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 L&F Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to JAR Sponsor, 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, as amended (the “Securities Act”) 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 Form 10-Q including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding 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. 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 OfferingAnnual Report on Form 10-K 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.
Overview
We are a blank check company incorporated in the Cayman Islands on August 20, 2020 formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or other similar Business Combinationbusiness combination with one or more businesses. We intend to effectuate our Business Combinationbusiness combination using cash derived from the proceeds of the Initial Public Offeringinitial public offering and the sale of the Private Placement Warrants,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 Combinationbusiness combination will be successful.
The Business Combination
The Business Combination Agreement provides for, among other things, the following transactions on the date of Closing: (i) the ZF Merger, with ZeroFox being the surviving company in the ZF Merger and, after giving effect to such merger, continuing as a wholly-owned subsidiary of L&F Holdings, (ii) the IDX Merger, with IDX being the Transitional IDX Entity and, after giving effect to such merger, continuing as a wholly-owned subsidiary of L&F Holdings, and (iii) the IDX Forward Merger, with IDX Forward Merger Sub being the surviving company in the IDX Forward Merger and, after giving effect to such merger, continuing as a wholly-owned subsidiary of L&F Holdings (the “Mergers”).
Business Combination Consideration
In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the effective times of the Mergers, among other things, (i) each outstanding share of common stock (including shares of common stock issued upon the mandatory conversion of shares of preferred stock) of ZeroFox, other than ZF Dissenting Shares (as defined in the Business Combination Agreement) and ZF Cancelled Shares (as defined in the Business Combination Agreement), will be automatically cancelled and converted into a right to receive a fraction of a share of LNFA Common Stock determined in accordance with the Business Combination Agreement on the basis of a pre-money enterprise value of ZeroFox of $866,250,000 and a price of $10.00 per share of LNFA Common Stock and (ii) each outstanding share of common stock and preferred stock of IDX, other than IDX Dissenting Shares (as defined in the Business Combination Agreement) and IDX Cancelled Shares (as defined in the Business Combination Agreement), will be automatically cancelled and converted into a right to receive (x) for common stock and series a-1 and series a-2 preferred stock, a fraction of a share of LNFA Common Stock, (y) for common stock and series a-1 and series a-2 preferred stock, a portion of $50,000,000 in cash consideration (subject to certain adjustments for cash, working capital, debt and transaction expenses, and net of liquidation preferences, as provided in the Business Combination Agreement), and (z) for series a-1, series a-2 and series b preferred stock, a liquidation preference amount of $0.361, in each case, in accordance with the Business Combination Agreement and on the basis of a pre-money enterprise value of IDX of $338,750,000 and a price of $10.00 per share of LNFA Common Stock.
Common Equity Investment
Concurrently with the execution of the Business Combination Agreement, LNFA entered into the Common Equity Subscription Agreements with the ZF Investors, and the IDX Investors. Pursuant to the Common Equity Subscription Agreements, the investors agreed to the Common Equity PIPE Financing.
In addition, on December 16, 2021, the ZF PIK Promissory Notes for an aggregate purchase price of $5,000,000. Such ZF PIK Promissory Notes accrue interest that will be paid-in-kind at a rate of 5.0% per annum. If the Closing occurs, the repayment of the original principal amount of the ZF PIK Promissory Notes may be offset against amounts owed by the ZF investors under their Common Equity Subscription Agreements.
In addition, if the Closing occurs, any portion of closing cash consideration to which the IDX Investors are entitled in connection with the consummation of the Business Combination may be reduced to fund the subscription amount the IDX Investors would otherwise be required to pay pursuant to the Common Equity Subscription Agreements.
The closing of the Common Equity PIPE Financing is contingent upon, among other things, the substantially concurrent consummation of the Business Combination. The Common Equity Subscription Agreements provide that LNFA will grant the investors in the Common Equity PIPE Financing certain customary registration rights.
The foregoing description of the Common Equity Subscription Agreements and the Common Equity PIPE Financing is subject to and qualified in its entirety by reference to the full text of the form of Common Equity Subscription Agreement, a copy of which is attached as Exhibit 10.8 hereto and the terms of which are incorporated herein by reference.
