UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
Amendment No. 1
(Mark One)
For the fiscal year ended
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| ||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including
area code:
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class: | Trading Symbol(s) | Name of Each Exchange on Which Registered: | ||
Units, each consisting of one share of Class A Common Stock and one-quarter of one Redeemable Warrant | FSRXU | The Nasdaq Stock Market LLC | ||
Warrants, each exercisable for one share of Class A Common Stock for $11.50 per share | FSRXW | The Nasdaq Stock Market LLC |
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
☒ | Smaller reporting company | |||||
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.
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
The aggregate market value of the Class A common
stock outstanding, other than shares held by persons who may be deemed affiliates of the registrant, computed by reference to the closing
price for the Class A common stock on June 30, 2021, as reported on the Nasdaq Capital Market was
$
As of March 29, 2022 there were
EXPLANATORY NOTE
This Amendment No.1 (the “Amendment No.1”) to the Annual Report on Form 10-K of FinServ Acquisition Corp. II (the “Company”) for the period ended December 31, 2021, originally filed with the Securities and Exchange Commission on March 29, 2022, is being filed solely to correct a typographical error with the issue date of the report provided by the Company’s independent auditor WithumSmith+Brown, PC. Pursuant to Rule 12b-15 promulgated under the Securities Exchange Act of 1934, as amended, we have repeated the entire text of Item 8 of the Form 10-K in this Amendment No. 1. However, there have been no changes to the text of such item other than the change in the date of the auditor’s report.
In addition, the Company is including in this Amendment No. 1 currently dated certifications from its Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 31.1 and 31.2 and Exhibits 32.1 and 32.2, respectively.
Except as expressly set forth above, this Amendment No. 1 speaks as of the original filing date of the Form 10-K, and does not reflect events that may have occurred subsequent to that date, nor does it modify or update in any way disclosure made in the original Form 10-K.
TABLE OF CONTENTS
PAGE | ||
Item 8. | Financial Statements and Supplementary Data | 1 |
Item 15. | Exhibit and Financial Statement Schedules | 2 |
Item 16. | Form 10-K Summary | 2 |
i
PART II
Item 8. | Financial Statements and Supplementary Data. |
This information appears following Item 16 of this Amendment No.1 to the Annual Report on Form 10-K and is included herein by reference.
1
PART IV
Item 15. | Exhibit and Financial Statement Schedules. |
(a) | The following documents are filed as part of this Report: |
(1) | Financial Statements |
(2) | Financial Statement Schedules |
All financial statement schedules are omitted because they are not applicable or the amounts are immaterial and not required, or the required information is presented in the financial statements and notes beginning on F-1 on this Report.
(3) | Exhibits |
We hereby file as part of this Report the exhibits listed in the attached Exhibit Index. Exhibits which are incorporated herein by reference can be inspected on the SEC website at www.sec.gov.
Item 16. | Form 10-K Summary. |
Not applicable.
2
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of
FinServ Acquisition Corp. II
Opinion on the Financial Statements
We have audited the accompanying balance sheets of FinServ Acquisition Corp. II (the “Company”) as of December 31, 2021 and 2020, the related statements of operations, changes in stockholders’ equity and cash flows for the year ended December 31, 2021 and the period from November 23, 2020 (inception) through December 31, 2020, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the year ended December 31, 2021 and the period from November 23, 2020 (inception) through December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, if the Company is unable to raise additional funds to alleviate liquidity needs and complete a business combination by February 22, 2023 then the Company will cease all operations except for the purpose of liquidating. The liquidity condition and date for mandatory liquidation and subsequent dissolution raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
We have served as the Company’s auditor since 2020.
March 29, 2022
PCAOB ID
F-1
FINSERV ACQUISITION CORP. II
BALANCE SHEETS
December 31, 2021 | December 31, 2020 | |||||||
Assets: | ||||||||
Current Assets: | ||||||||
Cash | $ | $ | ||||||
Investment in Mutual Funds | ||||||||
Prepaid Expenses | ||||||||
Total current assets | ||||||||
Other noncurrent assets | ||||||||
Deferred offering costs | ||||||||
Cash and Investments held in Trust Account | ||||||||
Total assets | $ | $ | ||||||
Liabilities, Redeemable Common Stock and Stockholders’ Equity (Deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | $ | ||||||
Promissory note - related party | ||||||||
Total current liabilities | ||||||||
Warrant liability | ||||||||
Deferred underwriting fee | ||||||||
Total liabilities | ||||||||
Commitments and Contingencies (Note 6) | ||||||||
Common Stock subject to possible redemption, | ||||||||
Stockholders’ Equity (Deficit): | ||||||||
Preferred stock, $ | ||||||||
Class A common stock, $ | — | |||||||
Class B common stock, $ | ||||||||
Additional paid-in capital | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Total stockholders’ equity (deficit) | ( | ) | ||||||
Total Liabilities, Redeemable Common Stock and Stockholders’ Equity (Deficit) | $ | $ |
(1) |
The accompanying notes are an integral part of these financial statements.
