NOTES TO UNAUDITED CONDENSED FINANCIAL
STATEMENTS
Note 1—Description of Organization
and Business Operations
Replay Acquisition Corp. (the “Company”)
was incorporated as a Cayman Islands exempted company on November 6, 2018. The Company was formed for the purpose of effecting
a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with
one or more businesses (the “Business Combination”). Although the Company is not limited to a particular business,
industry or geographical location for purposes of consummating a Business Combination, the Company intends to focus its search
for a target in Argentina and/or Brazil focused on industries that the Company believes have favorable prospects and a high likelihood
of generating strong risk-adjusted returns for its shareholders. These industries include, but are not limited to, the consumer,
telecommunications and technology, energy, financial services and real estate sectors. The Company is an emerging growth company
and, as such, the Company is subject to all of the risks associated with emerging growth companies.
As of September 30, 2020, the Company had
not commenced any operations. All activity for the period from November 6, 2018 (inception) through September 30, 2020 relates
to the Company’s formation, the Company’s initial public offering (the “Initial Public Offering”) described
below, and since the Initial Public Offering, the search for a potential target. The Company will not generate any operating revenues
until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income
in the form of investment income on cash and cash equivalents from the proceeds derived from the Initial Public Offering.
The Company’s sponsor is Replay Sponsor,
LLC, a Delaware limited liability company (the “Sponsor”). The Company’s ability to commence operations is contingent
upon obtaining adequate financial resources. The registration statement for the Company’s Initial Public Offering was declared
effective on April 3, 2019. On April 8, 2019, the Company consummated its Initial Public Offering of 28,750,000 units
(“Units”), including the issuance of 3,750,000 Units as a result of the underwriters’ full exercise of their
over-allotment option, at $10.00 per Unit, generating gross proceeds of $287.5 million, and incurring offering costs of approximately
$15.0 million, inclusive of approximately $9.2 million in deferred underwriting commissions (Note 5).
Simultaneously with the closing of the
Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 7,750,000 warrants
(each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of
$1.00 per Private Placement Warrant to the Sponsor, generating gross proceeds of $7.75 million (Note 4).
On August 15, 2019, the Company received
a written notice (the “Notice”) from the staff of NYSE Regulation of the New York Stock Exchange (“NYSE”)
indicating that the Company was not then in compliance with Section 802.01B of the NYSE Listed Company Manual (the “Manual”),
which requires the Company to maintain a minimum of 300 public shareholders on a continuous basis.
Pursuant to the Notice, the Company was
subject to the procedures set forth in Sections 801 and 802 of the Manual. The Company submitted a business plan that demonstrated
how the Company expected to return to compliance with the minimum public shareholders requirement within 18 months of receipt of
the Notice.
On October 24, 2019, the Company was
notified by the staff of NYSE Regulation that the NYSE’s Listings Operations Committee agreed to accept the Company’s
business plan, and the Company was subject to quarterly monitoring for compliance with such plan. On November 5, 2020, the Company
was notified by the staff of NYSE Regulation that the Company is a “company back in compliance” with Section 802.01B
of the Manual.
The Company’s ordinary shares, warrants
and Units, which trade under the symbols “RPLA,” “RPLA WS” and “RPLA.U,” respectively, will
continue to be listed and traded on the NYSE and will no longer bear the indicator “.BC” on the consolidated tape to
indicate noncompliance with the NYSE’s continued listing standards.
Trust Account
Upon the closing of the Initial Public
Offering and Private Placement, $287.5 million ($10.00 per Unit) of the net proceeds of the sale of the Units in the Initial
Public Offering and the Private Placement was placed in a trust account (the “Trust Account”), located in
the United States at J.P. Morgan Chase Bank, N.A., with Continental Stock Transfer & Trust Company acting as trustee,
and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company
Act 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended
investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2),
(d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of:
(i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
Initial Business Combination
The Company’s management has broad
discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private
Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business
Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must
complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in
the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at
the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination
if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires
a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment
Company Act.
The Company will provide its holders (the
“Public Shareholders”) of its ordinary shares, par value $0.0001 per share, sold in the Initial Public Offering (the
“Public Shares”), with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business
Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by
means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct
a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their
Public Shares for a pro rata portion of the amount then in the Trust Account (initially anticipated to be $10.00 per Public Share).
