The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
The accompanying notes are an integral part of
the unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Fusion Acquisition Corp. II (the “Company”)
is a blank check company incorporated in Delaware on January 11, 2021. The Company was formed for the purpose of entering into a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses
(the “Business Combination”).
The Company is not limited to a particular industry
or sector for purposes of consummating a Business Combination, however, the Company intends to concentrate its efforts identifying businesses
in the financial services industry, with particular emphasis on businesses in the wealth, financial advice, investment, and asset management
sectors or those that are providing or changing technology for traditional financial services. The Company is an early stage and emerging
growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies.
As of September 30, 2021, the Company had not
commenced any operations. All activity for the period from January 11, 2021 (inception) through September 30, 2021 relates to the Company’s
formation, initial public offering (the “Initial Public Offering”), which is described below, and subsequent to the Initial
Public Offering, identifying a target company for a Business Combination. The Company will generate non-operating income in the form of
interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s
Initial Public Offering was declared effective on February 25, 2021. On March 2, 2021, the Company consummated the Initial Public
Offering of 50,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units sold, the
“Public Shares”), which includes the partial exercise by the underwriter of its over-allotment option in the amount of 6,500,000
Units, at $10.00 per Unit, generating gross proceeds of $500,000,000 which is described in Note 4.
Simultaneously with the closing of the Initial
Public Offering, the Company consummated the sale of 7,133,333 warrants (the “Private Placement Warrants”) at a price of $1.50
per Private Placement Warrant in a private placement to Fusion Sponsor II LLC (the “Sponsor”), generating gross proceeds of
$10,700,000, which is described in Note 5.
Transaction costs amounted to $28,119,847, consisting
of $8,700,000 in cash underwriting fees, $18,800,000 of deferred underwriting fees and $619,847 of other offering costs.
Following the closing of the Initial Public Offering
on March 2, 2021, an amount of $500,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering
and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”), located in the United
States and invested only in 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 in any open-ended investment company that holds itself out as a money market fund selected
by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act of 1940, as amended (the “Investment Company Act”),
as determined by the Company, until the earlier of (i) the completion of a Business Combination and (ii) the distribution of
the funds held in the Trust Account, as described below.
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 the Private Placement Warrants,
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 a Business Combination
with one or more operating businesses or assets that together have an aggregate fair market value equal to at least 80% of the net assets
held in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount
of any deferred underwriting commissions) at the time of the Company’s signing a definitive agreement in connection with its initial
Business Combination. 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 an interest in the target business or assets sufficient for it
not to be required to register as an investment company under the Investment Company Act.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Company will provide its holders of the outstanding
Public Shares (the “public stockholders”) 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 stockholder meeting called to approve the Business Combination
or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination
or conduct a tender offer will be made by the Company. The public stockholders 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, plus any pro rata interest earned on the funds
held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon
the completion of a Business Combination with respect to the Company’s warrants.
The Company will only proceed with a Business
Combination if the Company has net tangible assets of at least $5,000,001 either prior to or upon such consummation of a Business Combination
and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder
vote is not required by applicable law or stock exchange rules and the Company does not decide to hold a stockholder vote for business
or other reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated
Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission
(“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder
approval of the transaction is required by applicable law or stock exchange rules, or the Company decides to obtain stockholder approval
for business or other 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. If the Company seeks stockholder approval in connection with a Business Combination,
the Sponsor has agreed to vote its Founder Shares (as defined in Note 6), and any Public Shares purchased during or after the Initial
Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares
irrespective of whether they vote for or against the proposed transaction or do not vote at all.
Notwithstanding the above, if the Company seeks
stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and
Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other
person with whom such stockholder 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 has agreed (a) to waive its redemption
rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination and
(b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing
of the Company’s obligation to allow redemption in connection with the Company’s initial Business Combination or to redeem
100% of its Public Shares if the Company does not complete a Business Combination or (ii) with respect to any other provision relating
to stockholders’ rights or pre-initial business combination activity, unless the Company provides the public stockholders with the
opportunity to redeem their Public Shares in conjunction with any such amendment.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Company will have until March 2, 2023 to complete
a Business Combination (the “Combination Period”). 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 to pay its tax obligations (less 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 stockholders’ rights as stockholders (including
the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption,
subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate,
subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of
other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which
will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
The Sponsor has agreed to waive its liquidation
rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However,
if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions
from the Trust Account 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 7) 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 assets remaining available for distribution will be less than the Initial Public Offering price per Unit
($10.00).
