 4,646 | $ | 2,056 | 44.3 | % |
Six Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Selling, general and administrative |
$ | 15,065 | $ | 1,808 | $ | 13,257 | 733.2 | % |
Six Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Acquisition-related expenses |
$ | 10,309 | $ | 11,477 | $ | (1,168 | ) | (10.2 | )% |
Six Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Depreciation and amortization |
$ | 5,828 | $ | 3,303 | $ | 2,525 | 76.4 | % |
Six Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Affiliate expenses |
$ | 942 | $ | 2,140 | (1,198 | ) | (56.0 | )% |
Six Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Impairment of long-lived assets |
$ | — | $ | 1,393 | $ | (1,393 | ) | (100.0 | )% |
Six Months Ended June 30, |
Change in |
|||||||||||||||
2021 |
2020 |
$ |
% |
|||||||||||||
(in thousands) |
||||||||||||||||
Income tax expense |
$ | 184 | $ | 25 | $ | 159 | 636.0 | % |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Net Revenues (includes net revenues from affiliate of $(2,007) and $(881), respectively) |
$ | 28,495 | (1) |
$ | (881 | ) | $ | 29,376 | 3,334.4 | % | ||||||
Other |
— | 17 | (17 | ) | N/A | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenues |
$ | 28,495 | (1) |
$ | (864 | ) | $ | 29,359 | 3,398.0 | % | ||||||
|
|
|
|
|
|
|
|
(1) | The year ended December 31, 2020 includes revenue of approximately $30.8 million from Bridge2 Solutions and approximately $2.2 million from Bakkt, partially offset by approximately $4.5 million in contra-revenue from Bakkt. |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Compensation and benefits |
$ | 43,141 | $ | 23,237 | $ | 19,904 | 85.7 | % |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Professional services |
$ | 5,751 | $ | 4,150 | $ | 1,601 | 38.6 | % |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Technology and communication |
$ | 9,741 | $ | 4,256 | $ | 5,485 | 128.9 | % |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Selling, general and administrative |
$ | 8,219 | $ | 2,617 | $ | 5,602 | 214.1 | % |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Acquisition-related cost |
$ | 13,372 | $ | 731 | $ | 12,641 | 1,729.3 | % |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Depreciation and amortization |
$ | 8,159 | $ | 324 | $ | 7,835 | 2,418.2 | % |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Affiliate expenses |
$ | 3,082 | $ | 500 | $ | 2,582 | 516.4 | % |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Impairment of long-lived assets |
$ | 15,292 | — | $ | 15,292 | N/A |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Interest income, net |
$ | 123 | $ | 3,280 | $ | (3,157 | ) | (96.3 | %) |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Income tax (expense) benefit |
$ | (391 | ) | $ | 199 | $ | (590 | ) | (296.5 | %) |
Six Months Ended June 30, |
||||||||||||||||
2021 |
2020 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Bakkt Gross Revenue |
$ | 844 | $ | 598 | $ | 246 | 41 | % | ||||||||
Bakkt Contra-Revenue |
(1,596 | ) | (1,552 | ) | (44 | ) | 3 | % | ||||||||
Bridge2 Solutions Revenue |
17,383 | 19,051 | (1,668 | ) | (9 | )% | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Pro Forma Revenue |
$ | 16,631 | $ | 18,097 | $ | (1,466 | ) | (8.1 | )% |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Bakkt Gross Revenue |
$ | 2,198 | $ | 17 | $ | 2,181 | 12,829 | % | ||||||||
Bakkt Contra-Revenue |
(4,477 | ) | (881 | ) | (3,596 | ) | 408 | % | ||||||||
Bridge2 Solutions Revenue |
36,433 | 44,297 | (7,864 | ) | (18 | %) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Pro Forma Revenue |
$ | 34,154 | $ | 43,433 | $ | (9,279 | ) | (21.4 | %) |
Six Months Ended June 30, |
||||||||||||||||
2021 |
2020 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Pro Forma Net Loss |
$ | (60,711 | ) | $ | (32,511 | ) | $ | (28,200 | ) | 86.7 | % |
Year Ended December 31, |
||||||||||||||||
2020 |
2019 |
$ Change |
% Change |
|||||||||||||
(dollars in thousands) |
||||||||||||||||
Pro Forma Net Loss |
$ | (80,071 | ) | $ | (30,232 | ) | $ | (49,839 | ) | 164.9 | % |
Six Months Ended June 30, |
Year Ended December 31, |
|||||||||||||||
2021 |
2020 |
2020 |
2019 |
|||||||||||||
(in thousands) |
||||||||||||||||
Net cash flows used in operating activities |
$ | (18,381 | ) | $ | (20,093 | ) | $ | (30,940 | ) | $ | (48,496 | ) | ||||
Net cash flows provided by (used in) investing activities |
$ | (6,763 | ) | $ | 2,826 | $ | (7,929 | ) | $ | (40,947 | ) | |||||
Net cash flows provided by (used in) financing activities |
$ | (64 | ) | $ | 37,711 | $ | 37,487 | — |
• | unit-based compensation expense, which has been excluded from Adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations, has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy; |
• | the intangible assets being amortized, and property and equipment being depreciated, may have to be replaced in the future, and the non-GAAP financial measures do not reflect cash capital expenditure requirements for such replacements or for new capital expenditures or other capital commitments; and |
• | non-GAAP measures do not reflect changes in, or cash requirements for, our working capital needs. |
Three Months Ended June 30, |
Six Months Ended June 30, |
Year Ended December 31, |
||||||||||||||||||||||
2021 |
2020 |
2021 |
2020 |
2020 |
2019 |
|||||||||||||||||||
(in thousands) |
||||||||||||||||||||||||
Net loss |
$ | (31,891 | ) | $ | (10,352 | ) | $ | (60,711 | ) | $ | (32,045 | ) | ($ | 79,605 | ) | ($ | 32,976 | ) | ||||||
Add: Depreciation and amortization |
3,034 | 2,205 | 5,828 | 3,303 | 8,159 | 324 | ||||||||||||||||||
Add/(Less): Interest (income) expense |
94 | 2 | 143 | (424 | ) | (123 | ) | (3,280 | ) | |||||||||||||||
Add/(Less): Income tax (benefit) expense |
161 | (12 | ) | 184 | 25 | 391 | (199 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
EBITDA |
(28,602 | ) | (8,157 | ) | (54,556 | ) | (29,141 | ) | (7,178 | ) | (36,131 | ) | ||||||||||||
Add: Acquisition-related transaction costs |
2,489 | 335 | 10,309 | 11,477 | 13,372 | 731 | ||||||||||||||||||
Add/(Less): Unit-based compensation expense |
1,256 | (1,419 | ) | 2,512 | (459 | ) | 2,082 | 10,673 | ||||||||||||||||
Add: Restructuring charges |
— | — | — | 588 | 588 | — | ||||||||||||||||||
Add: Impairment of long-lived assets |
— | — | — | 1,393 | 15,292 | — | ||||||||||||||||||
Less: Transition services to Bakkt Clearing |
— | (14 | ) | — | (196 | ) | (196 | ) | (145 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Adjusted EBITDA |
$ | (24,857 | ) | $ | (9,255 | ) | $ | (41,735 | ) | $ | (16,338 | ) | ($ | 40,040 | ) | ($ | 24,872 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Transaction revenue, net (1) |
$ | 3,542 | $ | 1,822 | ||||
Subscription and service revenue |
4,944 | 7,086 | ||||||
|
|
|
|
|||||
$ | 8,486 | $ | 8,908 | |||||
|
|
|
|
(1) | Amounts presented are net of rebates and liquidity payments under the Triparty Agreement, reductions in connection with the Contribution Agreement, and consideration payable to a customer pursuant to the Strategic Alliance Agreement of $707,000 and $929,000 for the three months ended June 30, 2021 and 2020, respectively. Included in these amounts are related party amounts of $17,000 and $639,000 for the three months ended June 30, 2021 and 2020, respectively (see Note 7). |
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Transaction revenue, net (1) |
$ | 6,837 | $ | 2,060 | ||||
Subscription and service revenue |
9,794 | 10,378 | ||||||
|
|
|
|
|||||
$ | 16,631 | $ | 12,438 | |||||
|
|
|
|
(1) | Amounts presented are net of rebates and liquidity payments under the Triparty Agreement, reductions in connection with the Contribution Agreement, and consideration payable to a customer pursuant to the Strategic Alliance Agreement of $1,596,000 and $1,552,000 for the six months ended June 30, 2021 and 2020, respectively. Included in these amounts are related party amounts of $43,000 and $1,004,000 for the six months ended June 30, 2021 and 2020, respectively (see Note 7). |
December 31, 2020 |
December 31, 2019 |
|||||||
Transaction revenue, net (1) |
$ | 7,386 | $ | (881 | ) | |||
Subscription and service revenue |
21,109 | — | ||||||
Other |
— | 17 | ||||||
|
|
|
|
|||||
Total |
$ | 28,495 | $ | (864 | ) | |||
|
|
|
|
(1) | Amounts presented are net of rebates and liquidity payments under the Triparty Agreement, reductions in connection with the Contribution Agreement, and consideration payable to a customer pursuant to the Strategic Alliance Agreement of $4,477,000 and $881,000 for the years ended December 31, 2020 and 2019, respectively. Included in these amounts are related party amounts of $4,090,000 and $881,000 for the years ended December 31, 2020 and 2019, respectively (see Note 7). |
• | Platform subscription fees: Monthly fixed fee charged to loyalty partners to access the redemption platform and receive customer support services. We recognize revenue for these fees on a straight-line basis over the related contract term, as the loyalty partner receives benefits evenly throughout the term of the contract. These fees are allocated to our performance obligation to provide access to our redemption platform, and thus are recognized on a gross basis. |
• | Transaction fees: Transaction fees are earned for most transactions processed through our platform. These fees are allocated to our performance obligation to provide order placement services on behalf of the loyalty partner, and therefore are recognized net of the related redemption cost. We allocate transaction fees to the period in which the related transaction occurs. |
• | Revenue share fees: We are entitled to revenue share fees in the form of rebates from third-party commerce merchants and other partners which provide services facilitating redemption order fulfilment. We allocate revenue share fees to the period in which the related transaction occurs. |
• | Service fees: We earn fees for certain software development activities associated with the implementation of new customers on our loyalty redemption platform and other development activities if a loyalty partner requests that we customize certain features and functionalities for their loyalty program. We recognize service fees as revenue on a straight-line basis, beginning when the internally developed software resulting from such implementation or other development activities are operational in our platform over the longer of the remaining anticipated customer life and 3 years, which represents the estimated useful life of the Company’s internally developed software. Implementation and development service fees are generally billed when the implementation and development activities are performed. |
• | Exclude sales taxes from the measurement of the transaction price. |
• | Not adjust the transaction price for the existence of a significant financing component if the timing difference between a customer’s payment and our performance is one year or less. |
• | Not provide disclosures about the transaction price allocated to unsatisfied performance obligations for contracts with a duration of one year or less or when the consideration is variable and allocated entirely to a wholly unsatisfied performance obligation or a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation. |
Estimated Useful Life |
||||
Internal use software |
3-7 years |
|||
Purchased software |
3 years | |||
Assets under finance lease |
2-5 years |
|||
Office, furniture and equipment |
7-10 years |
|||
Leasehold improvements |
7 years | |||
Other computer and network equipment |
3 years |
Name |
Age |
Position(s) | ||
Executive Officers: |
||||
Gavin Michael |
56 | Chief Executive Officer | ||
Adam White |
38 | President | ||
Andrew LaBenne |
47 | Chief Financial Officer | ||
Nicolas Cabrera |
46 | Chief Product Officer | ||
Marc D’Annunzio |
49 | General Counsel and Secretary | ||
Matthew Johnson |
49 | Chief Technology Officer | ||
Nancy Gordon |
51 | Executive Vice President, Loyalty, Rewards & Payments | ||
Michael Lewis |
56 | Executive Vice President, Engineering & Operations | ||
Sheela Zemlin |
52 | Executive Vice President, Chief Revenue Officer | ||
Daniel O’Prey |
35 | Executive Vice President, Digital Assets | ||
Board of Managers: |
||||
Thomas E. Noonan |
60 | Chairman of Board of Managers | ||
Hon. Sharon Y. Bowen |
64 | Member of Board of Managers | ||
Sean Collins |
41 | Member of Board of Managers | ||
Akshay Naheta |
40 |
Member of Board of Managers | ||
Jeffrey C. Sprecher |
65 | Member of Board of Managers |
Name and Principal Position |
Year |
Salary ($) (1) |
Stock Awards ($) (2) |
Bonus ($) |
All Other Compensation ($) |
Total ($) |
||||||||||||||||||
David C. Clifton (9) Interim Chief Executive Officer |
2020 |
— | 1,131,000 | — | — | 1,131,000 | ||||||||||||||||||
Nicolas Cabrera Chief Product Officer |
2020 |
360,833 | 1,652,670 | 120,200 |
(3) |
93,210 |
(6) |
2,226,913 | ||||||||||||||||
Matthew Johnson Chief Technology Officer |
2020 |
320,833 | 1,154,520 | 102,900 |
(4) |
18,210 |
(7) |
1,596,463 | ||||||||||||||||
Michael Blandina (10) Former Chief Executive Officer |
2020 |
208,048 | — |
250,000 |
(5) |
3,101 |
(8 ) |
461,149 |
(1) | Amounts reflect annual base salary paid for fiscal 2020. |
(2) | Amounts represent the grant date fair value of equity-based awards granted in fiscal 2020, calculated in accordance with ASC 718, and do not necessarily correspond to the actual value that may be recognized from the equity-based awards. Assumptions used in the calculation of these amounts are described in Note 9 of Bakkt’s audited consolidated financial statements included in this proxy statement/prospectus. |
(3) | Amount represents a discretionary bonus paid to Mr. Cabrera. |
(4) | Amount represents a discretionary bonus paid to Mr. Johnson. |
(5) | Amount represents a discretionary bonus paid to Mr. Blandina. |
(6) | Amount reflects (1) matching contributions made by Bakkt to Mr. Cabrera’s 401(k) plan account in the amount of $17,100, (2) imputed income from Bakkt’s group term life insurance in the amount of $810, (3) telecom allowance in the amount of $300 and (4) relocation expenses of $75,000. |
(7) | Amount reflects (1) matching contributions made by Bakkt to Mr. Johnson’s 401(k) plan account in the amount of $17,100, (2) imputed income from Bakkt’s group term life insurance in the amount of $810 and (3) telecom allowance in the amount of $300. |
(8) | Amount reflects (1) matching contributions made by Bakkt to Mr. Blandina’s 401(k) plan account in the amount of $2,800, (2) imputed income from Bakkt’s group term life insurance in the amount of $871 and (3) telecom allowance in the amount of $150. |
(9) | Mr. Clifton ceased being Bakkt’s interim Chief Executive Officer on January 11, 2021, when Mr. Michael became our Chief Executive Officer. Mr. Clifton received no other compensation for his services as Bakkt’s interim Chief Executive Officer other than profits interests in the form of 975,000 preferred incentive units. |
(10) | Mr. Blandina ceased being Bakkt’s Chief Executive Officer in May 2020. |
Name |
Number of profits interests units that have vested (#) |
Market value of profits interests units that have vested ($) |
Number of profits interests units that have not vested (#) (5) |
Market value of profits interests units that have not vested ($) (6) |
||||||||||||
David C. Clifton (1) |
0 | 0 | 975,000 | 1,131,000 | ||||||||||||
Nicolas Cabrera (2) |
0 | 0 | 3,099,000 | 2,975,040 | ||||||||||||
Matthew Johnson (3) |
0 | 0 | 2,544,000 | 2,442,240 | ||||||||||||
Michael Blandina (4) |
0 | 0 | 0 | 0 |
(1) | Mr. Clifton was granted 975,000 profits interests in the form of preferred incentive units on December 4, 2020, one-third of which will vest as of the consummation of the Proposed Transaction, and one-third of which will vest on each of the first and second anniversaries of the consummation of the Proposed Transaction. |
(2) | Mr. Cabrera was granted (1) 2,099,000 profits interests in the form of common incentive units on February 28, 2020 and (2) 1,000,000 profits interests in the form of common incentive units on December 4, 2020, all of which will vest as to one-third as of the consummation of the Proposed Transaction, and one-third on each of the first and second anniversaries of the consummation of the Proposed Transaction. |
(3) | Mr. Johnson was granted (1) 2,044,000 profits interests in the form of common incentive units on February 28, 2020 and (2) 500,000 profits interests in the form of common incentive units on December 4, 2020, all of which will vest as to one-third as of the consummation of the Proposed Transaction, and one-third on each of the first and second anniversaries of the consummation of the Proposed Transaction. |
(4) | Mr. Blandina was granted 9,000,000 profits interests in the form of preferred incentive units on May 17, 2019, all of which were forfeited by Mr. Blandina upon his voluntary resignation of employment. |
(5) | Following the Proposed Transaction, each profits interests will be exchanged for the right to receive a “paired interest” that represents a Bakkt Opco Common Unit together with a Bakkt Pubco Class V Share. See the section entitled “ The Business Combination Proposal — Related Agreements — Exchange Agreement Treatment of Bakkt Incentive Units and Bakkt Participation Units |
(6) | Represents the market value of the profits interests units based on the $1.16 per unit value of Bakkt’s preferred incentive units (which were granted to Mr. Clifton) and $0.96 per unit value of Bakkt’s common incentive units (which were granted to Messrs. Cabrera and Johnson) determined in the most recent valuation of Bakkt’s membership interests. |
Name |
Age |
Position | ||||
Gavin Michael |
56 | Chief Executive Officer, Class I Director | ||||
Adam White |
38 | President | ||||
Andrew LaBenne |
47 | Chief Financial Officer | ||||
Nicolas Cabrera |
46 | Chief Product Officer | ||||
Marc D’Annunzio |
49 | General Counsel and Secretary | ||||
Matthew Johnson |
49 | Chief Technology Officer | ||||
Nancy Gordon |
51 | Executive Vice President, Loyalty, Rewards & Payment | ||||
Michael Lewis |
56 | Executive Vice President, Engineering & Operations | ||||
Sheela Zemlin |
52 | Executive Vice President, Chief Revenue Officer | ||||
Daniel O’Prey |
35 | Executive Vice President, Digital Assets | ||||
Michelle Goldberg |
52 | Class I Director | ||||
Adrienne Harris |
40 | Class I Director | ||||
David C. Clifton |
44 | Class II Director | ||||
Kristyn Cook |
45 | Class II Director | ||||
Gordon Watson |
42 | Class II Director | ||||
Sean Collins |
41 | Class III Director | ||||
Richard Lumb |
60 | Class III Director | ||||
Andrew A. Main |
56 | Class III Director |
• | the Class I directors will be Ms. Michelle Goldberg, Ms. Adrienne Harris and Mr. Gavin Michael, whose terms will expire at the annual meeting of stockholders to be held in 2022; |
