Form 10-Q Financial Strategies For: Jun 30
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO |
COMMISSION FILE NUMBER
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of | (I.R.S. Employer | |
(Address of principal executive offices) | (Zip Code) |
(
Registrant’s telephone number, including area code
N/A | |||
(Former name, former address and former fiscal year, if changed since last report) | |||
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
| Trading |
| Name of each |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant (1) has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
☒ | Smaller reporting company | ||
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
As of August 15, 2022, there were
FINANCIAL STRATEGIES ACQUISITION CORP.
FORM 10-Q
Quarterly report for the period ended June 30, 2022
Table of Contents
i
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this Quarterly Report on Form 10-Q may constitute “forward looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would” and variations and similar words and expressions may identify forward looking statements, but the absence of these words does not mean that a statement is not forward looking. The forward-looking statements contained in this Quarterly Report on Form 10-Q are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements, including, but not limited to:
| ● | our ability to select an appropriate target business or businesses; |
| ● | our ability to complete our initial business combination; |
| ● | our expectations around the performance of the prospective target business or businesses; |
| ● | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
| ● | our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements; |
| ● | our potential ability to obtain additional financing to complete our initial business combination; |
| ● | our pool of prospective target businesses; |
| ● | the ability of our officers and directors to generate a number of potential acquisition opportunities; |
| ● | our public securities’ potential liquidity and trading; |
| ● | the lack of a market for our securities; |
| ● | the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; |
| ● | the trust account not being subject to claims of third parties; or |
| ● | our financial performance. |
For a more detailed discussion of these and other factors that could cause the actual results to differ materially from those anticipated in the forward-looking statements, see the factors described under the heading “Risk Factors” in our Annual Report on Form 10-K, filed on March 31, 2022. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
ii
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
FINANCIAL STRATEGIES ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| June 30, 2022 |
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(Unaudited) | December 31, 2021 | |||||
(Amounts in USD) | ||||||
ASSETS |
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Current Assets |
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Cash | $ | | $ | | ||
Prepaid Expenses |
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Total Current Assets |
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Marketable investments held in Trust Account |
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TOTAL ASSETS | $ | | $ | | ||
LIABILITIES & SHAREHOLDER’S EQUITY (DEFICIT) |
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Liabilities |
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Current Liabilities |
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Accounts payable & accrued expenses | $ | | $ | | ||
Tax Provisions |
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Total Current Liabilities |
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Non-current Liabilities |
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Promissory notes |
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Derivative warrant liabilities |
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Total Non-Current Liabilities |
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Total Liabilities |
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Commitments & Contingencies |
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Temporary Equity: |
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Class A common stock subject to redemption, |
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Shareholder’s Equity |
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Class A common stock, $ |
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Class B common stock, $ |
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Representative shares, |
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Additional paid in Capital and Reclassifications |
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Accumulated Profit /(Deficit) |
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Total Shareholder’s Equity (Deficit) |
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TOTAL LIABILITIES AND SHAREHOLDER’S EQUITY (DEFICIT) | $ | | $ | | ||
The accompanying notes are an integral part of the unaudited condensed financial statements.
1
FINANCIAL STRATEGIES ACQUISITION CORP.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the three months |
| For the three months |
| For the six months |
| For the six months | |||||
ended June 30, 2022 | ended June 30, 2021 | ended June 30, 2022 | ended June 30, 2021 | |||||||||
(Amounts in USD) | ||||||||||||
General & Administrative expenses | $ | | $ | | $ | | $ | | ||||
Operating Loss | ( | |
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Interest on marketable investments held in Trust Account | | |
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Change in fair value of Warrant Liabilities | | |
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Income before Income Tax | | |
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Tax on Interest income | ( | |
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Net Income | $ | | $ | | $ | | $ | | ||||
Basic and diluted Earnings/(Loss) per share |
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Class A common stock | | | | | ||||||||
Class B common stock | | | | | ||||||||
Weighted average common shares outstanding |
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Class A common stock | | |
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Class B common stock | | |
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The accompanying notes are an integral part of the unaudited condensed financial statements.