In order to protect the amounts held in the Trust
Account, the Sponsor has agreed to 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 discussed entering into a transaction agreement,
reduce the amount of funds in the Trust Account to below the lesser of (1) $10.00 per Public Share and (2) the actual amount
per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the
trust assets, less taxes payable, provided that such liability will not apply to 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 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”). Moreover, in the event that an executed waiver is deemed to be unenforceable against
a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. 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 (except the Company’s independent registered public accounting firm), prospective target businesses and
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.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 2. RESTATEMENT OF PREVIOUSLY ISSUED
FINANCIAL STATEMENTS
In connection with the preparation of the Company’s
unaudited condensed financial statements as of September 30, 2021, management identified errors made in its historical financial statements
where, at the closing of the Company’s Initial Public Offering, the Company improperly classified its Class A common stock subject
to possible redemption. The Company previously determined the Class A common stock subject to possible redemption to be equal to the
redemption value of $10.00 per share of Class A common stock while also taking into consideration a redemption cannot result in net tangible
assets being less than $5,000,001. Management determined that the Class A common stock issued during the Initial Public Offering can
be redeemed or become redeemable subject to the occurrence of future events considered outside the Company’s control. Therefore,
management concluded that the redemption value should include all shares of Class A common stock subject to possible redemption, resulting
in the Class A common stock subject to possible redemption being equal to their redemption value. As a result, management has noted a
reclassification error related to temporary equity and permanent equity. This resulted in a restatement of the initial carrying value
of the Class A common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available),
accumulated deficit and Class A common stock.
As a result, management has noted a reclassification
adjustment related to temporary equity and permanent equity. This resulted in an adjustment to the initial carrying value of the Class A
common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated
deficit and Class A common stock.
In connection with the change in presentation
for the Class A common stock subject to redemption, the Company also restated its income (loss) per common share calculation to allocate
net income (loss) pro rata to Class A and Class B common stock. This presentation contemplates a Business Combination as the most likely
outcome, in which case, both classes of common stock share pro rata in the income (loss) of the Company.
There has been no change in the Company’s
total assets, liabilities or operating results.
The impact of the restatement on the Company’s financial
statements is reflected in the following table.
Balance Sheet as of March 31, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Class A common stock subject to possible redemption
|
|
$
|
455,772,420
|
|
|
$
|
44,227,580
|
|
|
$
|
500,000,000
|
|
Class A common stock
|
|
$
|
442
|
|
|
$
|
(442
|
)
|
|
$
|
—
|
|
Additional paid-in capital
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accumulated deficit
|
|
$
|
4,998,314
|
|
|
$
|
(44,227,138
|
)
|
|
$
|
(39,228,824
|
)
|
Total Stockholders’ Equity
(Deficit)
|
|
$
|
5,000,006
|
|
|
$
|
(44,227,580
|
)
|
|
$
|
(39,227,574
|
)
|
Number of shares subject to redemption
|
|
|
45,577,242
|
|
|
|
4,422,758
|
|
|
|
50,000,000
|
|
Balance Sheet as of June 30, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Class A common stock subject to possible redemption
|
|
$
|
453,388,430
|
|
|
$
|
46,611,570
|
|
|
$
|
500,000,000
|
|
Class A common stock
|
|
$
|
466
|
|
|
$
|
(466
|
)
|
|
$
|
—
|
|
Additional paid-in capital
|
|
$
|
602,389
|
|
|
$
|
(602,389
|
)
|
|
$
|
—
|
|
Accumulated deficit
|
|
$
|
4,395,905
|
|
|
$
|
(46,008,715
|
)
|
|
$
|
(41,612,810
|
)
|
Total Stockholders’ Equity
(Deficit)
|
|
$
|
5,000,010
|
|
|
$
|
(46,611,570
|
)
|
|
$
|
(41,611,560
|
)
|
Number of shares subject to redemption
|
|
|
45,338,843
|
|
|
|
4,661,157
|
|
|
|
50,000,000
|
|
Statement of Operations for the Period from January 11, 2021 (Inception)
through March 31, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Weighted average shares outstanding, Class
A common stock
|
|
|
50,000,000
|
|
|
|
(32,777,778
|
)
|
|
|
17,222,222
|
|
Basic and diluted earnings per share, Class A common stock
|
|
$
|
—
|
|
|
$
|
0.25
|
|
|
$
|
0.25
|
|
Weighted average shares outstanding, Class B common stock
|
|
|
11,471,519
|
|
|
|
(1,263,186
|
)
|
|
|
10,208,333