F-2
FINSERV ACQUISITION CORP. II
STATEMENTS OF OPERATIONS
For the year ended December 31, 2021 | For the period from November 23, 2020 (Inception) to December 31, 2020 | |||||||
Formation and operating costs | $ | $ | ||||||
Loss from Operations | ( | ) | ( | ) | ||||
Other income (expense): | ||||||||
Interest earned on cash and marketable securities held in Trust Account | ||||||||
Offering costs allocated to warrants | ( | ) | ||||||
Change in fair value of warrant liability | ||||||||
Loss on investment in mutual funds | ( | ) | ||||||
Total other income (expense) | ||||||||
Net income (loss) | $ | $ | ( | ) | ||||
Basic and diluted weighted average shares outstanding, Class A common stock | ||||||||
Basic and diluted net income (loss) per share, Class A common stock | $ | $ | ||||||
Basic and diluted weighted average shares outstanding, Class B common stock(1) | ||||||||
Basic and diluted net income (loss) per share, Class B common stock | $ | $ | ( | ) |
(1) |
The accompanying notes are an integral part of these financial statements.
F-3
FINSERV ACQUISITION
CORP. II
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 2021 AND
PERIOD FROM NOVEMBER 23, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
Class A Common stock | Class B Common stock | Additional Paid-in | Accumulated | Total Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares(1) | Amount | Capital | Deficit | (Deficit) | ||||||||||||||||||||||
Balance as of November 23, 2020 (Inception) | $ | — | $ | $ | $ | $ | — | |||||||||||||||||||||
Issuance of Class B common stock to initial stockholders | — | — | $ | $ | — | |||||||||||||||||||||||
Net loss | — | — | — | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
Balance as of December 31, 2020 | $ | $ | $ | $ | ( | ) | $ | |||||||||||||||||||||
Sale of | — | — | — | |||||||||||||||||||||||||
Forfeiture of | — | — | ( | ) | ( | ) | — | — | ||||||||||||||||||||
Accretion of Class A common stock subject to possible redemption | — | — | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
Net income | — | — | — | |||||||||||||||||||||||||
Balance as of December 31, 2021 | $ | $ | $ | ( | ) | $ | ( | ) |
(1) |
The accompanying notes are an integral part of these financial statements.
F-4
FINSERV ACQUISITION CORP. II
STATEMENTS OF CASH FLOWS
For the year ended December 31, 2021 | For the period from November 23, 2020 (Inception) to December 31, 2020 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | $ | ( | ) | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Incorporation cost paid by Sponsor | ( | ) | ||||||
Interest earned on marketable securities held in trust account | ( | ) | ||||||
Offering costs allocated to warrants | ||||||||
Change in fair value of warrant liability | ( | ) | ||||||
Changes in operating assets and liabilities: | ||||||||
Prepaid assets | ( | ) | ||||||
Due to related party | ||||||||
Accrued expenses | ||||||||
Net cash used in operating activities | ( | ) | ( | ) | ||||
Cash Flows from Investing Activities: | ||||||||
Investment of cash in trust account | ( | ) | ||||||
Cash withdrawn from trust account to pay taxes | ||||||||
Net cash used in investing activities | ( | ) | ||||||
Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of founder shares | ||||||||
Proceeds from sale of units, net of underwriting discount | ||||||||
Proceeds from issuance of private placement warrants | ||||||||
Proceeds from (repayment of) promissory note – related party | ( | ) | ||||||
Payment of offering costs | ( | ) | ( | ) | ||||
Net cash provided by financing activities | ||||||||
Net change in cash and cash equivalents | ||||||||
Cash and cash equivalents, beginning of the period | ||||||||
Cash and cash equivalents, end of the period | $ | $ | ||||||
Cash, end of the period | $ | $ | ||||||
Investment in Mutual Funds, end of the period | ||||||||
Cash and cash equivalents, end of the period | $ | $ | ||||||
Supplemental disclosure of cash flow information from financing activity: | ||||||||
Deferred underwriters’ discount payable charged to additional paid-in capital | $ |
The accompanying notes are an integral part of these financial statements
F-5
FINSERV ACQUISITION CORP. II
NOTES TO FINANCIAL STATEMENTS
Note 1 — Organization and Business Operations
FinServ Acquisition Corp. II (the “Company”) is a newly organized blank check company incorporated as a Delaware corporation on November 23, 2020. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (“Business Combination”).