Convertible Notes Investment
In connection with signing the Business Combination Agreement, LNFA entered into the Convertible Note Subscription Agreements with affiliates of the Note Investors, in respect of the Convertible Notes Financing. The principal terms of the Notes are set forth in the Indenture attached as an exhibit to the Convertible Note Subscription Agreements, which shall be entered into by LNFA, the guarantors party thereto and the indenture trustee and the form of global note attached thereto. The Notes will bear interest at a rate of 7.00% per annum, payable quarterly in cash; provided, that the issuer may elect to pay interest in kind at 8.75% per annum, and the Notes will be convertible at an initial conversion price of $11.50, subject to customary anti-dilution adjustments, including with respect to the “Conversion Price, and shall mature on the date that is three years following the closing of the Convertible Notes Financing.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues to date. Our only activities from inception through SeptemberJune 30, 20212022, were organizational activities and those necessary to prepare for the Initial Public Offering,initial public offering, described below.below and identifying a target company for a business combination, and activities in connection with the Business Combination with the Target Companies. We do not expect to generate any operating revenues until after the completion of our initial Business Combination.business combination. We generate non-operating income in the form of interest income on marketable investments held in trust account after the Initial Public Offering.initial public offering. We expect that we will incur increased 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 searching for, and completing, a Business Combination.business combination.
For the three months ended SeptemberJune 30, 2021,2022, we had a net income of $1,657,897,$3,704,759, which consistedconsists of change in fair value of warrant liabilities of $2,469,841$5,714,437 and interest earned on marketable securitiesinvestments held in the Trust Account of $2,253,$83,368, partially offset by operating expensescosts of $814,197.$2,093,046.
For the ninesix months ended SeptemberJune 30, 2021,2022, we had a net income of $9,588,951,$10,682,774, which consistedconsists of change in fair value of warrant liabilities of $10,835,067$14,439,162 and interest earned on marketable securitiesinvestments held in the Trust Account of $16,799,$100,017, partially offset by operating expensescosts of $1,262,915.$3,856,405.
For the period from August 20, 2020 (inception) through Septemberthree months ended June 30, 2020,2021, we had a net loss of $5,000,$2,655,288, which consists of change in fair value of warrant liabilities of $2,460,419 and operating costs.costs of $201,223, partially offset by interest earned on marketable investments held in Trust Account of $6,354.
For the six months ended June 30, 2021, we had a net income of $7,931,054 which consists of change in fair value of warrant liabilities of $8,365,226 and interest earned on marketable investments held in Trust Account of $14,546, partially offset by operating costs of $448,718.
For the six months ended June 30, 2021, we had a net income of $7,931,054 which consists of change in fair value of warrant liabilities of $8,365,226 and interest earned on marketable investments held in Trust Account of $14,546, offset by operating costs of $448,718.
Liquidity, and Capital Resources and Going Concern
On November 23, 2020, we consummated the initial public offering of 15,000,000 units, at a price of $10.00 per unit, generating gross proceeds of $150,000,000. Simultaneously with the closing of the initial public offering, we consummated the sale of 6,859,505 Private Placement Warrantsprivate placement warrants to the Sponsor and Jefferies LLC at a price of $1.00 per private placement warrant and approximately $1.21 per private placement warrant, respectively, generating gross proceeds of approximately $7,250,002.
On November 25, 2020, the company sold an additional 2,250,000 Units for total gross proceeds of $22,500,000 in connection with the underwriters’ full exercise of their over-allotment option. Simultaneously with the closing of the over-allotment option, we also consummated the sale of an additional 728,925 Private Placement Warrantsprivate placement warrants to the sponsor and Jefferies LLC at $1.00 per Private Placement Warrantprivate placement warrant and approximately $1.21 per Private Placement Warrant,private placement warrant, respectively, generating total proceeds of $787,500.
Following the Initial Public Offering,initial public offering, the full exercise of the over-allotment option, and the sale of the Private Placement Warrants,private placement warrants, a total of $175,087,500 was placed in the Trust Account,trust account, and we had $1,480,035 of cash held outside of the Trust Account,trust account, after payment of costs related to the Initial Public Offering,initial public offering, and available for working capital purposes. We incurred $10,050,665 in transaction costs, including $3,450,000 of underwriting fees, $6,037,500 of deferred underwriting fees and $563,165 of other offering costs.
For the ninesix months ended SeptemberJune 30, 2022, net cash used in operating activities was $418,629. Net income of $10,682,774 was affected by change in fair value of warrant liabilities of $14,439,162 and interest earned on marketable investments held in trust account of $100,017. Changes in operating assets and liabilities provided $3,437,776 of cash from operating activities.
For the six months ended June 30, 2021, net cash used in operating activities was $246,908.$186,124. Net income of $9,588,951$7,931,054 was affected by changeschange in the fair value of warrantswarrant liabilities of $10,835,067,$8,365,226 and interest earned on marketable investments held in trust account of $16,799, and changes$14,546. Changes in operating assets and liabilities provided $261,794 of $1,016,007.
For the periodcash from August 20, 2020 (inception) through September 30, 2020, net cash used in operating activities was $0. Net loss of $5,000 was affected by transaction costs related to the IPO of $5,000.activities.