The per-share amount to be distributed to Public Shareholders who redeem their Public Shares will not be reduced by the deferred
underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares were classified
as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s
(“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from
Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of
at least $5,000,001 upon such consummation of a Business Combination and a majority of the shares voted are voted in favor of the
Business Combination. If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for
business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association
(the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender
offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the
SEC prior to completing a Business Combination. If, however, shareholder approval of the transactions is required by law, or the
Company decides to obtain shareholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction
with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public
Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the Business Combination.
If the Company seeks shareholder approval in connection with a Business Combination, the initial shareholders (as defined below)
agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Initial
Public Offering in favor of a Business Combination. Subsequent to the consummation of the Initial Public Offering, the Company
will adopt an insider trading policy which will require insiders to: (i) refrain from purchasing shares during certain blackout
periods and when they are in possession of any material non-public information and (ii) to clear all trades with the Company’s
legal counsel prior to execution. In addition, the initial shareholders agreed to waive their redemption rights with respect to
their Founder Shares and Public Shares in connection with the completion of a Business Combination.
Notwithstanding the foregoing, the Amended
and Restated Memorandum and Articles of Association provide that a Public Shareholder, together with any affiliate of such shareholder
or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares
with respect to more than an aggregate of 15% or more of the ordinary shares sold in the Initial Public Offering, without the prior
consent of the Company.
The Company’s Sponsor, officers and
directors (the “initial shareholders”) agreed not to propose an amendment to the Amended and Restated Memorandum and
Articles of Association (a) that would modify the substance or timing of the Company’s obligation to redeem 100% of
its Public Shares if the Company does not complete a Business Combination within 24 months from the closing of the Initial
Public Offering, or April 8, 2021, (the “Combination Period”) or (b) 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 ordinary shares in conjunction with any such amendment.
If the Company is unable to complete a
Business Combination within the Combination Period, the Company will (1) cease all operations except for the purpose of winding
up, (2) as promptly as reasonably possible but no more than 10 business days thereafter, subject to lawfully available
funds therefor, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit
in the Trust Account, including interest (less up to $100,000 of interest to pay dissolution expenses and which interest shall
be net of taxes payable), divided by the number of then issued and outstanding Public Shares, which redemption will completely
extinguish Public Shareholders’ rights as shareholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (3) as promptly as reasonably possible following such redemption, subject to the approval
of the Company’s remaining shareholders and its board of directors, dissolve and liquidate, 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.
The initial shareholders agreed to waive
their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the
Combination Period. However, if the initial shareholders should acquire Public Shares in or after the Initial Public Offering,
they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails
to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to their deferred
underwriting commissions (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination
within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account
that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the
per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than
the $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor
agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent
auditors) 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 below (1) $10.00 per Public Share or
(2) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due
to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay taxes. This liability
will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any
kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of
the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the
“Securities Act”).
Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability
for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust
Account due to claims of creditors by endeavoring to have all vendors, service providers (other than the Company’s independent
auditors), prospective target businesses or other entities with which the Company does business, execute agreements with the Company
waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Proposed Business Combination
On October 12, 2020, the Company;
Finance of America Equity Capital LLC, a Delaware limited liability company (“FoA”); Finance of America Companies
Inc., a Delaware corporation and wholly owned subsidiary of the Company (“New Pubco”); RPLY Merger Sub LLC, a
Delaware limited liability company and wholly owned subsidiary of New Pubco (“Replay Merger Sub”); RPLY BLKR
Merger Sub LLC, a Delaware limited liability company and wholly owned subsidiary of New Pubco (“Blocker Merger
Sub”); Blackstone Tactical Opportunities Fund (Urban Feeder) – NQ L.P., a Delaware limited partnership
(“Blocker”); Blackstone Tactical Opportunities Associates – NQ L.L.C., a Delaware limited liability company
(“Blocker GP”); BTO Urban Holdings L.L.C., a Delaware limited liability company (“BTO Urban”),
Blackstone Family Tactical Opportunities Investment Partnership – NQ – ESC L.P., a Delaware limited partnership
(“ESC”), Libman Family Holdings LLC, a Connecticut limited liability company (“Family Holdings”), The
Mortgage Opportunity Group LLC, a Connecticut limited liability company (“TMO”), L and TF, LLC, a North Carolina
limited liability company (“L&TF”), UFG Management Holdings LLC, a Delaware limited liability company
(“Management Holdings”), and Joe Cayre (each of BTO Urban, ESC, Family Holdings, TMO, L&TF, Management
Holdings and Joe Cayre, a “Seller” and, collectively, the “Sellers”); and BTO Urban and Family
Holdings, solely in their joint capacity as the representative of the Sellers pursuant to Section 12.18 of the Transaction
Agreement (as defined below) (the “Seller Representative”), entered into a Transaction Agreement (the
“Transaction Agreement”), pursuant to which the Company agreed to combine with FoA in a series of transactions
(collectively, the “Proposed Business Combination”) that will result in New Pubco becoming a publicly-traded
company on the New York Stock Exchange (“NYSE”) and controlling FoA in an “UP-C” structure. See Note
8.