As of December 31, 2021, the Company had not commenced any operations. All activity through December 31, 2021 relates to the Company’s formation and the Initial Public Offering (“IPO”) which is described below, and, since the closing of the IPO, identifying a target company for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates non-operating income in the form of interest income from the proceeds derived from the IPO.
The registration statement for the Company’s
IPO was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on February 17, 2021 (the “Effective
Date”). On February 22, 2021, the Company consummated the IPO of
Simultaneously with the closing of the IPO, the
Company consummated the sale of
Transaction costs of the IPO amounted to $
Following the closing of the IPO on February 22,
2021, $
The Company will provide its public stockholders
with the opportunity to redeem all or a portion of their public shares upon the completion of the initial Business Combination either
(i) in connection with a stockholder meeting called to approve the initial Business Combination or (ii) by means of a tender
offer. The decision as to whether the Company will seek stockholder approval of a proposed initial Business Combination or conduct a tender
offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction
and whether the terms of the transaction would require the Company to seek stockholder approval under the law or stock exchange listing
requirements. The stockholders will be entitled to redeem their shares for a pro rata share of the aggregate amount then on deposit in
the Trust Account (initially approximately $
F-6
The Company will have only 24 months from February
22, 2021, the closing of the IPO, to complete an initial Business Combination (the “Combination Period”). However, if the
Company doesn’t complete a Business Combination within the Combination Period, the Company will: (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the
public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including
interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes (less up to $
The Sponsor, officers and directors have agreed
to (i) waive their redemption rights with respect to their founder shares and public shares in connection with the completion of
the initial Business Combination, (ii) waive their redemption rights with respect to their founder shares and public shares in connection
with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (A) to modify
the substance or timing of the Company’s obligation to allow redemption in connection with an initial Business Combination or to
redeem
The Company’s Sponsor has agreed that it
will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company,
or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement
or Business Combination agreement, reduce the amount of funds in the Trust Account to below the lesser of
Liquidity and Capital Resources
As of December 31, 2021, the Company had approximately
$
The Company’s liquidity needs up to February
22, 2021 had been satisfied through a capital contribution from the Sponsor of $
The Company has until February 22, 2023 to complete its initial Business Combination under the terms of its final prospectus filed with the SEC on February 19, 2021. If the Company does not complete its initial Business Combination by February 22, 2023, it will begin mandatory liquidation proceedings, including the cessation of all operations and redemption of the Public Shares. As of the date of this filing, the Company has not yet identified a target for its initial Business Combination.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination. However, in light of the mandatory liquidation that could potentially occur within one year from the date of this filing, management believes there is substantial doubt as to the Company’s ability to continue as a going concern if it does not consummate its initial Business Combination before February 22, 2023.
F-7
Risks and Uncertainties
Management is continuing to evaluate the impacts of the COVID-19 pandemic and the ongoing conflict in Ukraine and has concluded that while it is reasonably possible that it could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 2 — Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting of normal recurring adjustments) have been made that are necessary to present fairly the financial position, results of operations and cash flows of the Company.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart our Business Startups Act of 2012, (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Accordingly, actual results could differ from those estimates.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. One of the more significant accounting estimates included in these financial statements is the determination of the fair value of the warrant liability. Accordingly, the actual results could differ significantly from those estimates.
F-8
Cash and Cash Equivalents
The Company considers all short-term
investments with an original maturity of three months or less when purchased to be cash equivalents. As of December 31, 2021 and
2020, the Company had cash and cash equivalents of $
Investments Held in Trust Account
At December 31, 2021, the assets held in the Trust Account were held in money market funds which invest in U.S. Treasury securities.