• | the Class II directors will be Messrs. Gordon Watson and David Clifton and Ms. Kristyn Cook, whose terms will expire at the annual meeting of stockholders to be held in 2023; and |
• | the Class III directors will be Messrs. Sean Collins, Andrew A. Main and Richard Lumb, whose terms will expire at the annual meeting of stockholders to be held in 2024. |
(i) | the source of compensation of such director, including any consulting, advisory or other compensatory fee paid by the company to such director; and |
(ii) | whether such director is affiliated with the company, a subsidiary of the company or an affiliate of a subsidiary of the company. |
• | selecting a qualified firm to serve as the independent registered public accounting firm to audit the Company’s financial statements; |
• | helping to ensure the independence and performance of the independent registered public accounting firm; |
• | discussing the scope and results of the audit with the independent registered public accounting firm and reviewing, with management and the independent registered public accounting firm, the Company’s interim and year-end financial statements; |
• | developing procedures for employees to submit concerns anonymously about questionable accounting or audit matters; |
• | reviewing the Company’s policies on and oversees risk assessment and risk management, including enterprise risk management; |
• | reviewing related party transactions; |
• | reviewing the adequacy and effectiveness of internal control policies and procedures and the Company’s disclosure controls and procedures; and |
• | approving or, as required, pre-approving, all audit and all permissible non-audit services, other than de minimis non-audit services, to be performed by the independent registered public accounting firm. |
• | reviewing, approving and determining the compensation of the Company’s officers and key employees; |
• | reviewing, approving and determining compensation and benefits, including equity awards, to directors for service on the Company Board or any committee thereof; |
• | administering the Company’s equity compensation plans; |
• | reviewing, approving and making recommendations to the Company Board regarding incentive compensation and equity compensation plans; and |
• | establishing and reviewing general policies relating to compensation and benefits of the Company’s employees. |
• | identifying, evaluating and selecting, or making recommendations to the Company Board regarding, nominees for election to the Company Board and its committees; |
• | evaluating the performance of the Company Board and of individual directors; |
• | considering, and making recommendations to the Company Board regarding, the composition of the Company Board and its committees; |
• | reviewing developments in corporate governance practices; |
• | evaluating the adequacy of the corporate governance practices and reporting; and |
• | developing, and making recommendations to the Company Board regarding, corporate governance guidelines and matters. |
• | $50,000 per year for service as a non-employee director; |
• | $100,000 per year for service as non-executive chair of the board of directors; |
• | $25,000 per year for service as chair of the audit committee; |
• | $10,000 per year for service as a member of the audit committee; |
• | $20,000 per year for service as chair of the compensation committee; |
• | $7,500 per year for service as a member of the compensation committee; |
• | $12,000 per year for service as chair of the corporate governance and nominating committee; and |
• | $5,000 per year for service as a member of the corporate governance and nominating committee. |
• | 1% of the total number of Bakkt Pubco Class A Shares then outstanding (as of the date of this proxy statement/prospectus, VIH has 25,921,502 VIH Shares outstanding); or |
• | the average weekly reported trading volume of the Bakkt Pubco Class A Common Stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale. |
• | the issuer of the securities that was formerly a shell company has ceased to be a shell company; |
• | the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
• | the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding twelve months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and |
• | at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. |
• | not later than the 90th day; and |
• | not earlier than the 120th day, |
Page |
||||
Audited Financial Statements |
||||
F-2 |
||||
Financial Statements: |
||||
F-3 |
||||
F-4 |
||||
F-5 |
||||
F-6 |
||||
F-7 |
||||
Unaudited Condensed Financial Statements |
||||
F-27 | ||||
F-28 | ||||
F-29 | ||||
F-30 | ||||
F-31 |
Audited Consolidated Financial Statements |
||||
F-49 | ||||
F-50 | ||||
F-51 | ||||
F-52 | ||||
F-53 | ||||
F-55 | ||||
Unaudited Consolidated Financial Statements |
||||
F-91 |
||||
F-92 |
||||
F-93 |
||||
F-97 |
||||
F-98 |
Audited Consolidated Financial Statements |
||||
F-121 | ||||
F-123 | ||||
F-124 | ||||
F-125 | ||||
F-126 | ||||
F-127 |
ASSETS |
||||
Current assets |
||||
Cash |
||||
Prepaid expenses |
||||
|
|
|||
Total Current Assets |
||||
Cash and marketable securities held in Trust Account |
||||
|
|
|||
TOTAL ASSETS |
||||
|
|
|||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||
Liabilities |
||||
Current liabilities |
||||
Accrued expenses |
||||
Accrued offering costs |
||||
|
|
|||
Total Current Liabilities |
||||
Deferred underwriting fee payable |
||||
Warrant liabilities |
||||
|
|
|||
Total Liabilities |
||||
|
|
|||
Commitments and Contingencies |
||||
Class A ordinary shares subject to possible redemption, |
||||
Shareholders’ Equity |
||||
Preference shares, $ |
||||
Class A ordinary shares, $ |
||||
Class B ordinary shares, $ |
||||
Additional paid-in capital |
||||
Accumulated deficit |
( |
) | ||
|
|
|||
Total Shareholders’ Equity |
||||
|
|
|||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||
|
|
Formation and operating costs |
$ | |||
Loss from operations |
( |
) | ||
Other income: |
||||
Interest earned on marketable securities held in Trust Account |
||||
Transaction Costs allocable to warrant liabilities |
( |
) | ||
Change in fair value of warrant liabilities |
( |
) | ||
Net Loss |
$ |
( |
) | |
Weighted average shares outstanding of Class A redeemable ordinary shares |
||||
Basic and diluted net income per share, Class A |
$ |
|||
Weighted average shares outstanding of Class B non-redeemable ordinary shares |
||||
Basic and diluted net loss per share, Class B |
$ |
( |
) | |
Class A Ordinary Shares |
Class B Ordinary Shares |
Additional Paid in |
Retained |
Total Shareholders’ |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Capital |
Earnings |
Equity |
||||||||||||||||||||||
Balance—July 31, 2020 (inception) |
$ |
$ |
$ |
$ |
$ |
|||||||||||||||||||||||
Issuance of Class B ordinary shares to Sponsor |
||||||||||||||||||||||||||||
Forfeiture of |
— | — | ( |
) | ( |
) | — | — | ||||||||||||||||||||
Sale of |
||||||||||||||||||||||||||||
Ordinary shares subject to possible redemption |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
Net loss |
— | — | ( |
) | ( |
) | ||||||||||||||||||||||
Balance—December 31, 2020 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Cash Flows from Operating Activities: |
||||
Net (loss) |
$ | ( |
) | |
Adjustments to reconcile net (loss) to net cash used in operating activities: |
||||
Interest earned on marketable securities held in Trust Account |
( |
) | ||
Formation costs paid by Sponsor in exchange for Founder shares |
||||
Change in fair value of warrant liabilities |
||||
Transaction costs allocable to warrant liabilities |
||||
Changes in operating assets and liabilities: |
||||
Prepaid expenses |
( |
) | ||
Accrued expenses |
||||
|
|
|||
Net cash used in operating activities |
( |
) | ||
|
|
|||
Cash Flows from Investing Activities: |
||||
Investment of cash in Trust Account |
( |
) | ||
|
|
|||
Net cash used in investing activities |
( |
) | ||
|
|
|||
Cash Flows from Financing Activities: |
||||
Proceeds from sale of Units, net of underwriting discounts paid |
||||
Proceeds from sale of Private Placements Warrants |
||||
Repayment of promissory note—related party |
( |
) | ||
Payment of offering costs |
( |
) | ||
|
|
|||
Net cash provided by financing activities |
||||
|
|
|||
Net Change in Cash |
||||
Cash—Beginning |
||||
|
|
|||
Cash—Ending |
$ |
|||
|
|
|||
Non-Cash Investing and Financing Activities: |
||||
Initial classification of Class A ordinary shares subject to possible redemption |
$ | |||
|
|
|||
Change in value of Class A ordinary shares subject to possible redemption |
$ | ( |
) | |
|
|
|||
Initial classification of warrant liabilities |
$ | |||
|
|
|||
Deferred underwriting fee payable |
$ | |||
|
|
|||
Payment of offering costs through promissory note |
$ | |||
|
|
|||
Offering costs paid by Sponsor in exchange for issuance of Founder shares |
$ | |||
|
|
|||
Offering costs included in accrued offering costs |
$ | |||
|
|
|||
Forfeiture of Founder Shares |
$ | ( |
) | |
|
|
Balance Sheet as of September 25, 2020 (audited) |
As Reported |
Restatement |
As Restated |
|||||||||
Warrant Liabilities |
$ | $ | $ | |||||||||
Total Liabilities |
||||||||||||
Class A ordinary shares subject to possible redemption |
( |
) | ||||||||||
Class A ordinary shares |
||||||||||||
Additional paid-in capital |
$ | $ | $ | |||||||||
Accumulated deficit |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Total Shareholders’ Equity |
$ | $ | $ | |||||||||
Number of shares subject to possible redemption |
( |
) | ||||||||||
Balance Sheet as of September 30, 2020 (unaudited) |
||||||||||||
Warrant Liabilities |
$ | $ | $ | |||||||||
Total Liabilities |
||||||||||||
Class A ordinary shares subject to possible redemption |
( |
) | ||||||||||
Class A ordinary shares |
||||||||||||
Additional paid-in capital |
$ | $ | $ | |||||||||
Accumulated deficit |
( |
) | ( |
) | ( |
) | ||||||
Total Shareholders’ Equity |
$ | $ | $ | |||||||||
Number of shares subject to possible redemption |
( |
) | ||||||||||
Balance Sheet as of December 31, 2020 (audited) |
||||||||||||
Warrant Liabilities |
$ | $ | $ | |||||||||
Total Liabilities |
||||||||||||
Class A ordinary shares subject to possible redemption |
( |
) | ||||||||||
Class A ordinary shares |
||||||||||||
Additional paid-in capital |
$ | $ | $ | |||||||||
Accumulated deficit |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Total Shareholders’ Equity |
$ | $ | $ | |||||||||
Number of shares subject to possible redemption |
( |
) |
Statement of Operations for the period from July 31, 2020 (Inception) through September 30, 2020 (unaudited) |
As Reported |
Restatement |
As Restated |
|||||||||
Transaction costs allocable to warrant liabilities |
$ | $ | ( |
) | $ | ( |
) | |||||
Change in fair value of warrant liabilities |
( |
) | ( |
) | ||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Basic and diluted net loss per share, Class B |
$ | $ | ( |
) | $ | ( |
) | |||||
Statement of Operations for the period from July 31, 2020 (Inception) through December 31, 2020 (audited) |
||||||||||||
Transaction costs allocable to warrant liabilities |
$ | $ | ( |
) | $ | ( |
) | |||||
Change in fair value of warrant liabilities |
( |
) | ( |
) | ||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Basic and diluted net (loss) per ordinary share, Class B |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Statement of Cash Flows for the period from July 31, 2020 (inception) through September 30, 2020 (audited) |
As Reported |
Restatement |
As Restated |
|||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Transaction costs allocable to warrant liabilities |
$ | — | $ | ( |
) | $ | ( |
) | ||||
Change in fair value of warrant liabilities |
— | ( |
) | ( |
) | |||||||
Initial classification of Class A Ordinary Shares subject to possible redemption | ( |
) | ||||||||||
Change in value of Class A Ordinary Shares subject to possible redemption | ( |
) | ( |
) | ( |
) | ||||||
Initial classification of warrant liability |
$ | — | $ | $ | ||||||||
Statement of Cash Flows for the period from July 31, 2020 (inception) through December 31, 2020 (audited) |
As Reported |
Restatement |
As Restated |
|||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | |||
Transaction costs allocable to warrant liabilities |
$ | $ | ( |
) | $ | ( |
) | |||||
Change in fair value of warrant liabilities |
( |
) | ( |
) | ||||||||
Initial classification of Class A Ordinary Shares subject to possible redemption |
( |
) | ||||||||||
Change in value of Class A Ordinary Shares subject to possible redemption |
( |
) | ( |
) | ( |
) | ||||||
Initial classification of warrant liability |
$ | $ | $ |
For the Period from July 31, 2020 (inception) Through December 31, 2020 |
||||
Redeemable Class A Ordinary Shares |
||||
Numerator: Earnings allocable to Redeemable Class A Ordinary Shares |
||||
Interest Income |
$ | |||
|
|
|||
Redeemable Net Earnings |
$ | |||
Denominator: Weighted Average Redeemable Class A Ordinary Shares |
||||
Redeemable Class A Ordinary Shares, Basic and Diluted |
||||
Net Income Per Share/Basic and Diluted Redeemable Class A Ordinary Shares |
$ | |||
Non-Redeemable Class B Ordinary Shares |
||||
Numerator: Net Income (Loss) minus Redeemable Net Earnings |
||||
Net Income (Loss) |
$ | ( |
) | |
Redeemable Net Earnings |
$ | ( |
) | |
|
|
|||
Non-Redeemable Net Loss |
$ | ( |
) | |
Denominator: Weighted Average Non-Redeemable Class B Ordinary Shares |
||||
Non-Redeemable Class B Ordinary Shares, Basic and Diluted |
||||
Net Loss Per Share/Basic and Diluted Non-Redeemable Class B Ordinary Shares |
$ | ( |
) |
• | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
• | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
• | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
• | in whole and not in part; |
• | at a price of $ |
• | upon a minimum of |
• | if, and only if, the reported closing price of the Company’s Class A ordinary shares equals or exceeds $ |
• | in whole and not in part; |
• | at $ provided |
• | if, and only if, the last reported sale price (the “closing price”) of the Company’s Class A ordinary shares equals or exceeds $ |
• | if the closing price of the Class A ordinary shares for any |
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. | |
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. | |
Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
Description |
Level |
December 31, 2020 |
||||||
Assets: |
||||||||
Investments held in Trust Account—U.S. Treasury Securities Money Market Fund |
1 | $ | ||||||
Liabilities: |
||||||||
Warrant Liability—Public Warrants |
1 | $ | ||||||
Warrant Liability—Private Placement Warrants |
3 | $ |
Input |
September 25, 2020 (Initial Measurement) |
September 30, 2020 |
||||||
Risk-free interest rate |
% | % | ||||||
Trading days per year |
||||||||
Expected volatility |
% | % | ||||||
Exercise price |
$ | $ | ||||||
Stock Price |
$ | $ |
Input |
September 25, 2020 (Initial Measurement) |
September 30, 2020 |
December 31, 2020 |
|||||||||
Risk-free interest rate |
% | % | % | |||||||||
Trading days per year |
||||||||||||
Expected volatility |
% | % | % | |||||||||
Exercise price |
$ | $ | $ | |||||||||
Stock Price |
$ | $ | $ |
Private Placement |
Public |
Warrant Liabilities |
||||||||||
Fair value as of September 25, 2020 |
$ | $ | $ | |||||||||
Initial measurement on September 25, 2020 (IPO) |
||||||||||||
Change in valuation inputs or other assumptions |
||||||||||||
|
|
|
|
|
|
|||||||
Fair value as of September 30, 2020 |
||||||||||||
Measurement on October 1, 2020 (Over-Allotment) |
||||||||||||
Change in valuation inputs or other assumptions |
( |
) | ||||||||||
|
|
|
|
|
|
|||||||
Fair value as of December 31, 2020 |
$ | $ | $ | |||||||||
|
|
|
|
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
(Unaudited) |
||||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash |
$ | $ | ||||||
Prepaid expenses |
||||||||
Total Current Assets |
||||||||
Cash and marketable securities held in Trust Account |
||||||||
TOTAL ASSETS |
$ |
$ |
||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY |
||||||||
Liabilities |
||||||||
Current Liabilities |
||||||||
Accounts payable and accrued expenses |
$ | $ | ||||||
Accrued offering costs |
||||||||
Total Current Liabilities |
||||||||
Warrant liabilities |
||||||||
Deferred underwriting fee payable |
||||||||
Total Liabilities |
||||||||
Commitments and Contingencies |
||||||||
Class A ordinary shares subject to possible redemption, |
||||||||
Shareholders’ Equity |
||||||||
Preference shares, $ |
||||||||
Class A ordinary shares, $ |
||||||||
Class B ordinary shares, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Total Shareholders’ Equity |
||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
$ |
||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||
2021 |
2021 |
|||||||
General and administrative expenses |
$ | $ | ||||||
Loss from operations |
( |
) |
( |
) | ||||
Other income (expense): |
||||||||
Other income |
||||||||
Interest earned on marketable securities held in Trust Account |
||||||||
Change in fair value of warrant liabilities |
( |
) | ||||||
Other income (expense), net |
( |
) | ||||||
Net income (loss) |
$ |
$ |
( |
) | ||||
Weighted average shares outstanding of Class A redeemable ordinary shares |
||||||||
Basic and diluted net income (loss) per share, Class A |
$ |
$ |
||||||
Weighted average shares outstanding of Class B non-redeemable ordinary shares |
||||||||
Basic and diluted net income (loss) per share, Class B |
$ |
$ |
( |
) | ||||
Class A Ordinary Shares |
Class B Ordinary Shares |
Additional Paid-in Capital |
Accumulated Deficit |
Total Shareholders’ Equity |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||
Balance – January 1, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Change in value of Class A Ordinary Shares subject to possible redemption |
||||||||||||||||||||||||||||
Net loss |
0 | 0 | ( |
) | ( |
) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance – March 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
Change in value of Class A Ordinary Shares subject to possible redemption |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
Net income |
0 | 0 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance – June 30, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities: |
||||
Net loss |
$ | ( |
) | |
Adjustments to reconcile net loss to net cash used in operating activities: |
||||
Interest earned on marketable securities held in Trust Account |
( |
) | ||
Change in fair value of warrant liability |
||||
Changes in operating assets and liabilities: |
||||
Prepaid expenses |
||||
Accounts payable and accrued expenses |
||||
|
|
|||
