NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Organization
and General
Netfin
Acquisition Corp. (the “Company”) was incorporated as a Cayman Islands exempted company on April 24, 2019. The Company
was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar
business combination with one or more businesses (the “Business Combination”). Although the Company is not limited
to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search
for targets in the financial technology, technology and financial services industries, including those engaged in commercial,
online and mobile banking and payments, trade finance and telecommunications, that offer a differentiated technology platform
and product suite for interfacing with the financial services sector. The Company is an emerging growth company and, as such,
the Company is subject to all of the risks associated with emerging growth companies.
As
of September 30, 2020, the Company had not commenced any operations. All activity for the period from April 24, 2019 (inception)
through September 30, 2020 relates to the Company’s formation, its initial public offering (the “Initial Public Offering”)
described below and, since the closing of the Initial Public Offering, the search for a prospective initial Business Combination.
The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest.
The Company generates non-operating income in the form of interest income on investments held in trust from the proceeds derived
from the Initial Public Offering.
Sponsor
and Initial Public Offering
The
Company’s sponsor is MVR Netfin LLC, a Nevada limited liability company (the “Sponsor”). The registration statement
for the Initial Public Offering was declared effective on July 30, 2019. On August 2, 2019, the Company consummated the Initial
Public Offering of 25,300,000 units (the “Units” and, with respect to the Class A ordinary shares included in the
Units, the “Public Shares”), including the issuance of 3,300,000 Units as a result of the underwriters’ exercise
of their over-allotment option in full, at $10.00 per Unit, generating gross proceeds of $253.0 million and incurring offering
costs of approximately $14.6 million, inclusive of approximately $8.9 million in deferred underwriting commissions (Note 5).
Simultaneously
with the closing of the Initial Public Offering, the Company consummated a private placement (the “Private Placement”)
of 681,000 units (the “Private Placement Units”) to the Sponsor at $10.00 per Private Placement Unit, generating gross
proceeds to the Company of $6.81 million (Note 4).
Trust
Account
Upon
the closing of the Initial Public Offering and the Private Placement, $253.0 million, made up of the net proceeds of the Initial
Public Offering and certain of the proceeds of the Private Placement, was placed in a trust account (the “Trust Account”),
located in the United States at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee,
and was invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company
Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under
the Investment Company Act which invest only in direct U.S. government treasury obligations. These funds will be held in the Trust
Account until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account, as
described below.
Initial
Business Combination
The
Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public
Offering and the sale of Private Placement Units, although substantially all of the net proceeds are intended to be applied generally
toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination
successfully. The Company must complete an initial Business Combination having an aggregate fair market value of at least 80%
of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on
the Trust Account) at the time of the agreement to enter into the initial Business Combination. However, the Company will only
complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities
of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an
investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”).
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The
Company will provide the public holders (the “Public Shareholders”) of its Public Shares with the opportunity to redeem
all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder
meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company
will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its
discretion. The Public Shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in
the Trust Account (initially $10.00 per Public Share). The per-share amount to be distributed to Public Shareholders who redeem
their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as
discussed in Note 5). The Company will proceed with a Business Combination if the Company has net tangible assets of at least
$5,000,001 upon such consummation of a Business Combination and the approval of an ordinary resolution.
The
Public Shares subject to possible redemption were classified as temporary equity upon the completion of the Initial Public Offering
in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”)
Topic 480 “Distinguishing Liabilities from Equity.”
If
a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal
reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association (the “Amended and
Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S.
Securities and Exchange Commission (the “SEC”) and file tender offer documents with the SEC prior to completing a
Business Combination. If, however, shareholder approval of the transactions is required by law, or the Company decides to obtain
shareholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation
pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem
their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder
approval in connection with a Business Combination, the initial shareholders (as defined below) have agreed to vote their Founder
Shares (as defined below in Note 4), the Class A ordinary shares underlying the Private Placement Units (the “Private Placement
Shares”) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination.
In addition, the initial shareholders have agreed to waive their redemption rights with respect to their Founder Shares, Private
Placement Shares and Public Shares in connection with the completion of a Business Combination.