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the federal
depository insurance corporation coverage of $
Warrant Liabilities
The Company does not use derivative instruments to hedge exposure to cash flow, market, or foreign currency risks. The Company evaluated the Public Warrants and Private Placement Warrants (collectively, “Warrants,” which are discussed in Note 3, Note 4, and Note 8) in accordance with ASC 815-40, “Derivatives and Hedging — Contracts in Entity’s Own Equity,” and concluded that a provision in the Warrant Agreement related to certain tender or exchange offer precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are recorded as derivative liabilities on the Balance Sheet and measured at fair value at inception (on the date of the IPO) and at each reporting date in accordance with ASC 820, “Fair Value Measurement,” with changes in fair value recognized in the Statement of Operations in the period of change.
Offering Costs Associated with the Initial Public Offering
The Company complies with the requirements of
the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial
Public Offering that were directly related to the Initial Public Offering. Offering costs are allocated to the separable financial instruments
issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs associated
with warrant liabilities are expensed as incurred, presented as non-operating expenses in the statement of operations. Offering costs
associated with the Class A common stock were charged to temporary equity upon the completion of the Initial Public Offering. Transaction
costs of the IPO amounted to an aggregate of $
Class A Common Stock Subject to Possible Redemption
All of the shares of Class A common stock sold as part of the Units in the Public Offering contain a redemption feature which allows for the redemption of such public shares in connection with the Company’s liquidation, if there is a stockholder vote or tender offer in connection with the Business Combination and in connection with certain amendments to the Company’s second amended and restated certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480. Accordingly, at December 31, 2021, all shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheets, respectively. The Company recognizes any subsequent changes in redemption value immediately as they occur and adjusts the carrying value of redeemable Class A common stock to the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value of redeemable Class A common stock. This method would view the end of the reporting period as if it were also the redemption date for the security. The change in the carrying value of redeemable Class A common stock also resulted in charges against Additional paid-in capital and Accumulated deficit.
F-9
The Class A common stock subject to possible redemption reflected on the balance sheet as of December 31, 2021 is reconciled in the following table:
Gross Proceeds | $ | |||
Less: | ||||
Proceeds allocated to public warrants | ( | ) | ||
Class A common stock issuance costs | ( | ) | ||
Plus: | ||||
Accretion of carrying value to redemption value | ||||
Class A common stock subject to possible redemption | $ |
Income Taxes
The Company accounts for income taxes under ASC 740, “Income Taxes” (“ASC 740”). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. The deferred tax assets were deemed to be de minimis as of December 31, 2021 and December 31, 2020.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2020. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company has identified the United States as its only “major” tax jurisdiction. The Company is subject to income tax examinations by major taxing authorities since inception. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. The provision for income taxes was deemed to be de minimis for the year ended December 31, 2021 and the period from November 23, 2020 (Inception) to December 31, 2020.
Net Income (Loss) Per Share of Common Stock
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, Earnings Per Share. The Company has two classes of shares, which are referred to as Class A common
stock and Class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per share is
computed by dividing net income by the weighted average number of shares outstanding during the period, excluding shares subject to forfeiture.
The Company has not considered the effect of the warrants sold in the Initial Public Offering and the Private Placement to purchase an
aggregate of
F-10
Reconciliation of Net Income (Loss) per Share of Common Stock
Accordingly, basic and diluted income (loss) per share for Class A common stock and for Class B common stock is calculated as follows:
For the year ended December 31, 2021 | For the period from November 23, 2020 (Inception) to December 31, 2020 | |||||||||||||||
Class A Common Stock | Class B Common Stock | Class A Common Stock | Class B Common Stock | |||||||||||||
Basic and diluted net income (loss) per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income (loss) | $ | $ | $ | $ | ( | ) | ||||||||||
Denominator: | ||||||||||||||||
Weighted-average shares outstanding | ||||||||||||||||
Basic and diluted net income (loss) per share | $ | $ | $ | $ | ( | ) |
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under FASB ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the accompanying balance sheets, primarily due to their short-term nature.
Recent Accounting Pronouncements
In August 2020, the FASB issued ASU 2020-06, Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. The ASU also removes certain settlement conditions that are required for equity-linked contracts to qualify for scope exception, and it simplifies the diluted earnings per share calculation in certain areas. The Company adopted ASU 2020-06 on January 1, 2021. Adoption of the ASU did not impact the Company’s financial position, results of operations or cash flows.
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
F-11
Note 3 — Initial Public Offering
Public Units
On February 22, 2021, the Company sold
Public Warrants
As of December 31, 2021, the Company has
The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a current prospectus relating thereto is current. No warrant will be exercisable and the Company will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In no event will the Company be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit.