Net cash (used in) operating activities |
( |
) | ||
Net Change in Cash |
( |
) | ||
Cash – Beginning of period |
||||
|
|
|||
Cash – End of period |
$ |
|||
|
|
|||
Non-Cash investing and financing activities: |
||||
Change in value of Class A ordinary shares subject to possible redemption |
$ | ( |
) | |
|
|
Three Months Ended June 30, 2021 |
Six Months Ended June 30, 2021 |
|||||||
Redeemable Class A Ordinary Shares |
||||||||
Numerator: Earnings allocable to Redeemable Class A Ordinary Shares Interest Income |
||||||||
|
|
|
|
|||||
Redeemable Net Earnings |
$ | $ | ||||||
Denominator: Weighted Average Redeemable Class A Ordinary Shares Redeemable Class A Ordinary Shares, Basic and Diluted |
||||||||
|
|
|
|
|||||
Basic and diluted earnings per share – Redeemable Class A Ordinary Shares |
$ | $ | ||||||
|
|
|
|
|||||
Non-Redeemable Class B Ordinary Shares |
||||||||
Numerator: Net Income (Loss) minus Redeemable Net Earnings Net Income (Loss) |
$ | $ | ( |
) | ||||
Redeemable Net Earnings |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Non-Redeemable Net Income (Loss) |
$ | $ | ( |
) | ||||
Denominator: Weighted Average Non-Redeemable Class B Ordinary Shares Non-Redeemable Class B Ordinary Shares, Basic and Diluted (1) |
||||||||
|
|
|
|
|||||
Basic and diluted earnings (loss) per share – Non-Redeemable Class B Ordinary Shares |
$ | $ | ( |
) | ||||
|
|
|
|
(1) | As of June 30, 2021, basic and diluted shares are the same as there are no non-redeemable securities that are dilutive to the Company’s ordinary shareholders. |
• | in whole and not in part; |
• | at a price of $ |
• | upon a minimum of |
• | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
• | in whole and not in part; |
• | at $ provided |
• | if, and only if, the closing price of the Class A ordinary shares equals or exceeds $ |
• | if the closing price of the Class A ordinary shares for any |
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. | |
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. | |
Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
Description |
June 30, 2021 |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
||||||||||||
Assets: |
||||||||||||||||
Cash and marketable securities held in Trust Account |
$ | $ | $ | $ | ||||||||||||
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|||||||||
Liabilities: |
||||||||||||||||
Warrant Liability – Public Warrants |
$ | $ | $ | $ | ||||||||||||
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|
|||||||||
Warrant Liability – Private Placement Warrants |
$ | $ | $ | |
$ | |||||||||||
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|
Description |
December 31, 2020 |
Quoted Prices in Active Markets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Other Unobservable Inputs (Level 3) |
||||||||||||
Assets: |
||||||||||||||||
Cash and marketable securities held in Trust Account |
$ | $ | $ | $ | ||||||||||||
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|||||||||
Liabilities: |
||||||||||||||||
Warrant Liability – Public Warrants |
$ | $ | $ | $ | ||||||||||||
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|
|||||||||
Warrant Liability – Private Placement Warrants |
$ | $ | $ | $ | ||||||||||||
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|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Stock price |
$ | $ | ||||||
Exercise price |
$ | $ | ||||||
Risk-free rate |
% | % | ||||||
Volatility |
% | % | ||||||
Term (in years) |
||||||||
Dividend yield |
% | % |
Private Placement |
||||
Fair value as of January 1, 2021 |
$ | |||
Change in fair value |
||||
|
|
|||
Fair value as of March 31, 2021 |
$ | |||
Change in fair value |
||||
|
|
|||
Fair value as of June 30, 2021 |
$ | |||
|
|
Page |
||||
F-49 |
||||
F-50 |
||||
F-51 |
||||
F-52 |
||||
F-53 |
||||
F-55 |
/s/ Ernst & Young LLP |
As of December 31, |
||||||||
2020 |
2019 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 75,361 | $ | 76,634 | ||||
Restricted cash |
16,500 | 16,500 | ||||||
Customer funds |
81 | — | ||||||
Short-term investments |
— | 1,988 | ||||||
Accounts receivable, net |
10,408 | — | ||||||
Other receivables |
— | 115 | ||||||
Investment in shares of affiliate stock, current |
1,823 | — | ||||||
Deposits with clearinghouse affiliate, current |
20,200 | |||||||
Other current assets |
7,690 | 4,840 | ||||||
|
|
|
|
|||||
Total current assets |
132,063 | 100,077 | ||||||
Property, equipment and software, net |
19,957 | 11,108 | ||||||
Goodwill |
233,429 | 16,854 | ||||||
Intangible assets, net |
62,199 | 2,092 | ||||||
Deposits with clearinghouse affiliate, noncurrent |
15,150 | 46,352 | ||||||
Investment in shares of affiliate stock |
— | 1,194 | ||||||
Other assets |
5,578 | 4 | ||||||
|
|
|
|
|||||
Total assets |
$ | 468,376 | $ | 177,681 | ||||
|
|
|
|
|||||
Liabilities and Members’ Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 42,915 | $ | 5,955 | ||||
Customer funds payable |
81 | — | ||||||
Deferred revenue, current |
4,282 | — | ||||||
Due to affiliates |
1,856 | 9,432 | ||||||
Other current liabilities |
1,943 | — | ||||||
|
|
|
|
|||||
Total current liabilities |
51,077 | 15,387 | ||||||
Deferred revenue, noncurrent |
4,103 | — | ||||||
Deferred tax liabilities, net |
95 | 104 | ||||||
Other liabilities |
3,319 | 158 | ||||||
|
|
|
|
|||||
Total liabilities |
58,594 | 15,649 | ||||||
Mezzanine equity: |
||||||||
Incentive units (156,000,000 authorized, 103,318,325 unvested units and 85,875,000 unvested units issued and outstanding as of December 31, 2020 and 2019, respectively) |
21,452 | 10,515 | ||||||
Members’ equity: |
||||||||
Class A voting units (413,000,000 units authorized, 400,000,000 units issued and outstanding as of December 31, 2020 and 2019) |
2,613 | 1,916 | ||||||
Class B voting units (212,500,000 units authorized, 182,500,000 units issued and outstanding as of December 31, 2020 and 2019) |
182,500 | 182,500 | ||||||
Class B warrant (see Note 8) |
5,426 | — | ||||||
Class C voting units (284,000,000 units authorized, 270,270,270 units and 0 units issued and outstanding as of December 31, 2020 and 2019, respectively) |
310,104 | — | ||||||
Accumulated other comprehensive income |
191 | — | ||||||
Accumulated deficit |
(112,504 | ) | (32,899 | ) | ||||
|
|
|
|
|||||
Total members’ equity |
388,330 | 151,517 | ||||||
|
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|
|
|||||
Total liabilities and members’ equity |
$ | 468,376 | $ | 177,681 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Revenues: |
||||||||
Net revenues (includes net revenues from affiliate of $(2,007) and $(881), respectively) |
$ | 28,495 | $ | (881 | ) | |||
Other |
— | 17 | ||||||
|
|
|
|
|||||
Total revenues |
28,495 | (864 | ) | |||||
|
|
|
|
|||||
Operating expenses: |
||||||||
Compensation and benefits |
43,141 | 23,237 | ||||||
Professional services |
5,751 | 4,150 | ||||||
Technology and communication |
9,741 | 4,256 | ||||||
Selling, general and administrative |
8,219 | 2,617 | ||||||
Acquisition-related expenses |
13,372 | 731 | ||||||
Depreciation and amortization |
8,159 | 324 | ||||||
Affiliate expenses |
3,082 | 500 | ||||||
Impairment of long-lived assets |
15,292 | — | ||||||
Other operating expenses |
857 | — | ||||||
|
|
|
|
|||||
Total operating expenses |
107,614 | 35,815 | ||||||
|
|
|
|
|||||
Operating loss |
(79,119 | ) | (36,679 | ) | ||||
Interest income, net |
123 | 3,280 | ||||||
Other income (expense), net |
(218 | ) | 224 | |||||
|
|
|
|
|||||
Loss before income taxes |
(79,214 | ) | (33,175 | ) | ||||
Income tax (expense) benefit |
(391 | ) | 199 | |||||
|
|
|
|
|||||
Net loss |
$ | (79,605 | ) | $ | (32,976 | ) | ||
|
|
|
|
|||||
Currency translation adjustment, net of tax |
191 | — | ||||||
|
|
|
|
|||||
Comprehensive loss |
$ | (79,414 | ) | $ | (32,976 | ) | ||
|
|
|
|
Class A Voting Units |
Class B Voting Units |
Class B Warrant |
Class C Voting Units |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Total Members’ Equity |
Incentive Units |
Total Mezzanine Equity |
||||||||||||||||||||||||||||||||||||||||||||||||
Units |
$ |
Units |
$ |
Warrants |
$ |
Units |
$ |
Units |
$ |
|
||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 |
400,000,000 | $ | — | 182,500,000 | $ | 182,500 | — | $ | — | — | $ | — | $ | 77 | $ | — | $ | 182,577 | — | $ | — | $ | — | |||||||||||||||||||||||||||||||||
Issuance of Class A voting units in exchange of capital contribution (see Note 8) |
— | 1,916 | — | — | — | — | — | — | — | — | 1,916 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Unit-based compensation expense for incentive units (see Note 9) |
— | — | — | — | — | — | — | — | — | — | — | — | 10,515 | 10,515 | ||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | (32,976 | ) | — | (32,976 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
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|
|||||||||||||||||||||||||||||
Balance as of December 31, 2019 |
400,000,000 | 1,916 | 182,500,000 | 182,500 | — | — | — | — | (32,899 | ) | — | 151,517 | — | 10,515 | 10,515 | |||||||||||||||||||||||||||||||||||||||||
Issuance of Class A voting units in exchange of capital contribution (see Note 8) |
— | 697 | — | — | — | — | — | — | — | — | 697 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of Class B warrant (Note 8) |
— | — | — | — | — | 5,426 | — | — | — | — | 5,426 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Unit-based compensation expense for incentive units (see Note 9) |
— | — | — | — | — | — | — | — | — | — | — | — | 10,937 | 10,937 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of Class C voting units |
— | — | — | — | — | — | 270,270,270 | 300,000 | — | — | 300,000 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Pushdown accounting for deferred income tax liabilities resulting from Bridge2 Solutions acquisition (see Note 4) |
— | — | — | — | — | — | — | 10,104 | — | — | 10,104 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment, net of tax |
— | — | — | — | — | — | — | — | — | 191 | 191 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | (79,605 | ) | (79,605 | ) | — | — | — | |||||||||||||||||||||||||||||||||||||||||
|
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|
|||||||||||||||||||||||||||||
Balance as of December 31, 2020 |
400,000,000 | $ | 2,613 | 182,500,000 | 182,500 | — | $ | 5,426 | 270,270,270 | $ | 310,104 | $ | (112,504 | ) | $ | 191 | $ | 388,330 | — | $ | 21,452 | $ | 21,452 | |||||||||||||||||||||||||||||||||
|
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|
|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (79,605 | ) | $ | (32,976 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation and amortization |
7,973 | 324 | ||||||
Non-cash lease expense |
1,388 | — | ||||||
Unit-based compensation expense (see Note 9) |
11,649 | 10,673 | ||||||
Recognition of affiliate capital contribution (see Note 7) |
697 | 188 | ||||||
Amortization of Class B warrant asset (see Note 8) |
388 | — | ||||||
Deferred income taxes |
(354 | ) | (114 | ) | ||||
Impairment of long-lived assets |
15,292 | — | ||||||
Acquisition-related expenses paid by affiliate (see Note 7) |
1,378 | — | ||||||
Unrealized gain on investment in shares of affiliate stock (see Note 7) |
(628 | ) | — | |||||
Other |
117 | — | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(264 | ) | — | |||||
Other receivables |
115 | (115 | ) | |||||
Deposits with clearinghouse affiliate |
11,002 | (39,007 | ) | |||||
Accounts payable and accrued liabilities |
16,076 | 5,863 | ||||||
Due to affiliates |
(7,927 | ) | 9,432 | |||||
Deferred revenues |
(4,331 | ) | — | |||||
Operating lease liabilities |
(1,192 | ) | — | |||||
Customer funds payable |
81 | — | ||||||
Other assets and liabilities |
(2,795 | ) | (2,764 | ) | ||||
|
|
|
|
|||||
Net cash used in operating activities |
(30,940 | ) | (48,496 | ) | ||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Capitalized internal-use software development costs and other capital expenditures |
(20,569 | ) | (9,181 | ) | ||||
Purchases of short-term investments |
— | (1,988 | ) | |||||
Proceeds from maturities of short-term investments |
1,988 | — | ||||||
Acquisitions, net of cash acquired |
— | (29,778 | ) | |||||
Cash acquired through non-cash business combination |
10,652 | — | ||||||
|
|
|
|
|||||
Net cash proceeds used in investing activities |
(7,929 | ) | (40,947 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Payment of finance lease liability |
(313 | ) | — | |||||
Proceeds from issuance of Class C voting units (see Note 7) |
37,800 | — | ||||||
|
|
|
|
|||||
Net cash provided by financing activities |
37,487 | — | ||||||
|
|
|
|
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
191 | — | ||||||
|
|
|
|
|||||
Net decrease in cash, cash equivalents, restricted cash and customer funds |
(1,191 | ) | (89,443 | ) | ||||
Cash, cash equivalents, restricted cash and customer funds at the beginning of the year |
93,134 | 182,577 | ||||||
|
|
|
|
|||||
Cash, cash equivalents, restricted cash and customer funds at the end of the year |
$ | 91,943 | $ | 93,134 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid for income taxes |
$ | — | $ | — | ||||
Supplemental disclosure of non-cash investing and financing activity: |
||||||||
Issuance of Class A voting units in exchange of capital contribution (see Note 8) |
$ | 697 | $ | 1,916 | ||||
Capitalized internal-use software development costs and other capital expenditures included in accounts payable and accrued liabilities |
$ | 1,564 | $ | 550 | ||||
Issuance of Class B warrant |
$ | 5,426 | — | |||||
Non-cash contribution of Bridge2 Holdings by affiliate (see Note 7) |
$ | 260,811 | $ | — | ||||
Reconciliation of cash, cash equivalents, restricted cash and customer funds to consolidated balance sheets |
||||||||
Cash and cash equivalents |
$ | 75,361 | $ | 76,634 | ||||
Restricted cash |
16,500 | 16,500 | ||||||
Customer funds |
82 | — | ||||||
|
|
|
|
|||||
Total cash, cash equivalents, restricted cash and customer funds |
$ | 91,943 | $ | 93,134 | ||||
|
|
|
|
1. |
Description of Business |
2. |
Summary of Significant Accounting Policies |
F-56 |
F-57 |
Estimated Useful Life | ||
Internal use software |
3-7 years | |
Purchased software |
3 years | |
Assets under finance lease |
2-5 years | |
Office, furniture and equipment |
7-10 years | |
Leasehold improvements |
7 years | |
Other computer and network equipment |
3 years |
F-58 |
F-59 |
F-60 |
F-61 |
• | Platform subscription fees: Monthly fixed fee charged to customers to access the redemption platform and receive customer support services. We recognize revenue for these fees on a straight-line basis over the related contract term as the customer receives benefits evenly throughout the term of the contract. These fees are allocated to our performance obligation to provide access to our redemption platform, and thus are recognized on a gross basis. Revenue from our platform subscription fees is included in “Subscription and services revenue” in the disaggregation of revenue table in Note 3. |
• | Transaction fees: Transaction fees are earned for most transactions processed through our platform. These fees are allocated to our performance obligation to provide order placement services on behalf of the loyalty program sponsor, and therefore are recognized net of the related redemption cost. We allocate transaction fees to the period in which the related transaction occurs. Revenue from our transaction fees is included in “Transaction revenue, net” in the disaggregation of revenue table in Note 3. |
• | Revenue share fees: We are entitled to revenue share fees in the form of rebates from third-party commerce merchants and other partners which provide services facilitating redemption order fulfillment. We allocate revenue share fees to the period in which the related transaction occurs. |
Revenue from our revenue share fees is included in “Transaction revenue, net” in the disaggregation of revenue table in Note 3. |
• | Service fees: We earn fees for certain software development activities associated with the implementation of new customers on our loyalty redemption platform and other development activities if a customer requests that we customize certain features and functionalities for their loyalty program. We recognize service fees as revenue on a straight-line basis, beginning when the internally developed software resulting from such implementation or other development activities are operational in our platform over the longer of the remaining anticipated customer life and 3 years, which represents the estimated useful life of the Company’s internally developed software. Implementation and development service fees are generally billed when the implementation and development activities are performed. The Company recognizes deferred revenue when all such fees are billed. Revenue from our services fees is included in “Subscription and services revenue” in the disaggregation of revenue table in Note 3. |
F-62 |
• | Exclude sales taxes from the measurement of the transaction price. |
• | Not adjust the transaction price for the existence of a significant financing component if the timing difference between a customer’s payment and our performance is one year or less. |
• | Not provide disclosures about the transaction price allocated to unsatisfied performance obligations for contracts with a duration of one year or less or when the consideration is variable and allocated entirely to a wholly unsatisfied performance obligation or a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation. |
F-63 |
F-64 |
F-65 |
F-66 |
F-67 |
3. |
Revenue from Contracts with Customers and Under the Triparty Agreement |
December 31, 2020 |
December 31, 2019 |
|||||||
Transaction revenue, net (a) |
$ | 7,386 | $ | (881 | ) | |||
Subscription and service revenue |
21,109 | — | ||||||
Other |
— | 17 | ||||||
|
|
|
|
|||||
$ | 28,495 | $ | (864 | ) | ||||
|
|
|
|
(a) | Amounts presented are net of rebates and liquidity payments under the Triparty Agreement, reductions in connection with the Contribution Agreement and consideration payable to a customer pursuant to the Strategic Alliance Agreement of $4,477,000 and $881,000 for the years ended December 31, 2020 and 2019, respectively. Included in these amounts are related party amounts of $4,090,000 and $881,000 for the years ended December 31, 2020 and 2019, respectively (see Note 7). |
4. |
Acquisitions |
F-68 |
February 8, 2019 |
||||
Other current assets |
$ | 2,076 | ||
Property and equipment |
366 | |||
Regulatory licenses |
554 | |||
Clearinghouse deposits |
4,766 | |||
Receivable from Depository Trust and Clearing Corporation |
2,684 | |||
Other non-current assets |
1,089 | |||
Goodwill |
9,200 | |||
|
|
|||
Total assets acquired |
20,735 | |||
|
|
|||
Total purchase consideration |
$ | 20,735 | ||
|
|
February 8, 2019 – December 31, 2019 |