Notwithstanding
the foregoing, the Amended and Restated Memorandum and Articles of Association provides that a Public Shareholder, together with
any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group”
(as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be restricted
from redeeming its shares with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent
of the Company.
The
Sponsor, officers and directors (the “initial shareholders”) have agreed not to propose an amendment to the Amended
and Restated Memorandum and Articles of Association that would modify the substance or timing of the Company’s obligation
to provide for the redemption of the Public Shares in connection with an initial Business Combination or to redeem 100% of its
Public Shares if the Company does not complete a Business Combination within 18 months from the closing of the Initial Public
Offering, or February 2, 2021, (the “Combination Period”), unless the Company provides the Public Shareholders with
the opportunity to redeem their Class A ordinary shares in conjunction with any such amendment.
If
the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter,
redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account,
including interest earned on the funds held in the Trust Account and not previously released to the Company (less taxes payable
and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption
will completely extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidation
distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the
Company’s remaining shareholders and the Company’s board of directors, liquidate and dissolve, subject, in the case
of clauses (ii) and (iii), to the Company’s obligations under Cayman Islands law to provide for claims of creditors and
in all cases subject to the other requirements of applicable law.
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The
Sponsor, officers and directors have agreed to waive their liquidation rights with respect to the Founder Shares and Private Placement
Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial shareholders
or members of the Company’s management team acquire Public Shares in or after the Initial Public Offering, they will be
entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete
a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting
commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within the
Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will
be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share
value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00 per share
initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it
will be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company,
or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or other
similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i)
$10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation
of the Trust Account, if less than $10.00 per share due to reductions in the value of the trust assets, less taxes payable, provided
that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any
and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims
under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the “Securities Act”). The Company will seek to reduce the
possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors,
service providers, prospective target businesses or other entities with which the Company does business, execute agreements with
the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Proposed
Business Combination
On
July 29, 2020, the Company entered into a business combination agreement (as amended on August 28, 2020, the “Business Combination
Agreement”), by and among the Company, Netfin Holdco (“Holdco”), Netfin Merger Sub (the “Merger Sub”),
Symphonia Strategic Opportunities Limited (“SSOL”), IKON Strategic Holdings Fund (“IKON” and together
with SSOL, the “Sellers”) and MVR Netfin LLC, as the Netfin Representative, pursuant to which (i) Merger Sub
will merge with and into Netfin, with Netfin continuing as the surviving company, as a result of which (a) Netfin will become
a wholly-owned subsidiary of Holdco, (b) each issued and outstanding unit of Netfin (a “Netfin Unit”), consisting
of one Class A ordinary share of Netfin (the “Class A Shares”) and one warrant of Netfin (the “Netfin
Warrants”), shall be automatically detached and the holder thereof shall be deemed to hold one Class A Share and one
Netfin Warrant, (c) each issued and outstanding Class A Share and Class B ordinary share of Netfin (the “Class B
Shares,” and, together with the Class A Shares, the “Ordinary Shares”) will be cancelled and cease to exist
and the holders thereof will receive one ordinary share of Holdco (the “Holdco Ordinary Shares”) for each Ordinary
Share and (d) each outstanding warrant to purchase a Class A Share will be assumed by Holdco and will become exercisable
for one ordinary share of Holdco on identical terms (the “Holdco Warrants”), and (ii) Holdco will acquire all
of the issued and outstanding ordinary shares of Triterras Fintech Pte. Ltd, a Singapore private company limited by shares (“Fintech”),
from the Sellers. Upon consummation of the transactions contemplated by the Business Combination Agreement (the “Business
Combination”), Fintech will become a wholly-owned subsidiary of Holdco, which will subsequently be renamed as “Triterras,
Inc.” See Note 8.
Going
Concern Consideration
As
of September 30, 2020, the Company had approximately $6,700 in its operating bank account, working capital deficit of approximately
$1.1 million (including approximately $1.1 million in accrued legal fees that will be due at the earlier of the consummation of
the initial Business Combination or the liquidation date), and approximately $4.2 million of interest income available in the
Trust Account to pay for the Company’s tax obligations, if any.