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Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $18.00
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
● | in whole and not in part; |
● | at a price of $0.01 per warrant; |
● | upon not less than 30 days’ prior written notice of redemption given after the warrants become exercisable (the “30-day redemption period”) to each warrant holder; and |
Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $10.00
Once the warrants become exercisable, the Company may redeem the outstanding warrants:
● | in whole and not in part; |
● | at a price of $0.10 per warrant, upon a minimum of 30 days’ prior written notice of redemption, provided that holders will be able to exercise their warrants, but only on a cashless basis, prior to redemption based on the redemption date and the “fair market value” of Class A common stock except as otherwise described below; |
● | if, and only if, the reported last sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days (the “Reference Days”) within a 30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders; and |
If the Company calls the warrants for redemption
as described above, the management will have the option to require all holders that wish to exercise warrants to do so on a cashless basis.
In determining whether to require all holders to exercise their warrants on a cashless basis, the management will consider, among other
factors, the Company’s cash position, the number of warrants that are outstanding and the dilutive effect on its stockholders of
issuing the maximum number of shares of Class A common stock issuable upon the exercise of the warrants. In such event, each holder
would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the lesser of
(A) the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants
multiplied by the excess of the “fair market value” (defined below) over the exercise price of the warrant by (y) the
fair market value and (B)
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the
Sponsor purchased an aggregate of
Each Placement Unit is identical to the Units offered in the Public Offering except as described below. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the founder shares, placement shares or placement warrants, which will expire worthless if the Company does not consummate a Business Combination within the Combination Period.
As of December 31, 2021, the Company has
The Company’s initial stockholders have
agreed to waive their redemption rights with respect to their placement shares (i) in connection with the consummation of a Business
Combination, (ii) in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation
to modify the substance or timing of the Company’s obligation to allow redemption in connection with the initial Business Combination
or certain amendments to the Company’s charter prior thereto, to redeem
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Note 5 — Related Party Transactions
Founder Shares
In December 2020, the Company’s initial
stockholders paid $
With certain limited exceptions, the founder shares are not transferable, assignable or salable (except to the Company’s officers and directors and other persons or entities affiliated with the Sponsor, each of whom will be subject to the same transfer restrictions) until the earlier of (A) six months after the completion of the Company’s initial Business Combination or (B) subsequent to the Company’s initial Business Combination, (x) if the last sale price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 90 days after the initial Business Combination, or (y) the date, following the completion of the Company’s initial Business Combination, on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Promissory Note — Related Party
On December 23, 2020, the Company issued an unsecured
promissory note to the Sponsor for an aggregate of up to $
Related Party Loans
In order to finance transaction costs in connection
with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors may,
but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a
Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company.
Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination
does not close, the Company may use a portion of the working capital held outside the Trust Account to repay the Working Capital Loans
but no proceeds from the Trust Account would be used to repay the Working Capital Loans. Up to $
Administrative Services Agreement
The Company entered into an agreement whereby,
commencing on April 1, 2021 through the earlier of the consummation of the Initial Business Combination or the Company’s liquidation,
the Company may pay, if requested by the Sponsor, a monthly fee of up to $
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Note 6 — Commitments and Contingencies
Registration Rights
The holders of the founder shares, Placement Units, and units that may be issued upon conversion of Working Capital Loans, and any shares of Class A common stock issuable upon the exercise of the placement warrants and any shares of Class A common stock and warrants (and underlying Class A common stock) that may be issued upon conversion of the units issued as part of the Working Capital Loans and Class A common stock issuable upon conversion of the founder shares, will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the Public Offering, requiring the Company to register such securities for resale. The holders of the majority of these securities are entitled to make up to three demands, excluding short form demands, that the Company registers such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act.
Underwriting Agreement
The underwriter had a 45-day option from the date
of the IPO to purchase up to an aggregate of
The underwriters are entitled to deferred underwriting
fee of
Note 7 — Stockholders’ Equity
Preferred Stock — The
Company is authorized to issue
Class A Common Stock —
The Company is authorized to issue
Class B Common Stock —
The Company is authorized to issue
The Company’s Sponsor, directors and officers
have agreed not to transfer, assign or sell their founder shares until the earlier to occur of (A) six months after the completion
of the Company’s initial Business Combination or (B) subsequent to the Company’s initial Business Combination, (x) if
the last sale price of the Company’s Class A common stock equals or exceeds $
The shares of Class B common stock will automatically
convert into shares of Class A common stock at the time of the initial Business Combination on a one-for-one basis (subject
to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment as
provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed
issued in excess of the amounts offered in Proposed Public Offering and related to the closing of the initial Business Combination, the
ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the
holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance
or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common
stock will equal, in the aggregate, on an as-converted basis,
Holders of record of the Class A common stock and holders of record of the Class B common stock will vote together as a single class on all matters submitted to a vote of the Company’s stockholders, with each share of common stock entitling the holder to one vote except as required by law.