||||
Revenue |
$ | — | ||
Net income / (loss) |
268 |
F-69 |
April 26, 2019 |
||||
Technology |
$ | 1,700 | ||
Goodwill |
7,654 | |||
|
|
|||
Total assets acquired |
9,354 | |||
Accounts payable and accrued liabilities |
(91 | ) | ||
Deferred tax liabilities |
(220 | ) | ||
|
|
|||
Total liabilities assumed |
(311 | ) | ||
|
|
|||
Total purchase consideration |
$ | 9,043 | ||
|
|
April 26, 2019 – December 31, 2019 |
||||
Revenue |
$ | 17 | ||
Net income / (loss) |
(256 | ) |
F-70 |
February 21, 2020 |
||||
Cash and cash equivalents |
$ | 10,652 | ||
Accounts receivable |
10,158 | |||
Other current assets |
1,284 | |||
Property and equipment |
4,465 | |||
Customer relationships |
53,620 | |||
Technology |
11,990 | |||
Trade name |
415 | |||
Other non-current assets |
2,864 | |||
Goodwill |
216,575 | |||
|
|
|||
Total assets acquired |
312,023 | |||
Accounts payable and accrued liabilities |
(22,450 | ) | ||
Deferred revenue |
(12,703 | ) | ||
Deferred income tax liabilities |
(3,005 | ) | ||
Other non-current liabilities |
(2,402 | ) | ||
|
|
|||
Total liabilities assumed |
(40,560 | ) | ||
|
|
|||
Total purchase consideration |
$ | (271,463 | ) | |
|
|
February 22, 2020 – December 31, 2020 |
||||
Revenue |
$ | 30,774 | ||
Net income / (loss) |
(11,085 | ) |
F-71 |
Year ended December 31, 2020 |
Year ended December 31, 2019 |
|||||||
Pro forma revenue |
$ | 34,154 | $ | 43,511 | ||||
Pro forma net loss |
$ | (80,071 | ) | $ | (31,843 | ) |
5. |
Goodwill and Intangible Assets, Net |
Amount |
||||
Balance as of January 1, 2019 |
$ | — | ||
Addition: acquisition of Bakkt Clearing |
9,200 | |||
Addition: acquisition of DACC |
7,654 | |||
|
|
|||
Balance as of December 31, 2019 |
$ | 16,854 | ||
Addition: acquisition of Bridge2 Solutions |
216,575 | |||
|
|
|||
Balance as of December 31, 2020 |
$ | 233,429 | ||
|
|
December 31, 2020 |
||||||||||||||||
Weighted Average Useful Life (years) |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
|||||||||||||
Regulatory licenses |
Indefinite | $ | 554 | $ | — | $ | 554 | |||||||||
Acquired technology |
7 | 13,690 | (1,879 | ) | 11,811 | |||||||||||
Customer relationships |
12 | 53,620 | (3,844 | ) | 49,776 | |||||||||||
Trade name |
1 | 415 | (357 | ) | 58 | |||||||||||
|
|
|
|
|
|
|||||||||||
$ | 68,279 | $ | (6,080 | ) | $ | 62,199 | ||||||||||
|
|
|
|
|
|
December 31, 2019 |
||||||||||||||||
Weighted Average Useful Life (years) |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
|||||||||||||
Regulatory licenses |
Indefinite | $ | 554 | $ | — | $ | 554 | |||||||||
Acquired technology |
7 | 1,700 | (158 | ) | 1,542 | |||||||||||
|
|
|
|
|
|
|||||||||||
$ | 2,254 | $ | (158 | ) | $ | 2,096 | ||||||||||
|
|
|
|
|
|
F-72 |
Year ending December 31: | Amount |
|||
2021 |
$ | 6,483 | ||
2022 |
6,424 | |||
2023 |
6,424 | |||
2024 |
6,424 | |||
2025 |
6,424 | |||
Thereafter |
29,466 | |||
|
|
|||
Total |
$ | 61,645 | ||
|
|
6. |
Consolidated Balance Sheet Components |
December 31, 2020 |
December 31, 2019 |
|||||||
Prepaid expenses |
$ | 5,365 | $ | 1,979 | ||||
Class B warrant asset, current (see Note 8) |
2,325 | — | ||||||
Receivable from Depository Trust and Clearing Corporation |
— | 2,684 | ||||||
Interest receivable |
— | 95 | ||||||
Income tax receivable |
— | 82 | ||||||
|
|
|
|
|||||
$ | 7,690 | $ | 4,840 | |||||
|
|
|
|
December 31, 2020 |
December 31, 2019 |
|||||||
Internal-use software |
$ | 20,343 | $ | 11,146 | ||||
Purchased software |
110 | — | ||||||
Office furniture and equipment |
609 | — | ||||||
Other computer and network equipment |
1,199 | 42 | ||||||
Leasehold improvements |
479 | — | ||||||
|
|
|
|
|||||
Property, equipment and software, gross |
22,740 | 11,188 | ||||||
Less: accumulated amortization and depreciation |
(2,783 | ) | (80 | ) | ||||
|
|
|
|
|||||
Total |
$ | 19,957 | $ | 11,108 | ||||
|
|
|
|
F-73 |
F-74 |
December 31, 2020 |
December 31, 2019 |
|||||||
Default resource contribution (see Note 7) |
$ | 35,350 | $ | 35,377 | ||||
Other clearinghouse deposits |
— | 10,975 | ||||||
|
|
|
|
|||||
$ | 35,350 | $ | 46,352 | |||||
|
|
|
|
December 31, 2020 |
December 31, 2019 |
|||||||
Class B warrant asset, noncurrent (see Note 8) |
$ | 2,713 | $ | — | ||||
Operating lease right-of-use |
1,799 | — | ||||||
Finance lease right-of-use |
468 | — | ||||||
Other |
598 | 4 | ||||||
|
|
|
|
|||||
$ | 5,578 | $ | 4 | |||||
|
|
|
|
December 31, 2020 |
December 31, 2019 |
|||||||
Accounts payable |
$ | 7,165 | $ | 1,613 | ||||
Accrued expenses |
14,808 | 2,393 | ||||||
Purchasing card payable |
12,683 | — | ||||||
Salaries and benefits payable |
6,018 | 1,914 | ||||||
Other |
2,241 | 35 | ||||||
|
|
|
|
|||||
$ | 42,915 | $ | 5,955 | |||||
|
|
|
|
December 31, 2020 |
December 31, 2019 |
|||||||
Current maturities of operating lease liability |
$ | 953 | $ | — | ||||
Software license obligation, current |
675 | — | ||||||
Current maturities of finance lease liability |
129 | — | ||||||
Other |
186 | — | ||||||
|
|
|
|
|||||
$ | 1,943 | $ | — | |||||
|
|
|
|
F-75 |
December 31, 2020 |
December 31, 2019 |
|||||||
Software license obligation, noncurrent |
$ | 1,233 | $ | — | ||||
Participation units liability |
870 | 158 | ||||||
Operating lease liability, noncurrent |
847 | — | ||||||
Finance lease liability, noncurrent |
369 | — | ||||||
|
|
|
|
|||||
$ | 3,319 | $ | 158 | |||||
|
|
|
|
7. |
Related Parties |
F-76 |
8. |
Members’ Equity |
F-77 |
As of February 19, 2020 |
||||
Dividend yield |
— | % | ||
Risk-free interest rate |
1.39 | % | ||
Expected volatility |
40.00 | % | ||
Expected term (years) |
3.00 |
F-78 |
As of May 19, 2020 |
||||
Dividend yield |
— | % | ||
Risk-free interest rate |
0.33 | % | ||
Expected volatility |
50.00 | % | ||
Expected term (years) |
4.35 |
9. |
Unit-Based Compensation |
F-79 |
F-80 |
Type of Unit |
Compensation Expense |
Statement of Operations and Comprehensive Loss Classification |
Balance Sheet Classification |
|||||||||
Preferred incentive unit |
$ | 10,388 | Compensation and benefits | |
Mezzanine equity |
| ||||||
Common incentive unit |
127 | Compensation and benefits | |
Mezzanine equity |
| |||||||
Participation unit |
158 | Compensation and benefits | Other non-current liabilities |
|||||||||
Total |
$ | 10,673 |
Type of Unit |
Compensation Expense |
Statement of Operations and Comprehensive Loss Classification |
Balance Sheet Classification |
|||||||||
Preferred incentive unit |
$ | 9,210 | Compensation and benefits | |
Mezzanine equity |
| ||||||
Common incentive unit |
1,727 | Compensation and benefits | |
Mezzanine equity |
| |||||||
Participation unit |
712 | Compensation and benefits | Other non-current liabilities |
|||||||||
Total |
$ | 11,649 |
F-81 |
Preferred Incentive Units |
Number of Preferred Incentive Units |
Weighted Average Remaining Contractual Term (years) |
Weighted Average Grant Date Fair Value |
Weighted Average Exercise Price |
Aggregate Intrinsic Value |
|||||||||||||||
Outstanding as of January 1, 2019 |
— | |||||||||||||||||||
Granted |
100,875 | $ | 0.42 | — | $ | 42,368 | ||||||||||||||
Forfeited |
(18,750 | ) | ||||||||||||||||||
Outstanding as of December 31, 2019 |
82,125 | 7.73 | $ | 0.42 | $ | 34,493 | ||||||||||||||
Granted |
3,350 | $ | 0.63 | — | $ | 2,105 | ||||||||||||||
Forfeited |
(9,000 | ) | $ | 0.41 | ||||||||||||||||
Outstanding as of December 31, 2020 |
76,475 | 6.75 | $ | 0.42 | $ | 88,711 | ||||||||||||||
Vested as of December 31, 2020 |
— |
Common Incentive Units |
Number of Common Incentive Units |
Weighted Average Remaining Contractual Term (years) |
Weighted Average Grant Date Fair Value |
Weighted Average Exercise Price |
Aggregate Intrinsic Value |
|||||||||||||||
Outstanding as of January 1, 2019 |
— | |||||||||||||||||||
Granted |
3,750 | $ | 0.34 | — | $ | 1,275 | ||||||||||||||
Forfeited |
— | |||||||||||||||||||
Outstanding as of December 31, 2019 |
3,750 | 7.73 | $ | 0.34 | $ | 1,275 | ||||||||||||||
Granted |
31,333 | $ | 0.42 | — | $ | 13,065 | ||||||||||||||
Forfeited |
(8,250 | ) | $ | 0.33 | ||||||||||||||||
Outstanding as of December 31, 2020 |
26,833 | 6.75 | $ | 0.43 | $ | 25,760 | ||||||||||||||
Vested as of December 31, 2020 |
— |
Participation Units |
Number of Participation Units |
Weighted Average Remaining Contractual Term (years) |
Weighted Average Grant Date Fair Value |
Weighted Average Exercise Price |
Aggregate Intrinsic Value |
|||||||||||||||
Outstanding as of January 1, 2019 |
— | |||||||||||||||||||
Granted |
8,716 | $ | 0.34 | — | $ | 2,963 | ||||||||||||||
Forfeited |
(65 | ) | ||||||||||||||||||
Outstanding as of December 31, 2019 |
8,651 | 7.73 | $ | 0.40 | $ | 3,460 | ||||||||||||||
Granted |
10,721 | $ | 0.44 | — | ||||||||||||||||
Forfeited |
(7,607 | ) | $ | 0.33 | ||||||||||||||||
Outstanding as of December 31, 2020 |
11,765 | 6.75 | $ | 0.43 | $ | 11,294 | ||||||||||||||
Vested as of December 31, 2020 |
— |
F-82 |
• | Expected term – The expected term represents the period that a unit is expected to be outstanding. |
• | Volatility – The Company has limited historical data available to derive its own stock price volatility. As such, the Company estimates stock price volatility based on the average historic price volatility of comparable public industry peers. |
• | Risk-free interest rate – The risk-free rate is based on the U.S. Treasury yield curve in effect on the grant date for securities with similar expected terms to the term of the Company’s incentive units. |
• | Expected dividends – Expected dividends is assumed to be zero as the Company has not paid and does not expect to pay cash dividends or non-liquidating distributions. |
Year Ended |
Year Ended |
|||||||
December 31, 2020 |
December 31, 2019 |
|||||||
Dividend yield |
— | % | — | % | ||||
Risk-free interest rate |
1.85 | % | 3.07 | % | ||||
Expected volatility |
45.00 | % | 50.00 | % | ||||
Expected term (years) |
4.73 and 7.73 | 5 and 8 |
10. |
Capital Requirements |
F-83 |
11. |
Commitments and Contingencies |
12. |
Income Taxes |
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Domestic |
$ | (82,339 | ) | $ | (33,175 | ) | ||
Foreign |
3,125 | — | ||||||
|
|
|
|
|||||
Total loss before provision for income taxes |
$ | (79,214 | ) | $ | (33,175 | ) | ||
|
|
|
|
F-84 |
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Current: |
||||||||
Foreign |
$ | 830 | $ | — | ||||
Federal |
— | — | ||||||
State |
(85 | ) | (85 | ) | ||||
|
|
|
|
|||||
Total current income tax expense (benefit) |
745 | (85 | ) | |||||
|
|
|
|
|||||
Deferred: |
||||||||
Foreign |
(1 | ) | — | |||||
Federal |
(11 | ) | (31 | ) | ||||
State |
(342 | ) | (83 | ) | ||||
|
|
|
|
|||||
Total deferred income tax benefit |
(354 | ) | (114 | ) | ||||
|
|
|
|
|||||
Total income tax expense (benefit) |
$ | 391 | $ | 199 | ||||
|
|
|
|
Year Ended December 31, |
||||||||
2020 |
2019 |
|||||||
Tax provision at federal statutory rate |
$ | (16,635 | ) | $ | (6,927 | ) | ||
Increase (decrease) in income tax resulting from: |
||||||||
Tax on income not subject to entity level federal income tax |
17,716 | 6,920 | ||||||
Tax rate differences on income in other jurisdictions |
172 | — | ||||||
State income taxes, net of federal tax effect |
(423 | ) | (164 | ) | ||||
Changes in valuation allowance |
15 | 29 | ||||||
Stock Compensation |
(851 | ) | (141 | ) | ||||
Other permanent adjustments |
397 | 84 | ||||||
|
|
|
|
|||||
Provision for (benefit from) income taxes |
$ | 391 | $ | (199 | ) | |||
|
|
|
|
|||||
Effective tax rate |
-0.5 | % | 0.6 | % | ||||
|
|
|
|
F-85 |
As of December 31, |
||||||||
2020 |
2019 |
|||||||
Deferred tax assets: |
||||||||
Deferred and stock-based compensation |
$ | 132 | $ | 18 | ||||
Acquisition costs |
138 | 160 | ||||||
Deferred Revenue |
55 | — | ||||||
Net operating loss carryforwards |
3,226 | 2,899 | ||||||
Property, equipment and software |
25 | 116 | ||||||
Other |
— | 32 | ||||||
|
|
|
|
|||||
Total deferred tax assets |
3,576 | 3,225 | ||||||
Less: valuation allowance |
(2,901 | ) | (2,899 | ) | ||||
|
|
|
|
|||||
Net deferred tax assets |
675 | 326 | ||||||
|
|
|
|
|||||
Deferred tax liabilities: |
||||||||
Customer Relationships |
293 | — | ||||||
Acquired Technology |
415 | 428 | ||||||
Other Acquired Intangibles |
21 | 2 | ||||||
Other |
41 | — | ||||||
|
|
|
|
|||||
Total deferred tax liabilities |
770 | 430 | ||||||
|
|
|
|
|||||
Net deferred tax assets (liabilities) |
$ | (95 | ) | $ | (104 | )) | ||
|
|
|
|
F-86 |
13. |
Fair Value Measurements |
As of December 31, 2020 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets: |
||||||||||||||||
Investment in shares of affiliate stock |
$ | 1,823 | $ | 1,823 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets measured at fair value |
$ | 1,823 | $ | 1,823 | $ | — | $ | — |
As of December 31, 2019 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets: |
||||||||||||||||
Deposits with clearinghouse affiliate, noncurrent: |
||||||||||||||||
U.S. government securities |
$ | 994 | $ | 994 | $ | — | $ | — | ||||||||
Short-term investments: |
||||||||||||||||
U.S. government securities |
1,988 | 1,988 | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets measured at fair value |
$ | 2,982 | $ | 2,982 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
14. |
Leases |
F-87 |
Year ended December 31, |
||||||||
2020 |
2019 |
|||||||
Finance lease cost |
||||||||
Amortization of right-of-use |
$ | 185 | $ | — | ||||
Interest on lease liabilities |
44 | — | ||||||
Operating lease cost |
984 | 525 | ||||||
Variable lease cost |
63 | — | ||||||
|
|
|
|
|||||
Total lease cost |
$ | 1,276 | $ | 525 | ||||
|
|
|
|
Year ended December 31, 2020 |
Year ended December 31, 2019 |
|||||||||||||||
Operating leases |
Finance leases |
Operating leases |
Finance leases |
|||||||||||||
Cash paid for amounts included in the measurement of lease liabilities |
||||||||||||||||
Cash flow from financing activities |
$ | — | $ | 313 | $ | — | $ | — | ||||||||
Cash flow from operating activities |
$ | 1,126 | $ | 44 | $ | 525 | $ | — | ||||||||
Supplemental non-cash information on lease liabilities arising from obtaining right-of-use |
$ | 2,991 | $ | 786 | $ | — | $ | — | ||||||||
Weighted average remaining lease term (in months) |
24.6 | 41.0 | — | — | ||||||||||||
Weighted average discount rate |
2.0 | % | 7.6 | % | — | % | — |
F-88 |
For the year ended December 31, | Operating leases |
Finance leases |
||||||
2021 |
$ | 977 | $ | 163 | ||||
2022 |
642 | 163 | ||||||
2023 |
215 | 163 | ||||||
2024 |
— | 80 | ||||||
2025 |
— | — | ||||||
Thereafter |
— | — | ||||||
|
|
|
|
|||||
Total undiscounted lease payments |
$ | 1,834 | $ | 569 | ||||
Less: Imputed interest |
(35 | ) | (71 | ) | ||||
|
|
|
|
|||||
Total lease liability |
$ | 1,799 | $ | 498 | ||||
Current |
$ | 953 | $ | 129 | ||||
Noncurrent |
$ | 846 | $ | 369 |
15. |
Subsequent Events |
F-89 |
Page |
||||
F-91 |
||||
F-92 |
||||
F-93 |
||||
F-97 |
||||
F-98 |
June 30, |
December 31, |
|||||||
2021 |
2020 |
|||||||
Assets |
(Unaudited) |
|||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 50,114 | $ | 75,361 | ||||
Restricted cash |
16,500 | 16,500 | ||||||
Customer funds |
294 | 81 | ||||||
Accounts receivable, net |
11,872 | 10,408 | ||||||
Investment in shares of affiliate stock, current |
— | 1,823 | ||||||
Due from affiliates |
— | — | ||||||
Deposits with clearinghouse affiliate, current |
— | 20,200 | ||||||
Other current assets |
6,233 | 7,690 | ||||||
|
|
|
|
|||||
Total current assets |
85,013 | 132,063 | ||||||
Property, equipment and software, net |
26,000 | 19,957 | ||||||
Goodwill |
233,391 | 233,429 | ||||||
Intangible assets, net |
58,955 | 62,199 | ||||||
Deposits with clearinghouse affiliate, noncurrent |
15,151 | 15,150 | ||||||
Other assets |
4,403 | 5,578 | ||||||
|
|
|
|
|||||
Total assets |
$ | 422,913 | $ | 468,376 | ||||
|
|
|
|
|||||
Liabilities and Members’ Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued liabilities |
$ | 57,763 | $ | 42,915 | ||||
Customer funds payable |
294 | 81 | ||||||
Deferred revenue, current |
4,150 | 4,282 | ||||||
Due to affiliates |
597 | 1,856 | ||||||
Other current liabilities |
2,036 | 1,943 | ||||||
|
|
|
|
|||||
Total current liabilities |
64,840 | 51,077 | ||||||
Deferred revenue, noncurrent |
3,569 | 4,103 | ||||||
Deferred tax liabilities, net |
95 | 95 | ||||||
Other liabilities |
3,141 | 3,319 | ||||||
|
|
|
|
|||||
Total liabilities |
71,645 | 58,594 | ||||||
Mezzanine equity: |
||||||||
Incentive units (156,000,000 authorized, 103,318,325 unvested units and 85,875,000 unvested units issued and outstanding as of June 30, 2021 and December 31, 2020) |
23,192 | 21,452 | ||||||
Members’ equity: |
||||||||
Class A voting units (413,000,000 units authorized, 400,000,000 units issued and outstanding as of June 30, 2021 and December 31, 2020) |
2,897 | 2,613 | ||||||
Class B voting units (212,500,000 units authorized, 192,453,454 and 182,500,000 units issued and outstanding as of June 30, 2021 and December 31, 2020, respectively) |
187,926 | 182,500 | ||||||
Class B warrant (see Note 8) |
— | 5,426 | ||||||
Class C voting units (284,000,000 units authorized, 270,270,270 units issued and outstanding as of June 30, 2021 and December 31, 2020) |
310,104 | 310,104 | ||||||
Accumulated other comprehensive income |
364 | 191 | ||||||
Accumulated deficit |
(173,215 | ) | (112,504 | ) | ||||
|
|
|
|
|||||
Total members’ equity |
328,076 | 388,330 | ||||||
|
|
|
|
|||||
Total liabilities and members’ equity |
$ | 422,913 | $ | 468,376 | ||||
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Revenues: |
||||||||||||||||
Net revenues (includes net revenues from affiliate of $(17), $(639), $(43) and $(1,004), respectively) |
$ | 8,486 | $ | 8,908 | $ | 16,631 | $ | 12,438 | ||||||||
Operating expenses: |
||||||||||||||||
Compensation and benefits |
19,916 | 10,411 | 35,150 | 17,870 | ||||||||||||
Professional services |
760 | 1,248 | 1,673 | 2,265 | ||||||||||||
Technology and communication |
3,916 | 2,630 | 6,702 | 4,646 | ||||||||||||
Selling, general and administrative |
8,956 | 1,028 | 15,065 | 1,808 | ||||||||||||
Acquisition-related expenses |
2,489 | 335 | 10,309 | 11,477 | ||||||||||||
Depreciation and amortization |
3,034 | 2,205 | 5,828 | 3,303 | ||||||||||||
Affiliate expenses |
471 | 1,070 | 942 | 2,140 | ||||||||||||
Impairment of long-lived assets |
— | — | — | 1,393 | ||||||||||||
Other operating expenses |
269 | 177 | 697 | 209 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
39,811 | 19,104 | 76,366 | 45,111 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating loss |
(31,325 | ) | (10,196 | ) | (59,735 | ) | (32,673 | ) | ||||||||
Interest income (expense), net |
(94 | ) | (2 | ) | (143 | ) | 424 | |||||||||
Other income (expense), net |
(311 | ) | (166 | ) | (649 | ) | 229 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes |
(31,730 | ) | (10,364 | ) | (60,527 | ) | (32,020 | ) | ||||||||