At SeptemberJune 30, 2021,2022, we had cash and marketable investmentssecurities held in the trust account of $175,106,330.$34,831,528. We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account, which interest shall be net of taxes payable and excluding deferred underwriting commissions, to complete our business combination. We may withdraw interest from the trust account to pay taxes, if any. To the extent that our 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 our growth strategies.
At SeptemberJune 30, 2021,2022, we had cash of $1,232,020$157,110 held outside of the trust account. 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, structure, negotiate and complete a business combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination,business combination, our Sponsorsponsor or an affiliate of our Sponsorsponsor 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,business combination, we may repay such loaned amounts out of the proceeds of the Trust Accounttrust account released to us. In the event that a Business Combinationbusiness combination does not close, we may use a portion of the working capital held outside the Trust Accounttrust account to repay such loaned amounts, but no proceeds from our Trust Accounttrust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants.private placement warrants.
We do not believe we willThe Company may need to raise additional capital through loans or additional investments from its Sponsor, stockholders, officers, directors, or third parties. The Company’s officers, directors and Sponsor may, but are not obligated to, loan the Company funds, from time to time or at any time, in orderwhatever amount they deem reasonable in their sole discretion, to meet the expenditures required for operating our business. However, if our estimate ofCompany’s working capital needs. Accordingly, the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary to do so, weCompany may have insufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may neednot be able to obtain additional financing. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of a potential transaction, and reducing overhead expenses. The Company cannot provide any assurance that new financing eitherwill be available to complete ourit on commercially acceptable terms, if at all.
In connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” the Company has until August 24, 2022, to consummate a business combination. It is uncertain that the Company will be able to consummate a business combination by this time. If the Business Combination or because we become obligated to redeem a significant numberproposed alternative business combination is not consummated by August 24, 2022, there will be a mandatory liquidation and subsequent dissolution of our public shares upon completion of ourthe Company. Management has determined that the mandatory liquidation, should the Business Combination in which case we may issue additional securities or incur debt in connection with such Business Combination.a proposed alternative business combination not occur, potential subsequent dissolution, and working capital deficit 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 August 24, 2022.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of SeptemberJune 30, 2021.2022. 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
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities and secretarial, and administrative support services provided to the Company. We began incurring these fees on November 18, 2020 and will continue to incur these fees monthly until the earlier of the completion of a Business Combination and the Company’s liquidation.
The underwriter is entitled to a deferred fee of $0.35 per Unit, or $6,037,500 in the aggregate. The deferred fee will become payable to the underwriter from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of condensed consolidated 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 condensed consolidated financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies.
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A Ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, Class A ordinary shares subject to possible redemption is presented as temporary equity, outside of the shareholders’ equity section of our balance sheet.
Warrant Liabilities
The Company accounts 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”)the 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 the Company’s 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.
Net Income (Loss) Income per Ordinary Share
The Company complies with accounting and disclosure requirements of the Financial Accounting Standards Board (“FASB”) ASC Topic 260, “Earnings Per Share”. Net lossincome (loss) per ordinary share is computed by dividing net lossincome (loss) by the weighted average number of ordinary shares outstanding duringfor 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 Pronouncements
In August 2020,October 2021, the FASB issued ASU No. 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):2021-08, Accounting Standards Update No. 2021-08 Business Combinations (Topic 805) Accounting for Convertible InstrumentsContract Assets and Contract Liabilities from Contracts with Customers, which amends ASC 805 to require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. As a result of the amendments, it is expected that an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify foracquirer will generally recognize and measure acquired contract assets and contract liabilities in a manner consistent with how the derivative scope exceptionacquiree recognized and it also simplifies the diluted earnings per share calculationmeasured them in certain areas. ASU 2020-06its preacquisition financial statements. The standard is effective for fiscal yearsthe Company for annual reporting periods beginning after December 15, 2023, including interim periods within those fiscal years, with2022, and early adoption is permitted. We adoptedThe Company elected to early adopt ASU 2020-06 effective as of January 1, 2021.No. 2021-08 for fiscal year 2023. There was no impact to the Company's condensed consolidated financial statements for the three and six months ended June 30, 2022. The Company expects that the adoption of ASU 2020-06 didNo. 2021-08 will simplify the accounting for the anticipated merger transaction (see Note 6), as it will permit the Company to record the contract assets and liabilities acquired from ZeroFox and/or IDX to be recorded at book value rather than an estimated fair value.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have an impacta material effect on ourthe Company’s condensed consolidated financial statements.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
As of SeptemberJune 30, 2021,2022, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in certain U.S. government obligations with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
ITEM 4. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensurewith the objective of ensuring that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periodsperiod specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and proceduresare also designed to ensurewith the objective of ensuring that such information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officerthe chief executive officer and Chief Financial Officer,chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
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 SeptemberJune 30, 2021.2022. 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)13a-15(e) and 15d-15 (e)15d-15(e) under the Exchange Act) were effective.