Going Concern Consideration
As of September 30, 2020, the Company had
approximately $1 million outside of the Trust Account, approximately $5.8 million of investment income available in the Trust Account
to pay for tax obligations (less up to $100,000 of interest to pay dissolution expenses), and working capital of approximately
$0.2 million.
Through September 30, 2020, the Company’s
liquidity needs have been satisfied through receipt of a $25,000 capital contribution from the Sponsor in exchange for the issuance
of the Founder Shares (Note 4) to the Sponsor, $250,000 in note payable to the Sponsor and approximately $2,000 of general and
administrative expenses paid by a related party on behalf of the Company. Subsequent to the consummation of the Initial Public
Offering, the Company received the net proceeds from the consummation of the Private Placement not held in the Trust Account of
$2.0 million. The Company fully repaid the note and the advances to the Sponsor and the related party in May 2019.
In addition, in order to finance transaction
costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors may, but are not obligated to, loan the Company Working Capital Loans (Note 4). Except for the foregoing,
the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such
loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the
lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants at a price of $1.00
per warrant. The warrants would be identical to the Private Placement Warrants. To date, the Company has no borrowings under the
Working Capital Loans.
On January 30, 2020, the World
Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus
(COVID-19). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic (the “COVID-19 pandemic”),
based on the rapid increase in exposure globally. The full impact of the COVID-19 pandemic continues to evolve. The impact of
the COVID-19 pandemic on the Company’s results of operations, financial position and cash flows will depend on future
developments, including the duration and spread of the pandemic and related advisories and restrictions. These developments
and the impact of the COVID-19 pandemic on the financial markets and the overall economy are highly uncertain and cannot be
predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s
results of operations, financial position and cash flows may be materially adversely affected. Additionally, the
Company’s ability to complete an initial Business Combination, including the Proposed Business Combination, may be
materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 pandemic or
treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit
the Company’s ability to have meetings with potential investors or affect the ability of a potential target
company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination in a
timely manner. The Company’s ability to consummate an initial Business Combination may also be dependent on the ability
to raise additional equity and debt financing, which may be impacted by the COVID-19 pandemic and the resulting market
downturn.
In connection with the Company’s
assessment of going concern considerations in accordance with FASB Accounting Standards Update 2014-15, “Disclosure of Uncertainties
about an Entity’s Ability to Continue as a Going Concern,” management has determined that the mandatory liquidation
and subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments
have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after April 8,
2021.
Note 2—Summary of Significant
Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial
statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“GAAP”)
for interim financial information and Article 8 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by GAAP. In the opinion of management, all adjustments (consisting of normal accruals) considered for a
fair presentation have been included. Operating results for the nine months ended September 30, 2020 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2020.
The accompanying unaudited condensed financial
statements should be read in conjunction with the audited financial statements and notes thereto included on form 10-K filed by
in the Company with the ’s Annual Report on Form 10-K for the year ended December 31, 2019 filed with U.S. Securities
and Exchange Commission (the “SEC”) on March 25, 2020.
Emerging Growth Company
Section 102(b)(1) of the Jumpstart
Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply
with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration
statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with
the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of
the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election
to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard
is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth
company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison
of the Company’s financial statement with another public company that is neither an emerging growth company nor an emerging
growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences
in accounting standards used.
Concentrations of Credit Risk
Financial instruments that potentially
subject the Company to credit risk consist principally of cash and investments held in the Trust Account. Cash is maintained in
accounts with financial institutions, which, at times may exceed the Federal depository insurance coverage of $250,000. The Company
has not experienced losses on its cash accounts and management believes, based upon the quality of the financial institutions,
that the credit risk with regard to these deposits is not significant. The Company’s investments held in the Trust Account
consists entirely of U.S. government securities with an original maturity of 180 days or less.
