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UNITED STATES
SECURITIES AND
EXCHANGE
COMMISSION
Washington, D.C. 20549
 
 
Amendment No.1 to
FORM
10-Q
 
 
(MARK ONE)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
 
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
                
to
                
Commission file
number:001-40160
 
 
VPC IMPACT ACQUISITION HOLDINGS II
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
Cayman Islands
 
98-1576492
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
Victory Park Capital Advisors, LLC
150 North Riverside Plaza, Suite 5200
Chicago, IL 60606
(Address of principal executive offices)
+1-312-701-1777
(Issuer’s telephone number)
 
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Units, each consisting of one Class A ordinary share, $0.0001 par value, and
one-fourth
of one redeemable warrant
 
VPCBU
 
The Nasdaq Stock Market LLC
Class A ordinary shares, par value $0.0001
 
VPCB
 
The Nasdaq Stock Market LLC
Redeemable warrants, each warrant exercisable for one Class A ordinary share, each at an exercise price of $11.50 per share
 
VPCBW
 
The Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☐    No  ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large, accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large, accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in
Rule 12b-2
of the Exchange Act.
 
Large, accelerated filer   ☐    Accelerated filer   ☐
       
Non-accelerated
filer 		  ☒    Smaller reporting company   ☒
       
         Emerging growth company   ☒
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act).    Yes  ☒    No  ☐
As o
f January 3, 2022, t
here were
 
25,578,466
Class A ordinary shares, $0.0001 par value and
6,394,617
Class B ordinary shares, $0.0001 par value, issued and outstanding.
 
 
 
VPC IMPACT ACQUISITION HOLDINGS II
FORM
10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2021
TABLE OF CONTENTS
 
    
Page
 
Part I. Financial Information
        
Item 1. Financial Statements
        
     1  
     2  
     3  
     4  
     5  
     28  
     35  
     35  
        
     36  
     37  
     38  
     38  
     38  
     38  
     39  
     40  
EXPLANATORY NOTE
VPC Acquisition Holdings II, Inc. (the “Company,” “VPC II,” “we,” “us” or “our”) is filing this Amendment No. 1 to its Quarterly Report on Form
10-Q/A
for the quarterly period ended September 30, 2021 (this “Amended Form
10-Q”)
to amend and restate certain terms in its Quarterly Report on Form
10-Q
for the quarterly period ended September 30, 2021 originally filed with the Securities and Exchange Commission (the “SEC”) on November 12, 2021 (the “Original Quarterly Report”).
Background of Restatement
All of the shares held by the Company’s public shareholders (the “Public Shares”) contain a redemption feature which provides each holder of such shares with the opportunity to have their shares redeemed, and management has no control over which Public Shares will be redeemed. ASC
480-10-S99-3A
provides that redemption provisions not solely within the control of the issuer require shares subject to redemption to be classified outside of permanent equity. Furthermore, ASC
480-10-25-6(b)
provides guidance stating that in determining if an instrument is mandatorily redeemable, a provision that defers redemption until a specified liquidity level is reached would not affect classification of the instrument. As such, management has identified errors made in the historical financial statements where, at the closing of the Company’s Initial Public Offering, the Company improperly classified its Class A ordinary shares subject to possible redemption. The Company previously determined the Class A ordinary shares subject to possible redemption to be equal to the redemption value, while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Management determined that the Public Shares 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 Class A ordinary shares subject to possible redemption, resulting in the Class A ordinary shares subject to possible redemption being equal to their redemption value. As a result, in the Original Quarterly Report management has noted a reclassification adjustment related to temporary equity and permanent equity as of September 30, 2021.
Following the filing of the Original Quarterly Report, the Company’s management, together with the Audit Committee, re-evaluated the materiality of the reclassification and whether the reclassification adjustment related to temporary equity and permanent equity should be restated as of the Initial Public Offering date and the next two subsequent reporting periods. Following such re-evaluation, the Company’s management, together with the Audit Committee determined that the Company’s financial statements and other financial data as of and the period from January 13, 2021 (inception) through March 31, 2021 and the period from January 13, 2021 (inception) through June 30, 2021 should be restated through the filing of this Amended Form 10-Q. The financial statements as of March 31, 2021 and the period from January 13, 2021 (inception) through March 31, 2021 and as of June 30, 2021 and the three months then ended and for the period from January 13, 2021 (inception) through June 30, 2021 have been restated in Note 2 of this Amended Form 10-Q, with the restatements resulting in a change in the initial carrying value of the Class A ordinary shares subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A ordinary shares. Further, due to the change in presentation for the Class A ordinary shares subject to redemption, the Company also revised its earnings per share calculation to allocate net income (loss) evenly to Class A and Class B ordinary shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of ordinary shares share pro rata in the income (loss) of the Company. There is no impact to the reported amounts for total assets, total liabilities, cash flows, or net income (loss).
The financial information that has been previously filed or otherwise reported for the period ended September 30, 2021 is superseded by the information in this Amended Form
10-Q,
and the financial statements and related financial information contained in the Original Quarterly Report, filed on November 12, 2021, including the filings for the Affected Periods should no longer be relied upon. On December 10, 2021, the Company filed a report on Form
8-K
disclosing the
non-reliance
on the financial statements included in the Original Quarterly Report, as well as the Form
8-K
for the Post-Initial Public Offering Audited Balance Sheet as of March 9, 2021 filed on March 15, 2021, the Form
10-Q
for the period ended March 31, 2021 filed on May 24, 2021 and the Form
10-Q
for the period ended June 30, 2021 filed on August 13, 2021.
Internal Control Considerations
In connection with the restatement, management has
re-evaluated
the effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting as of September 30, 2021. The Company’s management has concluded that, in light of the errors described above, and the filing of the Form
10-Q,
a material weakness exists in the Company’s internal control over financial reporting and that the Company’s disclosure controls and procedures were not effective as a result thereof. Management plans to enhance the system of evaluating and implementing the accounting standards that apply to our financial statements, including enhanced training of our personnel and increased communication among our personnel and third-party professionals with whom we consult regarding application of complex financial instruments. For a discussion of management’s consideration of our disclosure controls and procedures, internal controls over financial reporting, and the material weaknesses identified, see Part I, Item 4, “Controls and Procedures” of this Amended Form
10-Q.
VPC IMPACT ACQUISITION HOLDINGS II
CONDENSED BALANCE SHEET
SEPTEMBER 30, 2021
(UNAUDITED)
 
ASSETS
        
Current assets
        
Cash
   $ 573,466  
Prepaid expenses
     932,073  
    
 
 
 
Total Current Assets
     1,505,539  
Investment held in Trust Account
     255,800,954  
    
 
 
 
TOTAL ASSETS
  
$
257,306,493
 
    
 
 
 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
        
Current liabilities – accrued expense
   $ 2,759,946  
Warrant liabilities
     16,796,339  
Deferred underwriting fee payable
     8,952,463  
    
 
 
 
TOTAL LIABILITIES
  
 
28,508,748
 
Commitments and Contingencies
      
Class A ordinary shares subject to possible redemption 25,578,466 shares at $10.00 per share redemption value as of September 30, 2021
     255,784,660  
Shareholders’ Deficit
        
Preference
 shares, $0.0001 par value; 5,000,000 shares authorized;
none
issued and outstanding
     —    
Class A ordinary shares, $0.0001 par value; 500,000,000 shares authorized at September 30, 2021.
     —    
Class B ordinary shares, $0.0001 par value; 50,000,000 shares authorized; 6,394,617 shares issued and outstanding
 
(1)
     639  
Additional
paid-in
capital
     —    
Accumulated deficit
     (26,987,554 ) 
    
 
 
 
Total Shareholders’ Deficit
  
 
(26,986,915
) 
    
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT
  
$
257,306,493
 
    
 
 
 
 
(1)
In connection with the underwriters’ partial exercise of the over-allotment option and the forfeiture of the remaining over-allotment option on March 9, 2021, 74,133 Founder Shares were forfeited and 769,617 Founder Shares are no longer subject to forfeiture resulting in an aggregate of 6,394,617 Founder Shares outstanding at September 30, 2021.
The accompanying notes are an integral part of the unaudited condensed financial statements.
 
1
VPC IMPACT ACQUISITION HOLDINGS II
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
 
    
Three Months

Ended September 30,
   
For The Period

from January 13,

2021 (Inception)

Through September 30,
 
    
2021
   
2021
 
General and administrative expenses
   $ 1,358,575     $ 3,358,552  
    
 
 
   
 
 
 
Loss from operations
  
 
(1,358,575
) 
 
 
(3,358,552
) 
Other (expenses) income:
                
Changes in fair value of warrant liabilities
     (298,788 )      1,317,580  
Transaction costs incurred in connection with warrant liabilities
     —         (609,973 ) 
Interest earned on
investments
 held in Trust Account
     3,292       16,294  
    
 
 
   
 
 
 
Total other (expenses) income
     (295,496 )      723,901  
Net loss
  
$
(1,654,071
) 
 
$
(2,634,651
) 
    
 
 
   
 
 
 
Weighted average shares outstanding, Class A ordinary shares
     25,578,466       20,266,015  
    
 
 
   
 
 
 
Basic and diluted net loss per share, Class A
  
$
(0.05
) 
 
$
(0.10
) 
    
 
 
   
 
 
 
Weighted average shares outstanding, Class B ordinary shares (1)
     6,394,617       6,237,128  
    
 
 
   
 
 
 
Basic and diluted net loss per share, Class B
  
$
(0.05
) 
 
$
(0.10
) 
    
 
 
   
 
 
 
 
(1)
In connection with the underwriters’ partial exercise of the over-allotment option and the forfeiture of the remaining overallotment option on March 9, 2021, 74,133 Founder Shares were forfeited and 769,617 Founder Shares are no longer subject to forfeiture resulting in an aggregate of 6,394,617 Founder Shares outstanding at September 30, 2021. These shares were excluded from the calculation of weighted average shares outstanding until they were no longer subject to forfeiture. If forfeited, they have been excluded from the calculation of weighted average shares outstanding.
The accompanying notes are an integral part of the unaudited condensed financial statements.
 