Income tax (expense) benefit |
(161 | ) | 12 | (184 | ) | (25 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (31,891 | ) | $ | (10,352 | ) | $ | (60,711 | ) | $ | (32,045 | ) | ||||
|
|
|
|
|
|
|
|
|||||||||
Currency translation adjustment, net of tax |
94 | 129 | 173 | (167 | ) | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive loss |
$ | (31,797 | ) | $ | (10,223 | ) | $ | (60,538 | ) | $ | (32,212 | ) | ||||
|
|
|
|
|
|
|
|
Class A Voting Units |
Class B Voting Units |
Class B Warrant |
Class C Voting Units |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Total Members’ Equity |
Incentive Units |
Total Mezzanine Equity |
||||||||||||||||||||||||||||||||||||||||||||||||
Units |
$ |
Units |
$ |
Warrant |
$ |
Units |
$ |
Units |
$ |
|||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2021 |
400,000,000 | $ | 2,723 | 182,500,000 | $ | 182,500 | — | $ | 5,426 | 270,270,270 | $ | 310,104 | $ | (141,324 | ) | $ | 270 | $ | 359,699 | — | $ | 22,322 | $ | 22,322 | ||||||||||||||||||||||||||||||||
Issuance of Class A voting units in exchange of capital contribution (see Note 8) |
— | 174 | — | — | — | — | — | — | — | — | 174 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Unit-based compensation expense for incentive units (see Note 9) |
— | — | — | — | — | — | — | — | — | — | — | — | 870 | 870 | ||||||||||||||||||||||||||||||||||||||||||
Exercise of Class B Warrant for Class B Voting Units |
— | — | 9,953,454 | 5,426 | — | (5,426 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment, net of tax |
— | — | — | — | — | — | — | — | — | 94 | 94 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | (31,891 | ) | — | (31,891 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Balance as of June 30, 2021 |
400,000,000 | $ | 2,897 | 192,453,454 | $ | 187,926 | — | $ | — | 270,270,270 | $ | 310,104 | $ | (173,215 | ) | $ | 364 | $ | 328,076 | — | $ | 23,192 | $ | 23,192 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Voting Units |
Class B Voting Units |
Class B Warrant |
Class C Voting Units |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Total Members’ Equity |
Incentive Units |
Total Mezzanine Equity |
||||||||||||||||||||||||||||||||||||||||||||||||
Units |
$ |
Units |
$ |
Warrant |
$ |
Units |
$ |
Units |
$ |
|||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2020 |
400,000,000 | $ | 2,613 | 182,500,000 | $ | 182,500 | — | $ | 5,426 | 270,270,270 | $ | 310,104 | $ | (112,504 | ) | $ | 191 | $ | 388,330 | — | $ | 21,452 | $ | 21,452 | ||||||||||||||||||||||||||||||||
Issuance of Class A voting units in exchange of capital contribution (see Note 8) |
— | 284 | — | — | — | — | — | — | — | — | 284 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Unit-based compensation expense for incentive units (see Note 9) |
— | — | — | — | — | — | — | — | — | — | — | — | 1,740 | 1,740 | ||||||||||||||||||||||||||||||||||||||||||
Exercise of Class B Warrant for Class B Voting Units |
— | — | 9,953,454 | 5,426 | — | (5,426 | ) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment, net of tax |
— | — | — | — | — | — | — | — | — | 173 | 173 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | (60,711 | ) | — | (60,711 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Balance as of June 30, 2021 |
400,000,000 | $ | 2,897 | 192,453,454 | $ | 187,926 | — | $ | — | 270,270,270 | $ | 310,104 | $ | (173,215 | ) | $ | 364 | $ | 328,076 | — | $ | 23,192 | $ | 23,192 | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Voting Units |
Class B Voting Units |
Class B Warrant |
Class C Voting Units |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Total Members’ Equity |
Incentive Units |
Total Mezzanine Equity |
||||||||||||||||||||||||||||||||||||||||||||||||
Units |
$ |
Units |
$ |
Warrant |
$ |
Units |
$ |
Units |
$ |
|||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2020 |
400,000,000 | $ | 2,002 | 182,500,000 | $ | 182,500 | — | $ | 5,426 | 270,270,270 | $ | 310,104 | $ | (54,592 | ) | $ | (296 | ) | $ | 445,144 | — | $ | 20,455 | $ | 20,455 | |||||||||||||||||||||||||||||||
Issuance of Class A voting units in exchange of capital contribution (see Note 8) |
— | 97 | — | — | — | — | — | — | — | — | 97 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Unit-based compensation expense for incentive units (see Note 9) |
— | — | — | — | — | — | — | — | — | — | — | — | (871 | ) | (871 | ) | ||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment, net of tax |
— | — | — | — | — | — | — | — | — | 129 | 129 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | (10,352 | ) | — | (10,352 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Balance as of June 30, 2020 |
400,000,000 | $ | 2,099 | 182,500,000 | $ | 182,500 | — | $ | 5,426 | 270,270,270 | $ | 310,104 | $ | (64,944 | ) | $ | (167 | ) | $ | 435,018 | — | $ | 19,584 | $ | 19,584 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class A Voting Units |
Class B Voting Units |
Class B Warrant |
Class C Voting Units |
Accumulated Deficit |
Accumulated Other Comprehensive Loss |
Total Members’ Equity |
Incentive Units |
Total Mezzanine Equity |
||||||||||||||||||||||||||||||||||||||||||||||||
Units |
$ |
Units |
$ |
Warrant |
$ |
Units |
$ |
Units |
$ |
|||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 |
400,000,000 | $ | 1,916 | 182,500,000 | $ | 182,500 | — | $ | — | — | $ | — | $ | (32,899 | ) | $ | — | $ | 151,517 | — | $ | 10,515 | $ | 10,515 | ||||||||||||||||||||||||||||||||
Issuance of Class A voting units in exchange of capital contribution (see Note 8) |
— | 183 | — | — | — | — | — | — | — | — | 183 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Unit-based compensation expense for incentive units (see Note 9) |
— | — | — | — | — | — | — | — | — | — | — | — | 9,069 | 9,069 | ||||||||||||||||||||||||||||||||||||||||||
Issuance of Class B warrant |
— | — | — | — | — | 5,426 | — | — | — | — | 5,426 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of Class C voting units |
— | — | — | — | — | — | 270,270,270 | 300,000 | — | — | 300,000 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Pushdown accounting for deferred income tax liabilities resulting from Bridge2 Solutions acquisition (See Note 4) |
— | — | — | — | — | — | — | 10,104 | — | 10,104 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Currency translation adjustment, net of tax |
— | — | — | — | — | — | — | — | — | (167 | ) | (167 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | (32,045 | ) | — | (32,045 | ) | — | — | — | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Balance as of June 30, 2020 |
400,000,000 | $ | 2,099 | 182,500,000 | $ | 182,500 | — | $ | 5,426 | 270,270,270 | $ | 310,104 | $ | (64,944 | ) | $ | (167 | ) | $ | 435,018 | — | $ | 19,584 | $ | 19,584 | |||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
|
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|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | (60,711 | ) | $ | (32,045 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation and amortization |
5,759 | 3,187 | ||||||
Non-cash lease expense |
731 | 667 | ||||||
Unit-based compensation expense (see Note 9) |
2,512 | 9,108 | ||||||
Recognition of affiliate capital contribution (see Note 7) |
284 | 183 | ||||||
Amortization of Class B warrant asset (see Note 8) |
581 | — | ||||||
Impairment of long-lived assets |
— | 1,393 | ||||||
Acquisition-related expenses paid by affiliate |
— | 1,378 | ||||||
Unrealized loss (gain) on investment in shares of affiliate stock |
— | (254 | ) | |||||
Loss on sale of shares of affiliate stock |
3 | — | ||||||
Other |
(55 | ) | — | |||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
(1,464 | ) | 941 | |||||
Other receivables |
— | 115 | ||||||
Deposits with clearinghouse affiliate |
20,199 | 685 | ||||||
Accounts payable and accrued liabilities |
14,519 | (1,000 | ) | |||||
Due to affiliates |
(1,259 | ) | (1,431 | ) | ||||
Deferred revenues |
(666 | ) | (3,115 | ) | ||||
Operating lease liabilities |
(646 | ) | (530 | ) | ||||
Customer funds payable |
213 | — | ||||||
Other assets and liabilities |
1,278 | 625 | ||||||
|
|
|
|
|||||
Net cash used in operating activities |
(18,662 | ) | (20,093 | ) | ||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Capitalized internal-use software development costs and other capital expenditures |
(8,249 | ) | (9,814 | ) | ||||
Acquisitions, net of cash acquired |
— | 10,652 | ||||||
Proceeds from sale of shares of affiliate stock |
1,759 | — | ||||||
Proceeds from sale of equipment |
8 | — | ||||||
Short-term investments |
— | 1,988 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) investing activities |
(6,482 | ) | 2,826 | |||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Payment of finance lease liability |
(64 | ) | (89 | ) | ||||
Proceeds from issuance of Class C voting units (see Note 7) |
— | 37,800 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) financing activities |
(64 | ) | 37,711 | |||||
|
|
|
|
|||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
173 | (167 | ) | |||||
|
|
|
|
|||||
Net increase (decrease) in cash, cash equivalents, restricted cash and customer funds |
(25,035 | ) | 20,277 | |||||
Cash, cash equivalents, restricted cash and customer funds at the beginning of the year |
91,943 | 93,134 | ||||||
|
|
|
|
|||||
Cash, cash equivalents, restricted cash and customer funds at the end of the quarter |
$ | 66,908 | $ | 113,411 | ||||
|
|
|
|
|||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid for income taxes |
$ | — | $ | — | ||||
Supplemental disclosure of non-cash investing and financing activity: |
||||||||
Issuance of Class A voting units in exchange of capital contribution |
$ | 284 | $ | 183 | ||||
Capitalized internal-use software development costs and other capital expenditures included in accounts payable and accrued liabilities |
$ | 1,902 | $ | 1,647 | ||||
Issuance of Class B warrant |
$ | — | $ | 5,426 | ||||
Non-cash contribution of Bridge2 Holdings by affiliate |
$ | — | $ | 260,811 | ||||
Reconciliation of cash, cash equivalents, restricted cash and customer funds to consolidated balance sheets |
||||||||
Cash and cash equivalents |
$ | 50,114 | $ | 96,911 | ||||
Restricted cash |
16,500 | 16,500 | ||||||
Customer funds |
294 | — | ||||||
|
|
|
|
|||||
Total cash, cash equivalents, restricted cash and customer funds |
$ | 66,908 | $ | 113,411 | ||||
|
|
|
|
• | Platform subscription fees: Monthly fixed fee charged to loyalty partners to access the redemption platform and receive customer support services. We recognize revenue for these fees on a straight-line basis over the related contract term, as the loyalty partner receives benefits evenly throughout the term of the contract. These fees are allocated to our performance obligation to provide access to our redemption platform, and thus are recognized on a gross basis. |
• | Transaction fees: Transaction fees are earned for most transactions processed through our platform. These fees are allocated to our performance obligation to provide order placement services on behalf of the loyalty partner, and therefore are recognized net of the related redemption cost. We allocate transaction fees to the period in which the related transaction occurs. |
• | Revenue share fees: We are entitled to revenue share fees in the form of rebates from third-party commerce merchants and other partners which provide services facilitating redemption order fulfilment. We allocate revenue share fees to the period in which the related transaction occurs. |
• | Service fees: We earn fees for certain software development activities associated with the implementation of new customers on our loyalty redemption platform and other development activities if a loyalty partner requests that we customize certain features and functionalities for their loyalty program. We recognize service fees as revenue on a straight-line basis, beginning when the internally developed software resulting from such implementation or other development activities are operational in our platform over the longer of the remaining anticipated customer life and 3 years, which represents the estimated useful life of the Company’s internally developed software. Implementation and development service fees are generally billed when the implementation and development activities are performed. |
• | Exclude sales taxes from the measurement of the transaction price. |
• | Not adjust the transaction price for the existence of a significant financing component if the timing difference between a customer’s payment and our performance is one year or less. |
• | Not provide disclosures about the transaction price allocated to unsatisfied performance obligations for contracts with a duration of one year or less or when the consideration is variable and allocated entirely to a wholly unsatisfied performance obligation or a wholly unsatisfied promise to transfer a distinct good or service that forms part of a single performance obligation. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Transaction revenue, net (a) |
$ | 3,542 | $ | 1,822 | $ | 6,837 | $ | 2,060 | ||||||||
Subscription and service revenue |
4,944 | 7,086 | 9,794 | 10,378 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 8,486 | $ | 8,908 | $ | 16,631 | $ | 12,438 | |||||||||
|
|
|
|
|
|
|
|
(a) | Amounts presented are net of rebates and liquidity payments under the Triparty Agreement, reductions in connection with the Contribution Agreement, and consideration payable to a customer pursuant to the Strategic Alliance Agreement of $707,000 and $1,596,000 for the three and six months ended June 30, 2021, respectively. Included in these amounts are related party amounts of $17,000 and $43,000 for the three and six months ended June 30, 2021, respectively (see Note 7). Amounts presented are net of rebates and liquidity payments under the Triparty Agreement, reductions in connection with the Contribution Agreement, and consideration payable to a customer pursuant to the Strategic Alliance Agreement of $929,000 and $1,552,000 for the three and six months ended June 30, 2020, respectively. Amounts also include related party amounts of $639,000 and $1,004,000 for the three and six months ended June 30, 2020, respectively (see Note 7). |
February 21, 2020 |
||||
Cash and cash equivalents |
$ | 10,652 | ||
Accounts receivable |
10,158 | |||
Other current assets |
1,284 | |||
Property and equipment |
4,465 | |||
Customer relationships |
53,620 | |||
Technology |
11,990 | |||
Trade name |
415 | |||
Other non-current assets |
2,864 | |||
Goodwill |
216,575 | |||
|
|
|||
Total assets acquired |
312,023 | |||
Accounts payable and accrued liabilities |
(22,450 | ) | ||
Deferred revenue |
(12,703 | ) | ||
Deferred income tax liabilities |
(3,005 | ) | ||
Other non-current liabilities |
(2,402 | ) | ||
|
|
|||
Total liabilities assumed |
(40,560 | ) | ||
|
|
|||
Total purchase consideration |
$ | (271,463 | ) | |
|
|
February 22, 2020 – June 30, 2020 |
||||
Revenue |
$ | 13,392 | ||
Net income / (loss) |
(2,872 | ) |
Six Months Ended June 30, 2020 |
||||
Pro forma revenue |
$ | 18,097 | ||
Pro forma net loss |
(32,511 | ) |
5. |
Goodwill and Intangible Assets, Net |
Amount |
||||
Balance as of December 31, 2020 |
$ | 233,429 | ||
Foreign currency translation |
(38 | ) | ||
|
|
|||
Balance as of June 30, 2021 |
$ | 233,391 | ||
|
|
June 30, 2021 |
||||||||||||||||
Weighted Average Useful Life (years) |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
|||||||||||||
Regulatory licenses |
Indefinite | $ | 554 | $ | — | $ | 554 | |||||||||
Acquired technology |
7 | 13,690 | (2,849 | ) | 10,841 | |||||||||||
Customer relationships |
12 | 53,620 | (6,060 | ) | 47,560 | |||||||||||
Trade name |
1 | 415 | (415 | ) | — | |||||||||||
|
|
|
|
|
|
|||||||||||
$ | 68,279 | $ | (9,324 | ) | $ | 58,955 | ||||||||||
|
|
|
|
|
|
December 31, 2020 |
||||||||||||||||
Weighted Average Useful Life (years) |
Gross Carrying Amount |
Accumulated Amortization |
Net Carrying Amount |
|||||||||||||
Regulatory licenses |
Indefinite | $ | 554 | $ | — | $ | 554 | |||||||||
Acquired technology |
7 | 13,690 | (1,879 | ) | 11,811 | |||||||||||
Customer relationships |
12 | 53,620 | (3,844 | ) | 49,776 | |||||||||||
Trade name |
1 | 415 | (357 | ) | 58 | |||||||||||
|
|
|
|
|
|
|||||||||||
$ | 68,279 | $ | (6,080 | ) | $ | 62,199 | ||||||||||
|
|
|
|
|
|
Amount |
||||
Remainder of 2021 |
$ | 3,238 | ||
2022 |
6,424 | |||
2023 |
6,424 | |||
2024 |
6,442 | |||
2025 |
6,424 | |||
Thereafter |
29,449 | |||
|
|
|||
Total |
$ | 58,401 | ||
|
|
6. |
Consolidated Balance Sheet Components |
June 30, 2021 |
December 31, 2020 |
|||||||
Prepaid expenses |
$ | 3,908 | $ | 5,365 | ||||
Class B warrant asset, current (see Note 8) |
2,325 | 2,325 | ||||||
|
|
|
|
|||||
$ | 6,233 | $ | 7,690 | |||||
|
|
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Internal-use software |
$ | 27,544 | $ | 20,343 | ||||
Purchased software |
116 | 110 | ||||||
Office furniture and equipment |
609 | 609 | ||||||
Other computer and network equipment |
2,536 | 1,199 | ||||||
Leasehold improvements |
479 | 479 | ||||||
|
|
|
|
|||||
Property, equipment and software, gross |
31,284 | 22,740 | ||||||
Less: accumulated amortization and depreciation |
(5,284 | ) | (2,783 | ) | ||||
|
|
|
|
|||||
Total |
$ | 26,000 | $ | 19,957 | ||||
|
|
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Accounts payable |
$ | 15,100 | $ | 7,165 | ||||
Accrued expenses |
12,148 | 14,808 | ||||||
Purchasing card payable |
16,758 | 12,683 | ||||||
Salaries and benefits payable |
7,974 | 6,018 | ||||||
Other |
5,783 | 2,241 | ||||||
|
|
|
|
|||||
$ | 57,763 | $ | 42,915 | |||||
|
|
|
|
7. |
Related Parties |
8. |
Members’ Equity |
As of February 19, 2020 |
||||
Dividend yield |
— | % | ||
Risk-free interest rate |
1.39 | % | ||
Expected volatility |
40.00 | % | ||
Expected term (years) |
3.00 |
As of May 19, 2020 |
||||
Dividend yield |
— | % | ||
Risk-free interest rate |
0.33 | % | ||
Expected volatility |
50.00 | % | ||
Expected term (years) |
4.35 |
9. |
Unit-Based Compensation |
10. |
Capital Requirements |
11. |
Commitments and Contingencies |
12. |
Fair Value Measurements |
As of June 30, 2021 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets: |
||||||||||||||||
Investment in shares of affiliate stock |
$— | $— | $ | — | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets measured at fair value |
|
$— |
|
$— | $ | — | $ | — | ||||||||
As of December 31, 2020 |
||||||||||||||||
Total |
Level 1 |
Level 2 |
Level 3 |
|||||||||||||
Assets: |
||||||||||||||||
Investment in shares of affiliate stock |
$ | 1,823 | $ | 1,823 | $ | — | $ | — | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets measured at fair value |
$ | 1,823 | $ | 1,823 | $ | — | $ | — |
13. |
Subsequent Events |
Page |
||||
F-121 | ||||
