8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): January 27, 2023

 

FISCALNOTE HOLDINGS, INC.

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-39672	88-3772307
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
1201 Pennsylvania Avenue NW 6th Floor
Washington, District of Columbia		20004
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (202) 793-5300

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A common stock, par value $0.0001 per share	NOTE	The New York Stock Exchange
Warrants to purchase one share of Class A common stock, each at an exercise price of $11.50 per share	NOTE.WS	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01 Entry into a Material Definitive Agreement.

Purchase Agreement

On January 27, 2023, FiscalNote Holdings, Inc., a Delaware corporation (the “Company”), entered into a Sale and Purchase Agreement (the “Purchase Agreement”) with the persons and entities listed on Schedule 1 to the Purchase Agreement (the “Sellers”). Pursuant to the Purchase Agreement, on January 27, 2023 (the “Closing Date”), the Company purchased from the Sellers all of the issued and outstanding share capital of Dragonfly Eye Limited, a company incorporated in England (“Dragonfly”), for an aggregate purchase price of up to £26.5 million pounds sterling in value (the “Transaction”).

The aggregate purchase price consists of (i) £4.5 million pounds sterling in cash, (ii) £9.5 million pounds sterling in shares of the Company’s Class A Common Stock, par value $0.0001 per share (“Common Stock”), with an agreed upon value of £5.00 pounds sterling per share, and (iii) £9.0 million pounds sterling in aggregate principal amount of subordinated convertible promissory notes (“Convertible Notes”). The purchase price is subject to customary adjustment based on working capital adjustments and the amount of Dragonfly’s transaction expenses and net indebtedness that remain unpaid as of the Closing Date, and indemnification obligations for certain claims made following the Closing Date. All of such shares of Common Stock and Convertible Notes were issued only to eligible Sellers (the “Eligible Sellers”) in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided by Regulation S and Regulation D promulgated under the Securities Act.

Additionally, the Sellers are eligible to receive an additional payment from the Company of up to £3.5 million pounds sterling (the “Earnout”) based on the achievement by Dragonfly of U.S. GAAP revenue targets for 2023. In the event any part of the Earnout becomes payable, the Company may satisfy its payment obligations to the Sellers with cash or Common Stock having a deemed per share value equal to the volume weighted average price per share (“VWAP”) of Common Stock on a national securities exchange during the 30 consecutive trading day period ending December 30, 2023 or, if the Common Stock is not traded on a national securities exchange at such time, the per share value of the Common Stock will be determined by an independent appraiser.

The Purchase Agreement contains customary warranties and covenants of the Company, on one hand, and the Sellers, on the other hand, including, among others, restrictive covenants applicable to selected Sellers involved in Dragonfly’s business. The Sellers’ liability to the Company for breaches of their warranties and covenants in the Purchase Agreement are subject to certain specified limitations, including, among other things, limitations on the period during which the Company may make claims against the Sellers and limitations on the amounts for which the Sellers may be liable.

The warranties and covenants set forth in the Purchase Agreement were made solely between the parties to the Purchase Agreement and may be subject to important qualifications and limitations agreed to by the parties in connection with negotiating its terms, including being qualified by confidential disclosures exchanged between the parties in connection with the execution of the Purchase Agreement. Moreover, the warranties may be subject to a contractual standard of materiality that may be different from what may be viewed as material to investors or securityholders, or may have been used for the purpose of allocating risk between the parties to the Purchase Agreement rather than establishing matters as facts. Information concerning the subject matter of the warranties may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

For the foregoing reasons, no person should rely on the warranties as statements of factual information at the time they were made or otherwise.

Subordinated Convertible Promissory Notes

On the Closing Date, the Company issued approximately £9.0 million pounds in aggregate principal amount of Convertible Notes to Eligible Sellers in the Transaction. On the Closing Date, the Company also entered into a Subordination Agreement (the “Subordination Agreement”) with Runway Growth Finance Corp., certain of the Company’s subsidiaries (the “Borrowers”) and the representative of the Eligible Sellers. Pursuant to the Subordination Agreement, the Convertible Notes will be subordinated to the Company’s and the Borrowers’ respective obligations under that certain Second Amended and Restated Credit and Guaranty Agreement dated as of July 29, 2022 (as the same may be further amended, supplemented or otherwise modified from time to time) and related senior loan documents (the “Senior Loans”).