Investments Held in Trust Account
The Company’s portfolio of
investments held in the Trust Account are comprised solely of U.S. government securities, within the meaning set forth in
Section 2(a)(16) of the Investment Company Act, with a maturity of 180 days or less, classified as trading securities.
Trading securities are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses
resulting from the change in fair value of these securities is included in gain on marketable securities (net), dividends and
interest, held in the Trust Account in the accompanying statement of operations. The fair value for trading securities is
determined using quoted market prices in active markets.
Fair Value Measurements
ASC 820, Fair Value Measurement, defines
fair value and requires disclosures about 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:
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Level 1, defined as observable inputs such as quoted prices for identical instruments in active
markets;
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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
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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.
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As of September 30, 2020, and December 31,
2019, the recorded values of cash and accounts payable approximate the fair values due to
the short-term nature of the instruments. The Company’s investments held in the Trust Account are comprised of investments
in U.S. government securities with an original maturity of 180 days or less. The fair value for trading securities is determined
using quoted market prices in active markets.
Use of Estimates
The preparation of financial statements
in conformity with U.S. GAAP requires the Company’s management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the financial statements and the reported
amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Offering Costs
Offering costs consist of expenses incurred
in connection with preparation of the Initial Public Offering, of approximately $15.1 million consisted principally of underwriter
discounts of $14.4 million (including $9.2 million of which payment is deferred) and approximately $638,000 of professional, printing,
filing, regulatory and other costs. These expenses, together with the underwriting discounts and commissions, were charged to equity
upon completion of the Initial Public Offering.
Ordinary Shares Subject to Possible
Redemption
The Company accounts for its ordinary
shares subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from
Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as liability instruments 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 ordinary shares feature certain redemption rights that are considered to be
outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, at September
30, 2020 and December 31, 2019, 27,930,364 and 28,827,344 ordinary shares subject to possible redemption are presented
as temporary equity outside of the shareholders’ equity section of the Company’s balance sheets,
respectively.
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 share is computed
by dividing net income (loss) by the weighted-average number of ordinary shares outstanding during the periods. The Company had
not considered the effect of the warrants sold in the Initial Public Offering (including the consummation of the full over-allotment
option) and Private Placement to purchase an aggregate of 22,125,000 ordinary shares in the calculation of diluted income per share,
because their inclusion would be anti-dilutive under the treasury stock method.
The Company’s unaudited condensed
statements of operations include a presentation of income (loss) per ordinary share subject to redemption in a manner similar to
the two-class method of income per share. Net income (loss) per share for the three months ended September 30, 2020, basic and
diluted for Public Shares, was calculated by dividing the gain on marketable securities, dividends and interest held in the Trust
Account of approximately $87,000 by the weighted average number of 28,750,000 Public Shares outstanding for the period. Net loss
per share for the three months ended September 30, 2020, basic and diluted for Founder Shares, was calculated by dividing the net
loss (approximately $970,000 less gain attributable to Public Shares in the amount of approximately $87,000, resulting in a loss
of approximately $1 million), by the weighted average number of 7,187,500 Founder Shares outstanding for the period.
Net income (loss) per share for the nine
months ended September 30, 2020, basic and diluted for Public Shares, was calculated by dividing the gain on marketable securities,
dividends and interest held in the Trust Account of approximately $1.2 million, by the weighted average number of 28,750,000 Public
Shares outstanding for the period. Net loss per share for the nine months ended September 30, 2020, basic and diluted for Founder
Shares, was calculated by dividing the net loss (approximately $120,000, less income attributable to Public Shares in the amount
of $1.2 million, resulting in a loss of approximately $1.3 million), by the weighted average number of 7,187,500 Founder Shares
outstanding for the period.
At September 30, 2020, we did not have
any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share
in our earnings. As a result, diluted loss per share is the same as basic loss per share for the periods presented.
Income Taxes
The Company follows the asset and liability
method of accounting for income taxes under FASB ASC 740, “Income Taxes.” Deferred tax assets and liabilities
are recognized for the estimated future tax consequences attributable to differences between the financial statements carrying
amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the
period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to
the amount expected to be realized.