Prior
to the completion of the Initial Public Offering, the Company’s liquidity needs were satisfied through an advance of $25,000
from the Sponsor to cover for certain offering costs in exchange for the issuance of the Founder Shares, a $300,000 promissory
note (the “Note”) issued to the Sponsor and approximately $167,000 in advances from the Sponsor. The Company fully
repaid the Note and the advances to the Sponsor on August 2, 2019. Subsequent to the consummation of the Initial Public Offering
and Private Placement, the Company’s liquidity needs were satisfied with the proceeds from the consummation of the Private
Placement not held in the Trust Account. In addition, in order to finance transaction costs in connection with a Business Combination,
the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated
to, provide the Company Working Capital Loans (see Note 4). As of September 30, 2020, there were no amounts outstanding under
any Working Capital Loan.
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In
connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard
Board’s Accounting Standards Updated (“ASU”) 2014-15, “Disclosure of Uncertainties about an Entity’s
Ability to Continue as a Going Concern”, management has determined that the working capital deficit raises substantial doubt
about the Company’s ability to continue as a going concern until the earlier of the consummation of the Business Combination
or the date the Company is required to liquidate, February 2, 2021. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of Presentation
The
accompanying unaudited condensed consolidated financial statements are presented in U.S. dollars in conformity with accounting
principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the
rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the
opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, which include only normal
recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results
for the period for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be
expected through December 31, 2020.
The
accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited financial statements
and notes thereto included in the Annual Report on Form 10-K filed by the Company with the SEC on March 11, 2020.
Emerging
Growth Company
The
Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting
requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to,
not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements,
and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval
of any golden parachute payments not previously approved.
Further,
Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial
accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared
effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised
financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition
period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable.
The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised
and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt
the new or revised standard at the time private companies adopt the new or revised standard.
This
may make comparison of the Company’s financial statements with another public company that is neither an emerging growth
company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because
of the potential differences in accounting standards used.
Concentrations
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution,
which, at times, may exceed the Federal Depository Insurance Coverage of $250,000, and cash held in the Trust Account. At September
30, 2020, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant
risks on such accounts.
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Cash
and Cash Equivalents
The
Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
The Company had approximately $27,000 and $50,000 in cash equivalents held in the Trust Account as of September 30, 2020 and December
31, 2019, respectively.
Financial
Instruments
The
fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value
Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet.
As
of September 30, 2020, the carrying values of cash, accounts payable and accrued expenses approximate their fair values due to
the short-term nature of the instruments. The Company’s portfolio of marketable securities held in the Trust Account is
comprised of investments in U.S. Treasury securities with an original maturity of 185 days or less and of money market funds meeting
certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury
obligations.
Marketable
Securities Held in Trust Account
The
Company’s portfolio of marketable securities is comprised solely of U.S. government securities, within the meaning set forth
in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or of money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations.
Use
of Estimates
The
preparation of the financial statements in conformity with U.S. GAAP requires the Company’s management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date the financial statements and the reported amounts of expenses during the reporting periods. Actual results could differ
from those estimates.
Offering
Costs Associated with the Initial Public Offering
Offering
costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly
related to the Initial Public Offering and that were charged to shareholders’ equity upon the completion of the Initial
Public Offering.
Class
A Ordinary Shares Subject to Possible Redemption
The
Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing
Liabilities from Equity.” Class A ordinary shares subject to mandatory redemption (if any) are classified as liability
instruments and are measured at fair value. Conditionally redeemable Class A ordinary shares (including Class A ordinary shares
that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of
uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, Class
A ordinary shares are classified as shareholders’ equity. The Company’s Class A ordinary shares feature certain redemption
rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events.
Accordingly, Class A ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside
of the shareholders’ equity section of the Company’s balance sheets.
Net
Loss Per Ordinary Share
Net
loss per share is computed by dividing net loss by the weighted-average number of ordinary shares outstanding during the period.