2
VPC IMPACT ACQUISITION HOLDINGS II
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND FOR THE PERIOD FROM JANUARY 13, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021
(UNAUDITED)
 
    
Class A

Ordinary Shares
    
Class B

Ordinary Shares
   
Additional
Paid-in
   
Accumulated
   
Total
Shareholders’
 
    
Shares
    
Amount
    
Shares
   
Amount
   
Capital
   
Deficit
   
Deficit
 
Balance — January 13, 2021 (inception)
     —       
$
—
       —      
$
—
   
$
—
   
$
—
   
$
—
 
Issuance of Class B ordinary shares to Sponsor (1)
     —          —          6,468,750       647       24,353       —         25,000  
Forfeiture of Founder Shares
     —          —          (74,133 )      (8 )      —         —         (8 ) 
Accretion for Class A ordinary shares to redemption amount
     —          —          —         —         (24,353 )      (24,352,903 )      (24,377,256 ) 
Net loss
     —          —          —         —         —         (1,610,097 )      (1,610,097 ) 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance – March 31, 2021, as restated (see Note 2)
     —       
$
—       
 
6,394,617
 
 
$
639
 
 
$
—  
 
 
$
(25,963,000
) 
 
$
(25,962,361
) 
Net income
     —          —          —         —         —         629,517       629,517  
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance – June 30, 2021, as restated (see Note 2)
     —       
$
—       
 
6,394,617
 
 
$
639
 
 
$
—  
 
 
$
(25,333,483
) 
 
$
(25,332,844
) 
Net income (loss)
     —          —          —         —         —         (1,654,071 )      (1,654,071 ) 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance – September 30, 2021
     —       
$
—       
 
6,394,617
 
 
$
639
 
 
$
—  
 
 
$
(26,987,554
) 
 
$
(26,986,915
) 
    
 
 
    
 
 
    
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
(1)
In connection with the underwriters’ partial exercise of the over-allotment option and the forfeiture of the remaining overallotment option on March 9, 2021, 74,133 Founder Shares were forfeited and 769,617 Founder Shares are no longer subject to forfeiture resulting in an aggregate of 6,394,617 Founder Shares outstanding at September 30, 2021.
The accompanying notes are an integral part of the unaudited condensed financial statements.
 
3
VPC IMPACT ACQUISITION HOLDINGS II
CONDENSED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 13, 2021 (INCEPTION) THROUGH SEPTEMBER 30, 2021
(UNAUDITED)
 
Cash Flows from Operating Activities:
        
Net loss
   $ (2,634,651 ) 
Adjustments to reconcile net income to net cash used in operating activities:
        
Formation cost paid by Sponsor in exchange for issuance of founder shares
     5,000  
Interest earned on
investments
 held in Trust Account
     (16,294 ) 
Changes in fair value of warrant liabilities
     (1,317,580 ) 
Transaction costs incurred in connection with warrants
     609,973  
Changes in operating assets and liabilities:
        
Prepaid expenses
     (932,073 ) 
Accrued expense
     2,759,946  
    
 
 
 
Net cash used in operating activities
    
(1,525,679
) 
    
 
 
 
Cash Flows from Investing Activities:
        
Investment of cash into Trust Account
     (255,784,660 ) 
    
 
 
 
Net cash used in investing activities
    
(255,784,660
) 
    
 
 
 
Cash Flows from Financing Activities:
        
Proceeds from sale of Units, net of underwriting discounts paid
     250,668,967  
Proceeds from sale of Private Placements Warrants
     7,690,693  
Repayment of promissory note—related party
     (93,142 ) 
Payment of offering costs
     (382,713 ) 
    
 
 
 
Net cash provided by financing activities
    
257,883,805
 
    
 
 
 
Net Change in Cash
    
573,466
 
Cash - Beginning of period
     —    
    
 
 
 
Cash - End of period
  
$
573,466
 
    
 
 
 
Non-cash
Investing and Financing Activities:
        
Offering costs paid by Sponsor in exchange for issuance of founder shares
   $ 20,000  
    
 
 
 
Offering costs paid through promissory note
   $ 93,142  
    
 
 
 
Initial classification of Class A ordinary shares subject to possible redemption
   $ 255,784,660  
    
 
 
 
Deferred underwriting fee payable
   $ 8,952,463  
    
 
 
 
The accompanying notes are an integral part of the unaudited condensed financial statements.
 
4
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
NOTE 1. ORGANIZATION AND PLAN OF BUSINESS OPERATIONS
VPC Impact Acquisition Holdings II (the “Company”) is a blank check company incorporated as a Cayman Islands exempted company on January 13, 2021. The Company was formed for the purpose of effecting a merger, share capital, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities (a “Business Combination”).
The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. 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 13, 2021 (inception) through September 30, 2021 relates to the Company’s formation, its initial public offering (“Initial Public Offering”), which is described below, and subsequent to the Initial Public Offering, identifying a target for a Business Combination. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company generates
non-operating
income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s Initial Public Offering was declared effective on March 4, 2021. On March 9, 2021 the Company consummated the Initial Public Offering of 25,578,466 units (the “Units”) which includes the partial exercise by the underwriters of their over-allotment option in the amount of 3,078,466 Units, at $10.00 per Unit, generating gross proceeds of $255,784,660, which is described in Note 4.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 5,127,129 warrants (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to VPC Impact Acquisition Holdings Sponsor II, LLC (the “Sponsor”), generating gross proceeds of $7,690,693, which is described in Note 5.
Transaction costs amounted to $14,564,011, consisting of $5,115,693 of underwriting fees, $8,952,463 of deferred underwriting fees and $495,855 of other offering costs.
Following the closing of the Initial Public Offering on March 9, 2021, an amount of $255,784,660 ($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”) and will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (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 investing solely in U.S. Treasuries and meeting certain conditions under
Rule 2a-7of
the Investment Company Act, as determined by the Company, until the earliest of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders, as described below.
Business Combination Agreement
On August 2, 2021, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”), by and among, the Company, AG1 Holdings, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (“Holdco”), AG2 Holdings, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (“Merger Sub”), FinAccel Pte. Ltd., a Singapore private company limited by shares (the “Target Company”), each shareholder of the Target Company as set forth on Schedule 1 of the Business Combination Agreement (the “Target Company Shareholders”), and Akshay Garg in his capacity as “Shareholders Representative”, pursuant to which, among other things: (i) on the business day prior to the consummation of the acquisition by Holdco of the Target Company contemplated in the Business Combination Agreement (such consummation, the “Closing”), Merger Sub will merge with and into the Company, with Merger Sub continuing as the “Surviving VIH Company” (the “VIH Merger”, with the effective time of such merger, the “VIH Merger Effective Time”), as a result of which, (a) the Surviving VIH Company will become a wholly-owned subsidiary of Holdco and (b) immediately after the VIH Share Recapitalization (as defined below), each Class A ordinary share of the Company, par value $0.0001 per share (the “VIH Class A Ordinary Shares”) issued and outstanding and Class B ordinary shares of the Company, par value $0.0001 per share (“VIH Class B Ordinary Shares”, and together with the VIH Class A Ordinary Shares, the “VIH Ordinary Shares”) immediately prior to the VIH Merger Effective Time shall no longer be outstanding as of the VIH Merger Effective Time and shall automatically be cancelled and cease to exist in exchange for one Class A ordinary share of Holdco (“Holdco Class A Ordinary Share”) (in the form of one American Depository Share representing a Holdco Class A Ordinary Share, each a “Holdco Class A ADS”) and each outstanding warrant to purchase VIH Ordinary Shares will become exercisable for Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) on identical terms, and (ii) at the Closing, among other things, (x) Holdco will acquire all of the issued and outstanding ordinary shares of the Target Company (the “Target Company Ordinary Shares”) and the issued and outstanding preference Shares of the Target Company (the “Target Company Preference Shares”) from the Target Company Shareholders in exchange for the Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) or Class V Ordinary Shares of Holdco (“Holdco Class V Ordinary Share”, and together with the Holdco Class A Ordinary Shares, the “Holdco Ordinary Shares”) (in the form of American Depository Share representing a Holdco Class V Ordinary Share, each a “Holdco Class V ADS”, and together with the Holdco Class A ADSs, the “Holdco ADSs”), as the case may be, (b) each option to acquire Target Company Ordinary Shares granted under the FinAccel Employee Share Options Scheme (the “Target Company Options”) and each Assumed Warrant (as defined below) will be converted into the right to receive an option or a warrant to purchase Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs), respectively, and (c) each Target Company
 
5
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Convertible Note (as defined below) that is then outstanding and not converted into Target Company Ordinary Shares, shall be cancelled and extinguished and in exchange therefor, converted into the right to receive Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs), in each case, in accordance with the terms and conditions set forth in the Business Combination Agreement. The transactions contemplated by the Business Combination Agreement (the “Transactions”), including the VIH Merger, will constitute a “Business Combination” as contemplated by the Company’s existing amended and restated memorandum and articles of association (the “Current VIH Articles”).
The Business Combination Agreement and the Transactions were unanimously approved by the board of directors of VIH (the “Board”) on July 29, 2021.
First Amendment to the Business Combination Agreement
On September 29, 2021, VIH, Holdco, Merger Sub, Target Company and the Shareholders Representative pursuant to Section 13.18 of the Business Combination Agreement entered into the First Amendment to Business Combination Agreement (the “Amendment”), pursuant to which the Business Combination Agreement was amended to amend the definition of “Minimum Available Cash Amount” to mean an amount equal to Three Hundred Ten million dollars ($310,000,000) along with certain other technical clarifications.
All other terms of the Business Combination Agreement, which was previously filed by VIH as Exhibit 2.1 to VIH’s Current Report on
Form 8-K
on August 2, 2021, remained unchanged.
The foregoing summary description of the Amendment is subject to and qualified in its entirety by reference to the Amendment, the terms of which are incorporated by reference to Exhibit 2.1 to the Company’s Current Report on
Form 8-K
(file
No. 001-40160)
as filed with the SEC on September 29, 2021.
VIH Merger
At the VIH Merger Effective Time, Merger Sub and the Company shall consummate the VIH Merger, pursuant to which the Company shall be merged with and into Merger Sub, following which the separate corporate existence of the Company shall cease and Merger Sub shall continue as the surviving company (the “Surviving VIH Company”).
At the VIH Merger Effective Time, every issued and outstanding unit of the Company (consisting of one VIH Class A Ordinary Share and
one-fourth
of a VIH Public Warrant, as defined below, the “VIH Units”), to the extent not detached, shall be automatically detached and the holder thereof shall be deemed to hold one VIH Class A Ordinary Share
and one-fourth of
a warrant of the Company.
At the VIH Merger Effective Time, every issued VIH Class B Ordinary Share will convert into one VIH Class A Ordinary Share on a
one-for-one
basis (the “VIH Share Recapitalization”) and, immediately thereafter every issued VIH Class A Ordinary Share (other than those owned by the Company as treasury shares, which shall be canceled and extinguished without any conversion thereof or payment therefor) shall automatically be cancelled and cease to exist in exchange for one Holdco Class A Ordinary Share (in the form of one Holdco Class A ADS).
At the VIH Merger Effective Time, in accordance with the terms of the Warrant Agreement dated March 4, 2021 by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agreement”), each issued and outstanding whole warrant of the Company (consisting of either one public warrant entitling the holder to purchase one VIH Class A Ordinary Share per warrant at a price of $11.50 per VIH Class A Ordinary Share (a “VIH Public Warrant”), or a private placement warrant entitling the holder to purchase one VIH Class A Ordinary Share per warrant at a price of $11.50 per VIH Class A Ordinary Share (a “VIH Private Warrant”), collectively the “VIH Warrants”) will become exercisable for the right to receive one Holdco Class A Ordinary Share (in the form of Holdco Class A ADS(s)) at the same exercise price per share and on the same terms in effect immediately prior to the VIH Merger Effective Time, and the rights and obligations of the Company under the Warrant Agreement will be assigned and assumed by Holdco.
At the VIH Merger Effective Time, by virtue of the VIH Merger and without any action on the part of any party hereto or the holders of any shares of the Company, Holdco or Merger Sub, all of the ordinary shares of Merger Sub in issue immediately prior to the VIH Merger Effective Time, each of US$0.00001 par value in the share capital of Merger Sub, shall be converted into an equal number of ordinary shares of the Surviving VIH Company, each of US$0.00001 par value in the share capital of the Surviving VIH Company, with the same rights, powers and privileges as the shares so converted and shall constitute the only issued share capital of the Surviving VIH Company.
Target Company Shareholder Consideration
Pursuant to the Business Combination Agreement, the Target Company Shareholders, will receive aggregate merger consideration with an implied value of $2,000,000,000 (the “Equity Value”), consisting of a number of shares of Holdco Class A Ordinary Shares or Holdco Class V Ordinary Shares (in the form of Holdco Class A ADSs or Holdco Class V ADSs, respectively), equal to the Equity Value divided by $10.00 (the “Aggregate Share Consideration”).
 