|
|
Basic and diluted earnings per share, Class B common stock
|
|
$
|
0.59
|
|
|
$
|
(0.34
|
)
|
|
$
|
0.25
|
|
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Statement of Operations for the Three Months June 30, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Weighted average shares outstanding, Class
A common stock
|
|
|
50,000,000
|
|
|
|
—
|
|
|
|
50,000,000
|
|
Basic and diluted earnings per share, Class A common stock
|
|
$
|
—
|
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
Weighted average shares outstanding, Class B common stock
|
|
|
12,500,000
|
|
|
|
—
|
|
|
|
12,500,000
|
|
Basic and diluted earnings per share, Class B common stock
|
|
$
|
(0.19
|
)
|
|
$
|
0.15
|
|
|
$
|
(0.04
|
)
|
Statement of Operations for the Period from January 11, 2021 (Inception)
through June 30, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Weighted average shares outstanding, Class
A common stock
|
|
|
50,000,000
|
|
|
|
(16,388,889
|
)
|
|
|
33,611,111
|
|
Basic and diluted earnings per share, Class A common stock
|
|
$
|
—
|
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
Weighted average shares outstanding, Class B common stock
|
|
|
12,022,059
|
|
|
|
(667,892
|
)
|
|
|
11,354,167
|
|
Basic and diluted earnings per share, Class B common stock
|
|
$
|
0.36
|
|
|
$
|
(0.26
|
)
|
|
$
|
0.10
|
|
Statement of Changes in Stockholders’ Equity (Deficit) for
the Period from January 11, 2021 (Inception) through March 31, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Sale of 50,000,000 Units, net of underwriting discounts and offering expenses
|
|
$
|
452,250,864
|
|
|
$
|
(452,250,864
|
)
|
|
$
|
—
|
|
Common stock subject to possible redemption
|
|
$
|
(455,772,420
|
)
|
|
$
|
455,772,420
|
|
|
$
|
—
|
|
Accretion for Class A common stock to redemption amount
|
|
$
|
—
|
|
|
$
|
(47,749,136
|
)
|
|
$
|
(47,749,136
|
)
|
Total stockholders' equity (deficit)
|
|
$
|
5,000,006
|
|
|
|
(44,227,580
|
)
|
|
|
(39,227,574
|
)
|
Statement of Changes in Stockholders’ Equity (Deficit) for
the Three Months ended June 30, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Change in value of common stock subject to
redemption
|
|
$
|
2,383,990
|
|
|
$
|
(2,383,990
|
)
|
|
$
|
—
|
|
Total stockholders' equity (deficit)
|
|
$
|
5,000,010
|
|
|
$
|
(46,611,570
|
)
|
|
$
|
(41,611,560
|
)
|
Statement of Cash Flows for the Period from January 11, 2021 (Inception)
through March 31, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Initial classification of Class A common
stock subject to possible redemption
|
|
$
|
447,810,820
|
|
|
$
|
(447,810,820
|
)
|
|
$
|
—
|
|
Change in value of Class A common stock subject to
possible redemption
|
|
$
|
7,961,600
|
|
|
$
|
(7,961,600
|
)
|
|
$
|
—
|
|
Statement of Cash Flows for the Period from January 11, 2021 (Inception)
through June 30, 2021 (unaudited)
|
|
As Previously
Reported
|
|
|
Adjustment
|
|
|
As Restated
|
|
Initial classification of Class A common
stock subject to possible redemption
|
|
$
|
447,810,820
|
|
|
$
|
(447,810,820
|
)
|
|
$
|
—
|
|
Change in value of Class A common stock subject to
possible redemption
|
|
$
|
(2,383,990
|
)
|
|
$
|
2,383,990
|
|
|
$
|
—
|
|
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial
statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain
information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or
omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information
and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management,
the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are
necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial
statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering as filed with the SEC on
February 25, 2021, as well as the Company’s Quarterly Report on Form 10Q, as filed with the SEC on June 25, 2021, which includes
the restatement of the Company’s 8K filed on March 8, 2021. The interim results for the three months ended September 30, 2021 and
the period from January 11, 2021 (inception) to September 30, 2021 are not necessarily indicative of the results to be expected for the
period ending December 31, 2021 or for any future periods.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
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 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 statement 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 the condensed financial statements
in conformity with 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 of the financial statements and the reported amounts
of revenues and expenses during the reporting period.
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 condensed financial
statements is the determination of the fair value of the warrant liability. Such estimates may be subject to change as more current information
becomes available and, accordingly, the actual results could differ significantly from those estimates.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
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 did not have any cash equivalents
as of September 30, 2021.