The Convertible Notes bear interest at a rate of 8.0% per annum payable in kind in arrears. During the term of each Convertible Note, the principal amount thereof and accrued interest thereon will be convertible into Common Stock in the following scenarios:

•beginning on the 18-month anniversary of the date of issuance (the “Issuance Date”), a holder may convert, at its option, at the initial conversion price of $10.00 per share of Common Stock (the “Conversion Price”);

•beginning on the 18-month anniversary of the Issuance Date, the holders of at least a majority of the aggregate outstanding principal amount of the Convertible Notes may elect to convert the aggregate principal amount of all Convertible Notes, and accrued interest thereon, into Common Stock at the Conversion Price;

•subject to certain limitations, if the VWAP of Common Stock during any five consecutive trading day period following August 2, 2023 exceeds $11.50 per share, the Company may elect to convert all of the Convertible Notes into Common Stock at the Conversion Price; and

•after August 2, 2023, the Company may elect to convert the Convertible Notes into Common Stock at a price per share equal to the current VWAP of the Common Stock.

The Conversion Price is subject to adjustment in the event of any stock dividend, stock split, reverse stock split, combination or other similar recapitalization with respect to Common Stock. The Convertible Notes and the shares of the Company’s Common Stock issuable upon conversion thereof may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from registration requirements.

The Company may prepay the Convertible Notes without penalty at any time in connection with a refinancing, restructuring, or similar transaction involving the Senior Loans. The Convertible Notes will mature on the 5 year anniversary following the Issuance Date. Conversion of the full initial principal amount of the Convertible Notes at the Conversion Price would result in the issuance of approximately 900,000 shares of Common Stock, which amount is subject to increase by any interest paid in kind during the term of the Convertible Notes.

The Convertible Notes include customary representations, warranties and covenants and set forth standard events of default upon which the Convertible Notes may be declared immediately due and payable.

The foregoing descriptions of the Purchase Amendment and the Convertible Notes are not complete and are qualified in their entirety by reference to the Purchase Agreement and the

Convertible Notes, respectively, copies of which will be filed with the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2023.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

(a) The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

The information contained in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.

Item 7.01. Regulation FD Disclosure.

On January 27, 2023, the Company issued a press release announcing the entry into the Purchase Agreement and completion of the transactions contemplated thereby. This press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information in Item 7.01 of this Current Report on Form 8-K and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall any of it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits. The following exhibits are furnished with this report:

99.1	Press release dated January 27, 2023, concerning the acquisition of Dragonfly Eye Limited
104	Cover Page Interactive Data File (formatted as Inline XBRL).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			FISCALNOTE HOLDINGS, INC.
Date:	January 27, 2023	By:	/s/ Jon Slabaugh
			Name: Jon Slabaugh Title: Chief Financial Officer

EX-99.PRESSRELEASE

FISCALNOTE ANNOUNCES ACQUISITION OF DRAGONFLY,

A LEADING GEOPOLITICAL DATA AND SECURITY INTELLIGENCE COMPANY FOR BUSINESS RISK DECISION-MAKERS AT BLUE-CHIP ORGANIZATIONS AROUND THE WORLD

Known for its Subscription Security Intelligence and Analysis Service SaaS Platform, Dragonfly Empowers Its Expansive, Diverse Base of Customers with Actionable Intelligence, Data, and Advisory for Mission-Critical Solutions

Dragonfly Broadens FiscalNote’s Geopolitical & Marketplace Portfolio, Provides High-Growth Annual Recurring Revenue, & Expands Global Customer Footprint

WASHINGTON, D.C. - Friday, January 27, 2023 – FiscalNote Holdings, Inc. (NYSE: NOTE) ("FiscalNote"), a leading AI-driven enterprise SaaS technology provider of global policy and market intelligence, today announced the acquisition of Dragonfly Eye Ltd. (“Dragonfly”), a UK-based geopolitical and security intelligence provider of actionable data and analysis delivered through Dragonfly’s SaaS-based, proprietary Security Intelligence and Analysis Service (SIAS) subscription platform and API.