An aggregate of 23,829,895 Class A ordinary shares subject to possible redemption at September 30, 2020 was excluded from the
calculation of basic loss per ordinary share since such shares, if redeemed, only participate in their pro rata share of the Trust
Account earnings. The Company has not considered the effect of the warrants sold in the Initial Public Offering and Private Placement
to purchase an aggregate of 25,981,000 shares of the Company’s Class A ordinary shares in the calculation of diluted loss
per share, since they are not yet exercisable.
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Reconciliation
of net loss per ordinary share
The
Company’s net income is adjusted for the portion of income that is attributable to Class A ordinary shares subject to redemption,
as these shares only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly,
basic and diluted loss per ordinary share is calculated as follows:
|
|
For
the Three Months Ended
September 30,
|
|
|
For
the
Nine Months
Ended September 30,
|
|
|
For
the
Period From
April 24, 2019
(Inception) Through
September 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
Net
income (loss)
|
|
$
|
(458,412
|
)
|
|
$
|
718,371
|
|
|
$
|
837,192
|
|
|
$
|
713,066
|
|
Less:
Income attributable to Class A ordinary shares subject to possible redemption
|
|
|
(35,508
|
)
|
|
|
(783,170
|
)
|
|
|
(2,052,986
|
)
|
|
|
(783,170
|
)
|
Adjusted
net loss
|
|
$
|
(493,920
|
)
|
|
$
|
(64,799
|
)
|
|
$
|
(1,215,794
|
)
|
|
$
|
(70,104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average Class A and Class B ordinary shares outstanding, basic and diluted
|
|
|
8,431,520
|
|
|
|
7,314,790
|
|
|
|
8,390,584
|
|
|
|
6,584,160
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss per Class A and Class B ordinary share
|
|
$
|
(0.06
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(0.01
|
)
|
Income
Taxes
The
Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, “Income Taxes.”
Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between
the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized.
FASB
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more
likely than not to be sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September
30, 2020 and December 31, 2019. The Company’s management determined that the Cayman Islands is the Company’s only
major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. No amounts were accrued for the payment of interest and penalties as of September 30, 2020 and December 31, 2019. The
Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation
from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
The
Company is considered an exempted Cayman Islands company and is presently not subject to income taxes or income tax filing requirements
in the Cayman Islands or the United States. As such, the Company’s tax provision is zero as of September 30, 2020 and December
31, 2019.
Recent
Accounting Standards
The
Company’s management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently
adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements.
NOTE
3. INITIAL PUBLIC OFFERING
On
August 2, 2019, the Company sold 25,300,000 Units, including the issuance of 3,300,000 Units as a result of the underwriters’
exercise of their over-allotment option in full, at $10.00 per Unit, in the Initial Public Offering.
Each
Unit consists of one Class A ordinary share, and one redeemable warrant (each, a “Public Warrant”). Each Public Warrant
entitles the holder to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 6).
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
4. RELATED PARTY TRANSACTIONS
Founder
Shares
In
April 2019, the Sponsor purchased 6,325,000 Class B ordinary shares, par value $0.0001 (the “Founder Shares”), for
an aggregate price of $25,000. The Sponsor agreed to forfeit up to 825,000 Founder Shares to the extent that the over-allotment
option was not exercised in full by the underwriters. On August 2, 2019, the over-allotment option was exercised in full. Accordingly,
no Founder Shares were forfeited.
The
initial shareholders agreed, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until
the earlier to occur of: (i) six months after the completion of the initial Business Combination, or (ii) the date on which the
Company completes a liquidation, merger, share exchange or other similar transaction after the initial Business Combination that
results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities
or other property; except to certain permitted transferees and under certain circumstances (the “lock-up”). Notwithstanding
the foregoing, if the closing price of Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits,
share capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period
commencing at least 150 days after the initial Business Combination, the Founder Shares will be released from the lock-up.