FASB ASC 740 prescribes a recognition
threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be
sustained upon examination by taxing authorities. There were no unrecognized tax benefits as of September 30, 2020 and
December 31, 2019. The Company’s management determined that the Cayman Islands is the Company’s only major
tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax
expense. No amounts were accrued for the payment of interest and penalties at September 30, 2020 and December 31, 2019.
The Company is currently not aware of any issues under review that could result in significant payments, accruals or material
deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.
There is currently no taxation imposed on income by the Government of the Cayman Islands. In accordance with Cayman income
tax regulations, income taxes are not levied on the Company. Consequently, income taxes are not reflected in the
Company’s financial statements.
Recent Accounting Pronouncements
Management does not believe that any recently
issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s
financial statements.
Note 3—Initial Public Offering
On April 8, 2019, the Company sold 28,750,000
Units, including the issuance of 3,750,000 Units as a result of the underwriters’ full exercise of their over-allotment option,
at a purchase price of $10.00 per Unit in the Initial Public Offering. Of these, an aggregate of 2,500,000 Units in the Initial
Public Offering (“Affiliate Units”) were purchased by certain affiliates of the Sponsor for gross proceeds of $25.0 million.
Each Unit consists of one ordinary share
and one-half of one redeemable warrant (each, a “Public Warrant”). Each whole Public Warrant entitles the holder to
purchase one ordinary share at a price of $11.50 per share, subject to adjustment (see Note 6).
Note 4—Related Party Transactions
Founder Shares and Private Placement
Warrants
In December 2018, the Sponsor purchased
7,187,500 ordinary shares, par value $0.0001 per share (the “Founder Shares”), for an aggregate price of $25,000. In
March 2019, the Sponsor transferred to the Company’s independent directors an aggregate of 90,000 Founder Shares for
an aggregate purchase price of $313. The Sponsor agreed to forfeit up to 937,500 Founder Shares to the extent that the over-allotment
option was not exercised in full by the underwriters. The forfeiture was to be adjusted to the extent that the over-allotment option
was not exercised in full by the underwriters so that the Founder Shares would represent 20.0% of the Company’s issued and
outstanding shares after the Initial Public Offering. On April 5, 2019, the underwriters fully exercised their over-allotment
option which closed simultaneously with the Initial Public Offering; thus, the 937,500 Founder Shares were no longer subject to
forfeiture.
The initial shareholders agreed, subject
to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year
after the completion of the initial Business Combination or (B) subsequent to the initial Business Combination, (x) if
the last reported sale price of the ordinary shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends,
rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading
day period commencing at least 150 days after the initial Business Combination, or (y) the date on which the Company
completes a liquidation, merger, amalgamation, share exchange, reorganization or other similar transaction that results in all
of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Simultaneously with the closing of the
Initial Public Offering on April 8, 2019, the Company sold 7,750,000 Private Placement Warrants to the Sponsor at a price
of $1.00 per Private Placement Warrant, generating gross proceeds of $7.75 million. Each Private Placement Warrant is exercisable
for one ordinary share at a price of $11.50 per share. A portion of the net proceeds from the Private Placement Warrants was added
to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination
within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrants will be non-redeemable
and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
The Sponsor and the Company’s officers
and directors agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until
30 days after the completion of the initial Business Combination.
Contemporaneously with the execution
of the Transaction Agreement, the initial shareholders entered into an amendment and restatement of the existing Sponsor
Agreement (as amended and restated, the “Sponsor Agreement”) with New Pubco, the Company and FoA, pursuant to
which, among other things, (i) immediately prior to the Domestication (as defined below), all of the Private Placement
Warrants owned by the Sponsor will be exchanged for ordinary shares and (ii) excluding the Founder Shares held by the
Company’s independent directors (unless transferred to any other initial shareholder or permitted transferee thereof),
40% of the Founder Shares held by the Sponsor will be vested and wholly owned by the Sponsor as of the closing of the
Proposed Business Combination and 60% of the Founder Shares held by the Sponsor will be subject to vesting and forfeiture in
accordance with certain terms and conditions. See Note 8.
Pursuant to the Sponsor Agreement, the
initial shareholders have agreed to (i) vote or cause to be voted at the general meeting all of their Founder Shares and all other
equity securities that they hold in the Company in favor of each proposal in connection with the Proposed Business Combination
and the Transaction Agreement and any other matters reasonably necessary for consummation of the Proposed Business Combination,
(ii) use reasonable best efforts to cause to be done all reasonably necessary, proper or advisable actions to consummate the Proposed
Business Combination, (iii) waive all redemption rights and certain other rights in connection with the Proposed Business Combination
and (iv) be bound by the same exclusivity obligations that bind the purchaser-side parties in the Transaction Agreement.