Cash and Investments Held in Trust
Account
The Company classifies its U.S. Treasury and equivalent
securities as held-to-maturity in accordance with ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity
securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities
are recorded at amortized cost on the accompanying condensed balance sheet and adjusted for the amortization or accretion of premiums
or discounts.
Class A Common Stock Subject to Possible
Redemption
The Company accounts for its Class A common
stock subject to possible redemption in accordance with the guidance in ASC Topic 480
“Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified
as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption
rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Company’s control) is classified as temporary equity. At all other times, common stock is classified as stockholders’
equity. The Company’s Class A common stock features certain redemption rights that are considered to be outside of the Company’s
control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2021, 50,000,000 shares of Class A common
stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of the Company’s
condensed balance sheet.
The Company recognizes changes in redemption value
immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting
period.
At September 30, 2021, the Class A common stock
reflected in the unaudited condensed balance sheet are reconciled in the following table:
Gross proceeds
|
|
$
|
500,000,000
|
|
Less:
|
|
|
|
|
Proceeds allocated to Public Warrants
|
|
|
(20,810,000
|
)
|
Class A common stock issuance costs
|
|
|
(26,939,136
|
)
|
Plus:
|
|
|
|
|
Accretion of carrying value to redemption value
|
|
|
47,749,136
|
|
|
|
|
|
|
Class A common stock subject to possible redemption
|
|
$
|
500,000,000
|
|
Offering Costs
Offering costs consisted of legal, accounting
and other expenses incurred through the Initial Public Offering that were directly related to the Initial Public Offering. Offering costs
were 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 allocated to warrant liabilities were expensed as incurred in the condensed statements of operations.
Offering costs associated with the Class A common stock issued were initially charged to temporary equity and then accreted to common
stock subject to redemption upon the completion of the Initial Public Offering.
Warrant Liabilities
The Company does not use derivative instruments
to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including
issued stock purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives,
pursuant to ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). The Company accounts for the
Public Warrants and Private Placement Warrants (together with the Public Warrants, the “Warrants”) in accordance with the
guidance contained in Accounting Standards Codification 815-40, “Derivatives and Hedging — Contracts on an Entity’s
Own Equity” (“ASC 815-40”) and determined that the Warrants do not meet the criteria for equity treatment thereunder.
As such, each Warrant must be recorded as a liability and is subject to re-measurement at each balance sheet date and any change in fair
value is recognized in the Company’s statements of operations.
For issued or modified warrants that meet all
of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the
time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required
to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the Private Placement
Warrants was estimated using a Black-Scholes Option Pricing Model. The Public Warrants were valued using the instrument’s publicly
listed trading price.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Income Taxes
The Company follows the asset and liability method
of accounting for income taxes under 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. As of September 30, 2021, the Company
had deferred tax assets with a full valuation allowance recorded against them.
The Company’s current taxable income primarily
consists of interest earned on the Trust Account. The Company’s general and administrative costs are generally considered start-up
costs and are not currently deductible. During the three months ended September 30, 2021 and the period from January 11, 2021 (inception)
to September 30, 2021, the Company recorded no income tax expense. The Company’s effective tax rate for three months ended September
30, 2021 and the period from January 11, 2021 (inception) to September 30, 2021 was approximately 0%, which differs from the expected
income tax rate due mainly to the start-up costs (discussed above), the change in fair value of warrant liability, and transaction costs
allocated to warrant liabilities which are not currently deductible.
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.
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 September 30, 2021. 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.
Net income (Loss) per Shares of Common
Stock
The Company complies with accounting and disclosure
requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per share of common stock is computed by dividing net income
(loss) by the weighted average number of common stock outstanding for the period. The Company applies the two-class method in calculating
earnings per share. Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the
redemption value approximates fair value.
The Company has not considered the effect of warrants
sold in the Initial Public Offering and private placement to purchase 23,800,000 shares of common stock in the calculation of diluted
income (loss) per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such
warrants would be anti-dilutive.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The following table reflects the calculation of
basic and diluted net income (loss) per share of common stock (in dollars, except per share amounts):
|
|
Three Months Ended
September 30, 2021
|
|
|
Nine Months Ended
September 30, 2021
|
|
|
|
Class A
|
|
|
Class B
|
|
|
Class A
|
|
|
Class B
|
|
Basic and diluted net income per common stock
|
|
|
|
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Allocation of net income, as adjusted
|
|
$
|
5,705,015
|
|
|
$
|
1,426,254
|
|
|
$
|
9,268,469
|
|
|
$
|
2,258,705
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average shares outstanding
|
|
|
50,000,000
|
|
|
|
12,500,000
|
|
|
|
50,000,000
|
|
|
|
12,184,886
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income per common stock
|
|
$
|
0.11
|
|
|
$
|
0.11
|
|
|
$
|
0.19
|
|
|
$
|
0.19
|
|
Concentration of Credit Risk
Financial instruments that potentially subject
the Company to concentrations of credit risk consist of a cash account in a financial institution, which, at times, may exceed the Federal
Deposit Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on this account and management believes
the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and
liabilities which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximate the carrying amounts
represented in the accompanying condensed balance sheet, primarily due to their short-term nature, except for the derivative warrant liabilities
(see Note 11).