Consolidated Financial Statements |
||||
F-123 | ||||
F-124 | ||||
F-125 | ||||
F-126 | ||||
F-127 |
2019 |
2018 |
|||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 14,797,056 | $ | 11,661,106 | ||||
Accounts receivable, net |
14,450,236 | 25,612,891 | ||||||
Deferred costs |
865,429 | 825,881 | ||||||
Other current assets |
873,176 | 1,174,649 | ||||||
|
|
|
|
|||||
Total current assets |
30,985,897 | 39,274,527 | ||||||
|
|
|
|
|||||
Noncurrent assets: |
||||||||
Property and equipment, net |
1,432,097 | 1,870,128 | ||||||
Internally developed software, net |
9,559,880 | 11,418,470 | ||||||
Deferred costs, less current portion |
3,028,740 | 2,820,013 | ||||||
Other noncurrent assets, net |
232,520 | 299,786 | ||||||
|
|
|
|
|||||
Total noncurrent assets |
14,253,237 | 16,408,397 | ||||||
|
|
|
|
|||||
Total assets |
$ | 45,239,134 | $ | 55,682,924 | ||||
|
|
|
|
|||||
Liabilities and Shareholders’ Deficit |
||||||||
Current liabilities: |
||||||||
Accounts payable and accrued expenses |
$ | 12,847,190 | $ | 19,285,181 | ||||
Purchasing card payable |
16,627,159 | 21,616,026 | ||||||
Deferred revenue |
7,700,159 | 10,907,753 | ||||||
Borrowings under revolving line of credit |
6,876,207 | 7,500,000 | ||||||
Current portion of subordinated notes payable |
2,666,667 | 2,666,667 | ||||||
Current portion of capital lease obligations |
356,280 | 1,169,451 | ||||||
|
|
|
|
|||||
Total current liabilities |
47,073,662 | 63,145,078 | ||||||
|
|
|
|
|||||
Long-term liabilities: |
||||||||
Deferred revenue |
5,917,398 | 8,447,717 | ||||||
Deferred rent expense |
799,413 | 1,115,261 | ||||||
Capital lease obligations |
498,849 | 230,375 | ||||||
Subordinated notes payable, net |
12,202,825 | 7,278,337 | ||||||
|
|
|
|
|||||
Total long-term liabilities |
19,418,485 | 17,071,690 | ||||||
|
|
|
|
|||||
Total liabilities |
66,492,147 | 80,216,768 | ||||||
|
|
|
|
|||||
Shareholders’ deficit: |
||||||||
Series A redeemable preferred stock |
77,893,303 | 36,815,087 | ||||||
Common stock |
5,108 | 5,104 |
Additional paid in capital |
(8,529,011 | ) | (8,942,357 | ) | ||||
Accumulated deficit |
(90,446,029 | ) | (52,111,907 | ) | ||||
Accumulated other comprehensive loss |
(176,384 | ) | (299,771 | ) | ||||
|
|
|
|
|||||
Total shareholders’ deficit |
(21,253,013 | ) | (24,533,844 | ) | ||||
|
|
|
|
|||||
Total liabilities and shareholders’ deficit |
$ | 45,239,134 | $ | 55,682,924 | ||||
|
|
|
|
2019 |
2018 |
|||||||
Revenues: |
||||||||
Transaction |
$ | 9,692,307 | $ | 12,468,911 | ||||
Subscription |
12,822,951 | 12,183,477 | ||||||
Services |
21,782,190 | 18,487,504 | ||||||
|
|
|
|
|||||
Total revenues |
44,297,448 | 43,139,892 | ||||||
|
|
|
|
|||||
Operating expenses: |
||||||||
Salary and compensation expense |
24,306,975 | 27,586,040 | ||||||
Other selling, general and administrative expenses |
6,950,155 | 5,863,390 | ||||||
Depreciation and amortization |
6,807,284 | 8,274,727 | ||||||
|
|
|
|
|||||
Total operating expenses |
38,064,414 | 41,724,157 | ||||||
|
|
|
|
|||||
Income from operations |
6,233,034 | 1,415,735 | ||||||
Other income (expense): |
||||||||
Interest |
(2,730,720 | ) | (4,438,345 | ) | ||||
Settlement |
— | 3,000,000 | ||||||
Foreign currency transaction losses |
(648,403 | ) | (500,733 | ) | ||||
Other |
(109,817 | ) | (19,756 | ) | ||||
|
|
|
|
|||||
Income (loss) before income taxes |
2,744,094 | (543,099 | ) | |||||
Provision for income taxes |
— | — | ||||||
|
|
|
|
|||||
Net income (loss) |
2,744,094 | (543,099 | ) | |||||
Currency translation adjustment |
123,387 | (271,514 | ) | |||||
|
|
|
|
|||||
Comprehensive income (loss) |
$ | 2,867,481 | $ | (814,613 | ) | |||
|
|
|
|
Series A Redeemable Preferred Stock |
Common Shares |
|||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Par Value |
Additional Paid in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Loss |
Total Shareholders’ Deficit |
|||||||||||||||||||||||||
Balance at December 31, 2017 |
3,371,345 | $ | 31,975,782 | 5,103,434 | $ | 5,104 | $ | (8,963,821 | ) | $ | (46,729,503 | ) | $ | (28,257 | ) | $ | (23,740,695 | ) | ||||||||||||||
Stock compensation expense |
— | — | 21,464 | — | — | 21,464 | ||||||||||||||||||||||||||
Cumulative translation adjustment |
— | — | — | — | — | — | (271,514 | ) | (271,514 | ) | ||||||||||||||||||||||
Preferred stock accretion |
— | 4,839,305 | — | — | — | (4,839,305 | ) | — | — | |||||||||||||||||||||||
Net loss |
— | — | — | — | — | (543,099 | ) | — | (543,099 | ) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2018 |
3,371,345 | 36,815,087 | 5,103,434 | 5,104 | (8,942,357 | ) | (52,111,907 | ) | (299,771 | ) | (24,533,844 | ) | ||||||||||||||||||||
Options exercised |
— | — | 3,958 | 4 | 6,764 | — | — | 6,768 | ||||||||||||||||||||||||
Capital contributions |
— | — | — | — | 390,125 | — | — | 390,125 | ||||||||||||||||||||||||
Stock compensation expense |
— | — | — | — | 16,457 | — | — | 16,457 | ||||||||||||||||||||||||
Cumulative translation adjustment |
— | — | — | — | — | — | 123,387 | 123,387 | ||||||||||||||||||||||||
Preferred stock accretion |
— | 41,078,216 | — | — | — | (41,078,216 | ) | — | — | |||||||||||||||||||||||
Net income |
— | — | — | — | — | 2,744,094 | — | 2,744,094 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at December 31, 2019 |
3,371,345 | $ | 77,893,303 | 5,107,392 | $ | 5,108 | $ | (8,529,011 | ) | $ | (90,446,029 | ) | $ | (176,384 | ) | $ | (21,253,013 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 |
2018 |
|||||||
Cash flows from operating activities: |
||||||||
Net income (loss) |
$ | 2,744,094 | $ | (543,099 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |
||||||||
Depreciation and amortization |
6,807,284 | 8,274,727 | ||||||
Non-cash interest expense |
145,605 | 171,139 | ||||||
Net loss on asset disposition |
129,913 | 20,485 | ||||||
Stock compensation expense |
16,457 | 21,464 | ||||||
Changes in operating assets and liabilities: |
||||||||
Accounts receivable |
11,356,598 | 517,671 | ||||||
Deferred costs |
(248,275 | ) | (1,222,504 | ) | ||||
Accounts payable and accrued liabilities |
(6,515,900 | ) | (9,676,562 | ) | ||||
Purchasing card payable |
(4,988,867 | ) | (3,699,610 | ) | ||||
Deferred revenue |
(5,754,425 | ) | (3,625,010 | ) | ||||
Other assets and liabilities |
56,976 | (145,227 | ) | |||||
|
|
|
|
|||||
Net cash provided by (used in) operating activities |
3,749,460 | (9,906,526 | ) | |||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Purchase of property and equipment |
(176,693 | ) | (333,128 | ) | ||||
Investment in internally developed software |
(3,769,518 | ) | (5,219,045 | ) | ||||
|
|
|
|
|||||
Net cash used in investing activities |
(3,946,211 | ) | (5,552,173 | ) | ||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Capital contributions |
390,125 | — | ||||||
Exercise of options |
6,768 | — | ||||||
Proceeds from subordinated notes payable |
15,000,000 | — | ||||||
Repayments of subordinated notes payable |
(10,623,793 | ) | — | |||||
Cash paid for deferred financing costs |
(221,117 | ) | (66,167 | ) | ||||
Proceeds from line of credit |
— | 1,500,000 | ||||||
Payments for capital lease obligations |
(1,233,372 | ) | (996,134 | ) | ||||
|
|
|
|
|||||
Net cash provided by financing activities |
3,318,611 | 437,699 | ||||||
|
|
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents |
14,090 | (33,460 | ) | |||||
|
|
|
|
|||||
Increase (decrease) in cash and cash equivalents |
3,135,950 | (15,054,460 | ) | |||||
Cash and cash equivalents—beginning of year |
11,661,106 | 26,715,566 | ||||||
|
|
|
|
|||||
Cash and cash equivalents—end of year |
$ | 14,797,056 | $ | 11,661,106 | ||||
|
|
|
|
|||||
Supplemental Disclosure of Cash Flow Information |
||||||||
Cash paid during the year for interest |
$ | 2,743,826 | $ | 4,108,495 | ||||
Cash paid for income taxes |
$ | — | $ | — | ||||
Fixed assets acquired through capital leases |
$ | 688,675 | $ | — |
Note 1: Nature |
of Operations and Summary of Significant Accounting Policies |
• | the best estimates of stand-alone selling price of performance obligations included in contracts with multiple performance obligations; |
• | the recognition, measurement and valuation of current and deferred income taxes; |
• | the useful lives of internally developed software and other intangible assets, property and equipment, and the determination of other-than-temporary impairments; and |
• | determining provisions for doubtful accounts. |
• | Identification of the contract, or contracts, with a customer |
• | Identification of the performance obligations in the contract |
• | Determination of the transaction price |
• | Allocation of the transaction price to the performance obligations in the contract |
• | Recognition of revenue when, or as, it satisfies a performance obligation |
As of December 31, 2018 |
||||||||||||
As Reported |
Adjustments |
As Adjusted |
||||||||||
Balance Sheet |
||||||||||||
Deferred costs |
$ | — | $ | 3,645,894 | $ | 3,645,894 | ||||||
Deferred revenue |
18,505,443 | 850,027 | 19,355,470 | |||||||||
Deferred tax asset (liability) |
— | — | — | |||||||||
Accumulated deficit |
(54,907,774 | ) | 2,795,867 | (52,111,907 | ) |
As of December 31, 2018 |
||||||||||||
As Reported |
Adjustments |
As Adjusted |
||||||||||
Statement of Operations |
||||||||||||
Revenues |
$ | 48,663,379 | $ | (5,523,487 | ) | $ | 43,139,892 | |||||
Other selling, general and administrative expenses |
7,085,893 | (1,222,504 | ) | 5,863,389 | ||||||||
Net income (loss) |
3,757,885 | (4,300,983 | ) | (543,098 | ) |
Note |
3: Property and Equipment |
2019 |
2018 |
|||||||
Computer hardware |
$ | 1,428,524 | $ | 2,147,005 | ||||
Purchased software |
2,636,373 | 2,627,948 | ||||||
Assets under capital lease |
7,833,996 | 7,145,321 | ||||||
Office furniture and equipment |
312,951 | 312,951 | ||||||
Leasehold improvements |
1,372,122 | 1,364,821 | ||||||
|
|
|
|
|||||
13,583,966 | 13,598,046 | |||||||
Accumulated depreciation |
(12,151,869 | ) | (11,727,918 | ) | ||||
|
|
|
|
|||||
Property and equipment—net |
$ | 1,432,097 | $ | 1,870,128 | ||||
|
|
|
|
Note 4: Internally |
Developed Software |
2019 |
2018 |
|||||||
Internal use software |
$ | 31,594,419 | $ | 30,302,966 | ||||
Accumulated amortization |
(22,034,539 | ) | (18,884,496 | ) | ||||
|
|
|
|
|||||
Internal use software—net |
$ | 9,559,880 | $ | 11,418,470 | ||||
|
|
|
|
Year ending December 31, |
||||
2020 |
$ | 422,755 | ||
2021 |
162,526 | |||
2022 |
162,526 | |||
2023 |
162,526 | |||
2024 |
81,263 | |||
|
|
|||
991,596 | ||||
Less amount representing interest |
(136,466 | ) | ||
|
|
|||
855,130 | ||||
Less current portion |
(356,280 | ) | ||
|
|
|||
Long-term capital lease obligations |
$ | 498,850 | ||
|
|
2019 |
2018 |
|||||
Risk-free interest rate |
N/A | 1.35 - 2.69 |
% | |||
Volatility factor |
N/A | 66.84 | % | |||
Dividend yield |
N/A | 0.00 | % | |||
Expected life (years) |
N/A | 1.23 - 6.08 |
Incentive Units |
Weighted- Average Strike Price |
Weighted- Average Remaining Contractual Term |
||||||||||
Units outstanding as of December 31, 2018 |
120,000 | $ | 1.67 | |||||||||
Granted |
— | — | ||||||||||
Exercised |
(3,958 | ) | 1.71 | |||||||||
Cancelled or expired |
(21,042 | ) | 1.71 | |||||||||
|
|
|||||||||||
Units outstanding as of December 31, 2019 |
95,000 | $ | 1.66 | 9.14 | ||||||||
|
|
|||||||||||
Units exercisable as of December 31, 2019 |
75,250 | $ | 1.69 | 8.93 | ||||||||
|
|
Nonvested Units |
Incentive Units |
Weighted- Average Grant Date Fair Value |
||||||
Nonvested units at December 31, 2018 |
53,908 | $ | 0.83 | |||||
Granted |
— | — | ||||||
Vested |
(13,116 | ) | 0.83 | |||||
Cancelled or expired |
(21,042 | ) | 0.43 | |||||
|
|
|
|
|||||
Nonvested units at December 31, 2019 |
19,750 | $ | 0.96 | |||||
|
|
|
|
2019 |
2018 |
|||||||
Current expense |
||||||||
Federal |
$ | — | $ | — | ||||
State |
— | — | ||||||
Foreign |
— | — | ||||||
|
|
|
|
|||||
— | — | |||||||
|
|
|
|
|||||
Deferred expense |
||||||||
Federal |
— | — | ||||||
State |
— | — | ||||||
Foreign |
— | — | ||||||
|
|
|
|
|||||
— | — | |||||||
|
|
|
|
|||||
Income tax expense |
$ | — | $ | — | ||||
|
|
|
|
2019 |
2018 |
|||||||
Deferred tax assets (liabilities): |
||||||||
Intangible asset |
$ | 6,409,022 | $ | 6,940,862 | ||||
Deferred revenues, net |
1,476,592 | 1,722,671 | ||||||
Net operating loss carryforwards |
5,913,637 | 5,744,514 | ||||||
Capitalized software development costs |
(2,915,046 | ) | (2,462,286 | ) | ||||
Accrued expenses |
711,279 | 995,921 | ||||||
Fixed assets |
(159,455 | ) | (201,653 | ) | ||||
Allowance for doubtful accounts |
21,667 | 56,067 | ||||||
|
|
|
|
|||||
Deferred tax assets - net |
11,457,696 | 12,796,096 | ||||||
Valuation allowance |
(11,457,696 | ) | (12,796,096 | ) | ||||
|
|
|
|
|||||
Deferred taxes - net |
$ | — | $ | — | ||||
|
|
|
|
2020 |
$ | 1,119,154 | ||
2021 |
598,880 | |||
2022 |
609,603 | |||
2023 |
204,094 | |||
|
|
|||
Total |
$ | 2,531,731 | ||
|
|
Page |
||||||
ARTICLE I | | |||||
CLOSING TRANSACTIONS; THE MERGER | | |||||
Section 1.1 |
Closing Transactions | A-3 | ||||
Section 1.2 |
Merger | A-3 | ||||
Section 1.3 |
Location and Date | A-3 | ||||
Section 1.4 |
Effective Time | A-3 | ||||
Section 1.5 |
Effects of Merger | A-3 | ||||
Section 1.6 |
Organizational Documents of Surviving Company | A-3 | ||||
Section 1.7 |
Directors, Managers and Officers of Surviving Company | A-4 | ||||
Section 1.8 |
Certain Closing Deliveries | A-4 | ||||
ARTICLE II | | |||||
EFFECT OF THE DOMESTICATION AND MERGER | | |||||
Section 2.1 |
Actions to Effect Domestication | A-5 | ||||
Section 2.2 |
Effect of Domestication | A-5 | ||||
Section 2.3 |
Merger and Closing Payments; Effect on Equity Interests | A-6 | ||||
Section 2.4 |
Treatment of Bakkt Incentive Plan Awards | A-7 | ||||
Section 2.5 |
Treatment of Bakkt Opco Warrants | A-8 | ||||
Section 2.6 |
Exchange | A-8 | ||||
Section 2.7 |
Closing Statement; Determination of Available Cash | A-9 | ||||
Section 2.8 |
Withholding Rights | A-9 | ||||
ARTICLE III | | |||||
REPRESENTATIONS AND WARRANTIES OF BAKKT OPCO | | |||||
Section 3.1 |
Due Organization | A-9 | ||||
Section 3.2 |
Authorization; No Conflict | A-10 | ||||
Section 3.3 |
Capitalization | A-11 | ||||
Section 3.4 |
Financial Statements | A-11 | ||||
Section 3.5 |
Absence of Changes | A-12 | ||||
Section 3.6 |
Real Property | A-12 | ||||
Section 3.7 |
Assets | A-13 | ||||
Section 3.8 |
Taxes | A-13 | ||||
Section 3.9 |
Employee Benefit Plans | A-14 | ||||
Section 3.10 |
Labor Matters | A-16 | ||||
Section 3.11 |
Compliance; Permits | A-17 | ||||
Section 3.12 |
Legal Proceedings | A-17 | ||||
Section 3.13 |
Contracts and Commitments | A-18 | ||||
Section 3.14 |
Intellectual Property | A-19 | ||||
Section 3.15 |
Data Privacy and IT Systems | A-20 | ||||
Section 3.16 |
Insurance | A-21 | ||||
Section 3.17 |
Environmental Matters | A-21 | ||||
Section 3.18 |
Brokers and Agents | A-22 | ||||
Section 3.19 |
Transactions with Related Parties | A-22 | ||||
Section 3.20 |
Regulatory Matters | A-22 | ||||
Section 3.21 |
Board Recommendation | A-23 | ||||
Section 3.22 |
No Other VIH or Merger Sub Representations or Warranties | A-23 |
A-i |
ARTICLE IV | | |||||
REPRESENTATIONS AND WARRANTIES OF VIH AND MERGER SUB | | |||||
Section 4.1 |
Due Organization | A-24 | ||||
Section 4.2 |
Authorization; No Conflict | A-24 | ||||
Section 4.3 |
Capitalization | A-24 | ||||
Section 4.4 |
Merger Sub | A-25 | ||||
Section 4.5 |
Special Purpose Acquisition Company; Absence of Changes | A-25 | ||||
Section 4.6 |
Taxes | A-25 | ||||
Section 4.7 |
Brokers and Agents | A-26 | ||||
Section 4.8 |
Financing | A-27 | ||||
Section 4.9 |
Legal Proceedings | A-27 | ||||
Section 4.10 |
Compliance; Permits | A-27 | ||||
Section 4.11 |
SEC Filings and VIH Financials | A-27 | ||||
Section 4.12 |
National Stock Exchange | A-28 | ||||
Section 4.13 |
Board Recommendation | A-28 | ||||
Section 4.14 |
Trust Account | A-28 | ||||
Section 4.15 |
Insurance | A-29 | ||||
Section 4.16 |
Intellectual Property | A-29 | ||||
Section 4.17 |
Agreements, Contracts and Commitments | A-29 | ||||
Section 4.18 |
Title to Property | A-29 | ||||
Section 4.19 |
Employee Matters | A-29 | ||||
Section 4.20 |
Regulatory Matters | A-30 | ||||
Section 4.21 |
Investment Company Act | A-30 | ||||
Section 4.22 |
PIPE Financing | A-30 | ||||
Section 4.23 |
Due Diligence Investigation | A-31 | ||||
Section 4.24 |
No Other Bakkt Opco Representations or Warranties | A-31 | ||||
ARTICLE V | | |||||
PRE-CLOSING COVENANTS |
| |||||
Section 5.1 |
Conduct of Business of Bakkt Opco | A-32 | ||||
Section 5.2 |
Conduct of Business of VIH | A-34 | ||||
Section 5.3 |
Access to Information; Confidential Information. | A-35 | ||||
Section 5.4 |
Notification of Certain Matters | A-36 | ||||
Section 5.5 |
Cause Conditions to be Satisfied | A-36 | ||||
Section 5.6 |
PIPE Financing | A-36 | ||||
Section 5.7 |
Governmental Consents and Filing of Notices | A-37 | ||||
Section 5.8 |
Registration Statement; VIH Shareholder Meeting; Information Statement | A-37 | ||||
Section 5.9 |
Disclosure Information | A-39 | ||||
Section 5.10 |
Securities Listing | A-41 | ||||
Section 5.11 |
No Solicitation | A-41 | ||||
Section 5.12 |
Post-Closing Board of Directors and Executive Officers | A-41 | ||||
Section 5.13 |
Trust Account Disbursement | A-42 | ||||
Section 5.14 |
Section 16 | A-42 | ||||
Section 5.15 |
Third-Party Consents | A-42 | ||||
Section 5.16 |
Unpaid Expenses | A-43 | ||||
Section 5.17 |
No Trading | A-43 | ||||
Section 5.18 |
Advice of Changes | A-43 | ||||
Section 5.19 |
Cooperation Agreement | A-43 |
A-ii |
ARTICLE VI | | |||||
OTHER COVENANTS | | |||||
Section 6.1 |
Tax Matters | A-43 | ||||
Section 6.2 |
Further Assurances | A-44 | ||||
Section 6.3 |
Indemnification, Exculpation and Insurance | A-45 | ||||
Section 6.4 |
Equity Incentive Plan | A-45 | ||||
Section 6.5 |
Shareholder Litigation | A-45 | ||||
ARTICLE VII | | |||||
CONDITIONS PRECEDENT | | |||||
Section 7.1 |
Conditions Precedent to Obligations of VIH, Merger Sub and Bakkt Opco | A-46 | ||||
Section 7.2 |
Conditions Precedent to Obligations of VIH and Merger Sub | A-46 | ||||
Section 7.3 |
Conditions Precedent to Obligations of Bakkt Opco | A-47 | ||||
Section 7.4 |
Frustration of Closing Conditions | A-48 | ||||
ARTICLE VIII | | |||||
TERMINATION | | |||||
Section 8.1 |
Termination | A-48 | ||||
Section 8.2 |
Effect of Termination | A-49 | ||||
ARTICLE IX | | |||||
NO SURVIVAL; WAIVERS; GUARANTY | | |||||
Section 9.1 |
No Survival; Waivers | A-49 | ||||
Section 9.2 |
Trust Account Waiver | A-51 | ||||
ARTICLE X |
||||||
DEFINITIONS |
||||||
Section 10.1 |
Specific Definitions | A-52 | ||||
Section 10.2 |
Accounting Terms | A-62 | ||||
Section 10.3 |
Usage | A-62 | ||||
Section 10.4 |
Index of Defined Terms | A-63 | ||||
ARTICLE XI |
||||||
GENERAL |
||||||
Section 11.1 |
Notices | A-65 | ||||
Section 11.2 |
Entire Agreement | A-66 | ||||