PIPE Agreements
Concurrently with the execution of the
Transaction Agreement, the Company entered into the Replay PIPE Agreements (as defined below) with various investors, including
an affiliate of the Sponsor, pursuant to which such investors agreed to purchase ordinary shares (which ordinary shares will be
converted into Replay LLC Units pursuant to the Domestication and then will be converted into the right to receive shares of Class
A Common Stock pursuant to the Replay Merger (as defined below)). In the aggregate, the PIPE Investors (as defined below) have
committed to purchase $250.0 million of PIPE Shares (as defined below), at a purchase price of $10.00 per PIPE Share, including
$10.0 million of PIPE Shares to be purchased by an affiliate of the Sponsor. See Note 8.
Related Party Loans
On December 1, 2018, the Sponsor agreed
to loan the Company an aggregate of up to $250,000 to cover expenses related to the Initial Public Offering pursuant to a promissory
note (the “Note”). This loan was non-interest bearing and payable on the earlier of June 30, 2019 or the completion
of the Initial Public Offering. The Company borrowed $250,000 under the Note, and fully repaid on May 6, 2019.
In addition to the Note, the Company borrowed
approximately $2,000 from a related party for general and administrative expenses. The Company repaid this amount on May 7,
2019.
In addition, in order to finance transaction
costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s
officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”).
If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust
Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust
Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust
Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital
Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements
exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination,
without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible
into warrants at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. To date, the
Company had no borrowings under the Working Capital Loans.
Reimbursement
The Sponsor, officers and directors,
or any of their respective affiliates, will be reimbursed for any out-of-pocket expenses incurred in connection with
activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on
suitable Business Combinations. The Company’s Audit Committee will review on a quarterly basis all payments that were
made to the Sponsor, officers, directors or the Company’s or any of their affiliates and will determine which expenses
and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses
incurred by such persons in connection with activities on the Company’s behalf.
Note 5—Commitments and Contingencies
Registration Rights
The holders of Founder Shares, Private
Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, and any ordinary shares underlying
such securities, are entitled to registration rights pursuant to a Registration Rights Agreement entered into on April 3,
2019. These holders will be entitled to certain demand and “piggyback” registration rights. However, the Registration
Rights Agreement provides that the Company will not permit any registration statement filed under the Securities Act to become
effective until the termination of the applicable lock-up period for the securities to be registered. The Company will bear the
expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a
45-day option from the date of the final prospectus relating to the Initial Public Offering to purchase up to 3,750,000 additional
Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. On
April 5, 2019, the underwriters fully exercised their over-allotment option which closed simultaneously with the Initial Public
Offering.
Except on the Affiliate Units, the underwriters
were entitled to an underwriting discount of $0.20 per Unit, or $5.25 million in the aggregate, paid upon the closing of the
Initial Public Offering. In addition, $0.35 per Unit, or approximately $9.19 million in the aggregate will be payable to the
underwriters for deferred underwriting commissions. 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.
Note 6—Shareholders’ Equity
Ordinary Shares—The
Company is currently authorized to issue 200,000,000 ordinary shares with a par value of $0.0001 per share. Holders of ordinary
shares are entitled to one vote for each share. In April 2019, the Company sold 28,750,000 Units in the Initial Public Offering. As
a result, as of September 30, 2020 and December 31, 2019, there were 35,937,500 ordinary shares issued and outstanding, including
27,930,364 and 27,942,373 ordinary shares subject to possible redemption, respectively.
Preferred Shares—The
Company is authorized to issue 2,000,000 preferred shares with such designations, voting and other rights and preferences as may
be determined from time to time by the Company’s board of directors. As of September 30, 2020, and December 31, 2019,
there were no preferred shares issued or outstanding.