Private
Placement Units
Simultaneously
with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 681,000 Private Placement Units at a price
of $10.00 per Private Placement Unit in a Private Placement. A portion of the proceeds from the Private Placement Units were added
to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination
within the Combination Period, the private placement warrants underlying the Private Placement Units (the “Private Placement
Warrants”) will expire worthless.
The
Sponsor and the Company’s officers and directors agreed, subject to limited exceptions, not to transfer, assign or sell
any of their Private Placement Units (or the securities underlying the Private Placement Units) until 30 days after the completion
of the initial Business Combination.
Related
Party Loans
The
Sponsor paid an aggregate of approximately $7,000 and approximately $160,000 on behalf of the Company for general and administrative
expenses and offering costs, respectively. In addition, the Sponsor also loaned the Company an aggregate of $300,000 to cover
expenses related to the Initial Public Offering pursuant to the Note. This loan was non-interest bearing and payable on completion
of the Initial Public Offering. The Company fully repaid the Note and the advances to the Sponsor on August 2, 2019.
In
addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the
Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may
be required (the “Working Capital Loans”). If the Company completes a Business Combination, the Company would repay
the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans
would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the
Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in
the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital
Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans
would either be repaid upon consummation of a Business Combination, without interest, or at the lender’s discretion, up
to $1.5 million of such Working Capital Loans may be convertible into private placement-equivalent units at a price of $10.00
per unit. As of September 30, 2020, the Company had no Working Capital Loans.
Administrative
Support Agreement
Commencing
on the date that the securities of the Company were first listed on Nasdaq, the Company agreed to pay the Sponsor a total of $10,000
per month for office space, utilities, secretarial and administrative support services. Upon completion of the Initial Business
Combination or the Company’s liquidation, the Company will cease paying these monthly fees. The Company incurred $30,000
and $90,000 in expenses in connection with such services during the three and nine months ended September 30, 2020, as reflected
in the accompanying statement of operations.
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
5. COMMITMENTS & CONTINGENCIES
Registration
Rights
The
holders of Founder Shares, Private Placement Units (including the underlying securities), and securities that may be issued upon
conversion of Working Capital Loans, if any, will be entitled to registration rights pursuant to a registration rights agreement.
These holders will be entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriting
Agreement
The
Company granted the underwriters a 45-day option from the date of the final prospectus relating to the Initial Public Offering
to purchase up to 3,300,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting
discounts and commissions. The underwriters fully exercised their over-allotment option on August 2, 2019.
The
underwriters were entitled to an underwriting discount of $0.20 per unit, or $5.06 million in the aggregate, paid upon the closing
of the Initial Public Offering. In addition, $0.35 per unit, or up to approximately $8.9 million in the aggregate will be payable
to the underwriters for deferred underwriting commissions. The deferred fee is payable to the underwriters from the amounts held
in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting
agreement.
Financial
Advisory and Private Placement Agreement
On
December 19, 2019, the Company entered into a financial advisory agreement with an advisor in connection with a potential Business
Combination. Pursuant to the agreement, the Company agreed to pay the advisor a cash fee of $1.0 million if the Business Combination
is consummated. Fifty percent (50%) of the advisory fee shall be credited to the Company by the advisor against fees earned by
the advisor on or before December 31, 2021 in connection with capital raising activities occurring subsequent to the date of the
agreement, where the advisor acts as a placement agent, initial purchaser or underwriter in connection with the private placement
or public offering of securities for the Company. The fees are payable upon the closing of the Business Combination, and the Company
is not obligated to pay these fees if no Business Combination is consummated. These fees are an unrecognized contingent liability,
as closing of a potential Business Combination was not considered probable as of September 30, 2020.
In
addition, on December 19, 2019, the Company also entered into a private placement agreement with an agent in connection with a
potential Business Combination. Pursuant to the agreement, the Company agreed to pay the advisor a placement agent fee of up to
4.5% of the gross proceeds raised in the private placement, if the Business Combination is consummated. The fees are payable upon
the closing of the Business Combination, and the Company is not obligated to pay these fees if no Business Combination is consummated.