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Fair Value Measurements
Fair value is defined as the price that would
be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement
date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
|
●
|
Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets;
|
|
●
|
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
|
|
●
|
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
|
In some circumstances, the inputs used to measure
fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is
categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Derivative Financial Instruments
The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic
815, “Derivatives and Hedging.” For derivative financial instruments that are accounted for as liabilities, the derivative
instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the
fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments
should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified
in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required
within 12 months of the balance sheet date.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“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) (“ASU 2020-06”) to simplify accounting for certain
financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion
features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts
in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments
that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be
applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021. The Company adopted ASU
2020-06 as of January 11, 2021 (inception) and the adoption did not have an impact on its financial position, results of operations or
cash flows.
Management does not believe that any other recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed
financial statements.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 4. PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company
sold 50,000,000 Units, which includes a partial exercise by the underwriters of their over-allotment option in the amount of 6,500,000
Units, at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-third of one warrant (“Public
Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50
per share, subject to adjustment (see Note 10).
NOTE 5. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial
Public Offering, the Sponsor purchased an aggregate of 7,133,333 Private Placement Warrants, at a price of $1.50 per warrant, or $10,700,000
in the aggregate in a private placement. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at
an exercise price of $11.50 per share, subject to adjustment (see Note 10). A portion of the proceeds from the Private Placement Warrants
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 proceeds from the sale of the Private Placement Warrants held in the Trust Account will be used to
fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire
worthless.
NOTE 6. RELATED PARTY TRANSACTIONS
Founder Shares
In January 2021, the Sponsor paid $25,000
to cover certain offering costs of the Company in consideration of 8,625,000 shares of the Company’s Class B common stock (the
“Founder Shares”). On February 18, 2021, the Company effected a 1:1.2167 stock split of its Class B common stock, resulting
in an aggregate of 10,493,750 Founder Shares outstanding. On February 25, 2021, the Company effected a 1:1.19178 stock split of the Company’s
Class B common stock, resulting in the Sponsor holding an aggregate of 12,506,250 Founder Shares. All share and per share amounts have
been retroactively restated.
The Sponsor has agreed, subject to certain limited
exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier of (A) one year after the completion of a
Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A common
stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock reorganizations, recapitalizations and the like) for any
20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date
on which the Company completes a liquidation, merger, stock exchange, reorganization or other similar transaction that results in all
of the Company’s stockholders having the right to exchange their shares of Class A common stock for cash, securities or other
property.
Administrative Services Agreement
The Company entered into an agreement, commencing
February 25, 2021, through the earlier of the Company’s consummation of a Business Combination or its liquidation, to pay the Sponsor
a total of $10,000 per month for office space, secretarial, and administrative services. For the three months ended September 30, 2021
and for the period from January 11, 2021 (inception) through September 30, 2021, the Company incurred $30,000 and $70,000 in fees for
these services, respectively, of which $70,000 is included in accounts payable and accrued expenses in the accompanying condensed balance
sheet.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Promissory Note — Related Party
On January 11, 2021, the Sponsor issued an unsecured
promissory note to the Company (the “Promissory Note”), pursuant to which the Company could borrow up to an aggregate principal
amount of $300,000. The Promissory Note was non-interest bearing and payable on the earlier of December 31, 2021 or the consummation of
the Initial Public Offering. The outstanding amount of $173,972 outstanding under the Promissory Note was repaid on March 5, 2021. Borrowings
under the Promissory Note are no longer available.
Advances from Related Party
As of September 30, 2021, the Sponsor had advanced
$300,000 to the Company to pay for operating costs. The advances are non-interest bearing and due on demand.
Related Party Loans
In addition, in order to finance transaction costs
in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or certain of the Company’s officers and directors
or their affiliates 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 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. The Working Capital
Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to
$1,500,000 of such Working Capital Loans may be convertible into warrants of the post Business Combination entity. The warrants would
be identical to the Private Placement Warrants. 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. As of September 30, 2021, there were no amounts outstanding under
the Working Capital Loans.