Warrants—Public
Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of
the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable 30 days after the
completion of a Business Combination, provided that the Company has an effective registration statement under the Securities
Act covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to them is
available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is
exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later
than 15 business days, after the closing of a Business Combination, the Company will use its best efforts to file with
the SEC a registration statement for the registration, under the Securities Act, of the ordinary shares issuable upon
exercise of the Public Warrants. If the shares issuable upon exercise of the warrants are not registered under the Securities
Act, the Company will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will
be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking
to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the
securities laws of the state of the exercising holder, or an exemption from registration is available. Notwithstanding the
above, if the Company’s ordinary shares are at the time of any exercise of a warrant not listed on a national
securities exchange such that it satisfies the definition of a “covered security” under
Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who
exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the
Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a
registration statement, but the Company will use its best efforts to register or qualify the shares under applicable blue sky
laws to the extent an exemption is not available.
The Public Warrants will expire five years
after the completion of a Business Combination or earlier upon redemption or liquidation.
The Private Placement Warrants are identical
to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and
the ordinary shares issuable upon exercise of the Private Placement Warrants 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 non-redeemable so long as they are held by the initial purchasers or such purchasers’ 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.
The Company may call the Public Warrants
for redemption (except with respect to the Private Placement Warrants):
|
·
|
in whole and not in part;
|
|
·
|
at a price of $0.01 per warrant;
|
|
·
|
upon a minimum of 30 days’ prior written notice of redemption; and
|
|
·
|
if, and only if, the last reported closing price of the ordinary shares equals or exceeds $18.00
per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the
Company sends the notice of redemption to the warrant holders.
|
If the Company calls the Public Warrants
for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a
“cashless basis,” as described in the warrant agreement.
The exercise price and number of ordinary
shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a share dividend,
recapitalization, reorganization, merger or consolidation. In addition, if (x) the Company issues additional ordinary shares
or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at
an issue price or effective issue price of less than $9.20 per 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 Sponsor or its
affiliates, without taking into account any Founder Shares held by the Sponsor or such affiliates, as applicable, prior to such
issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than
60% of the total equity proceeds, and interest thereon, available for the funding of the Company’s initial Business Combination
on the date of the consummation of such initial Business Combination (net of redemptions), and (z) the volume weighted average
trading price of the Company’s ordinary shares during the 20 trading day period starting on the trading day prior to the
day on which the Company consummates its initial Business Combination (such price, the “Market Value”) is below $9.20
per share, the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the Market
Value and the Newly Issued Price and the $18.00 per share redemption trigger price described above will be adjusted (to the nearest
cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price. Additionally, in no event will the Company
be required to net cash settle the warrant shares. If the Company is unable to complete a Business Combination within the Combination
Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with
respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account
with the respect to such warrants. Accordingly, the warrants may expire worthless.
Note 7 — Fair Value Measurements
The following tables present information
about the Company’s financial assets that are measured at fair value on a recurring basis as of September 30, 2020 and December 31,
2019 by level within the fair value hierarchy:
Description
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs (Level 2)
|
|
|
Significant
Other
Unobservable
Inputs (Level 3)
|
|
Investments held in Trust Account
|
|
|
|
|
|
|
|
|
|
|
|
|
Money Market Fund
|
|
$
|
9,201
|
|
|
$
|
-
|
|
|
$
|
-
|
|
U.S. Treasury Securities
|
|
|
293,246,339
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
293,255,540
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Description
|
|
Quoted Prices in
Active Markets
(Level 1)
|
|
|
Significant
Other
Observable
Inputs (Level 2)
|
|
|
Significant
Other
Unobservable
Inputs (Level 3)
|
|
Investments held in Trust Account
|
|
|
|
|
|
|
|
|
|
|
|
|
Money Market Fund
|
|
$
|
7,882
|
|
|
$
|
-
|
|
|
$
|
-
|
|
U.S. Treasury Securities
|
|
|
292,046,276
|
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
292,054,158
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Note 8 — Subsequent Events
Proposed Business Combination
On October 12, 2020, the Company, FoA,
New Pubco, Replay Merger Sub, Blocker Merger Sub, Blocker, Blocker GP, the Sellers and BTO Urban and Family Holdings, solely in
their joint capacity as the Seller Representative, entered into the Transaction Agreement, pursuant to which the Company agreed
to combine with FoA in the Proposed Business Combination that will result in New Pubco becoming a publicly-traded company on the
NYSE and controlling FoA in an “UP-C” structure.