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Note 8 — Fair Value Measurements
The Company follows the guidance in ASC 820, “Fair Value Measurement,” for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1 — | Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment. |
Level 2 — | Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means. |
Level 3 — | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
December 31, | Quoted Prices In Active Markets | Significant Other Observable Inputs | Significant Other Unobservable Inputs | |||||||||||||
2021 | (Level 1) | (Level 2) | (Level 3) | |||||||||||||
Assets: | ||||||||||||||||
U.S. Money Market held in Trust Account | $ | $ | $ | $ | ||||||||||||
$ | $ | $ | $ | |||||||||||||
Liabilities: | ||||||||||||||||
Public Warrants Liability | $ | $ | $ | $ | ||||||||||||
Private Placement Warrants Liability | ||||||||||||||||
$ | $ | $ | $ |
Level 1 assets include investments in mutual funds and money market funds invested in government securities. The Company uses inputs such as actual trade data, benchmark yields, quoted market prices from dealers or brokers, and other similar sources to determine the fair value of its investments.
The Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the balance sheet. The warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the statement of operations.
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The Company established the initial fair value of the Public and Private Warrants on February 22, 2021, the date of the Company’s Initial Public Offering, using a Monte Carlo simulation model and modified Black-Sholes model. The Warrants were classified as Level 3 at the initial measurement date due to the use of unobservable inputs. As of December 31, 2021, the Company used the quoted market price as the fair value of the Public Warrants and the Public Warrants were reclassified from Level 3 to Level 1. Due to certain “make whole” provisions in the warrant agreement, the Company also used the quoted market price of the Public Warrants as the fair value of the Private Warrants as of December 31, 2021, and reclassified the Private Warrants from Level 3 to Level 2, due to the use of the quoted price of a similar liability.
The following table presents the changes in the fair value of Level 3 warrant liabilities for the year ended December 31, 2021:
Level 3 Warrant Liabilities | ||||
Fair Value as of December 31, 2020 | $ | |||
Initial measurement on February 22, 2021 | ||||
Transfer of Public Warrants to Level 1 | ( | ) | ||
Transfer of Private Placement Warrants to Level 2 | ( | ) | ||
Change in valuation as of December 31, 2021 | ||||
Fair Value as of December 31, 2021 | $ |
The key inputs into the Monte Carlo simulation and modified Black-Sholes model as of February 22, 2021 were as follows:
Inputs | February 22, (initial measurement) | |||
Risk-free interest rate | % | |||
Exercise price | $ | |||
Expected volatility | % | |||
Underlying stock price | $ | |||
Term (in years) |
Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements.
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EXHIBIT INDEX
* | Filed herewith. |
** | Furnished herewith |
(1) | Incorporated by reference to the Company’s Registration Statement on Form S-1, filed with the SEC on February 2, 2021. |
(2) | Incorporated by reference to the Company’s Registration Statement on Form S-1/A, filed with the SEC on February 8, 2021. |
(3) | Incorporated by reference to the Company’s Form Current Report 8-K, filed with the SEC on February 23, 2021. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
April 1, 2022 | FINSERV ACQUISITION CORP. II | |
By: | /s/ Lee Einbinder | |
Name: | Lee Einbinder | |
Title: | Chief
Executive Officer (Principal Executive Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name | Position | Date | ||
/s/ Lee Einbinder |
Chief Executive Officer and Director | April 1, 2022 | ||
Lee Einbinder | (Principal Executive Officer) | |||
/s/ Steven Handwerker |
Chief Financial Officer | April 1, 2022 | ||
Steven Handwerker | (Principal Financial and Accounting Officer) | |||
/s/ Howard Kurz |
President and Director | April 1, 2022 | ||
Howard Kurz | ||||
/s/ Robert Matza |
Director | April 1, 2022 | ||
Robert Matza | ||||
/s/ David Smilow |
Director | April 1, 2022 | ||
David Smilow | ||||
/s/ Val Soranno Keating |
Director | April 1, 2022 | ||
Val Soranno Keating | ||||
/s/ Michael Vaughan |
Director | April 1, 2022 | ||
Michael Vaughan |
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