With offices in London, New York, and Singapore - Dragonfly provides security, crisis management, and risk professionals at leading multinational companies, financial institutions, public sector entities, and NGOs with real-time mission-critical intelligence about potential and ongoing security risks to operations, early warning detection and forecasting to anticipate threats, risk rating systems around potential major disruptions, and access to key analysts and embedded intelligence. Dragonfly’s flagship SIAS platform is used by nearly half of the top 30 companies in the FTSE-500, and by 90% of the world’s top 11 banks.

“FiscalNote’s ambitious acquisition strategy continues to be fueled by a robust pipeline, with Dragonfly becoming our third announced M&A deal since our public listing,” said Tim Hwang, Chairman, CEO, and Co-founder, FiscalNote. “The addition of Dragonfly will power FiscalNote’s promising organic and inorganic revenue growth, broaden our global customer base, and provide significant upsell and cross-sell opportunities. Dragonfly’s recession-resilient and forward-looking solutions will help our customers advance business objectives while protecting their people, operations, assets, and brand with precision, leading to greater confidence and stability in a time of tumult and crises in every corner of the world.”

Dragonfly serves a global customer base facing unprecedented threats and risks to business operations and people, which can quickly become disruptive board-level and material concerns, requiring intensive and persistent monitoring and evaluation. These include ongoing supply chain disruptions, continuing COVID-19 outbreaks, rising terror incidents, surging cybercrime attacks and damage, and an increased focus on corporates by political activists. Dragonfly provides solutions by offering a forward-looking view of global risks and threats for strategic and tactical decision-making, opportunity identification, and risk mitigation. Dragonfly tracks hostile intent and sentiment,

extremist propaganda, criminal threats, exposure of sensitive or privileged information, and other risks to customers from a range of actors - from fixed individuals to terrorist groups.

Dragonfly’s robust and comprehensive suite of market-leading products and services include:

•Security Intelligence & Analysis Service (SIAS): the essential subscription-based SaaS platform for corporate security and crisis management professionals, featuring all-source intelligence from the widest range of open and human sources, surface and dark web, and third-party datasets which are fed into proprietary methodology to produce Risk Ratings, identify underlying trends, and formulate risk intelligence strategies.

•TerrorismTracker: the definitive, industry-leading databank for counter-terrorism professionals, tracking and analyzing almost 70,000 incidents and plots and updated daily with activity that is geolocated, summarized, and indexed by 17 different categories.

•Protective Intelligence and Political Risk Advisory: customized services safeguard people, organizations, events, brands, and assets from threats by adding a layer of investigative, counter-intelligence, and cyber security methods, while also forecasting political risks in emerging markets to support investor decision-making and security evaluation.

The addition of Dragonfly provides a number of benefits to FiscalNote’s business and customers:

•a highly successful, recession-resilient, and stable subscription-driven business - a long-term growth compounder fueled by double-digit, year-over-year growth; an average customer lifespan of more than three years; a net customer retention rate consistently exceeding 100 percent; and a geographic- and industry-diverse global base of blue-chip clients.

•upsell and cross-sell opportunities that expand and amplify FiscalNote’s product toolkit - bolstering FiscalNote’s ‘land-and-expand’ strategy & driving further revenue opportunities.

•development of an enhanced offering combining FiscalNote’s Predata platform of security intelligence for public sector clients with Dragonfly’s expertise in security and risk intelligence for private, commercial sector clients.

Dragonfly has 2022 unaudited revenue of approximately ₤6m GBP, the majority of which is annual recurring revenue (ARR). The company is accretive to FiscalNote's Adjusted EBITDA upon acquisition.