These fees are an unrecognized contingent liability, as closing of a potential Business Combination was not considered probable
as of September 30, 2020.
Risk
and Uncertainties
On
January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain
of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based
on the rapid increase in exposure globally. The full impact of the COVID-19 outbreak continues to evolve. The impact of the COVID-19
outbreak on the Company’s results of operations, financial position and cash flows will depend on future developments, including
the duration and spread of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19
outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets
and/or the overall economy are impacted for an extended period, the Company’s results of operations, financial position
and cash flows may be materially adversely affected. Additionally, the Company’s ability to complete an Initial Business
Combination may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19
outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may
limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s
personnel, vendors and service providers to negotiate and consummate an Initial Business Combination in a timely manner. The Company’s
ability to consummate an Initial Business Combination may also be dependent on the ability to raise additional equity and debt
financing, which may be impacted by the COVID-19 outbreak and the resulting market downturn.
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
6. SHAREHOLDERS’ EQUITY
Class
A Ordinary Shares — The Company is authorized to issue 200,000,000 Class A ordinary shares with a par value of $0.0001
per share. As of September 30, 2020 and December 31, 2019, there were 25,981,000 Class A ordinary shares outstanding, including
23,829,895 and 23,959,607 Class A ordinary shares subject to possible redemption which were classified as temporary equity in
the accompanying balance sheets, respectively.
Class
B Ordinary Shares — The Company is authorized to issue 20,000,000 Class B ordinary shares with a par value of $0.0001
per share. Holders of Class B ordinary shares are entitled to one vote for each Class B ordinary share held. As of September 30,
2020 and December 31, 2019, there were 6,325,000 Class B ordinary shares outstanding. Of the 6,325,000 Class B ordinary shares,
an aggregate of up to 825,000 shares were subject to forfeiture to the Company by the Sponsor for no consideration to the extent
that the underwriters’ over-allotment option was not exercised in full or in part, so that the initial shareholders would
collectively own 20% of the Company’s issued and outstanding ordinary shares after the Initial Public Offering (excluding
the Private Placement Shares). On August 2, 2019, the over-allotment option was exercised in full. Accordingly, no Class B ordinary
shares were forfeited.
Holders
of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters
submitted to a vote of the Company’s shareholders, except as required by law or stock exchange rule; provided that only
holders of the Class B ordinary shares have the right to vote on the election of the Company’s directors prior to the initial
Business Combination.
The
Class B ordinary shares will automatically convert into Class A ordinary shares at the time of the initial Business Combination
on a one-for-one basis (as adjusted). In the case that additional Class A ordinary shares or equity-linked securities are issued
or deemed issued in connection with the initial Business Combination, the number of Class A ordinary shares issuable upon conversion
of all Founder Shares will equal, in the aggregate, 20% of the total number of Class A ordinary shares outstanding after such
conversion (excluding the private placement shares underlying the private placement units and after giving effect to any redemptions
of Class A ordinary shares by public shareholders), including the total number of Class A ordinary shares issued, or deemed issued
or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection
with or in relation to the consummation of the initial Business Combination, excluding any Class A ordinary shares or equity-linked
securities exercisable for or convertible into Class A ordinary shares issued, or to be issued, to any seller in the initial Business
Combination and any private placement-equivalent units issued to the Sponsor, officers or directors upon conversion of Working
Capital Loans; provided that such conversion of Founder Shares will never occur on a less than one-for-one basis.
Preferred
Shares — The Company is authorized to issue 1,000,000 preferred shares with such designations, voting and other
rights and preferences as may be determined from time to time by the Company’s board of directors. As of September 30, 2020
and December 31, 2019, there were no preferred shares issued or outstanding.