6
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Pursuant to the Business Combination Agreement, at the VIH Merger Effective Time, (a) Target Company
 
Ordinary Shares held by the Target Company Shareholders will be cancelled and automatically converted into the right to receive, in the case of the Shareholders other than Akshay Garg and Umang Rustagi, a number of newly issued Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) or, in the case of Akshay Garg and Umang Rustagi (the “Founders”), Holdco Class V Ordinary Shares (in the form of Holdco Class V ADSs), each with a par value of $0.00001, equal to an exchange ratio (the “Exchange Ratio”) determined by dividing the Aggregate Share Consideration by the sum of (without duplication): (a) the total number of outstanding Target Company Ordinary Shares, (b) the total number of Target Company Ordinary Shares convertible from all of the outstanding Target Company Preference Shares, (c) the total number of Target Company Ordinary Shares subject to issuance pursuant to a Target Company Option, or portion thereof, to the extent such Target Company Option (or applicable portion thereof) is vested and outstanding as of immediately prior to the Closing or would vest upon or immediately following the Closing (the “Vested Target Company Options”), (d) the maximum number of Target Company Ordinary Shares subject to issuance pursuant to the (i) the Warrant by and between the Target Company and Partners for Growth V, L.P., dated August 12, 2019 and (ii) the Warrant by and between the Target Company and Partners for Growth V, L.P., dated May 12, 2021 (collectively, the “PFG Warrants”), (e) the maximum number of Target Company Ordinary Shares subject to issuance pursuant to the Warrant to Purchase Ordinary Shares of FinAccel Pte. Ltd. by and between the Target Company and Victory Park Capital Advisors, LLC, dated July 10, 2020 (the “VPC Warrant”), and (f) the maximum number of Target Company Ordinary Shares or Target Company Ordinary Shares issuable upon conversion of Target Company Preference Shares, in each case subject to issuance pursuant to outstanding Target Company Convertible Notes, in each case of the foregoing items (a) through (f), as of immediately prior to the Closing.
As of the Closing, each Target Company Option that is then outstanding shall be converted into the right to receive an option relating to Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) on the same terms and conditions as are in effect with respect to such Target Company Option immediately prior to the Closing (including with respect to vesting, release, and forfeiture or termination provisions) (each, a “Holdco Option”) except that (i) such Holdco Option shall relate to such number of Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs, rounded down to the nearest whole Holdco Class A Ordinary Share) as is equal to the product of (A) the number of Target Company Ordinary Shares subject to such Target Company Option multiplied by (B) the Exchange Ratio, and (ii) the exercise price per share for each such Holdco Option shall be equal to the quotient of (A) the exercise price per share of such Target Company Option in effect immediately prior to the Closing divided by (B) the Exchange Ratio (the exercise price per share, as so determined, being rounded up to the nearest full cent).
 
7
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Each of the PFG Warrants and VPC Warrant (collectively, the “Target Company Warrants”), to the extent that it remains outstanding and unexercised immediately prior to the VIH Merger Effective Time (each, an “Assumed Warrant”), shall be converted into a warrant to purchase Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) on the same terms and conditions as are in effect immediately prior to the VIH Merger Effective Time (the “Successor Warrant”), except that (a) each Assumed Warrant shall entitle the holder thereof to purchase such number of Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) as is equal to the product of (i) the number of Target Company Ordinary Shares subject to such Assumed Warrant immediately prior to the VIH Merger Effective Time multiplied by (ii) the Exchange Ratio and (b) each Assumed Warrant shall have an exercise price per share (which shall be rounded up to the nearest whole cent) equal to the quotient of (i) the exercise price per share of such Assumed Warrant immediately prior to the VIH Merger Effective Time divided by (ii) the Exchange Ratio.
As of the Closing, each note issued by the Target Company that is convertible into Target Company Ordinary Shares or Target Company Preference Shares (the “Target Company Convertible Notes”) that is then outstanding and not converted into Target Company Ordinary Shares, shall be cancelled and extinguished and in exchange therefor, converted into the right to receive with respect to such Target Company Convertible Note, Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs, rounded down to the nearest whole Holdco Class A Ordinary Shares) equal to the product of (i) the number of Target Company Ordinary Shares that such Target Company Convertible Notes were convertible into immediately prior to the Closing based on the principal amount and any accrued and unpaid interest outstanding on such Target Company Convertible Note multiplied by (ii) the Exchange Ratio.
High Vote Shares
Pursuant to the Business Combination Agreement, immediately prior to the Closing, the Current Holdco Articles will be further amended and restated (the “A&R Holdco Articles”) to, among other things, (a) establish a dual-class Holdco Ordinary Shares structure consisting of Holdco Class A Ordinary Shares and Holdco Class V Ordinary Shares, and (b) provide that each Holdco Class A Ordinary Share will be entitled to one (1) vote per share and each Holdco Class V Ordinary Share will be entitled to ten (10) votes per share (the “High Vote”). In connection with the Transactions, the VIH Ordinary Shares received as consideration by the Founders will be Holdco Class V Ordinary Shares, and will entitle the Founders to the High Vote until such time as such Holdco Class V Ordinary Shares are exchanged pursuant to the terms of the A&R Holdco Articles for an equal number of Holdco Class A Ordinary Shares (i) at the option of the holder, (ii) upon a transfer to an unaffiliated third party, (iii) upon the conversion of any Class V Ordinary Share by Holdco in any manner available under applicable law, including redeeming or repurchasing the relevant Class V Shares and applying the proceeds thereof towards payment for the new Holdco Class A Ordinary Shares, (iv) upon a Founder’s death or incapacity or (v) the date that the number of shares of Holdco, including any shares of Holdco underlying any securities (including restricted stock units, options, or other convertible instruments) convertible into or exchangeable or exercisable into shares of Holdco, held by a Founder and certain permitted transferees is less than 50% of the number of shares of Class V Ordinary Shares held by such Founder and such permitted transferees at the Closing (whichever is earlier with respect to such Holdco Class V Ordinary Shares). The Holdco Class V Ordinary Shares will provide the Founders with approximately 70.5% of the voting power of the Holdco Ordinary Shares outstanding immediately following the Closing, assuming no redemptions by the Company’s shareholders.
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 Target Company, its subsidiaries, Holdco Merger Sub, and the Company prior to the Closing. The Closing is subject to certain customary conditions.
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. The stock exchange listing rules require that the Business Combination must be with one or more operating businesses or assets with a fair market value equal to at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account). The Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the issued and outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.
The Company will provide the holders of the public shares (the “Public Shareholders”) with the opportunity to redeem all or a portion of their public shares upon the completion of the Business Combination, either (i) in connection with a general 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, equal to the aggregate amount then on deposit in the Trust Account, calculated as of two business days prior to the consummation of the Business Combination (initially $10.00 per Public Share), including interest (which interest shall be net of taxes payable), divided by the number of then issued and outstanding public shares, subject to certain limitations as described in the prospectus. The
per-share amount
to be distributed to the Public Shareholders who properly redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 7). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
 
8
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(
Unaudited
)
 
The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $5,000,001 and, if the Company seeks shareholder approval, it receives an ordinary resolution under Cayman Islands law approving a Business Combination, which requires the affirmative vote of a majority of the shareholders who attend and vote at a general meeting of the Company. If a shareholder vote is not required 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, conduct the redemptions pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination. If the Company seeks shareholder 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 Shareholder may elect to redeem
their
Public
Shares
, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.
 
9
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combination and the Company does not conduct redemptions pursuant to the tender offer rules, 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 15%
 
of the Public Shares without the Company’s prior written consent.
 
10
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
The Sponsor and certain of the Company’s officers and directors (the “initial shareholders”) have agreed (a) to waive their redemption rights with respect to any Founder Shares and Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Memorandum and Articles of Association (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 the
 
Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to shareholders’ rights or
pre-initial
business combination activity, unless the Company provides the Public Shareholders with the opportunity to redeem their Public Shares upon approval of any such amendment 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 Trust Account and not previously released to pay taxes, divided by the number of then issued and outstanding Public Shares.
The Company will have until March 9, 2023 to consummate a Business Combination (the “Combination Period”). However, if the Company has not completed 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 100% of 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 and not previously released to us to pay our taxes, if any (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish the rights of the Public Shareholders as shareholders (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 Public Shareholders and its Board of Directors, liquidate and dissolve, subject in each case to the Company’s obligations under Cayman Islands 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 initial shareholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial shareholders acquire 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 that it will be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) 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, if less than $10.00 per Public Share, due to reductions in the value of trust assets, in each case net of the interest that may be withdrawn to pay taxes. This liability will not apply to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and as to any claims under the 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”). 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 (other than the Company’s independent registered public accounting firm), 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.
Liquidity and Capital Resources
Prior to the completion of the Initial Public Offering, the Company’s liquidity needs had been satisfied through a contribution of $25,000 from Sponsor to cover for certain formation and offering costs in exchange for the issuance of the Founder Shares, the loan of up to $300,000 from the Sponsor pursuant to the Note (see Note 6).
On March 9, 2021, the Company consummated the Initial Public Offering of 25,578,466 Units, which includes the partial exercise by the underwriters of their over-allotment options in the amount of 3,078,466 Units, at $10.00 per Unit, generating gross proceeds of $255,784,466, which is described in Note 4.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 5,127,129 Private Placement Warrants at a price of $1.50 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $7,690,693, which is described in Note 5. Transaction costs amounted to $14,564,061, consisting of $5,115,693 of underwriting fees, $8,952,463 of deferred underwriting fees and $495,855 of other offering costs.
 