On March 5, 2021, the Company issued an unsecured
convertible promissory note (the “Sponsor Convertible Note”) to the Sponsor, pursuant to which the Company may borrow up to
$1,500,000 from the Sponsor for ongoing expenses reasonably related to the business of the Company and the consummation of the Business
Combination. All unpaid principal under the Sponsor Convertible Note will be due and payable in full on the earlier of (i) March 2, 2023
and (ii) the consummation of a Business Combination (such earlier date, the “Maturity Date”). The Sponsor will have the option,
at any time on or prior to the Maturity Date, to convert any amounts outstanding under the Sponsor Convertible Note into warrants to purchase
shares of the Company’s Class A common stock, at a conversion price of $1.50 per warrant. The warrants would be identical to the
Private Placement Warrants. As of September 30, 2021, there was no borrowings outstanding under the Sponsor Convertible Note.
NOTE 7. COMMITMENTS
Risks and Uncertainties
Management continues to evaluate the impact of
the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus 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 condensed financial statements. The condensed financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Registration Rights
Pursuance to a registration rights agreement entered
into on February 25, 2021, the holders of the Founder Shares, Private Placement Warrants, and warrants that may be issued upon conversion
of Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or warrants issued
upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) are entitled to registration rights requiring
the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of Class A
common stock). The holders of these securities will be entitled to make up to three demands, excluding short form registration demands,
that the Company register such securities. In addition, the holders will have certain “piggy-back” registration rights with
respect to registration statements filed subsequent to the completion of a Business Combination. The Company will bear the expenses incurred
in connection with the filing of any such registration statements.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
Underwriting Agreement
The underwriters are entitled to a deferred fee
of $0.35 per Unit, or $18,800,000 in the aggregate. The deferred fee will be forfeited by the underwriters solely in the event that the
Company fails to complete a Business Combination, subject to the terms of the underwriting agreement.
NOTE 8. CLASS A COMMON STOCK SUBJECT TO POSSIBLE
REDEMPTION
Class A Common Stock – The Company is authorized
to issue 280,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are
entitled to one vote for each share. At September 30, 2021, there were 50,000,000 shares
of common stock subject to possible redemption, which are presented as temporary equity.
Holders of Class A common stock and Class B
common stock will vote together as a single class on all matters submitted to a vote of stockholders except as required by law.
The shares of Class B common stock will automatically
convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject to adjustment.
In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection
with a Business Combination, the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal,
in the aggregate, on an as-converted basis, 20% of the total number of shares of Class A common stock outstanding after such conversion
(after giving effect to any redemptions of shares of Class A common stock by public stockholders), including the total number of
shares of Class A common stock 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 a Business Combination, excluding
any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A
common stock issued, or to be issued, to any seller in a Business Combination and any private placement warrants 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.
NOTE 9. STOCKHOLDERS’ EQUITY
Preferred Stock — The Company
is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designation, rights and preferences
as may be determined from time to time by the Company’s board of directors. At September 30, 2021, there were no shares of preferred
stock issued or outstanding.
Class B Common Stock —
The Company is authorized to issue 20,000,000 shares of common stock with a par value of $0.0001 per share. Holders of Class B common
stock are entitled to one vote for each share. At September 30, 2021, there were 12,500,000 shares of common stock issued and outstanding.
NOTE 10. WARRANT LIABILITIES
As of September 30, 2021, there are 16,166,667
Public Warrants and 7,133,333 Private Placement Warrants outstanding. Public Warrants may only be exercised for a whole number of shares.
No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become
exercisable on the later of (a) 12 months from the closing of the Initial Public Offering and (b) 30 days after the completion of
a Business Combination.
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 Class A common stock underlying the warrants is then
effective and a prospectus relating thereto is current, subject to the Company satisfying its obligations with respect to registration.
No warrant will be exercisable and the Company will not be obligated to issue any shares of Class A common stock upon exercise of
a warrant unless the share of 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.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The Company has agreed that as soon as practicable,
but in no event later than 15 business days after the closing of a Business Combination, it will use its best efforts to file with the
SEC a registration statement registering the registration, under the Securities Act, of the Class A common stock issuable upon exercise
of the warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such
registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions
of the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants
is not effective by the sixtieth (60th) business day after the closing of a 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 Class A common stock is at the time of any exercise of a warrant not
listed on a national securities exchange such that it satisfies 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 elects, the Company will not
be required to file or maintain in effect a registration statement, but will use its best efforts to qualify the shares under applicable
blue sky laws to the extent an exemption is not available.