Warrants
— The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination
or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration
statement under the Securities Act covering the Class A ordinary shares issuable upon exercise of the warrants and a current prospectus
relating to them is available (or the Company permits holders to exercise their warrants on a cashless basis and such cashless
exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no
event later than 15 business days after the closing of the initial Business Combination, the Company will use its best efforts
to file with the SEC and have an effective registration statement covering the Class A ordinary shares issuable upon exercise
of the warrants and to maintain a current prospectus relating to those Class A ordinary shares until the warrants expire or are
redeemed, as specified in the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon
exercise of the warrants is not effective by the 60th business day after the closing of the initial Business Combination,
warrant holders may, until such time as there is an effective registration statement and during any period when the Company will
have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance
with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if the Company’s Class A ordinary
shares are at the time of any exercise of a warrant not listed on a national securities exchange such that they satisfy the definition
of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders
of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of
the Securities Act and, in the event the Company so elect, the Company will not be required to file or maintain in effect a registration
statement, and in the event the Company does not so elect, the Company will use its best efforts to register or qualify the shares
under applicable blue sky laws to the extent an exemption is not available.
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The
warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The
Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except
that the Private Placement Warrants and the ordinary shares issuable upon exercise of the Private Placement Warrants, so long
as they are held by the Sponsor or its permitted transferees, (i) will not be redeemable by the Company, (ii) may not (including
the Class A ordinary shares issuable upon exercise of these warrants), subject to certain limited exceptions, be transferred,
assigned or sold by the holders until 30 days after the completion of the initial Business Combination, (iii) may be exercised
by the holders on a cashless basis and (iv) will be entitled to registration rights. If the Private Placement Warrants are held
by holders other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company
and exercisable by the holders on the same basis as the Public Warrants.
The
Company may call the Public Warrants for redemption (except with respect to the Private Placement Warrants):
|
●
|
in
whole and not in part;
|
|
●
|
at
a price of $0.01 per warrant;
|
|
●
|
upon
a minimum of 30 days’ prior written notice of redemption; and
|
|
●
|
if,
and only if, the last reported closing price of the Class A ordinary shares equals or exceeds $18.00 per share for any 20
trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the
notice of redemption to the warrant holders.
|
If
the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise
the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
In
addition, if (x) the Company issues additional Class A ordinary shares or equity-linked securities for capital raising purposes
in connection with the closing of the initial Business Combination at an issue price or effective issue price of less than $9.20
per Class A ordinary share (with such issue price or effective issue price to be determined in good faith by the Company’s
board of directors and, in the case of any such issuance to the Company’s initial shareholders or their affiliates, without
taking into account any Founder Shares held by the initial shareholders or such affiliates, as applicable, prior to such issuance),
(y) the aggregate gross proceeds from such issuances represent more than 50% of the total equity proceeds, and interest thereon,
available for the funding of the Company’s initial Business Combination, and (z) the volume weighted average trading price
of Class A ordinary shares during the 10 trading day period starting on the trading day after the day on which the Company consummates
the initial Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of
the warrants will be adjusted (to the nearest cent) to be equal to 115% of the Market Value, and the $18.00 per share redemption
trigger will be adjusted (to the nearest cent) to be equal to 180% of the Market Value.
Additionally,
in no event will the Company be required to net cash settle any Warrants. If the Company is unable to complete the Initial Business
Combination within the combination period and the Company liquidates the funds held in the Trust Account, holders of warrants
will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s
assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE
7. FAIR VALUE MEASUREMENTS
The
Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value
at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The
fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company
would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an
orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets
and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and
to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).
The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable
inputs used in order to value the assets and liabilities:
|
●
|
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 the Company’s assessment of the assumptions that market participants would use in pricing
the asset or liability.
|
Description
|
|
Level
|
|
|
September 30,
2020
|
|
|
December 31,
2019
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and marketable securities held in Trust Account
|
|
1
|
|
|
$
|
257,257,704
|
|
|
$
|
255,080,087
|
|
Approximately
$27,000 and $50,000 of the balance held in Trust Account was held in cash equivalents as of September 30, 2020 and December 31,
2019, respectively.