11
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Following the closing of the Initial Public Offering on March 9, 2021, an amount of $255,784,466 ($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 the Trust Account.
For the period from January 14, 2021 through September 30, 2021, cash used in operating activities was $1,525,679. Net loss of $2,634,651 was affected by interest earned on marketable securities held in the Trust Account of $16,294, changes in fair value of warrant liability of $1,317,580, and transaction costs allocated to warrant liabilities of $600,973. Changes in operating assets and liabilities provided $1,827,873 of cash for operating activities.
As of September 30, 2021, the Company had $573,466 in its operating bank accounts and working capital of deficit $1,254,407. As of September 30, 2021, the Company had marketable securities held in the Trust Account of $255,800,954 consisting of U.S. Treasury Bills with a maturity of 185 days or less. Interest income on the balance in the Trust Account may be used by the Company to pay taxes. Through September 30, 2021, the Company has not withdrawn any interest earned from the Trust Account.
The Company intends to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less income taxes payable), to complete a Business Combination. To the extent that the Company’s share capital or debt is used, in whole or in part, as consideration to complete a Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue growth strategies.
The Company intends to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or 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 or their affiliates may, but are not obligated to, loan us funds as may be required (see Note 6). If we complete a Business Combination, the Company would repay such loaned amounts. In the event that a Business Combination does not close, the Company may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from the Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into Private Placement Warrants of the post Business Combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants. As of September 30, 2021, the Company had no borrowings under the Working Capital Loans.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity from the sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
 
12
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
NOTE 2.
RESTATEMENT
OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS
In connection with the preparation of the Company’s financial statements as of September 30, 2021, management determined it should restate its previously reported financial statements. The Company determined during quarter ended September 30, 2021 that it had improperly classified its Class ordinary shares subject to possible redemption, at the closing of the Company’s Initial Public Offering and closing of the sale of shares sold pursuant to the exercise of the underwriters’ overallotment, it had improperly valued its Class A ordinary shares subject to possible redemption. The Company previously determined the Class A ordinary shares subject to possible redemption to be equal to the redemption value of $
10.00 per Class A ordinary share 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 ordinary shares issued during the Initial Public Offering
and
pursuant
to the exercise of the underwriters’ overallotment 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 Class A ordinary shares subject to possible redemption, resulting in the Class A ordinary shares subject to possible redemption being equal to their redemption value. 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 ordinary shares subject to possible redemption with the offset recorded to additional
paid-in
capital (to the extent available), accumulated deficit and Class 
A ordinary shares.
In connection with the change in presentation for the Class A ordinary shares subject to redemption, the Company also revised its earnings per share calculation to allocate net income (loss) evenly to Class A and Class B ordinary shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of ordinary shares share pro rata in the income (loss) of the Company.
In accordance with SEC Staff Accounting Bulletin No. 99, “Materiality,” and SEC Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements,” the Company evaluated the corrections and has determined that the related impact was material to the previously filed financial statements that contained the error, reported in the Company’s Form
10-Qs
for the quarterly periods ended March 31, 2021, and June 30, 2021 (the “Affected Quarterly Periods”). Therefore, the Company, in consultation with its Audit Committee, concluded that the
Post-IPO
Balance Sheet and Affected Quarterly Periods should be restated to present all Class A ordinary shares subject to possible redemption as temporary equity and to recognize accretion from the initial book value to redemption value at the time of its Initial Public Offering. As such, the Company is reporting these restatements to those periods in this quarterly report.
There has been no change in the Company’s total assets, liabilities or operating results.
The impact of the restatement on the Company’s previously issued financial statements is reflected in the following tables:
 
Balance Sheet as of March 31, 2021 (unaudited)
  
As Previously
Reported
 
  
Adjustment
 
  
As Restated
 
Class A ordinary shares subject to possible redemption
   $ 224,822,290      $ 30,962,370      $ 255,784,660  
Class A ordinary shares
   $ 310      $ (310 )     $ —    
Additional
paid-in
capital
   $ 6,609,157      $ (6,609,157 )     $ —    
Accumulated deficit
   $ (1,610,097 )     $ (24,352,903 )     $ (25,963,000 ) 
Total shareholders’ equity (deficit)
   $ 5,000,009      $ (30,962,370 )     $ (25,962,361 ) 
 
13
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL
 
STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Number of shares subject to redemption
     22,482,229        3,096,237        25,578,466  
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance Sheet as of June 30, 2021 (unaudited)
                          
Class A ordinary shares subject to possible redemption
   $ 225,451,810      $ 30,332,850      $ 255,784,660  
Class A ordinary shares
   $ 303      $ (303 )     $ —    
Additional
paid-in
capital
   $ 5,979,644      $ (5,979,644 )     $ —    
Accumulated deficit
   $ (980,580 )     $ (24,352,903 )     $ (25,333,483 ) 
Total shareholders’ equity (deficit)
   $ 5,000,006      $ (30,332,850 )     $ (25,332,844 ) 
Number of shares subject to redemption
     22,545,181        3,033,285        25,578,466  
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Cash Flows for The Period from January 13, 2021 (Inception) Through March 31, 2021 (unaudited)
                          
Initial classification of Class A ordinary shares subject to possible redemption
   $ 224,433,090      $ 31,351,570      $ 255,784,660  
Change in value of Class A ordinary shares subject to possible redemption
   $ 389,200      $ (389,200 )     $ —    
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Cash Flows for The Period from January 13, 2021 (inception) Through June 30, 2021 (unaudited)
                          
Initial classification of Class A ordinary shares subject to possible redemption
   $ 224,433,090      $ 31,351,570      $ 255,784,660  
Change in value of Class A ordinary shares subject to possible redemption
   $ 1,018,720      $ (1,018,720 )     $ —    
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Operations for The Period from January 13, 2021 (inception) Through March 31, 2021 (unaudited)
                          
Weighted average shares outstanding, Class A redeemable ordinary shares
     25,578,466        (18,174,173 )       7,404,293  
Basic and diluted net income (loss) per share, Class A redeemable ordinary shares
   $ —        $ (0.12 )     $ (0.12 ) 
Weighted average shares outstanding, Class B
non-redeemable
ordinary shares
     5,857,910        (10,126 )       5,847,784  
Basic and diluted net income (loss) per share, Class B
non-redeemable
ordinary shares
   $ (0.28 )     $ 0.16      $ (0.12 ) 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Operations for the three months ended June 30, 2021 (unaudited)
                          
Weighted average shares outstanding, Class A redeemable ordinary shares
     25,578,466        —          25,578,466  
Basic and diluted net income (loss) per share, Class A redeemable ordinary shares
   $ —        $ 0.02      $ 0.02  
 
14
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Weighted average shares outstanding, Class B
non-redeemable
ordinary shares
     6,394,617        —          6,394,617  
Basic and diluted net income (loss) per share, Class B
non-redeemable
ordinary shares
   $ 0.10      $ (0.08 )     $ 0.02  
 
 
 
 
 
 
 
 
 
 
 
 
 
Statement of Operations for The Period from January 13, 2021 (inception) Through June 30, 2021 (unaudited)
                          
Weighted average shares outstanding, Class A redeemable ordinary shares
     25,578,466        (8,270,881 )       17,307,585  
Basic and diluted net income (loss) per share, Class A redeemable ordinary shares
   $ —        $ (0.04 )     $ (0.04 ) 
Weighted average shares outstanding, Class B
non-redeemable
ordinary shares
     6,150,367        —          6,150,367  
Basic and diluted net income (loss) per share, Class B
non-redeemable
ordinary shares
   $ (0.16 )     $ 0.12      $ (0.04 ) 
NOTE 3—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 March 8, 2021. The interim results for the three months ended September 30, 2021 and for the period from January 13, 2021 (inception) through September 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any future periods.
 
15
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED 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 of 2002, 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 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 financial statements is the determination of the fair value of the warrant liabilities. Accordingly, the actual results could differ significantly from those estimates.
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 in its operating account as of September 30, 2021.
Offering Costs
Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the Initial Public Offering that are 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 associated with warrant liabilities were expensed as incurred in the condensed statements of operations. Offering costs associated with the Class A ordinary shares issued were charged to shareholders’ equity upon the completion of the Initial Public Offering. Offering costs amounting to$13,954,038 were charged to shareholders’ equity or period expense upon the completion of the Initial Public Offering, and $609,973 of the offering costs were related to the warrant liabilities and charged to the statement of operations.
Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815. We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
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.
 
16
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO
UNAUDITED
CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Class A Ordinary Shares Subject to Possible Redemption
The Company accounts for its Class A ordinary shares subject to possible
redemption
in accordance with the guidance in ASC 480. Class A ordinary shares subject to mandatory redemption are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including 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, 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, at September 30, 2021, Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s condensed consolidated balance sheets.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable ordinary shares to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the accretion from initial book value to redemption amount value. The change in the carrying value of redeemable Class A ordinary shares resulted in charges against additional
paid-in
capital and accumulated deficit.
At September 30, 2021, the Class A ordinary shares reflected in the condensed balance sheet are reconciled in the following table:
 
Gross proceeds
   $ 255,784,660  
Less:
        
Proceeds allocated to Public Warrants
     (10,423,226 ) 
Class A ordinary shares issuance costs
     (13,954,038 ) 
Plus:
        
Accretion of carrying value to redemption value
     24,377,264  
    
 
 
 
Class A ordinary shares subject to possible redemption
   $ 255,784,660  
    
 
 
 
Income Taxes
The Company accounts for income taxes under ASC Topic 740, “Income Taxes,” which 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’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of September 30, 2021, there were no unrecognized tax benefits and no amounts accrued for interest and penalties. 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 considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction 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 was zero for the periods presented.
Net Income (Loss) per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares 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 ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
The calculation of diluted income (loss) per share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 11,521,746 Class A ordinary shares in the aggregate. As of September 30, 2021, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a result, diluted net loss per ordinary share is the same as basic net loss per ordinary share for the periods presented.
 