Redemption of warrants for cash. Once the
warrants become exercisable, the Company may call the warrants for redemption:
|
●
|
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 to each warrant holder; and
|
|
●
|
if, and only if, the closing price of the common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like and for certain issuances of Class A common stock and equity-linked securities for capital raising purposes in connection with the closing of the initial business combination as described in the warrant agreement) for any 20 trading days within a 30-trading day period ending three business days before we send to the notice of redemption to the warrant holders.
|
If and when the warrants become redeemable by
the Company, it may exercise its redemption right even if the Company is unable to register or qualify the underlying securities for sale
under all applicable state securities laws.
Redemption of warrants for Class A common
stock. Commencing ninety days after the warrants become exercisable, the Company may redeem the outstanding warrants:
|
●
|
in whole and not in part;
|
|
●
|
at $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 prior to redemption and receive that number of shares, based on the redemption date and the fair market value of the Class A common stock;
|
|
●
|
if, and only if, the last reported sale price of the Class A common stock equals or exceeds $10.00 per share (as adjusted per stock splits, stock dividends, reorganizations, reclassifications, recapitalizations and the like) on the trading day prior to the date on which the Company sends the notice of redemption to the warrant holders;
|
|
●
|
if, and only if, the Private Placement Warrants are also concurrently exchanged at the same price (equal to a number of shares of Class A common stock) as the outstanding Public Warrants, as described above; and
|
|
●
|
if, and only if, there is an effective registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating thereto available throughout the 30-day period after written notice of redemption is given
|
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
If the Company calls the Public Warrants for redemption
for cash, 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. The exercise price and number of shares of common stock issuable upon exercise of
the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization,
merger or consolidation. However, except as described below, the warrants will not be adjusted for issuance of common stock at a price
below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable
to complete a 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.
In addition, if (x) the Company issues additional
shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business
Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (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 Sponsor or its affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable,
prior to such issuance), (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more
than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation
of a Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A common stock
during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a 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 higher of the Market Value and the Newly Issued Price, and the $18.00 per share redemption trigger price
will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to
the Public Warrants underlying the Units being sold in the Initial Public Offering, except that the Private Placement Warrants and the
shares of common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or saleable until
30 days after the completion of a Business Combination, subject to certain limited exceptions, and will be entitled to certain registration
rights (see Note 6). Additionally, the Private Placement Warrants will be exercisable for cash or on a cashless basis, at the holder’s
option, and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees (except for a number of
shares of Class A common stock as described above under Redemption of warrants for Class A common stock). If the Private
Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants
will be redeemable by the Company in all redemption scenarios and exercisable by such holders on the same basis as the Public Warrants.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 11. FAIR VALUE MEASUREMENTS
The Company classifies its U.S. Treasury and equivalent
securities as held-to-maturity in accordance with ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity
securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities
are recorded at amortized cost on the accompanying unaudited condensed balance sheet and adjusted for the amortization or accretion of premiums
or discounts.
At September 30, 2021, assets held in the Trust
Account were comprised of $380 in cash and $500,113,271 in U.S. Treasury securities. Through September 30, 2021, the Company did not withdraw
any interest income from the Trust Account.
The following table presents information about
the Company’s assets that are measured at fair value on a recurring basis at September 30, 2021 and indicates the fair value hierarchy
of the valuation inputs the Company utilized to determine such fair value. The gross holding gains and fair value of held-to-maturity
securities at September 30, 2021 are as follows:
|
|
|
Held-To-Maturity
|
|
Level
|
|
|
Amortized
Cost
|
|
|
Gross
Holding
Gain
|
|
|
Fair Value
|
|
September 30, 2021
|
|
|
U.S. Treasury Securities (Matures on 12/02/21)
|
|
|
1
|
|
|
$
|
500,114,260
|
|
|
$
|
(609
|
)
|
|
$
|
500,113,651
|
|
The following table presents information about
the Company’s liabilities that are measured at fair value on a recurring basis at September 30, 2021 and indicates the fair value
hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description
|
|
Level
|
|
|
September 30,
2021
|
|
Liabilities:
|
|
|
|
|
|
|
Warrant Liability – Public Warrants
|
|
|
1
|
|
|
$
|
11,210,000
|
|
Warrant Liability – Private Warrants
|
|
|
3
|
|
|
$
|
4,857,086
|
|
The warrants were accounted for as liabilities
in accordance with ASC 815-40 and are presented within warrant liabilities on the condensed 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 condensed statements of operations.