“Dragonfly supplements and strengthens the robust suite of turnkey products within our Geopolitical & Market Intelligence portfolio, allowing FiscalNote to expand into a strategic adjacent market, reach new customer personas in a rapidly growing, in-demand space, and provide even more value for the world’s most important decision-makers,” said FiscalNote’s President & Chief Operating Officer, Josh Resnik. “Dragonfly’s security-based SaaS platform aligns with our existing products by offering tactical, actionable solutions in operational planning for corporate security leaders who are an increasingly strategic and essential function within the enterprise.”

“We set out to find a partner who shared our vision for technology-driven, client-focused, actionable, and forward-looking intelligence, and we are delighted to be joining FiscalNote, which so closely mirrors our approach and aspirations,” said Dragonfly’s CEO, David Claridge. “This combination significantly strengthens our ability to build upon our established reputation as a geopolitical and security risk intelligence service with FiscalNote’s technological expertise and exceptional stable of businesses focused on geopolitical and market intelligence.”

FiscalNote’s acquisition of Dragonfly closed with a transaction multiple in line with the company's historical acquisitions. Cowen acted as exclusive financial advisor and BCPL acted as exclusive legal advisor to Dragonfly with respect to the transaction.

About FiscalNote
FiscalNote (NYSE: NOTE) is a leading technology provider of global policy and market intelligence. By uniquely combining AI technology, actionable data, and expert and peer insights, FiscalNote empowers customers to manage policy, address regulatory developments, and mitigate global risk. Since 2013, FiscalNote has pioneered technology that delivers mission-critical insights and the tools to turn them into action. Home to CQ, Equilibrium, FrontierView, Oxford Analytica, VoterVoice, and many other industry-leading brands, FiscalNote serves more than 5,000 customers worldwide with global offices in North America, Europe, Asia, and Australia. To learn more about FiscalNote and its family of brands, visit FiscalNote.comand follow @FiscalNote.

Forward-Looking Statements

Certain statements in this press release may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or FiscalNote’s future financial or operating performance. For example, statements regarding FiscalNote’s financial outlook for future periods, expectations regarding profitability, capital resources, and anticipated growth in the industry in which FiscalNote operates are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “pro forma,” “may,” “should,” “could,” “might,” “plan,” “possible,” “project,” “strive,” “budget,” “forecast,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “believe,” “predict,” “potential” or “continue,” or the negatives of these terms or variations of them or similar terminology. Such forward-looking statements are subject to risks, uncertainties, and other important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

Factors that may impact such forward-looking statements include those discussed under the caption "Risk Factors" in FiscalNote’s Current Report on Form 8-K filed with the SEC on August 2, 2022 and other filings with the SEC. These forward-looking statements are based upon estimates and assumptions that, while considered reasonable by FiscalNote and its management, are inherently uncertain. Nothing in this press release should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. You should not place undue reliance on forward-looking statements, which speak only as of the date they are made.

FiscalNote undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Contact:

Media

Nicholas Graham

FiscalNote

press@fiscalnote.com

Investors

Sara Buda

FiscalNote

IR@fiscalnote.com

Source: FiscalNote

XML

Document And Entity Information	Jan. 27, 2023
Document Information [Line Items]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Jan. 27, 2023
Entity Registrant Name	FISCALNOTE HOLDINGS, INC.
Entity Central Index Key	0001823466
Entity Emerging Growth Company	true
Securities Act File Number	001-39672
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	88-3772307
Entity Address, Address Line One	1201 Pennsylvania Avenue NW
Entity Address, Address Line Two	6th Floor
Entity Address, City or Town	Washington
Entity Address, State or Province	DC
Entity Address, Postal Zip Code	20004
City Area Code	(202)
Local Phone Number	793-5300
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Entity Ex Transition Period	false
Class A Common Stock
Document Information [Line Items]
Title of 12(b) Security	Class A common stock, par value $0.0001 per share
Trading Symbol	NOTE
Security Exchange Name	NYSE
Warrants
Document Information [Line Items]
Title of 12(b) Security	Warrants to purchase one share of Class A common stock, each at an exercise price of $11.50 per share
Trading Symbol	NOTE.WS
Security Exchange Name	NYSE