Section 11.3 |
Successors and Assigns | A-66 | ||||
Section 11.4 |
Counterparts | A-66 | ||||
Section 11.5 |
Expenses and Fees | A-66 | ||||
Section 11.6 |
Governing Law | A-67 | ||||
Section 11.7 |
Submission to Jurisdiction; WAIVER OF JURY TRIAL | A-67 | ||||
Section 11.8 |
Specific Performance | A-67 | ||||
Section 11.9 |
Severability | A-67 | ||||
Section 11.10 |
Amendment; Waiver | A-67 | ||||
Section 11.11 |
Absence of Third Party Beneficiary Rights | A-68 | ||||
Section 11.12 |
Mutual Drafting | A-68 | ||||
Section 11.13 |
Further Representations | A-68 | ||||
Section 11.14 |
Waiver of Conflicts | A-68 | ||||
Section 11.15 |
Currency | A-69 | ||||
Section 11.16 |
No Recourse | A-69 | ||||
Section 11.17 |
Made Available | A-70 |
A-iii |
Exhibit A |
Form of Surviving Company LLC Agreement | |
Exhibit B |
Form of Exchange Agreement | |
Exhibit C |
Form of Tax Receivable Agreement | |
Exhibit D |
Form of Registration Rights Agreement | |
Exhibit E |
Form of Voting Agreement | |
Exhibit F |
Form of Stockholders Agreement | |
Exhibit G |
Form of Bakkt Pubco Charter | |
Exhibit H |
Form of Bakkt Pubco Bylaws | |
Exhibit I |
Form of Equity Incentive Plan | |
Exhibit J |
Form of Support Agreement | |
Exhibit K |
Form of Certificate of Merger |
A-iv |
A-1 |
A-2 |
A-3 |
A-4 |
A-5 |
A-6 |
A-7 |
A-8 |
A-9 |
A-10 |
A-11 |
A-12 |
A-13 |
A-14 |
A-15 |
A-16 |
A-17 |
A-18 |
A-19 |
A-20 |
A-21 |
A-22 |
A-23 |
A-24 |
A-25 |
A-26 |
A-27 |
A-28 |
A-29 |
A-30 |
A-31 |
A-32 |
A-33 |
A-34 |
A-35 |
A-36 |
A-37 |
A-38 |
A-39 |
A-40 |
A-41 |
A-42 |
A-43 |
A-44 |
A-45 |
A-46 |
A-47 |
A-48 |
A-49 |
A-50 |
A-51 |
A-52 |
A-53 |
A-54 |
A-55 |
A-56 |
A-57 |
A-58 |
A-59 |
A-60 |
A-61 |
A-62 |
Defined Term |
Section | |
Acquisition Proposal |
Section 5.11(a) | |
Agreement |
Introduction | |
Alternative Transaction |
Section 5.11(a) | |
Announcement 8-K |
Section 5.9(a) | |
Bakkt Disclosure Letter |
Article III | |
Bakkt Non-Recourse Party |
Section 11.16(a) | |
Bakkt Opco |
Introduction | |
Bakkt Opco Warrant |
Section 2.5 | |
Bakkt Pubco |
Recitals | |
Bakkt Pubco Bylaws |
Section 2.1(d) | |
Bakkt Pubco Charter |
Section 2.1(c) | |
Bakkt Pubco Public Warrants |
Recitals | |
Bakkt Pubco Warrants |
Recitals | |
Bakkt Representations |
Section 4.24 | |
Business Combination |
Section 9.2(a) | |
Certificate of Merger |
Section 1.4 | |
Class I Directors |
Section 5.12(a)(i) | |
Class II Directors |
Section 5.12(a)(ii) | |
Class III Directors |
Section 5.12(a)(iii) | |
Closing |
Section 1.3 | |
Closing Date |
Section 1.3 | |
Closing Press Release |
Section 5.9(a) | |
Closing Statement |
Section 2.7 | |
Companies Act |
Recitals | |
Completion 8-K |
Section 5.9(a) | |
Computer Systems |
Section 3.15(a) | |
control |
Section 10.1(c) | |
controlled by |
Section 10.1(c) | |
D&O Indemnitees |
Section 6.3(a) | |
Data Privacy Practices |
Section 3.15(b) | |
DGCL |
Recitals | |
DLLCA |
Recitals | |
Domestication |
Recitals | |
Effective Time |
Section 1.4 | |
Enforcement Exceptions |
Section 3.2(a) | |
Environmental Permits |
Section 3.17 | |
Equity Incentive Plan |
Section 5.8(a) | |
Exchange Agreement |
Section 1.8(a)(ii) | |
Excluded Bakkt Interests |
Section 2.3(b)(i) | |
Excluded Bakkt Matters |
Section 9.1(a) | |
Excluded VIH Matters |
Section 9.1(c) | |
Final Merger Consideration Spreadsheet |
Section 2.3(b)(ii) | |
Financial Statements |
Section 3.4(a) | |
Formation Date |
Section 3.4(a) | |
GAAP |
Section 3.4(a) | |
Illustrative Merger Consideration Spreadsheet |
Section 2.3(b)(ii) | |
Information Statement |
Section 5.8(g) |
A-63 |
Initial Bakkt Equity Holder Support Agreement |
Recitals | |
Intended Tax Treatment |
Section 6.1(a) |
Interim Period |
Section 5.1 | |
IPO |
Section 9.2(a) | |
Joinder |
Recitals | |
Letter of Transmittal |
Section 2.6(a) | |
Liabilities |
Section 3.4(d) | |
Material Contracts |
Section 3.13(a) | |
Material Permits |
Section 3.2(b) | |
Material VIH Contracts |
Section 4.17(a) | |
Merger |
Recitals | |
Merger Consideration |
Section 2.3(b)(ii) | |
Merger Sub |
Introduction | |
Most Recent Balance Sheet Date |
Section 3.4(a) | |
Name Change |
Recitals | |
OFAC |
Section 3.20(d) | |
Original RRA |
Recitals | |
Parties |
Introduction | |
Party |
Introduction | |
PCAOB Financial Statements |
Section 5.9(b) | |
PIPE Financing |
Recitals | |
PIPE Investors |
Recitals | |
PIPE Subscription Agreements |
Recitals | |
Post-Closing Bakkt Pubco Board |
Section 5.12(a) | |
Post-Closing Directors |
Section 5.12(a) | |
Proxy Statement |
Section 5.8(a) | |
Public Certifications |
Section 4.11(a) | |
Public Stockholders |
Section 9.2(a) | |
Redemption |
Section 4.14 | |
Registered Bakkt IP |
Section 3.14(a) | |
Registration Rights Agreement |
Recitals | |
Registration Statement |
Section 5.8(a) | |
Regulatory Filings |
Section 5.7 | |
Related Party |
Section 3.19 | |
Released Claims |
Section 9.2(b)(i) | |
Requisite Bakkt Equity Holders |
Recitals | |
Reviewable Document |
Section 5.9(c) | |
SDN List |
Section 3.20(d) | |
SEC Reports |
Section 4.11(a) | |
Signing Press Release |
Section 5.9(a) | |
Stockholders Agreement |
Section 1.8(a)(vi) | |
Support Agreement |
Recitals | |
Surviving Company |
Recitals | |
Surviving Company LLC Agreement |
Section 1.6 | |
Tax Receivable Agreement |
Section 1.8(a)(iii) | |
Transactions |
Recitals | |
Transfer Taxes |
Section 6.1(c) | |
Trust Account |
Section 9.2(a) | |
Trust Agreement |
Section 4.14 | |
Trustee |
Section 4.14 | |
under common control with |
Section 10.1(c) | |
Voting Agreement |
Section 1.8(a)(v) | |
Voting Matters |
Section 5.8(a) | |
VIH |
Introduction |
A-64 |
VIH Board |
Recitals | |
VIH Class A Shares |
Section 4.3(a) | |
VIH Class B Shares |
Section 4.3(a) | |
VIH Disclosure Letter |
Article IV | |
VIH Financials |
Section 4.11(b) | |
VIH Memorandum and Articles |
Recitals | |
VIH Non-Recourse Party |
Section 11.16(b) | |
VIH Ordinary Shares |
Section 4.3(a) | |
VIH Preference Shares |
Section 4.3(a) | |
VIH Public Warrants |
Section 4.12 | |
VIH Representations |
Section 3.22 | |
VIH Shareholder Meeting |
Section 5.8(a) | |
VIH Sponsor Letter |
Recitals | |
VIH Warrants |
Section 4.3(a) | |
Written Consent |
Section 5.8(g) |
A-65 |
A-66 |
A-67 |
A-68 |
A-69 |
A-70 |
BAKKT OPCO | ||||
BAKKT HOLDINGS, LLC | ||||
By: | /s/ David Clifton | |||
Name: | David Clifton | |||
Title: | Chief Executive Officer | |||
VIH | ||||
VPC IMPACT ACQUISITION HOLDINGS | ||||
By: | /s/ Gordon Watson | |||
Name: | Gordon Watson | |||
Title: | President and Chief Operating Officer | |||
MERGER SUB | ||||
PYLON MERGER COMPANY LLC | ||||
By: | /s/ Gordon Watson | |||
Name: | Gordon Watson | |||
Title: | President and Chief Operating Officer |
A-71 |
1. | Certain Amendments to the Merger Agreement . |
(a) | The first sentence of Section 5.12(a) of the Merger Agreement is hereby replaced in its entirety with the following: |
i. | The Parties shall take all necessary action, including causing the directors of VIH to resign, so that effective as of the Closing, the board of directors of Bakkt Pubco (the “ Post-Closing Bakkt Pubco Board ”) will consist of five to nine (5 to 9) members, with one (1) designated by Bakkt Opco, one (1) designated by the VIH Sponsor, and the remaining members to be appointed jointly by Bakkt Opco and the VIH Sponsor (collectively, the “Post-Closing Directors ”). |
(b) | Exhibit F to the Merger Agreement (the Stockholders Agreement), is hereby replaced in its entirety by the form attached hereto as Attachment 1 . |
2. | Effect of Amendment . Except as otherwise expressly set forth in this Amendment, the provisions of the Merger Agreement, as amended by this Amendment, remain in full force and effect. From and after the date hereof, references to “this Agreement” or Section 5.12 in the Merger Agreement shall be deemed references to the Merger Agreement or Section 5.12, respectively, in each case as amended by this Amendment. From and after the date hereof, references to (i) “Exhibit F” and/or the “Stockholders Agreement” including in the Merger Agreement and/or any Exhibit thereto or (ii) “this Agreement” in the Stockholders Agreement, as applicable, shall be deemed references to the form of Exhibit F attached hereto as Attachment 1 . |
3. | Entire Agreement . This Amendment and the Merger Agreement (which includes the Bakkt Disclosure Letter, the VIH Disclosure Letter, the other schedules thereto and the exhibits thereto), as amended pursuant to this Amendment, the Transaction Documents and the Confidentiality Agreement set forth the entire understanding of the Parties with respect to the Transactions. Any and all previous agreements and understandings between or among the Parties regarding the subject matter hereof, whether written or oral, are superseded by the documents and agreements referred to in this section. |
4. | Miscellaneous . Article XI of the Merger Agreement is hereby incorporated by reference and shall apply mutatis mutandis |
BAKKT OPCO: | ||
BAKKT HOLDINGS, LLC | ||
By: | ![]() | |
Name: Gavin Michael | ||
Title: Chief Executive Officer |
VIH: | ||
VPC IMPACT ACQUISITION HOLDINGS | ||
By: | ![]() | |
Name: Gordon Watson | ||
Title: President and COO |
MERGER SUB: | ||
PYLON MERGER COMPANY LLC | ||
By: | VPC Impact Acquisition Holdings | |
Its: | Managing Member | |
By: | ![]() | |
Name: Gordon Watson | ||
Title: President and COO |
Page |
||||||
ARTICLE I INTRODUCTORY MATTERS |
A-2-9 | |||||
Section 1.01 |
Defined Terms |
A-2-9 | ||||
Section 1.02 |
Construction |
A-2-14 | ||||
ARTICLE II CORPORATE GOVERNANCE MATTERS |
A-2-14 | |||||
Section 2.01 |
Election of Directors |
A-2-14 | ||||
Section 2.02 |
Committees |
A-2-15 | ||||
Section 2.03 |
Independent Directors |
A-2-15 | ||||
Section 2.04 |
Compensation; Reimbursement of Expenses |
A-2-15 | ||||
Section 2.05 |
Indemnification |
A-2-15 | ||||
Section 2.06 |
D&O Insurance |
A-2-16 | ||||
Section 2.07 |
Information Sharing |
A-2-16 | ||||
Section 2.08 |
Confidentiality |
A-2-16 | ||||
ARTICLE III RESTRICTIONS ON TRANSFER |
A-2-17 | |||||
Section 3.01 |
General Restrictions on Transfer |
A-2-17 | ||||
Section 3.02 |
Permitted Transfers |
A-2-17 | ||||
Section 3.03 |
Miscellaneous Provisions Relating to Transfers. |
A-2-18 | ||||
ARTICLE IV GENERAL PROVISIONS |
A-2-18 | |||||
Section 4.01 |
Termination |
A-2-18 | ||||
Section 4.02 |
Notices |
A-2-19 | ||||
Section 4.03 |
Amendment; Waiver |
A-2-19 | ||||
Section 4.04 |
Further Assurances |
A-2-20 | ||||
Section 4.05 |
Assignment |
A-2-20 | ||||
Section 4.06 |
Third-Party Beneficiaries |
A-2-20 | ||||
Section 4.07 |
Governing Law |
A-2-20 | ||||
Section 4.08 |
Jurisdiction; WAIVER OF JURY TRIAL |
A-2-20 | ||||
Section 4.09 |
Specific Performance |
A-2-21 | ||||
Section 4.10 |
Entire Agreement |
A-2-21 | ||||
Section 4.11 |
Severability |
A-2-21 | ||||
Section 4.12 |
Table of Contents, Headings and Captions |
A-2-21 | ||||
Section 4.13 |
Counterparts |
A-2-21 | ||||
Section 4.14 |
Subsequent Acquisition of Securities |
A-2-21 | ||||
Section 4.15 |
No Recourse |
A-2-21 |
PUBCO | ||
BAKKT HOLDINGS, INC. | ||
By: | | |
Name: | ||
Title: |
BAKKT EQUITY HOLDER | ||
[●] | ||
By: | | |
Name: | ||
Title: |
Address for Notices : |
|
|
|
Attention: |
| |
Facsimile: |
| |
E-mail: |
|
SPONSOR | ||
VPC IMPACT ACQUISITION HOLDINGS | ||
SPONSOR, LLC | ||
By: | Victory Park Management, LLC | |
Title: | Manager | |
By: | | |
Name: | Scott Zemnick | |
Title: | Authorized Signatory |
1 |
Note to Draft |
TRANSFEROR | ||
Print |
||
Name: |
| |
By: |
| |
Name: |
| |
Title: |
|
TRANSFEREE | ||
Print |
||
Name: |
| |
By: |
| |
Name: |
| |
Title: |
|
Address for Notices : |
|
|
|
Attention: |
| |
Facsimile: |
| |
E-mail: |
|
a. | any merger or consolidation of the Corporation or any direct or indirect majority-owned subsidiary of the Corporation (i) with the interested stockholder, or (ii) with any other corporation, partnership, unincorporated association or other entity if the merger or consolidation is caused by the interested stockholder and as a result of such merger or consolidation Section (B) of this Article IX is not applicable to the surviving entity; |
b. | any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions), except proportionately as a stockholder of the Corporation, to or with the interested stockholder, whether as part of a dissolution or otherwise, of assets of the Corporation or of any direct or indirect majority-owned subsidiary of the Corporation which assets have an aggregate market value equal to 10% or more of either the aggregate market value of all the assets of the Corporation determined on a consolidated basis or the aggregate market value of all the outstanding stock of the Corporation; |
c. | any transaction which results in the issuance or transfer by the Corporation or by any direct or indirect majority-owned subsidiary of the Corporation of any stock of the Corporation or of such subsidiary to the interested stockholder, except: (i) pursuant to the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which securities were outstanding prior to the time that the interested stockholder became such; (ii) pursuant to a merger under Section 251(g) of the DGCL; (iii) pursuant to a dividend or distribution paid or made, or the exercise, exchange or conversion of securities exercisable for, exchangeable for or convertible into stock of the Corporation or any such subsidiary which security is distributed, pro rata to all holders of a class or series of stock of the Corporation subsequent to the time the interested stockholder became such; (iv) pursuant to an exchange offer by the Corporation to purchase stock made on the same terms to all holders of said stock; or (v) any issuance or transfer of stock by the Corporation; provided, however, |
d. | any transaction involving the Corporation or any direct or indirect majority-owned subsidiary of the Corporation which has the effect, directly or indirectly, of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the Corporation or of any such subsidiary which is owned by the interested stockholder, except as a result of immaterial changes due to fractional share adjustments or as a result of any purchase or redemption of any shares of stock not caused, directly or indirectly, by the interested stockholder; or |
e. | any receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of the Corporation), of any loans, advances, guarantees, pledges, or other financial benefits (other than those expressly permitted in subsections (a) through (d) above) provided by or through the Corporation or any direct or indirect majority-owned subsidiary. |
a. | beneficially owns such stock, directly or indirectly; or |
b. | has (i) the right to acquire such stock (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise; provided, however, provided, however, |
right to vote such stock if the agreement, arrangement or understanding to vote such stock arises solely from a revocable proxy or consent given in response to a proxy or consent solicitation made to 10 or more persons; or |
c. | has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting (except voting pursuant to a revocable proxy or consent as described in item (ii) of subsection (b) above), or disposing of such stock with any other person that beneficially owns, or whose Affiliates or associates beneficially own, directly or indirectly, such stock. |
Gordon Watson | 5900 Windward Parkway, Suite 450 | |
Alpharetta, GA 30005 |
Gavin Michael | 5900 Windward Parkway, Suite 450 | |
Alpharetta, GA 30005 | ||
Michelle Goldberg | 5900 Windward Parkway, Suite 450 | |
Alpharetta, GA 30005 |
Adrienne Harris | 5900 Windward Parkway, Suite 450 | |
Alpharetta, GA 30005 | ||
David C. Clifton | 5900 Windward Parkway, Suite 450 | |
Alpharetta, GA 30005 | ||
Kristyn Cook | 5900 Windward Parkway, Suite 450 | |
Alpharetta, GA 30005 | ||
Gordon Watson | 5900 Windward Parkway, Suite 450 | |
Alpharetta, GA 30005 | ||
Sean Collins | 5900 Windward Parkway, Suite 450 | |
Alpharetta, GA 30005 | ||
Richard Lumb | 5900 Windward Parkway, Suite 450 | |
Alpharetta, GA 30005 | ||
Andrew A. Main | 5900 Windward Parkway, Suite 450 | |
Alpharetta, GA 30005 |
By: | | |
Name: | ||
Sole Incorporator |
(a) | If to Bakkt Pubco, to: |
(b) | If to the Company, to: |
(c) | If to any Unitholder, to the address and other contact information set forth in the records of the Company from time to time. |
BAKKT PUBCO: | ||
BAKKT HOLDINGS, INC. | ||
By: | | |
Name: | ||
Title: | ||
COMPANY: | ||
BAKKT OPCO HOLDINGS, LLC | ||
By: | | |
Name: | ||
Title: | ||
UNITHOLDERS: | ||
[•] | ||
By: | | |
Name: | ||
Title: |
By: | | |
Name: Dated: |
|
Address for Notices: |
With copies to: | |
|
| |
|
| |
Email: Attention: |
Email: Attention: |
Page |
||||||
ARTICLE I INTRODUCTORY MATTERS |
E-2 | |||||
Section 1.01 |
Defined Terms | E-2 | ||||
Section 1.02 |
Construction | E-7 | ||||
ARTICLE II CORPORATE GOVERNANCE MATTERS |
E-7 | |||||
Section 2.01 |
Election of Directors | E-7 | ||||
Section 2.02 |
Committees | E-8 | ||||
Section 2.03 |
Independent Directors | E-8 | ||||
Section 2.04 |
Compensation; Reimbursement of Expenses | E-8 | ||||
Section 2.05 |
Indemnification | E-8 | ||||
Section 2.06 |
D&O Insurance | E-9 | ||||
Section 2.07 |
Information Sharing | E-9 | ||||
Section 2.08 |
Confidentiality | E-9 | ||||
ARTICLE III RESTRICTIONS ON TRANSFER |
E-10 | |||||
Section 3.01 |
General Restrictions on Transfer. | E-10 | ||||
Section 3.02 |
Permitted Transfers. | E-10 | ||||
Section 3.03 |
Miscellaneous Provisions Relating to Transfers. | E-11 | ||||
ARTICLE IV GENERAL PROVISIONS |
E-11 | |||||
Section 4.01 |
Termination | E-11 | ||||
Section 4.02 |
Notices | E-12 | ||||
Section 4.03 |
Amendment; Waiver | E-12 | ||||
Section 4.04 |
Further Assurances | E-12 | ||||
Section 4.05 |
Assignment | E-13 | ||||
Section 4.06 |
Third-Party Beneficiaries | E-13 | ||||
Section 4.07 |
Governing Law | E-13 | ||||
Section 4.08 |
Jurisdiction; WAIVER OF JURY TRIAL | E-13 | ||||
Section 4.09 |
Specific Performance | E-13 | ||||
Section 4.10 |
Entire Agreement | E-13 | ||||
Section 4.11 |
Severability | E-14 | ||||
Section 4.12 |
Table of Contents, Headings and Captions | E-14 | ||||
Section 4.13 |
Counterparts | E-14 | ||||
Section 4.14 |
Subsequent Acquisition of Securities | E-14 | ||||
Section 4.15 |
No Recourse | E-14 |
if to Pubco, to: |
with a copy (which shall not constitute notice) to: | |
Bakkt Holdings, Inc. | Wilson Sonsini Goodrich & Rosati, P.C. | |
5900 Windward Parkway, Suite 450 | 900 S. Capital of Texas Hwy, Las Cimas IV, Ste 500 | |
Alpharetta, GA 30005 | Austin, Texas 78746 | |
Attention: General Counsel | Attention: J. Matthew Lyons | |
E-mail: marc.dannuzio@bakkt.com |
E-mail: mlyons@wsgr.com | |
if to the Sponsor, to: |
with a copy (which shall not constitute notice) to: | |
Victory Park Management, LLC | White & Case LLP | |