17
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED
CONDENSED
FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
The following table reflects the calculation of
basic
and diluted net loss per ordinary shar
e
 (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 loss per ordinary share
  
  
  
  
Numerator:
  
  
  
  
Allocation of net loss, as adjusted
   $ (1,323,257 )     $ (330,814 )     $ (2,014,624 )     $ (620,027 ) 
Denominator:
                                   
Basic and diluted weighted average shares outstanding
     25,578,466        6,394,617        20,266,015        6,237,128  
    
 
 
    
 
 
    
 
 
    
 
 
 
Basic and diluted net loss per ordinary share
   $ (0.05 )     $ (0.05 )     $ (0.10 )     $ (0.10 ) 
 
18
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times may exceed the Federal
Deposit
Insurance Corporation coverage limit of $250,000. The Company has not experienced losses on these accounts 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 Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.
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 is currently assessing the impact, if any, that ASU
2020-06
would have on its financial position, results of operations or cash flows. Management does not believe that any other recently issued, but not yet effective, account standard updates, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.
NOTE 4. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 25,578,466 Units which includes a partial exercise by the underwriters of their over-allotment option in the amount of 3,078,466 Units, at a purchase price of $10.00 per Unit. Each Unit consists of one Class A ordinary share and
one-fourth
of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one Class A ordinary share at an exercise price of $11.50 per whole share (see Note 8).
 
19
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
NOTE 5. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 5,127,129 Private Placement Warrants at a price of $1.50 per Private Placement Warrant, for an aggregate purchase price of $7,690,693.50. Each Private Placement Warrant is exercisable to purchase one Class A ordinary share at a price of $11.50 per share, subject to adjustment (see Note 8). 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 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
On January 14, 2021, the Sponsor paid $25,000 to cover certain offering costs of the Company in consideration for 7,187,500 Class B ordinary shares (the “Founder Shares”). On January 15, 2021, the Sponsor forfeited 718,750 Founder Shares back to the Company for no consideration, resulting in an aggregate of 6,468,750 Founder Shares outstanding. On January 18, 2021, the Sponsor transferred an aggregate of 60,000 Founder Shares to members of the Company’s board of directors, resulting in the Sponsor holding 6,408,750 Founder Shares. The Founder Shares included an aggregate of up to 843,750 shares that were subject to forfeiture depending on the extent to which the underwriters’ over-allotment option was exercised, so that the number of Founder Shares would equal, on an
as-converted
basis, approximately 20% of the Company’s issued and outstanding shares after the Initial Public Offering. In connection with the underwriters’ partial exercise of the over-allotment option and the forfeiture of the remaining over-allotment option, 74,133 Founder Shares were forfeited and 769,617 Founder Shares are no longer subject to forfeiture resulting in an aggregate of 6,394,617 Founder Shares outstanding.
The initial shareholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earliest of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the closing price of the Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for share
sub-divisions,
share capitalizations, 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, share exchange or other similar transaction that results in all of the Public Shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property.
 
20
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Promissory Note — Related Party
On January 14, 2021, the Company issued an unsecured promissory note (the “Promissory Note”) to the Sponsor, 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 (i) December 31, 2021 or (ii) the completion of the Initial Public Offering. The outstanding balance under the Promissory Note of $93,142 was repaid at the closing of the Initial Public Offering on March 9, 2021. Borrowings under the Promissory Note are no longer available.
Administrative Services Agreement
The Company entered into an agreement, commencing on March 4, 2021, to pay the Sponsor up to $10,000per month for office space, utilities, secretarial and administrative support services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees. For the three months ended and for the period from January 13, 2021 (Inception) through September 30, 2021, the Company incurred and included in accrued expenses $30,000 and $70,000 in fees for these services, respectively.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of notes may be converted upon completion of a Business Combination into warrants at a price of $1.50 per warrant. Such warrants would be identical to the Private Placement Warrants. 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. As of September 30, 2021, the Company had no outstanding borrowings under the Working Capital Loans.
NOTE 7. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of theCOVID-19pandemic 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 financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration and Shareholders Rights
Pursuant to a registration rights agreement entered into on March 4, 2021, the holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of the Working Capital Loans) are entitled to registration rights requiring the Company to register a sale of any of its securities held by them. The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders 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.
Underwriting Agreement
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $8,952,463 in the aggregate. The deferred fee will become 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.
Subscription Agreement
Concurrently with entering into the Business Combination Agreement, Holdco has entered into subscription agreements with certain investors (the “PIPE Investors”) (the “Subscription Agreements”), pursuant to which such investors would subscribe for Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) in a private placement for $10.00 per share substantially concurrently at the Closing for an aggregate purchase price of $120 million. The proceeds from the private placement will be used for general working capital purposes following the Closing. Each Subscription Agreement will terminate upon the earlier to occur of (a) the termination of the Business Combination Agreement in accordance with its terms, (b) the mutual written agreement of the parties to such Subscription Agreement, (c) if specified conditions to closing of such Subscription Agreement are not satisfied or waived prior to Closing, and (d) August 2, 2022, if the Closing has not occurred by such date.
 
21
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Business Combination Agreement
On August 2, 2021, the Company entered into a Business Combination Agreement (the “Business
 
Combination Agreement”), by and among, the Company, AG1 Holdings, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (“Holdco”), AG2 Holdings, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (“Merger Sub”), FinAccel Pte. Ltd., a Singapore private company limited by shares (the “Target Company”), each shareholder of the Target Company as set forth on Schedule 1 of the Business Combination Agreement (the “Target Company Shareholders”), and Akshay Garg in his capacity as “Shareholders Representative”, pursuant to which, among other things: (i) on the business day prior to the consummation of the acquisition by Holdco of the Target Company contemplated in the Business Combination Agreement (such consummation, the “Closing”), Merger Sub will merge with and into the Company, with Merger Sub continuing as the “Surviving VIH Company” (the “VIH Merger”, with the effective time of such merger, the “VIH Merger Effective Time”), as a result of which, (a) the Surviving VIH Company will become a wholly-owned subsidiary of Holdco and (b) immediately after the VIH Share Recapitalization (as defined below), each Class A ordinary share of the Company, par value $0.0001 per share (the “VIH Class A Ordinary Shares”) issued and outstanding and Class B ordinary shares of the Company, par value $0.0001 per share (“VIH Class B Ordinary Shares”, and together with the VIH Class A Ordinary Shares, the “VIH Ordinary Shares”) immediately prior to the VIH Merger Effective Time shall no longer be outstanding as of the VIH Merger Effective Time and shall automatically be cancelled and cease to exist in exchange for one Class A ordinary share of Holdco (“Holdco Class A Ordinary Share”) (in the form of one American Depository Share representing a Holdco Class A Ordinary Share, each a “Holdco Class A ADS”) and each outstanding warrant to purchase VIH Ordinary Shares will become exercisable for Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) on identical terms, and (ii) at the Closing, among other things, (x) Holdco will acquire all of the issued and outstanding ordinary shares of the Target Company (the “Target Company Ordinary Shares”) and the issued and outstanding preference Shares of the Target Company (the “Target Company Preference Shares”) from the Target Company Shareholders in exchange for the Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) or Class V Ordinary Shares of Holdco (“Holdco Class V Ordinary Share”, and together with the Holdco Class A Ordinary Shares, the “Holdco Ordinary Shares”) (in the form of American Depository Share representing a Holdco Class V Ordinary Share, each a “Holdco Class V ADS”, and together with the Holdco Class A ADSs, the “Holdco ADSs”), as the case may be, (b) each option to acquire Target Company Ordinary Shares granted under the FinAccel Employee Share Options Scheme (the “Target Company Options”) and each Assumed Warrant (as defined below) will be converted into the right to receive an option or a warrant to purchase Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs), respectively, and (c) each Target Company Convertible Note (as defined below) that is then outstanding and not converted into Target Company Ordinary Shares, shall be cancelled and extinguished and in exchange therefor, converted into the right to receive Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs), in each case, in accordance with the terms and conditions set forth in the Business Combination Agreement. The transactions contemplated by the Business Combination Agreement (the “Transactions”), including the VIH Merger, will constitute a “Business Combination” as contemplated by the Company’s existing amended and restated memorandum and articles of association (the “Current VIH Articles”).
The Business Combination Agreement and the Transactions were unanimously approved by the board of directors of VIH (the “Board”) on July 29, 2021.
First Amendment to the Business Combination Agreement
On September 29, 2021, VIH, Holdco, Merger Sub, Target Company and the Shareholders Representative pursuant to Section 13.18 of the Business Combination Agreement entered into the First Amendment to Business Combination Agreement (the “Amendment”), pursuant to which the Business Combination Agreement was amended to amend the definition of “Minimum Available Cash Amount” to mean an amount equal to Three Hundred Ten million dollars ($310,000,000) along with certain other technical clarifications.
All other terms of the Business Combination Agreement, which was previously filed by VIH as Exhibit 2.1 to VIH’s Current Report on Form 8-K on August 2, 2021, remained unchanged.
The foregoing summary description of the Amendment is subject to and qualified in its entirety by reference to the Amendment, the terms of which are incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (file
No. 001-40160)
as filed with the SEC on September 29, 2021.
NOTE 8. SHAREHOLDERS’ EQUITY
Preference Shares
—The Company is authorized to issue 5,000,000 preference shares with a par value of $0.0001 per share, with such designations, voting and other 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 preference shares issued or outstanding.
Class
 A Ordinary Shares
—The Company is authorized to issue 500,000,000 Class A ordinary shares, with a par value of $0.0001 per share. Holders of Class A ordinary shares are entitled to one vote for each share. At September 30, 2021, there were 25,578,466 Class A ordinary shares issued and outstanding which are presented as temporary equity.
 
22
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Class
 B Ordinary Shares
—The Company is authorized to issue 50,000,000 Class B ordinary shares, with a par value of $0.0001 per share. Holders of the Class B ordinary shares are entitled to one vote for each share. At September 30, 2021, there were 6,394,617 Class B ordinary shares issued and outstanding.
Only holders of the Class B ordinary shares will have the right to vote on the appointment of directors prior to the Business Combination. Holders of Class A ordinary shares and Class B ordinary shares will vote together as a single class on all other matters submitted to a vote of shareholders, except as required by law and except that in a vote to continue the Company in a jurisdiction outside the Cayman Islands, holders of Class B ordinary shares will have ten votes per share and holders of Class A ordinary shares will have one vote per share.
The Class B ordinary shares will automatically convert into Class A ordinary shares concurrently with or immediately following the consummation of a Business Combination on a
one-for-one
basis, subject to adjustment. In the case that additional Class A ordinary shares or equity-linked securities are issued or deemed issued in connection with a 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 (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 a 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 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.
 