The Public Warrants were initially valued
using a Monte Carlo simulation implementing the Black-Scholes Option Pricing Model that was modified to capture the redemption features
of the public warrants, which is considered to be a Level 3 fair value measurement. The underlying assumptions in the Black-Scholes option
pricing model include the underlying share price, risk-free interest rate, estimated volatility and the expected term. The primary unobservable
inputs utilized in determining the fair value of the public warrants are the expected volatility of the Company’s common stock
and common stock price. The expected volatility of the Company’s common stock was determined based on implied volatilities of public
warrants issued by selected guideline companies and was estimated to be 10% before the expected business combination and 20% after the
expected business combination. The Company’s common stock price was determined based on an iterative procedure that matched the
estimated value of the common stock and fractional warrant price to equate to the observed price of the Company’s outstanding units.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the date of valuation equal to the remaining expected
life of the public warrants. The dividend yield percentage is zero because the Company does not currently pay dividends, nor does it
intend to do so during the expected term of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining
contractual term. Inputs are re-evaluated each quarterly reporting period to estimate the fair market value of the private placement
warrants as of the reporting period. The subsequent measurements of the Public Warrants after the detachment of the Public Warrants from
the Units are classified as Level 1 due to the use of an observable market quote in an active market under the ticker FSNB.WS. For periods
subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair
value of the Public Warrants as of each relevant date.
FUSION ACQUISITION CORP. II
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
The private placement warrants were valued using
a Black-Scholes option pricing model, which is considered to be a Level 3 fair value measurement. The underlying assumptions in the Black-Scholes
option pricing model include the underlying share price, risk-free interest rate, estimated volatility and the expected term. The primary
unobservable inputs utilized in determining fair value of the private placement warrants are the expected volatility of the Company’s
common stock and common stock price. The expected volatility of the Company’s common stock was determined based on implied volatilities
of public warrants issued by selected guideline companies and was estimated to be 10% before the expected business combination and 20%
after the expected business combination. The Company’s stock price was determined based on an iterative procedure that matched the
estimated value of the common stock and fractional warrant price to equate to the observed price of the Company’s outstanding units.
The risk-free interest rate is based on the U.S. Treasury yield curve in effect on the date of valuation equal to the remaining expected
life of the public warrants. The dividend yield percentage is zero because the Company does not currently pay dividends, nor does it intend
to do so during the expected term of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual
term. Inputs are re-evaluated each quarterly reporting period to estimate the fair market value of the private placement warrants as of
the reporting period.
The following assumptions were used to determine
the Level 3 fair value measurements:
|
|
September 30,
2021
|
|
Risk-free interest rate
|
|
|
1.10
|
%
|
Time to expiration, in Years
|
|
|
5.71
|
|
Expected volatility
|
|
|
12.0
|
%
|
Dividend yield
|
|
|
0.00
|
%
|
Exercise price
|
|
$
|
11.50
|
|
Unit Price
|
|
$
|
9.71
|
|
The following table presents the changes in the
fair value of warrant liabilities:
|
|
Private Placement
|
|
|
Public
|
|
|
Warrant Liabilities
|
|
Fair value as of January 11, 2021 (inception)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Initial measurement on March 2, 2021
|
|
|
8,983,329
|
|
|
|
20,810,000
|
|
|
|
29,793,329
|
|
Change in fair value
|
|
|
(2,465,108
|
)
|
|
|
(5,615,000
|
)
|
|
|
(8,080,108
|
)
|
Fair Value as of March 31, 2021
|
|
|
6,518,221
|
|
|
|
15,195,000
|
|
|
|
21,713,221
|
|
Change in fair value
|
|
|
571,249
|
|
|
|
1,136,667
|
|
|
|
1,707,916
|
|
Transfer to Level 1
|
|
|
—
|
|
|
|
(16,331,667
|
)
|
|
|
(16,331,667
|
)
|
Fair value as of June 30, 2021
|
|
|
7,089,470
|
|
|
|
—
|
|
|
|
7,089,470
|
|
Change in fair value
|
|
|
(2,232,384
|
)
|
|
|
—
|
|
|
|
(2,232,384
|
)
|
Fair value as of September 30, 2021
|
|
$
|
4,857,086
|
|
|
$
|
—
|
|
|
$
|
4,857,086
|
|
Transfers to/from Levels 1, 2 and 3 are recognized
at the end of the reporting period in which a change in valuation technique or methodology occurs. The estimated fair value of the Public
Warrants transferred from a Level 3 measurement to a Level 1 fair value measurement during the period from January 11, 2021 (inception)
to September 30, 2021 was $16,331,667.
NOTE 12. SUBSEQUENT EVENTS
The Company evaluated subsequent events and
transactions that occurred after the balance sheet date up to the date that the condensed 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 condensed financial
statements, other than the restatement discussed in Note 2.