The
Proposed Business Combination encompasses a series of transactions to effect an “UP-C” structure, pursuant to
which, among other things: (i) the Company will change its jurisdiction of incorporation from the Cayman Islands to the State
of Delaware by deregistering as an exempted company in the Cayman Islands and continuing and domesticating as a limited
liability company formed under the laws of the State of Delaware (the “Domestication”), whereby (A) each of
the Company’s ordinary shares outstanding immediately prior to the Domestication will be converted into a unit
representing a limited liability company interest in the Company (each, a “Replay LLC Unit”) and (B) the
Company will be governed by a limited liability company agreement; (ii) the Sellers and Blocker GP will sell to the Company
limited liability company interests in FoA (“FoA Units”) in exchange for cash; (iii) Replay Merger Sub will merge
with and into the Company (the “Replay Merger”), with the Company surviving the Replay Merger as a direct wholly
owned subsidiary of New Pubco and each Replay LLC Unit outstanding immediately prior to the effectiveness of the Replay
Merger being converted into the right to receive one share of New Pubco’s Class A common stock, par value $0.0001
per share (“Class A Common Stock”); (iv) Blocker will be converted from a Delaware limited partnership to a
Delaware limited liability company; (v) Blocker Merger Sub will merge with and into
Blocker (the “Blocker Merger”), with Blocker surviving the Blocker Merger as a direct wholly owned subsidiary of
New Pubco and each limited liability company interest of Blocker (each, a “Blocker Share”) outstanding
immediately prior to the effectiveness of the Blocker Merger being converted into the right to receive a combination of
shares of Class A Common Stock and cash; (vi) Blocker GP will contribute its remaining FoA Units to New Pubco in
exchange for shares of Class A Common Stock, after which New Pubco will contribute such FoA Units to Blocker; and (vii)
New Pubco will issue to the Sellers shares of New Pubco’s Class B common stock, par value $0.0001 per share
(“Class B Common Stock”), which will have no economic rights but will entitle each holder of at least one
such share (regardless of the number of shares so held) to a number of votes that is equal to the aggregate number of FoA
Units held by such holder on all matters on which stockholders of New Pubco are entitled to vote generally.
As a result of the Proposed Business Combination,
among other things: (A) New Pubco will indirectly hold (through the Company and Blocker) FoA Units and will have the sole and exclusive
right to appoint the board of managers of FoA; (B) the Sellers will hold (i) FoA Units that are exchangeable on a one-for-one basis
for shares of Class A Common Stock and (ii) shares of Class B Common Stock; and (C) the holders of Blocker Shares
outstanding immediately prior to the effectiveness of the Blocker Merger and Blocker GP will, directly or indirectly, hold shares
of Class A Common Stock.
The consummation of the Proposed Business
Combination is subject to a number of conditions set forth in the Transaction Agreement including, among others, receipt of the
requisite approval of the Company’s shareholders, satisfaction of the minimum cash requirements provided in the Transaction
Agreement, the termination or expiration of all required waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended (the “HSR Act”), and the execution of the various related transaction agreements. On November 4,
2020, the request for early termination of the waiting period under the HSR Act with respect to the Proposed Business Combination
was granted by the Federal Trade Commission.
Concurrently with the execution of the
Transaction Agreement, (i) the Company entered into subscription agreements with various investors, including an affiliate of the
Sponsor, pursuant to which such investors agreed to purchase ordinary shares (which ordinary shares will be converted into Replay
LLC Units pursuant to the Domestication and then will be converted into the right to receive shares of Class A Common Stock pursuant
to the Replay Merger) (each such subscription agreement, a “Replay PIPE Agreement”), and (ii) New Pubco entered into
subscription agreements with certain funds affiliated with The Blackstone Group Inc. and Brian L. Libman and certain entities controlled
by him (collectively, the “Principal Stockholders”, and together with the investors party to the Replay PIPE Agreements,
the “PIPE Investors”) pursuant to which the Principal Stockholders agreed to purchase shares of Class A Common Stock
(together with the ordinary shares being purchased pursuant to the Replay PIPE Agreements, the “PIPE Shares”). In the
aggregate, the PIPE Investors have committed to purchase $250.0 million of PIPE Shares, at a purchase price of $10.00 per PIPE
Share, including $10.0 million of PIPE Shares to be purchased by an affiliate of the Sponsor.
In accordance with ASC Topic 855, “Subsequent
Events,” which establishes general standards of accounting for and disclosure of events that occur after the balance sheet
date but before financial statements are issued, the Company evaluated subsequent events and transactions that occurred after September
30, 2020, the balance sheet date, up to the date that the audited financial statements were available to be issued. Other than as described above, there are no other subsequent events as of September 30, 2020.