23
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
NOTE 9. WARRANT LIABILITIES
As of September 30, 2021, there are 6,394,617 Public Warrants outstanding and 5,127,129 Private Placement Warrants outstanding. Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) one year from the closing of the Initial Public Offering. The Public Warrants will expire five years from the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any Class A ordinary shares 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 ordinary shares 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 a Class A ordinary share upon exercise of a warrant unless the Class A ordinary share 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.
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 for the registration, under the Securities Act, of the Class A ordinary shares 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 Class A ordinary shares 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 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 elects, 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, it will use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Redemption of warrants when the price per Class
 A ordinary share equals or exceeds $18.00.
 Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described 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 to each warrant holder; and
 
  •  
if, and only if, the closing price of the Class A ordinary shares equals or exceeds $18.00 per share (as adjusted) for any 20 trading days within
a
 
30-trading
 
day
period ending three business days before the Company sends the notice of redemption to the warrant holders.
If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws.
 
24
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
Redemption of warrants when the price per Class
 A ordinary share equals or exceeds $
10.00
. Once the warrants become exercisable, the Company may redeem the outstanding warrants (except as described with respect to the Private Placement Warrants):
 
 
•
in whole and not in part;
 
  •
at a price of $0.10 per warrant;
 
  •
upon a minimum of 30 days’ prior written notice of redemption; provided that holders will be able to exercise their warrants on a cashless basis prior to redemption and receive that number of shares
 
determined based on the redemption date and the fair market value of the Class A ordinary shares;
 
  •
if, and only if, the closing price of the Class A ordinary shares equals or exceeds $10.00 per public share (as adjusted) for any 20 trading days within
the 30-trading day
period ending three trading days before the Company send the notice of redemption of the warrant holders; and
 
  •
if the closing price of the Class A ordinary shares for any 20 trading days
withina30-tradingdayperiod
ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders is less than $18.00 per share (as adjusted for adjustments to the number of shares issuable upon exercise or the exercise price of a warrant as described under the heading “Description of Securities—Warrants—Public Warrants—Anti-dilution Adjustments”), the private placement warrants must also be concurrently called for redemption on the same terms as the outstanding public warrants, as described above.
If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a share dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public 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 Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless.
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 a 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 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) (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 ordinary shares during the 10 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, and the $10.00 per share redemption trigger price will be adjusted (to the nearest cent) to be equal to the higher of the Market Value and the Newly Issued Price.
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 Class A ordinary shares issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be
non-redeemable,
except as described above, so long as they are held by the initial purchasers or their permitted transferees. 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 and exercisable by such holders on the same basis as the Public Warrants.
 
25
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
NOTE 10. FAIR VALUE MEASUREMENTS
At September 30, 2021, assets held in the Trust Account were comprised of $255,800,954 in Money Market Funds which are invested primarily in U.S. Treasury Securities. During the period ended 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 and 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
 
Assets:
  
  
Investments held in Trust Account – U.S. Treasury Securities Money Market Fund
     1      $ 255,800,954  
Liabilities:
                 
Warrant liability – Public Warrants
     1      $ 7,673,540  
Warrant liability – Private Placement Warrants
     3        9,122,799  
As of September 30, 2021, the carrying values of prepaid expenses, accounts payable, and accrued expenses approximate their fair values due to the short-term nature of the instruments.
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 from January 13, 2021 (inception) through September 30, 2021.
The Warrants were accounted for as liabilities in accordance with ASC815-40and are presented within warrant liabilities on our 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 statement of operations.
The Private Placement Warrants were initially valued using a Modified Black Scholes Option Pricing Model, which is considered to be a Level 3 fair value measurement. The Modified Black Scholes model’s primary unobservable input utilized in determining the fair value of the Private Placement Warrants is the expected volatility of the ordinary shares. The expected volatility as of the IPO date was derived from observable public warrant pricing on comparable ‘blank-check’ companies without an identified target. The expected volatility as of subsequent valuation dates was implied from the Company’s own public warrant pricing. A Monte Carlo simulation methodology was used in estimating the fair value of the public warrants for periods where no observable traded price was available, using the same expected volatility as was used in measuring the fair value of the Private Placement Warrants. For periods subsequent to the detachment of the warrants from the Units, the close price of the public warrant price was used as the fair value as of each relevant date.
The key inputs into the Monte Carlo simulation model Public Warrants and the Black-Scholes-Merton model for the Private Placement Warrants were as follows:
 
 
  
March 9, 2021

(Initial Measurement)
 
 
September 30,

2021
 
Input
  
Public

Warrants
 
 
Private

Warrants
 
 
Private

Warrants
 
Share Price
   $ 10.00     $ 9.59     $ 9.85  
Exercise Price
   $ 11.50     $ 11.50     $ 11.50  
Volatility
     26.9 %      26.0 %      25.0 % 
Term (years)
     5.00       5.00       5.00  
Dividend Yield
     0.00       0.00 %      0.00 % 
Risk Free Rate
     1.21 %      1.34 %      0.98 % 
 
2
6
VPC IMPACT ACQUISITION HOLDINGS II
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
(Unaudited)
 
The following table presents the changes in the fair value of Level 3 warrant liabilities:
 
 
  
Private Placement(1)
 
 
Public
 
 
Warrant Liabilities
 
Fair value as of January 13, 2021 (inception)
   $ —       $ —       $ —    
Initial measurement on March 9, 2021
     9,075,018       10,423,226       19,498,244  
Change in valuation inputs or other assumptions
     (256,356 )      (255,785 )      (512,141 ) 
Transfer to Level 1
     —         (10,167,441 )      (10,167,441 ) 
    
 
 
    
 
 
    
 
 
 
Fair value as of March 31, 2021
     8,818,662       —         8,818,662  
Change in valuation inputs or other assumptions
     325,080       —         325,080  
    
 
 
    
 
 
    
 
 
 
Fair value as of June 30, 2021
   $ 9,143,742     $ —       $ 9,143,742  
Change in fair value
     (20,943 )              (20,943 ) 
    
 
 
    
 
 
    
 
 
 
Fair value as of September 30, 2021
   $ 9,122,799     $ —       $ 9,122,799  
    
 
 
    
 
 
    
 
 
 
 
(1)
As a result of the difference in fair value of $1.77 per share of the Private Placement warrants and the purchase of $1.50 per share (see Note 6), the Company recorded a charge of $1.4 million as of the date of the Private Placement which is included in the private placement liability initial measurement within this table but is reported as part of the change in fair value of the warrant liability in the statement of operations.
NOTE 11. 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.
 
2
7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to VPC Impact Acquisition Holdings II. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to VPC Impact Acquisition Holdings Sponsor II, LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form10-Qincluding, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the completion of the Proposed Business Combination (as defined below), the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including that the conditions of the Proposed Business Combination are not satisfied. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section of the Company’s final prospectus for its Initial Public Offering filed with the U.S. Securities and Exchange Commission (the “SEC”). The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations has been amended and restated to give effect to the restatement of our financial statements as of March 31, 2021 and June 30, 2021. Management identified misstatements made in its historical financial statements where, at the closing of our Initial Public Offering, we improperly classified our Class A ordinary shares subject to possible redemption. We previously determined the Class A ordinary shares subject to possible redemption to be equal to the redemption value of $10.00 per Class A ordinary share 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 ordinary shares issued during the Initial Public Offering can be redeemed or become redeemable subject to the occurrence of future events considered outside of the Company’s control. Therefore, management concluded that the redemption value should include all Class A ordinary shares subject to possible redemption, resulting in the Class A ordinary shares 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 to the initial carrying value of the Class A ordinary shares subject to possible redemption with the offset recorded to additional
paid-in
capital (to the extent available), accumulated deficit and Class A ordinary shares.
Overview
We are a blank check company incorporated in the Cayman Islands on January 13, 2021 formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. We intend to effectuate our Business Combination using cash derived from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Business Combination Agreement
On August 2, 2021, the Company entered into a Business Combination Agreement (the “Business Combination Agreement”), by and among, the Company, AG1 Holdings, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (“Holdco”), AG2 Holdings, Ltd., an exempted company incorporated in the Cayman Islands with limited liability (“Merger Sub”), FinAccel Pte. Ltd., a Singapore private company limited by shares (the “Target Company”), each shareholder of the Target Company as set forth on Schedule 1 of the Business Combination Agreement (the “Target Company Shareholders”), and Akshay Garg in his capacity as “Shareholders Representative”, pursuant to which, among other things: (i) on the business day prior to the consummation of the acquisition by Holdco of the Target Company contemplated in the Business Combination Agreement (such consummation, the “Closing”), Merger Sub will merge with and into the Company, with Merger Sub continuing as the “Surviving VIH Company” (the “VIH Merger”, with the effective time of such merger, the “VIH Merger Effective Time”), as a result of which, (a) the Surviving VIH Company will become a wholly-owned subsidiary of Holdco and (b) immediately after the VIH Share Recapitalization (as defined below), each Class A ordinary share of the Company, par value $0.0001 per share (the “VIH Class A Ordinary Shares”) issued and outstanding and Class B ordinary shares of the Company, par value $0.0001 per share (“VIH Class B Ordinary Shares”, and together with the VIH Class A Ordinary Shares, the “VIH Ordinary Shares”) immediately prior to the VIH Merger Effective Time shall no longer be outstanding as of the VIH Merger Effective Time and shall automatically be cancelled and cease to exist in exchange for one Class A ordinary share of Holdco (“Holdco Class A Ordinary Share”) (in the form of one American Depository Share representing a Holdco Class A Ordinary Share, each a “Holdco Class A ADS”) and each outstanding warrant to purchase VIH Ordinary Shares will become exercisable for Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) on identical terms,
 
28
and (ii) at the Closing, among other things, (x) Holdco will acquire all of the issued and outstanding ordinary shares of the Target Company (the “Target Company Ordinary Shares”) and the issued and outstanding preference Shares of the Target Company (the “Target Company Preference Shares”) from the Target Company Shareholders in exchange for the Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) or Class V Ordinary Shares of Holdco (“Holdco Class V Ordinary Share”, and together with the Holdco Class A Ordinary Shares, the “Holdco Ordinary Shares”) (in the form of American Depository Share representing a Holdco Class V Ordinary Share, each a “Holdco Class V ADS”, and together with the Holdco Class A ADSs, the “Holdco ADSs”), as the case may be, (b) each option to acquire Target Company Ordinary Shares granted under the FinAccel Employee Share Options Scheme (the “Target Company Options”) and each Assumed Warrant (as defined below) will be converted into the right to receive an option or a warrant to purchase Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs), respectively, and (c) each Target Company Convertible Note (as defined below) that is then outstanding and not converted into Target Company Ordinary Shares, shall be cancelled and extinguished and in exchange therefor, converted into the right to receive Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs), in each case, in accordance with the terms and conditions set forth in the Business Combination Agreement. The transactions contemplated by the Business Combination Agreement (the “Transactions”), including the VIH Merger, will constitute a “Business Combination” as contemplated by the Company’s existing amended and restated memorandum and articles of association (the “Current VIH Articles”).
 