NOTE
8. PROPOSED BUSINESS COMBINATION
On
July 29, 2020, the Company entered into a Business Combination Agreement, by and among the Company, Holdco, Merger Sub, the Sellers
and MVR Netfin LLC, as the Netfin Representative, pursuant to which (i) Merger Sub will merge with and into Netfin, with
Netfin continuing as the surviving company, as a result of which (a) Netfin will become a wholly-owned subsidiary of
Holdco, (b) each issued and outstanding Netfin Unit, consisting of one Class A Shares and one Netfin Warrant, shall
be automatically detached and the holder thereof shall be deemed to hold one Class A Share and one Netfin Warrant, (c) each
issued and outstanding Ordinary Shares will be cancelled and cease to exist and the holders thereof will receive one Holdco Ordinary
Share for each Ordinary Share and (d) each outstanding warrant to purchase a Class A Share will be assumed by Holdco
and will become exercisable for one Holdco Warrant, and (ii) Holdco will acquire all of the issued and outstanding ordinary
shares of Fintech, from the Sellers. Upon consummation of the Business Combination, Fintech will become a wholly-owned subsidiary
of Holdco, which will subsequently be renamed as “Triterras, Inc.”
The
aggregate value of the consideration to be paid to Sellers in the Business Combination is approximately $585,000,000, of which
(i) approximately $525,000,000 will be paid in the form of Holdco Ordinary Shares, valued at $10.17 per Holdco Ordinary Share
and (ii) $60 million will be paid in cash (the “Cash Consideration”). In addition, the Sellers will be entitled to
receive earnout consideration of up to an additional 15,000,000 Holdco Ordinary Shares upon Holdco meeting certain financial or
share price thresholds. The Cash Consideration will come from the proceeds available from the Trust Account, after giving effect
to any and all redemptions.
The
parties to the Business Combination Agreement have made customary representations, warranties and covenants in the Business Combination
Agreement, including, among others, covenants with respect to the conduct of the Company, the Sellers, the Target and their respective
subsidiaries prior to the closing of the Business Combination. Each of the Company, the Netfin Representative, Merger Sub and
the Sellers have agreed to use their reasonable best efforts to cause the Business Combination to be consummated.
NETFIN
ACQUISITION CORP.
NOTES
TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The
closing of the Business Combination (the “Closing”) is subject to certain conditions, including, among other things,
(i) approval of the Business Combination by holders of the Ordinary Shares, (ii) approval of the listing of the Holdco Ordinary
Shares to be issued in connection with the Business Combination on the Nasdaq Stock Market (“Nasdaq”), (iii) the Company
having at least $5,000,001 in net tangible assets at the closing of the Business Combination after giving effect to redemptions
of Class A ordinary shares, if any, and (iv) the effectiveness of the Registration Statement (as defined below).
The
Business Combination Agreement may be terminated under certain circumstances, including, among others, (i) by mutual written consent
of the Sellers and the Company, (ii) if the Closing has not occurred on or prior to July 28, 2021 for any reason other than delay
and/or non-performance of the party seeking such termination, (iii) a breach of the terms of the Business Combination Agreement
that is not capable of being cured or is not cured by the breaching party within 30 days and (iv) if the Company’s shareholders
do not approve the Business Combination.
Other
Agreements to be Executed at Closing
The
Business Combination Agreement also contemplates the execution by the parties of various agreements at the Closing, including,
among others, the below.
Lock-Up
Agreement
At
the Closing, Holdco, Netfin and the Sponsor will enter into a lock-up agreement with the Sellers, and any of their respective
transferees, successors or assigns, pursuant to which they will agree to not transfer, sell, assign or otherwise dispose of the
Holdco Ordinary Shares they receive in the Business Combination prior to (i) three months with respect to 10% of their Holdco
Ordinary Shares and (ii) six months with respect to the remaining 90% of their Holdco Ordinary Shares, subject to certain
exceptions set forth therein.
Registration
Rights Agreement
At
the Closing, Holdco will enter into a registration rights agreement with Netfin, the Sponsor and the Sellers (or any of the Sellers’
respective transferees, successors or assigns), pursuant to which they will be granted certain resale registration rights with
respect to any Holdco Ordinary Shares or Holdco Warrants (including the underlying Holdco ordinary shares issued upon the exercise
of such warrants) held by them on or prior to the date of Closing.
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.