FISCALNOTE HOLDINGS, INC.
Notes to the Consolidated Financial Statements (continued)
(in thousands, except shares, par value, per share amounts, or as otherwise noted)
The Oxford Analytica International Group Acquisition
In February 2021, FiscalNote, Inc. acquired The Oxford Analytica International Group Incorporated (“OA”), through a merger with FiscalNote’s direct wholly owned subsidiary, FN OA Merger Sub LLC. The total fair value of the merger consideration was $6,476 paid in cash and common stock of the Company. The original cash funded amount was $6,002 plus cash out of fractional shares and the Company issued 815,646 common shares. The Company retained $125 of the original cash funded amount to cover the estimated negative working capital adjustment and retained a holdback of $500 to cover final closing working capital adjustments and indemnity obligations. The balance of the holdback, if any, will be released nine months after closing. Simultaneously with the closing of the merger, OA was paid $1,502 by the majority shareholder of OA for the sale of an office building located in Oxford, UK to the majority shareholder.
Ozmen AmendmentFireside21
On July 3, 2019, the Company issued a Subordinated Convertible Promissory Note in the principal amount of $4,000 and bearing interest at a rate of 15% per annum over 5 years (the “Ozmen Note”) to Ozmen Ventures FN LLC, now known as 8090 FN LLC (“Ozmen”). Concurrently with the issuance of the Ozmen Note, the Trust entered into a binding term sheet (the “Term Sheet”) with Ozmen pursuant to which the Trust agreed to purchase the Ozmen Note from Ozmen on the one-year anniversary of the issuance date of the Ozmen Note in exchange for (i) $4,000 in immediately available funds and (ii) $4,000 in the form of shares of the then senior-most class and series of capital stock of the Company, which would be generated from an immediate conversion of the Ozmen Note by the Trust.
In March 2021, pursuant to a Letter Agreement, by and among Ozmen, Hwang, the Trust, and the Company, the parties agreed to amend the Ozmen Note to, among other things, (i) reduce the interest rate from 15% to 1% and (ii) waive all accrued interest under the Ozmen Note through, but not including, the effective date of the Letter Agreement in exchange for the issuance to Ozmen by the Company of 549,484 shares of Series F Preferred Stock of the Company. In addition, pursuant to the Letter Agreement, Hwang, the Trust and Ozmen agreed to terminate the Term Sheet.
Fireside21 Acquisition
In April 2021, FiscalNote signed a membership interest purchase agreement to acquire 100% of the membership interests of Fireside 21, LLC (“F21”). At closing, on April 30, 2021, the Company paid $7,000 in cash, subject toissued the estimated closing working capital adjustment and an escrow holdbackFireside sellers: (i) $7,350 of $500, which will be used to satisfy any final closing working capital adjustment and indemnity obligations, and the balance of the escrow holdback, if any, will be released 12 months after closing. In addition, at closing, the Company issued subordinated, unsecured promissory notes (the “Fireside Promissory Notes”) and (ii) $2,911 of convertible subordinated promissory notes (the “Fireside Convertible Notes”).
The Fireside Promissory Notes (i) provide for interest at the applicable federal rate (“AFR”) (0.89% at issuance), (ii) mature on the earlier of May 31, 2024 or upon an event of default, (iii) provide for no payments until maturity, (iv) allow the Company to prepay in whole or in part from time to time, and (v) are subordinate to the aggregateCompany’s Senior Term Loan and New GPO Note. The Company did not incur a material amount of $7,350issuance costs with respect to the Fireside Promissory Notes. The Fireside Promissory Notes were recorded at their issuance fair value of $4,971 with a debt discount of $2,379 to be amortized as additional interest expense over the term.
The Fireside Convertible Notes (i) provide for interest at the AFR (0.89% at issuance), (ii) provide for automatic conversion into 848,564 shares of Company common stock on the earlier of May 31, 2024 or a conversion event, (iii) provide for no payments until maturity, and (v) are subordinate to the Company’s Senior Term Loan and New GPO Note. Conversion events include closing of a firm commitment public offering or a change in control event. The Company did not incur a material amount of issuance costs with respect to the Fireside Convertible Notes. The Company recorded the Fireside Convertible Notes at its principal amount of $2,911 and recorded the debt premium of $2,350 as an increase to additional paid-in capital.
The Company incurred total interest expense related to the Fireside Promissory Notes and the Fireside Convertible Notes, of $570 during the year ended December 31, 2021.
Timebase
On May 7, 2021, the Company issued convertible,the Timebase sellers AUD 2,800 (USD equivalent of $2,185 on the date of issuance) of subordinated, unsecuredconvertible promissory notes (the “Timebase Convertible Notes”).
The Timebase Convertible Notes (i) provide for PIK interest of 4%, (ii) mature on the earlier of July 31, 2024 or an event of default, (iii) provide for automatic conversion upon a conversion event, (iv) provide for no payments until maturity, and (v) are subordinate to the Company’s Senior Term Loan and New GPO Note. Conversion events include closing of a firm commitment public offering or a change in control event. Upon a conversion event, the Timebase Convertible Notes shall convert into the same class and series of shares issued in the aggregateconversion event at the midpoint of the price range anticipated in such event. The Company did not incur a material amount of $2,882. Theseissuance costs with respect to the Timebase Convertible Notes. The Timebase Convertible Notes were recorded at their issuance fair value of $2,078 with a debt discount of $107 to be amortized as additional interest expense over the term.
The Company incurred total interest expense related to the Timebase Convertible Notes of $73 during the year ended December 31, 2021.
Board.org
On June 3, 2021 the Company issued the Board.org sellers $4,300 of subordinated, convertible promissory notes (the “Board.org Convertible Notes”).
The Board.org Convertible Notes (i) provide for interest at the AFR (1.02% at issuance), (ii) provide for automatic conversion upon the earlier of May 31, 2024, an event of default and a conversion event, (iii) provide for no payments until maturity, and (iv) are convertiblesubordinate to the Company’s Senior Term Loan and New GPO Note. Conversion events include closing of a firm commitment public offering or a change in control event. Upon conversion, the Board.org Convertible Notes shall convert into an aggregate of 848,564 common shares of the Company.
TimeBase Acquisition
In May 2021, FiscalNote, Inc. acquired 100%Company’s common stock at a conversion price of the issued shares in the capital of TimeBase Pty. Ltd. (“TimeBase”). At closing, FiscalNote paid AUD $2,900 in cash (USD $2,263), subject to the estimated closing working capital adjustment and$4.30. The Company did not incur a holdback of AUD $150 (USD $117), which will be used to satisfy any final closing working capital adjustment, and the balance of the holdback, if any, will be released following the finalization and settlement of any final closing working capital adjustment. In addition, at closing, the Company issued subordinated, unsecured convertible promissory notes in the aggregatematerial amount of AUD $2,800 (USD $2,185).
Board.org Acquisition
In June 2021, the Company acquired 100% of the membership interests of Board.org, LLC (“Board.org”). At closing, the Company paid $10,000 in cash, subject to an indemnity escrow amount ofissuance