29
The Business Combination Agreement and the Transactions were unanimously approved by the board of directors of VIH (the “Board”) on July 29, 2021.
VIH Merger
At the VIH Merger Effective Time, Merger Sub and the Company shall consummate the VIH Merger, pursuant to which the Company shall be merged with and into Merger Sub, following which the separate corporate existence of the Company shall cease and Merger Sub shall continue as the surviving company (the “Surviving VIH Company”).
At the VIH Merger Effective Time, every issued and outstanding unit of the Company (consisting of one VIH Class A Ordinary Share
and one-fourth of
a VIH Public Warrant, as defined below, the “VIH Units”), to the extent not detached, shall be automatically detached and the holder thereof shall be deemed to hold one VIH Class A Ordinary Share
and one-fourth of
a warrant of the Company.
At the VIH Merger Effective Time, every issued VIH Class B Ordinary Share will convert into one VIH Class A Ordinary Share on a
one-for-one
basis (the “VIH Share Recapitalization”) and, immediately thereafter every issued VIH Class A Ordinary Share (other than those owned by the Company as treasury shares, which shall be canceled and extinguished without any conversion thereof or payment therefor) shall automatically be cancelled and cease to exist in exchange for one Holdco Class A Ordinary Share (in the form of one Holdco Class A ADS).
At the VIH Merger Effective Time, in accordance with the terms of the Warrant Agreement dated March 4, 2021 by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agreement”), each issued and outstanding whole warrant of the Company (consisting of either one public warrant entitling the holder to purchase one VIH Class A Ordinary Share per warrant at a price of $11.50 per VIH Class A Ordinary Share (a “VIH Public Warrant”), or a private placement warrant entitling the holder to purchase one VIH Class A Ordinary Share per warrant at a price of $11.50 per VIH Class A Ordinary Share (a “VIH Private Warrant”), collectively the “VIH Warrants”) will become exercisable for the right to receive one Holdco Class A Ordinary Share (in the form of Holdco Class A ADS(s)) at the same exercise price per share and on the same terms in effect immediately prior to the VIH Merger Effective Time, and the rights and obligations of the Company under the Warrant Agreement will be assigned and assumed by Holdco.
At the VIH Merger Effective Time, by virtue of the VIH Merger and without any action on the part of any party hereto or the holders of any shares of the Company, Holdco or Merger Sub, all of the ordinary shares of Merger Sub in issue immediately prior to the VIH Merger Effective Time, each of US$0.00001 par value in the share capital of Merger Sub, shall be converted into an equal number of ordinary shares of the Surviving VIH Company, each of US$0.00001 par value in the share capital of the Surviving VIH Company, with the same rights, powers and privileges as the shares so converted and shall constitute the only issued share capital of the Surviving VIH Company.
Target Company Shareholder Consideration
Pursuant to the Business Combination Agreement, the Target Company Shareholders, will receive aggregate merger consideration with an implied value of $2,000,000,000 (the “Equity Value”), consisting of a number of shares of Holdco Class A Ordinary Shares or Holdco Class V Ordinary Shares (in the form of Holdco Class A ADSs or Holdco Class V ADSs, respectively), equal to the Equity Value divided by $10.00 (the “Aggregate Share Consideration”).
Pursuant to the Business Combination Agreement, at the VIH Merger Effective Time, (a) Target Company Ordinary Shares held by the Target Company Shareholders will be cancelled and automatically converted into the right to receive, in the case of the Shareholders other than Akshay Garg and Umang Rustagi, a number of newly issued Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) or, in the case of Akshay Garg and Umang Rustagi (the “Founders”), Holdco Class V Ordinary Shares (in the form of Holdco Class V ADSs), each with a par value of $0.00001, equal to an exchange ratio (the “Exchange Ratio”) determined by dividing the Aggregate Share Consideration by the sum of (without duplication): (a) the total number of outstanding Target Company Ordinary Shares, (b) the total number of Target Company Ordinary Shares convertible from all of the outstanding Target Company Preference Shares, (c) the total number of Target Company Ordinary Shares subject to issuance pursuant to a Target Company Option, or portion thereof, to the extent such Target Company Option (or applicable portion thereof) is vested and outstanding as of immediately prior to the Closing or would vest upon or immediately following the Closing (the “Vested Target Company Options”), (d) the maximum number of Target Company Ordinary Shares subject to issuance pursuant to the (i) the Warrant by and between the Target Company and Partners for Growth V, L.P., dated August 12, 2019 and (ii) the Warrant by and between the Target Company and Partners for Growth V, L.P., dated May 12, 2021 (collectively, the “PFG Warrants”), (e) the maximum number of Target Company Ordinary Shares subject to issuance pursuant to the Warrant to Purchase Ordinary Shares of FinAccel Pte. Ltd. by and between the Target Company and Victory Park Capital Advisors, LLC, dated July 10, 2020 (the “VPC Warrant”), and (f) the maximum number of Target Company Ordinary Shares or Target Company Ordinary Shares issuable upon conversion of Target Company Preference Shares, in each case subject to issuance pursuant to outstanding Target Company Convertible Notes, in each case of the foregoing items (a) through (f), as of immediately prior to the Closing.
As of the Closing, each Target Company Option that is then outstanding shall be converted into the right to receive an option relating to Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) on the same terms and conditions as are in effect with respect to such Target Company Option immediately prior to the Closing (including with respect to vesting, release, and forfeiture or termination provisions) (each, a “Holdco Option”) except that (i) such Holdco Option shall relate to such number of Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs, rounded down to the nearest whole Holdco Class A Ordinary Share) as is equal to the product of (A) the number of Target Company Ordinary Shares subject to such Target Company Option multiplied by (B) the Exchange Ratio, and (ii) the exercise price per share for each such Holdco Option shall be equal to the quotient of (A) the exercise price per share of such Target Company Option in effect immediately prior to the Closing divided by (B) the Exchange Ratio (the exercise price per share, as so determined, being rounded up to the nearest full cent).
 
30
Each of the PFG Warrants and VPC Warrant (collectively, the “Target Company Warrants”), to the extent that it remains outstanding and unexercised immediately prior to the VIH Merger Effective Time (each, an “Assumed Warrant”), shall be converted into a warrant to purchase Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) on the same terms and conditions as are in effect immediately prior to the VIH Merger Effective Time (the “Successor Warrant”), except that (a) each Assumed Warrant shall entitle the holder thereof to purchase such number of Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) as is equal to the product of (i) the number of Target Company Ordinary Shares subject to such Assumed Warrant immediately prior to the VIH Merger Effective Time multiplied by (ii) the Exchange Ratio and (b) each Assumed Warrant shall have an exercise price per share (which shall be rounded up to the nearest whole cent) equal to the quotient of (i) the exercise price per share of such Assumed Warrant immediately prior to the VIH Merger Effective Time divided by (ii) the Exchange Ratio.
 
31
As of the Closing, each note issued by the Target Company that is convertible into Target Company Ordinary Shares or Target Company Preference Shares (the “Target Company Convertible Notes”) that is then outstanding and not converted into Target Company Ordinary Shares, shall be cancelled and extinguished and in exchange therefor, converted into the right to receive with respect to such Target Company Convertible Note, Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs, rounded down to the nearest whole Holdco Class A Ordinary Shares) equal to the product of (i) the number of Target Company Ordinary Shares that such Target Company Convertible Notes were convertible into immediately prior to the Closing based on the principal amount and any accrued and unpaid interest outstanding on such Target Company Convertible Note multiplied by (ii) the Exchange Ratio.
High Vote Shares
Pursuant to the Business Combination Agreement, immediately prior to the Closing, the Current Holdco Articles will be further amended and restated (the “A&R Holdco Articles”) to, among other things, (a) establish a dual-class Holdco Ordinary Shares structure consisting of Holdco Class A Ordinary Shares and Holdco Class V Ordinary Shares, and (b) provide that each Holdco Class A Ordinary Share will be entitled to one (1) vote per share and each Holdco Class V Ordinary Share will be entitled to ten (10) votes per share (the “High Vote”). In connection with the Transactions, the VIH Ordinary Shares received as consideration by the Founders will be Holdco Class V Ordinary Shares, and will entitle the Founders to the High Vote until such time as such Holdco Class V Ordinary Shares are exchanged pursuant to the terms of the A&R Holdco Articles for an equal number of Holdco Class A Ordinary Shares (i) at the option of the holder, (ii) upon a transfer to an unaffiliated third party, (iii) upon the conversion of any Class V Ordinary Share by Holdco in any manner available under applicable law, including redeeming or repurchasing the relevant Class V Shares and applying the proceeds thereof towards payment for the new Holdco Class A Ordinary Shares, (iv) upon a Founder’s death or incapacity or (v) the date that the number of shares of Holdco, including any shares of Holdco underlying any securities (including restricted stock units, options, or other convertible instruments) convertible into or exchangeable or exercisable into shares of Holdco, held by a Founder and certain permitted transferees is less than 50% of the number of shares of Class V Ordinary Shares held by such Founder and such permitted transferees at the Closing (whichever is earlier with respect to such Holdco Class V Ordinary Shares). The Holdco Class V Ordinary Shares will provide the Founders with approximately 70.5% of the voting power of the Holdco Ordinary Shares outstanding immediately following the Closing, assuming no redemptions by the Company’s shareholders.
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 Target Company, its subsidiaries, Holdco Merger Sub, and the Company prior to the Closing. The Closing is subject to certain customary conditions.
Results of Operations
We have neither engaged in any operations (other than searching for a Business Combination after our Initial Public Offering) nor generated any revenues to date. Our only activities through September 30, 2021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and, after the Initial Public Offering, identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate
non-operating
income in the form of interest income on marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing a Business Combination.
For the three months ended September 30, 2021, we had net loss of $1,654,071, which consists of the change in fair value of warrant liability of $298,788 and formation and operating costs of $1,358,575, offset by interest income on marketable securities held in the Trust Account of $3,292.
For the period from January 13, 2021 (inception) through September 30, 2021, we had a net loss of $2,634,651 which consists of transaction costs incurred in connection with warrant liability of $609,973 and formation and operating costs of $3,358,552, offset by change in fair value of warrant liability of $1,317,580 and interest earned on marketable securities held in Trust Account of $16,294.
Liquidity and Capital Resources
On March 9, 2021 the Company consummated the Initial Public Offering of 25,578,466 units (the “Units”) which includes the partial exercise by the underwriters of their over-allotment option in the amount of 3,078,466 Units, at $10.00 per Unit, generating gross proceeds of $255,784,660. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 5,127,129 warrants (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to VPC Impact Acquisition Holdings Sponsor II, LLC (the “Sponsor”), generating gross proceeds of $7,690,693.
Transaction costs amounted to $14,564,011, consisting of $5,115,693 of underwriting fees, $8,952,463 of deferred underwriting fees and $495,855 of other offering costs.
For the period from January 13, 2021 (inception) through September 30, 2021, cash used in operating activities was $1,525,679. Net loss of $2,634,651 was affected by interest earned on marketable securities held in the Trust Account of $16,294, changes in fair value of warrant liability of $1,317,580, transaction costs incurred in connection with warrant liability of $609,973, and formation cost paid by Sponsor in exchange for issuance of founder shares of $5,000. Changes in operating assets and liabilities provided $1,827,873 of cash for operating activities.
As of September 30, 2021, we had marketable securities held in the Trust Account of $255,800,954 consisting of U.S. Treasury Bills with a maturity of 185 days or less. We may withdraw interest from the Trust Account to pay taxes, if any. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less income taxes payable), to complete our Business Combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
 