Changes in Internal Control Over Financial Reporting
There was no changenot 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 occurred duringour financial statements were prepared in accordance with GAAP. Accordingly, management believes that the fiscal quarter ended September 30, 2021 covered byfinancial statements included in this QuarterlyAnnual Report on Form 10-Q thatpresent fairly in all material respects our financial position, results of operations and cash flows for the period presented.
Management has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Theidentified a material weakness discussed below was remediated duringin internal controls related to the quarter ended September 30, 2021.
Remediation of a Material weakness in Internal Control over Financial Reporting
We recognize the importance of the control environment as it sets the overall toneaccounting for the Company and is the foundation for all other components of internal control. Consequently,complex financial instruments. While we designed and implemented remediation measures to address the material weakness previously identified and enhance our internal control over financial reporting. In light of the material weakness, we enhanced ourhave processes to identify and appropriately apply applicable accounting requirements, we plan to better evaluatecontinue to enhance our system of evaluating and understandimplementing the nuances of the complex accounting standards that apply to our financial statements, including providingthrough enhanced access to accounting literature, research materials and documents and increased communication amonganalyses by our personnel and third-party professionals with whom we consult regarding complex accounting applications. The foregoing actions, which we believe remediatedManagement since identifying the material weakness has implemented additional controls, testing on these controls has not yet been performed.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting were completed as ofduring the date of June 30, 2021most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS. |
None.
Except as set forth below, asAs of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in our Annual Report on form 10-K/A10-K filed with the SEC on May 28, 2021.March 14, 2022, and our Form S-4, initially filed on February 7, 2022 as amended. 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.
The securities in which we invest the funds held in the Trust Account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.15 per share.
The proceeds held in the Trust Account are invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable to complete our initial business combination or make certain amendments to our Amended and Restated Certificate and articles of Incorporation, our public shareholders are entitled to receive their pro-rata share of the proceeds held in the Trust Account, plus any interest income not released to us, net of taxes payable. Negative interest rates could impact the per-share redemption amount that may be received by public shareholders.
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. |
On November 23, 2020, we consummated our Initial Public Offering of 15,000,000 Units. On November 25, 2020, in connection with the underwriters’ election to fully exercise their over-allotment option, we sold an additional 2,250,000 Units. The Units sold in the Initial Public Offering and the full exercise of over-allotment option sold at an offering price of $10.00 per Unit, generating total gross proceeds of $175,087,501. Jefferies, LLC acted as the sole book-running manager of the Initial Public Offering. The securities sold in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-249497). The registration statements became effective on November 18, 2020.
Simultaneously with the consummation of the Initial Public Offering and the full exercise of the over-allotment option, we consummated a private placement of 7,588,430 Private Placement Warrants to our Sponsor and Jefferies LLC at a price of $1.00 per Private Placement Warrant and approximately $1.21 per Private Placement Warrant, respectively, generating gross proceeds of approximately $8,037,502. Such securities were issued pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
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 are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.
Of the gross proceeds received from the Initial Public Offering including the over-allotment option, and the sale of the Private Placement Warrants, $175,087,501 was placed in the Trust Account.
We paid a total of $3,450,000 in underwriting discounts and commissions and $563,165 for other offering costs related to the Initial Public Offering. In addition, the underwriters agreed to defer $6,037,500 in underwriting discounts and commissions.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES. |
None.
ITEM 4. | MINE SAFETY DISCLOSURES. |
Not applicable.
ITEM 5. | OTHER INFORMATION. |
None.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
No. | | Description of Exhibit |
| | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| | 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 |
| | 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* | | XBRL Instance Document |
101.CAL* | | XBRL Taxonomy Extension Calculation Linkbase Document |
101.SCH* | | XBRL Taxonomy Extension Schema Document |
101.DEF* | | XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | | XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE* | | XBRL Taxonomy Extension Presentation Linkbase Document |
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| L&F ACQUISITION CORP. |
| | |
Date: November 12, 2021July 27, 2022 | | /s/ Adam Gerchen |
| Name: | Adam Gerchen |
| Title: | Chief Executive Officer |
| | (Principal Executive Officer) |
| | |
Date: November 12, 2021July 27, 2022 | | /s/ Tom Gazdziak |
| Name: | Tom Gazdziak |
| Title: | Chief Financial Officer |
| | (Principal Financial and Accounting Officer) |