c/o VPC Impact Acquisition Holdings Sponsor, LLC | 111 South Wacker Drive, Suite 5100 | |
150 North Riverside Plaza, Suite 5200 | Chicago, Illinois 60606 | |
Chicago, Illinois 60606 | Attention: Raymond Bogenrief | |
Attention: Scott Zemnick | Facsimile: (312) 881-5450 | |
Facsimile: (312) 701-0794 |
E-mail: Raymond.Bogenrief@whitecase.com | |
E-mail: szemnick@vpcadvisors.com |
if to any Bakkt Equity Holder, to: the address of such Bakkt Equity Holder set forth on its signature page hereto. |
PUBCO | ||
BAKKT HOLDINGS, INC. | ||
By: | | |
Name: | ||
Title: |
BAKKT EQUITY HOLDER | ||
[●] | ||
By: | | |
Name: | ||
Title: |
Address for Notices : | ||
| ||
| ||
| ||
Attention: | | |
Facsimile: | | |
E-mail: |
|
SPONSOR | ||
VPC IMPACT ACQUISITION HOLDINGS SPONSOR, LLC | ||
By: | Victory Park Management, LLC | |
Title: | Manager | |
By: | | |
Name: | Scott Zemnick | |
Title: | Authorized Signatory |
TRANSFEROR | ||
Print Name: |
| |
By: | | |
Name: | | |
Title: | |
TRANSFEREE | ||
Print Name: |
| |
By: | | |
Name: | | |
Title: | | |
Address for Notices : | ||
| ||
| ||
| ||
Attention: | | |
Facsimile: | | |
E-mail: |
|
Page |
||||||
ARTICLE I INTRODUCTORY MATTERS |
F-2 | |||||
Section 1.01 |
Defined Terms | F-2 | ||||
Section 1.02 |
Construction | F-7 | ||||
ARTICLE II CORPORATE GOVERNANCE MATTERS |
F-7 | |||||
Section 2.01 |
Election of Directors | F-7 | ||||
Section 2.02 |
Committees | F-8 | ||||
Section 2.03 |
Independent Directors | F-8 | ||||
Section 2.04 |
Compensation; Reimbursement of Expenses | F-8 | ||||
Section 2.05 |
Indemnification | F-8 | ||||
Section 2.06 |
D&O Insurance | F-9 | ||||
Section 2.07 |
Information Sharing | F-9 | ||||
Section 2.08 |
Confidentiality | F-9 | ||||
ARTICLE III RESTRICTIONS ON TRANSFER |
F-9 | |||||
Section 3.01 |
General Restrictions on Transfer | F-9 | ||||
Section 3.02 |
Permitted Transfers | F-10 | ||||
Section 3.03 |
Miscellaneous Provisions Relating to Transfers. | F-10 | ||||
ARTICLE IV GENERAL PROVISIONS |
F-11 | |||||
Section 4.01 |
Termination | F-11 | ||||
Section 4.02 |
Notices | F-11 | ||||
Section 4.03 |
Amendment; Waiver | F-12 | ||||
Section 4.04 |
Further Assurances | F-12 | ||||
Section 4.05 |
Assignment | F-12 | ||||
Section 4.06 |
Third-Party Beneficiaries | F-13 | ||||
Section 4.07 |
Governing Law | F-13 | ||||
Section 4.08 |
Jurisdiction; WAIVER OF JURY TRIAL | F-13 | ||||
Section 4.09 |
Specific Performance | F-13 | ||||
Section 4.10 |
Entire Agreement | F-13 | ||||
Section 4.11 |
Severability | F-13 | ||||
Section 4.12 |
Table of Contents, Headings and Captions | F-14 | ||||
Section 4.13 |
Counterparts | F-14 | ||||
Section 4.14 |
Subsequent Acquisition of Securities | F-14 | ||||
Section 4.15 |
No Recourse | F-14 |
if to Pubco, to: | ||
Bakkt Holdings, Inc. | ||
5900 Windward Parkway, Suite 450 | ||
Alpharetta, GA 30005 |
Attention: | General Counsel | |
E-mail: |
marc.dannunzio@bakkt.com | |
with a copy (which shall not constitute notice) to: | ||
Wilson Sonsini Goodrich & Rosati, P.C. | ||
900 S. Capital of Texas Hwy, Las Cimas IV, Ste 500 | ||
Austin, Texas 78746 | ||
Attention: | J. Matthew Lyons | |
E-mail: |
mlyons@wsgr.com |
if to the Sponsor, to: | ||
Victory Park Management, LLC | ||
c/o VPC Impact Acquisition Holdings Sponsor, LLC | ||
150 North Riverside Plaza, Suite 5200 | ||
Chicago, Illinois 60606 | ||
Attention: | Scott Zemnick | |
Facsimile: | (312) 701-0794 | |
E-mail: |
szemnick@vpcadvisors.com | |
with a copy (which shall not constitute notice) to: | ||
White & Case LLP | ||
111 South Wacker Drive, Suite 5100 | ||
Chicago, Illinois 60606 | ||
Attention: | Raymond Bogenrief | |
Facsimile: | (312) 881-5450 | |
E-mail: |
Raymond.Bogenrief@whitecase.com | |
if to any Bakkt Equity Holder, to: the address of such Bakkt Equity Holder set forth on its signature page hereto. |
PUBCO : | ||
BAKKT HOLDINGS, INC. | ||
By: | | |
Name: | ||
Title: |
BAKKT EQUITY HOLDER | ||
[•] | ||
By: | | |
Name: | ||
Title: |
Address for Notices: | ||
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Attention: | | |
Facsimile: | | |
E-mail: |
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SPONSOR : | ||
VPC IMPACT ACQUISITION HOLDINGS SPONSOR, LLC | ||
By: | Victory Park Management, LLC | |
Title: | Manager | |
By: | | |
Name: | Scott Zemnick | |
Title: | Authorized Signatory |
TRANSFEROR | ||
Print Name: | | |
By: | | |
Name: | | |
Title: | |
TRANSFEREE : | ||
Print Name: | | |
By: | | |
Name: | | |
Title: | | |
Address for Notices : | ||
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Attention: | | |
Facsimile: | | |
E-mail: |
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Page |
||||||
ARTICLE I DEFINITIONS |
G-1 | |||||
Section 1.1 |
Definitions | G-1 | ||||
ARTICLE II DETERMINATION OF CERTAIN REALIZED TAX BENEFIT |
G-8 | |||||
Section 2.1 |
Basis Adjustment | G-8 | ||||
Section 2.2 |
Tax Benefit Schedule | G-8 | ||||
Section 2.3 |
Procedures, Amendments | G-8 | ||||
ARTICLE III TAX BENEFIT PAYMENTS |
G-9 | |||||
Section 3.1 |
Payments | G-9 | ||||
Section 3.2 |
No Duplicative Payments | G-10 | ||||
Section 3.3 |
Pro Rata |
G-10 | ||||
ARTICLE IV TERMINATION |
G-10 | |||||
Section 4.1 |
Early Termination and Acceleration Event | G-10 | ||||
Section 4.2 |
Early Termination Notice | G-11 | ||||
Section 4.3 |
Payment upon Early Termination | G-12 | ||||
ARTICLE V SUBORDINATION AND LATE PAYMENTS |
G-12 | |||||
Section 5.1 |
Subordination | G-12 | ||||
Section 5.2 |
Late Payments by the Corporate Taxpayer | G-12 | ||||
ARTICLE VI NO DISPUTES; CONSISTENCY; COOPERATION |
G-13 | |||||
Section 6.1 |
Participation in the Corporate Taxpayer’s and OpCo’s Tax Matters | G-13 | ||||
Section 6.2 |
Consistency | G-13 | ||||
Section 6.3 |
Cooperation | G-13 | ||||
ARTICLE VII MISCELLANEOUS |
G-14 | |||||
Section 7.1 |
Notices | G-14 | ||||
Section 7.2 |
Counterparts | G-14 | ||||
Section 7.3 |
Entire Agreement; No Third Party Beneficiaries | G-14 | ||||
Section 7.4 |
Governing Law | G-14 | ||||
Section 7.5 |
Severability | G-14 | ||||
Section 7.6 |
Successors; Assignment; Amendments; Waivers | G-15 | ||||
Section 7.7 |
Titles and Subtitles | G-15 | ||||
Section 7.8 |
Resolution of Disputes | G-15 | ||||
Section 7.9 |
Reconciliation | G-16 | ||||
Section 7.10 |
Withholding | G-16 | ||||
Section 7.11 |
Admission of the Corporate Taxpayer into a Consolidated Group; Transfers of Corporate Assets | G-17 | ||||
Section 7.12 |
Confidentiality | G-17 | ||||
Section 7.13 |
Change in Law | G-18 | ||||
Section 7.14 |
LLC Agreement | G-18 | ||||
Section 7.15 |
Independent Nature of TRA Parties’ Rights and Obligations | G-18 |
Term |
Section | |
Acceleration Event Agreement |
Section 4.1(b) Preamble | |
Amended Schedule |
Section 2.3 | |
Class A Common Stock |
Recitals | |
Code |
Recitals | |
Common Units |
Recitals | |
Corporate Taxpayer |
Preamble | |
Early Termination Effective Date |
Section 4.2 | |
Early Termination Notice |
Section 4.2 | |
Early Termination Payment |
Section 4.2 | |
Early Termination Schedule |
Section 4.3(b) | |
Exchange Basis Schedule |
Section 2.1 | |
Expert Interest Amount |
Section 7.9 Section 3.1(b) | |
Material Objection Notice |
Section 4.2 | |
Net Tax Benefit |
Section 3.1(b) | |
Objection Notice |
Section 2.3(a) | |
Other Tax Receivable Obligations |
Section 3.3(c) | |
Reconciliation Dispute |
Section 7.9 | |
Reconciliation Procedures |
Section 2.3(a) | |
Senior Obligations |
Section 5.1 | |
Tax Benefit Payment |
Section 3.1(b) | |
Tax Benefit Schedule |
Section 2.2 | |
TRA Party |
Preamble |
1 |
NTD: Figure to be included in the execution version. |
BAKKT HOLDINGS, INC. | ||
By: | | |
Name: | | |
Title: | |
TRA PARTIES |
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Name: |
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Name: |
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Name: |
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Name: |
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Name: |
COMPANY : | ||
BAKKT HOLDINGS, INC. | ||
By: | | |
Name: | | |
Title: | | |
STOCKHOLDER : | ||
INTERCONTINENTAL EXCHANGE HOLDINGS, INC. | ||
By: | | |
Name: | | |
Title: | |
B-1-2 |
Page |
||||||
ARTICLE I DEFINITIONS AND DETERMINATION OF VALUATION |
I-2 | |||||
Section 1.1 |
Definitions | I-2 | ||||
ARTICLE II ORGANIZATIONAL MATTERS |
I-12 | |||||
Section 2.1 |
Formation of Company | I-12 | ||||
Section 2.2 |
Limited Liability Company Agreement | I-12 | ||||
Section 2.3 |
Name | I-12 | ||||
Section 2.4 |
Purpose | I-12 | ||||
Section 2.5 |
Principal Office; Registered Office | I-12 | ||||
Section 2.6 |
Term | I-13 | ||||
Section 2.7 |
No State-Law Partnership |
I-13 | ||||
Section 2.8 |
Fiscal Year | I-13 | ||||
Section 2.9 |
Powers of the Company | I-13 | ||||
Section 2.10 |
Members; Reclassification; Admission of New Members | I-13 | ||||
Section 2.11 |
Resignation | I-13 | ||||
Section 2.12 |
Investment Representations of Members | I-13 | ||||
Section 2.13 |
Schedule of Members | I-14 | ||||
ARTICLE III CAPITAL CONTRIBUTIONS |
I-14 | |||||
Section 3.1 |
Common Units | I-14 | ||||
Section 3.2 |
Authorization and Issuance of Additional Units | I-15 | ||||
Section 3.3 |
Non-certificated Units; Certificates; Lost, Stolen or Destroyed Certificates; Registration and Transfer of Common Units |
I-16 | ||||
Section 3.4 |
Purchase or Redemption of Shares of Class A Common Stock | I-17 | ||||
Section 3.5 |
Bakkt Pubco Equity Plans | I-17 | ||||
Section 3.6 |
Registered Members | I-17 | ||||
Section 3.7 |
Capital Accounts | I-17 | ||||
Section 3.8 |
Negative Capital Accounts | I-17 | ||||
Section 3.9 |
No Withdrawal | I-17 | ||||
Section 3.10 |
Loans From Members | I-17 | ||||
ARTICLE IV DISTRIBUTIONS AND ALLOCATIONS |
I-17 | |||||
Section 4.1 |
Distributions | I-17 | ||||
Section 4.2 |
Allocations | I-18 | ||||
Section 4.3 |
Special Allocations | I-18 | ||||
Section 4.4 |
Tax Allocations | I-20 | ||||
Section 4.5 |
Indemnification and Reimbursement for Payments on Behalf of a Member | I-21 | ||||
ARTICLE V COVENANTS |
I-21 | |||||
Section 5.1 |
Records and Accounting | I-21 | ||||
Section 5.2 |
Transmission of Communications | I-22 | ||||
Section 5.3 |
Governmental Consents and Filings | I-22 | ||||
ARTICLE VI MANAGEMENT |
I-22 | |||||
Section 6.1 |
Authority of the Managing Member | I-22 | ||||
Section 6.2 |
Actions of the Managing Member | I-23 | ||||
Section 6.3 |
Compensation | I-23 | ||||
Section 6.4 |
Expenses | I-23 | ||||
Section 6.5 |
Delegation of Authority | I-23 | ||||
Section 6.6 |
Officers | I-23 | ||||
Section 6.7 |
Purchase of Equity Securities | I-24 | ||||
Section 6.8 |
Limitation of Liability | I-24 | ||||
ARTICLE VII RIGHTS AND OBLIGATIONS OF MEMBERS |
I-25 | |||||
Section 7.1 |
Limitation of Liability of Members and Managing Member | I-25 | ||||
Section 7.2 |
Lack of Authority | I-25 | ||||
Section 7.3 |
No Right of Partition | I-25 |
Page |
||||||
Section 7.4 |
Members Right to Act | I-25 | ||||
Section 7.5 |
Outside Activities of the Managing Member | I-26 | ||||
ARTICLE VIII TAX MATTERS |
I-26 | |||||
Section 8.1 |
Preparation of Tax Returns | I-26 | ||||
Section 8.2 |
Tax Elections | I-26 | ||||
Section 8.3 |
Tax Classifications | I-27 | ||||
Section 8.4 |
Tax Controversies | I-27 | ||||
Section 8.5 |
Certain Actions | I-28 | ||||
Section 8.6 |
Merger Agreement Conflicts | I-28 | ||||
ARTICLE IX RESTRICTIONS ON TRANSFER OF UNITS; CERTAIN TRANSFERS |
I-28 | |||||
Section 9.1 |
Transfers by Members | I-28 | ||||
Section 9.2 |
Market Stand-Off |
I-29 | ||||
Section 9.3 |
Restricted Units Legend | I-29 | ||||
Section 9.4 |
Further Restrictions | I-30 | ||||
Section 9.5 |
Transfer | I-30 | ||||
Section 9.6 |
Assignee’s Rights | I-30 | ||||
Section 9.7 |
Admissions, Resignations and Removals | I-31 | ||||
Section 9.8 |
Admission of Assignees as Substitute Members | I-31 | ||||
Section 9.9 |
Resignation and Removal of Members | I-31 | ||||
Section 9.10 |
Section 1445 and 1446(f) Withholding | I-31 | ||||
ARTICLE X DISSOLUTION AND LIQUIDATION |
I-32 | |||||
Section 10.1 |
Dissolution | I-32 | ||||
Section 10.2 |
Liquidation and Termination | I-32 | ||||
Section 10.3 |
Deferment; Distribution in Kind | I-33 | ||||
Section 10.4 |
Cancellation of Certificate | I-33 | ||||
Section 10.5 |
Reasonable Time for Winding Up | I-33 | ||||
Section 10.6 |
Termination | I-33 | ||||
Section 10.7 |
Return of Capital | I-33 | ||||
Section 10.8 |
Restrictions on Termination Transactions | I-33 | ||||
ARTICLE XI LIABILITY AND INDEMNIFICATION |
I-34 | |||||
Section 11.1 |
Liability of Members | I-34 | ||||
Section 11.2 |
Indemnification | I-35 | ||||
ARTICLE XII GENERAL PROVISIONS |
I-36 | |||||
Section 12.1 |
Amendments | I-36 | ||||
Section 12.2 |
Confidentiality | I-36 | ||||
Section 12.3 |
Title to Company Assets | I-37 | ||||
Section 12.4 |
Notices | I-37 | ||||
Section 12.5 |
Binding Effect | I-38 | ||||
Section 12.6 |
Creditors | I-38 | ||||
Section 12.7 |
Waiver | I-38 | ||||
Section 12.8 |
Counterparts | I-38 | ||||
Section 12.9 |
Governing Law; Waiver of Jury Trial | I-38 | ||||
Section 12.10 |
Severability | I-38 | ||||
Section 12.11 |
Further Action | I-39 | ||||
Section 12.12 |
Delivery by Facsimile or Electronic Transmission | I-39 | ||||
Section 12.13 |
Offset | I-39 | ||||
Section 12.14 |
Entire Agreement | I-39 | ||||
Section 12.15 |
Remedies | I-39 | ||||
Section 12.16 |
Descriptive Headings; Interpretation | I-39 | ||||
Section 12.17 |
Attorneys’ Fees | I-40 | ||||
Section 12.18 |
Representation of the Company by Shearman & Sterling LLP | I-40 | ||||
Section 12.19 |
Amendment and Restatement of Prior LLC Agreement | I-40 |
BAKKT OPCO HOLDINGS, LLC | ||
By: |
||
Name: |
||
Title: |
MANAGING MEMBER: |
BAKKT HOLDINGS, INC. | ||
By: |
||
Name: |
||
Title: |
MEMBER | ||
Name of Member | ||
By: |
||
Name: |
||
Title: |
RESTRICTED PARTY : | ||
INTERCONTINENTAL EXCHANGE HOLDINGS, INC. | ||
By: | /s/ Andrew Surdykowski | |
Name: | Andrew Surdykowski | |
Title: | General Counsel | |
Number & Type of Subject Bakkt Opco Units: 400,000,000 Class A Voting Units 115,000,000 Class B Voting Units 237,327,456 Class C Voting Units Address for Notices: Intercontinental Exchange Holdings, Inc. 5660 New Northside Drive Atlanta, Georgia 30328 Attention: General Counsel Email: legal-notices@theice.com |
VIH : | ||
VPC IMPACT ACQUISITION HOLDINGS | ||
By: | /s/ Gordon Watson | |
Name: | Gordon Watson | |
Title: | President and Chief Executive Officer |
BAKKT OPCO : | ||
BAKKT HOLDINGS, LLC | ||
By: | /s/ Marc D’Annunzio | |
Name: | Marc D’Annunzio | |
Title: | General Counsel |
MEMBER: | ||
INTERCONTINENTAL EXCHANGE HOLDINGS, INC. | ||
By: | | |
Name: | | |
Title: | | |
Date: | |
MEMBER: |
Print Member Name |
By: |
Name: |
Title (if applicable): |
Date: |
| ||
By: | | |
Name: | ||
Title: | ||
Address for Notices: | ||
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Attn: | | |
Facsimile: | | |
Email: | |
Exhibit No. |
Description | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
† | Certain of the exhibits and schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(a)(5). The Registrant agrees to furnish a copy of all omitted exhibits and schedules to the SEC upon its request. |
* | Previously filed. |
(a) | (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(i) | To include any prospectus required by Section 10(a)(3) of the Securities Act; |
(ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “ Calculation of Registration Fee |
(iii) | To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. |
(2) | That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide |
(3) | To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
(4) | That, for the purpose of determining liability under the Securities Act to any purchaser, if the registrant is subject to Rule 430C, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness; provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use. |
(5) | That, for the purpose of determining any liability under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: |
(i) | Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
(ii) | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
(iii) | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and |
(iv) | Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser. |
(6) | That prior to any public reoffering of the securities registered hereunder through use of a prospectus which is a part of this registration statement, by any person or party who is deemed to be an underwriter within the meaning of Rule 145(c), the issuer undertakes that such reoffering prospectus will contain the information called for by the applicable registration form with respect to reofferings by persons who may be deemed underwriters, in addition to the information called for by the other items of the applicable form. |
(7) | That every prospectus: (i) that is filed pursuant to the immediately preceding paragraph, or (ii) that purports to meet the requirements of Section 10(a)(3) of the Securities Act and is used in connection with an offering of securities subject to Rule 415, will be filed as a part of an amendment to the registration statement and will not be used until such amendment is effective, and that, for purposes of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. |
(8) | Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the undersigned pursuant to the foregoing provisions, or otherwise, the undersigned has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the undersigned of expenses incurred or paid by a director, officer or controlling person of the undersigned in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the undersigned will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. |
(b) | The undersigned registrant hereby undertakes to respond to requests for information that is incorporated by reference into the proxy statement/prospectus pursuant to Items 4, 10(b), 11, or 13 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request. |
(c) | The undersigned registrant hereby undertakes to supply by means of a post-effective amendment all information concerning a transaction, and the company being acquired involved therein, that was not the subject of and included in the registration statement when it became effective. |
VPC IMPACT ACQUISITION HOLDINGS | ||
By: | /s/ John Martin | |
Name: | John Martin | |
Title: | Chief Executive Officer |
Signature |
Title |
Date | ||
/s/ John Martin John Martin |
Chief Executive Officer and Chairman ( Principal Executive Officer |
August 18, 2021 | ||
/s/ Gordon Watson Gordon Watson |
Chief Operating Officer and President | August 18, 2021 | ||
/s/ Olibia Stamatoglou Olibia Stamatoglou |
Chief Financial Officer ( Principal Financial and Accounting Officer |
August 18, 2021 | ||
* Adrienne Harris |
Director | August 18, 2021 | ||
* Kai Schmitz |
Director | August 18, 2021 | ||
* Kurt Summers |
Director | August 18, 2021 |
*By: | /s/ John Martin | |
Attorney-in-Fact |