32
We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of our Sponsor, or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into Private Placement Warrants of the post Business Combination entity at a price of $1.50 per warrant at the option of the lender. Such warrants would be identical to the Private Placement Warrants.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity from the sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Off-Balance
Sheet Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance
sheet arrangements as of September 30, 2021. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating
off-balance
sheet arrangements. We have not entered into any
off-balance
sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any
non-financial
assets.
Contractual Obligations
The Company entered into an agreement, commencing on March 4, 2021, to pay the Sponsor up to $10,000 per month for office space, utilities, secretarial and administrative support services. Upon completion of a Business Combination or its liquidation, the Company will cease paying these monthly fees. For the three months ended and for the period from January 13, 2021 (Inception) through September 30, 2021, the Company incurred and accrued $30,000 and $40,000 in fees for these services, respectively.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $8,952,463 in the aggregate. The deferred fee will become 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.
Subscription Agreement
Concurrently with entering into the Business Combination Agreement, Holdco has entered into subscription agreements with certain investors (the “PIPE Investors”) (the “Subscription Agreements”), pursuant to which such investors would subscribe for Holdco Class A Ordinary Shares (in the form of Holdco Class A ADSs) in a private placement for $10.00 per share substantially concurrently at the Closing for an aggregate purchase price of $120 million. The proceeds from the private placement will be used for general working capital purposes following the Closing.
Each Subscription Agreement will terminate upon the earlier to occur of (a) the termination of the Business Combination Agreement in accordance with its terms, (b) the mutual written agreement of the parties to such Subscription Agreement (c) if the specified conditions to closing of such Subscription Agreement are not satisfied or waived prior to Closing, and (d) August 2, 2022, if the Closing has not occurred by such date.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We do not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. We evaluate all of our financial instruments, including issued share purchase warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to ASC 480 and ASC 815. We account for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
 
33
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to
 
34
redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ equity section of our condensed balance sheets.
Net Income (loss) Per Ordinary Share
Net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstanding during the period. We apply the
two-class
method in calculating earnings per share. Accretion associated with the redeemable shares of Class A ordinary shares is excluded from earnings per share as the redemption value approximates fair value.
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. We are currently assessing the impact, if any, that
ASU 2020-06
would have on its financial position, results of operations or cash flows. Management does not believe that any other recently issued, but not yet effective, account standard updates, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
As required by Rules
13a-15
and
15d-15
under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules
13a-15(e)
and
15d-15(e)
under the Exchange Act) were not effective, due solely to the material weakness in our internal control over financial reporting related to the Company’s accounting for complex financial instruments. As a result, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the financial statements included in this Amended Form
10-Q
present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Management has implemented remediation steps to improve our internal control over financial reporting. Specifically, we expanded and improved our review process for complex financial instruments. We plan to further improve this process by enhancing access to accounting literature, identification of third-party professionals with whom to consult regarding complex accounting applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
Changes in Internal Control over Financial Reporting
The Company has made changes in its internal control over financial reporting to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our condensed consolidated financial statements, including providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The Company can offer no assurance that these changes will ultimately have the intended effects.
 
35
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
None
 
36
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our final prospectus for its Initial Public Offering filed with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our final prospectus for its Initial Public Offering filed with the SEC, except for the following:
We have identified a material weakness in our internal control over financial reporting as of September 30, 2021. If we are unable to develop and maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results in a timely manner, which may adversely affect investor confidence in us and materially and adversely affect our business and operating results.
In connection with the preparation of our financial statements as of September 30, 2021, we concluded we were appropriate to restate the presentation of shares of Class A Ordinary shares subject to possible redemption to reflect its public shares within temporary equity after determining the public shares redemption feature is not solely within our control. As part of such process, we identified a material weakness in its internal controls over financial reporting related to the accounting for our complex financial instruments (including redeemable equity instruments as described above). In light of the material weakness identified and the resulting restatement, although we have processes to identify and appropriately apply applicable accounting requirements, we plan to enhance our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements. Our plans at this time include providing enhanced access to accounting literature, research materials and documents and increased communication among our personnel and third-party professionals with whom we consult regarding complex accounting applications. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented, or detected and corrected on a timely basis.
Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud. We continue to evaluate steps to remediate the material weakness. These remediation measures may be time consuming and costly and there is no assurance that these initiatives will ultimately have the intended effects.
A material weakness could limit our ability to prevent or detect a misstatement of our accounts or disclosures that could result in a material misstatement of our annual or interim financial statements. In such a case, we may be unable to maintain compliance with securities law requirements regarding timely filing of periodic reports in addition to applicable stock exchange listing requirements, investors may lose confidence in our financial reporting, our securities price may decline and we may face litigation as a result of the foregoing. We cannot assure you that the measures it has taken to date, or any measures it may take in the future, will be sufficient to avoid potential future material weaknesses.
As a result of this material weakness, our management concluded that our internal control over financial reporting was not effective as of September 30, 2021.
We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting.
As a result of such material weakness, the restatement, the change in accounting for the temporary equity, the resulting material weakness and other matters raised or that may in the future be raised by the SEC, we face potential for litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the restatement and material weaknesses in our internal control over financial reporting and the preparation of our financial statements. As of the date of this Quarterly Report, we have no knowledge of any such litigation or dispute. However, we can provide no assurance that such litigation or dispute will not arise in the future. Any such litigation or dispute, whether successful or not, could have a material adverse effect on our business, results of operations and financial condition or our ability to complete an initial business combination.
Our warrants are accounted for as liabilities and the changes in value of our warrants could have a material effect on our financial results.
On April 12, 2021, the Acting Director of the Division of Corporation Finance and Acting Chief Accountant of the SEC together issued a statement regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies (“SPACs”)” (the “SEC Staff Statement”). Specifically, the SEC Staff Statement focused on certain settlement terms and provisions related to certain tender offers following a business combination, which terms are similar to those contained in the warrant agreement governing our warrants. As a result of the SEC Staff Statement, we reevaluated the accounting treatment of our 6,394,617 public warrants and 5,127,129 private placement warrants, each as of March 31, 2021, and determined to classify the warrants as derivative liabilities measured at fair value, with changes in fair value each period reported in earnings.
As a result, included on our consolidated balance sheet as of March 31, 2021 contained elsewhere in this Quarterly Report are derivative liabilities related to embedded features contained within our warrants. Accounting Standards Codification 815, Derivatives and Hedging (“ASC 815”), provides for the remeasurement of the fair value of such derivatives at each balance sheet date, with a resulting non-cash gain or loss related to the change in the fair value being recognized in earnings in the statement of operations. As a result of the recurring fair value measurement, our consolidated financial statements and results of operations may fluctuate quarterly, based on factors, which are outside of our control. Due to the recurring fair value measurement, we expect that we will recognize non-cash gains or losses on our warrants each reporting period and that the amount of such gains or losses could be material.
 
37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On March 9, 2021 the Company consummated the Initial Public Offering of 25,578,466 units (the “Units”) which includes the partial exercise by the underwriters of their over-allotment option in the amount of 3,078,466 Units, at $10.00 per Unit, generating gross proceeds of $255,784,660. Citigroup and Jefferies acted as book-running managers of the Initial Public Offering. The securities in the offering were registered under the Securities Act on registration statement
onFormS-1/A(No.333-252298).
The Securities and Exchange Commission declared the registration statements effective on March 4, 2021.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 5,127,129 warrants (the “Private Placement Warrants”) at a price of $1.50 per Private Placement Warrant in a private placement to VPC Impact Acquisition Holdings Sponsor II, LLC (the “Sponsor”), generating gross proceeds of $7,690,693. Each whole Private Placement Warrant is exercisable to purchase one ordinary share at an exercise price of $11.50 per share. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Placement Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
Transaction costs amounted to $14,564,011, consisting of $5,115,693 of underwriting fees, $8,952,463 of deferred underwriting fees and $495,855 of other offering costs. In addition, at March 9, 2021 cash of $789,218 was held outside of the Trust Account (as defined below) and is available for working capital purposes.
Following the closing of the Initial Public Offering on March 9, 2021, an amount of $255,784,660 ($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”) and will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (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 investing solely in U.S. Treasuries and meeting certain conditions under
Rule 2a-7of
the Investment Company Act, as determined by the Company, until the earliest of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account to the Company’s shareholders.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of
thisForm10-Q.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
None
Item 5. Other Information
None
 
38
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report
onForm10-Q.
 
No.
  
Description of Exhibit
2.1    First Amendment to Business Combination Agreement, dated as of September 29, 2021, by and among VPC Impact Acquisition Holdings II, AG1 Holdings, Ltd., AG2 Holdings, Ltd., FinAccel Pte. Ltd. and Akshay Garg in his capacity as the Shareholders Representative (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K (file No. 001-40160) filed with the SEC on September 29, 2021.
31.1*    Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*    Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**    Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2**    Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS*    Inline XBRL Instance Document
101.SCH*    Inline XBRL Taxonomy Extension Schema Document
101.CAL*    Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*    Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*    Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*    Inline XBRL Taxonomy Extension Presentation Linkbase Document
104    Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
 
*
Filed herewith.
**
Furnished herewith.
 
39
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
   
VPC IMPACT ACQUISITION HOLDINGS II
Date: January 3, 2022     By:  
/s/ Gordon Watson
    Name:   Gordon Watson
    Title:  
Co-Chief Executive Officer
(Principal Executive Officer)
Date: January 3, 2022     By:  
/s/ Carly Altieri
    Name:   Carly Altieri
    Title:  
Chief Financial Officer
(Principal Financial and Accounting Officer)
 
40
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