2
FINANCIAL STRATEGIES ACQUISITION CORP.
CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY/(DEFICIT)
(UNAUDITED)
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| Retained |
| Total | |||||||||||
Additional | Earnings | Shareholder’s | |||||||||||||||||
Common Stock Class A | Common Stock Class B | paid in | (Accumulated | Equity | |||||||||||||||
Shares | Amount | Shares | Amount | Capital |
| Deficit) |
| (Deficit) | |||||||||||
(Amounts in USD) | |||||||||||||||||||
Balance - December 31, 2021 | | $ | | | $ | | $ | $ | ( | $ | ( | ||||||||
Net Income / (Loss) | |
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Balance - March 31, 2022 | | $ | | | $ | | $ | $ | ( | $ | ( | ||||||||
Net Income / (Loss) | |
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Balance - June 30, 2022 | | $ | | | $ | | $ | $ | ( | $ | ( | ||||||||
Balance - December 31, 2020 | | $ | | | $ | | $ | | $ | ( | $ | | |||||||
Net Income / (Loss) | |
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Balance - March 31, 2021 | | $ | | | $ | | $ | | $ | ( | $ | | |||||||
Net Income / (Loss) | |
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Balance - June 30, 2021 | | $ | | | $ | | $ | | $ | ( | $ | | |||||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
3
FINANCIAL STRATEGIES ACQUISITION CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| For the six months ended |
| For the six months ended | |||
| June 30, 2022 |
| June 30, 2021 | |||
(Amounts in USD) | ||||||
Cash Flows from Operating Activities | ||||||
Net Income |
| $ | |
| $ | — |
Adjustments to reconcile net income to net cash used in operating activities: | ||||||
Change in Prepaid Expenses |
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Changes in Accounts Payable and Accrued Liabilities |
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Changes in Tax Provisions |
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Add-back of interest earned in Trust Account |
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Change in fair value of Warrant Liabilities |
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Net Cash used in Operating activities |
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Cash Flows from Financing Activities |
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Proceeds from short term loan |
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Payment of Offering Cost |
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Net Cash used in Financing activities |
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Net decrease in Cash | $ | ( | $ | ( | ||
Cash at beginning of period | $ | | $ | | ||
Cash at end of period | $ | | $ | | ||
The accompanying notes are an integral part of the unaudited condensed financial statements.
4
Notes to the Condensed Financial Statements (Unaudited)
NOTE 1 ─ ORGANIZATION AND DESCRIPTION OF BUSINESS OPERATIONS
Financial Strategies Acquisition Corp. (the “Company”) is a blank check company incorporated on July 1, 2020, under the laws of the State of Delaware for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar business combination with
As of December 14, 2021, the Company had not commenced any operations. All activity for the period from July 1, 2020 (inception) through December 14, 2021, relates to the Company’s formation and its initial public offering (“IPO”), which is described below. The Company will not generate any operating revenues until after the completion of a Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the IPO. The Company has selected December 31 as its fiscal year end.
On December 14, 2021, the Company consummated its IPO of
Transaction costs amounted to $
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO and the sale of the Private Placement Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete a Business Combination with one or more operating businesses or assets that together have an aggregate fair market value equal to at least
Upon the closing of the IPO on December 14, 2021, the Company deposited $
5
The Company will provide its stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The stockholders will be entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account (initially $
The Company will proceed with a Business Combination only if the Company has net tangible assets of at least $
The Co-Sponsors, initial stockholders and I-Bankers have entered into a letter agreement with the Company, pursuant to which they have agreed (A) to waive their redemption rights with respect to any Founder Shares, Private Placement Shares or Public Shares held by them in connection with the completion of an initial Business Combination, (B) to waive their redemption rights with respect to their Founder Shares, Private Placement Shares and Public Shares in connection with a stockholder vote to approve an amendment to the Company’s amended and restated certificate of incorporation (x) to modify the substance or timing of the Company’s obligation to redeem
Each public stockholder may elect to redeem its Public Shares, without voting, and if they do vote, irrespective of whether they vote for or against a proposed Business Combination.
Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of
The Company will have until
If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than business days thereafter, redeem
6
Our Co-Sponsors, initial stockholders and I-Bankers have entered into a letter agreement with us, pursuant to which they have agreed to waive their liquidation rights with respect to the Founder Shares (as defined below) and Private Placement Shares (and Representative Shares (as defined below) in the case of I-Bankers) if the Company fails to complete a Business Combination within the Combination Period. However, if the Co-Sponsors, initial stockholders or I-Bankers acquire Public Shares in or after the IPO, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their business combination marketing fees (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 funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the IPO price per Unit ($
The Co-Sponsors have agreed that they will be liable to the Company, if and to the extent any claims by a third party for services rendered or products sold to the Company, or by a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (1) $
Underwriting Agreement and Business Combination Marketing Agreement
The Company engaged I-Bankers as the representative of the underwriters (the “Underwriters”) in the IPO and the simultaneous listing of the Units on Nasdaq. Pursuant to that certain underwriting agreement, I-Bankers acted as the representative of the Underwriters of the IPO for
Upon the closing of the IPO, the Company issued to I-Bankers a
In addition, under a business combination marketing agreement, the Company has engaged I-Bankers as an advisor in connection with the Business Combination and will pay I-Bankers a cash fee for such marketing services upon the consummation of the Business Combination in an amount equal to, in the aggregate,
7
Liquidity and Capital Resources
Prior to the completion of the IPO, the Company lacked the liquidity it needed to sustain operations for a reasonable period of time, which is considered to be one year from the issuance date of the unaudited condensed financial statements. The Company has since completed its IPO, in which an amount of $
On August 17, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Greg Gaylor, as trustee of the William C Gaylor and Dorothy J Gaylor Rev. Trust (the “Purchaser”). Pursuant to the Securities Purchase Agreement, the Company sold to the Purchaser, for an aggregate purchase price of $
Based on the foregoing, our management believes that the Company will have sufficient working capital and liquidity to meet its needs through the consummation of a Business Combination. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 2 ─ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on March 31, 2022, which contains the audited financial statements and notes thereto for the year ended December 31, 2021. The interim results for the three and six months ended June 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022 or for any future interim periods.
Emerging Growth Company Status
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act and modified by the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding
8
executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s unaudited condensed financial statements with another public company which is either not an emerging growth company or an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed financial statements and the reported amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited condensed financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company had $
Marketable Investments held in Trust Account
A total of $
At June 30, 2022, assets of $
Offering Costs Associated with the IPO
The Company complies with the requirements of the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the IPO that were directly related to the IPO. The Company incurred offering costs amounting to $
9
Common Stock Subject to Possible Redemption
All of the
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentration of credit risk consist of cash accounts in a financial institution which, at times, may exceed the federal depository insurance coverage corporation limit of $
Business Combination Marketing Fee
Pursuant to the business combination marketing agreement, the Company has engaged I-Bankers as an advisor in connection with the Business Combination and will pay I-Bankers a cash fee for marketing services upon the consummation of the Business Combination in an amount equal to, in the aggregate,
Income Taxes
The Company complies with the accounting and reporting requirements of FASB ASC, 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement 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. There were
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. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
The provision for income taxes was deemed to be immaterial for the year ended December 31, 2021. As of June 30, 2022, the Company has established a provision for income taxes in the amount of $
Franchise Tax
Being incorporated in Delaware, the Company is subject to Delaware franchise tax. The calculation of the potential tax liability for the business year 2021, applying the “Authorized Shares Method” as well as the “Assumed Par Value Capital Method,” has shown that under both methods the maximum annual tax of $
10
Warrants
ASC 480 requires a reporting entity to classify certain freestanding financial instruments as liabilities (or in some cases as assets). ASC 480-10-S99 addresses concerns raised by the SEC regarding the financial statement classification and measurement of securities subject to mandatory redemption requirements or whose redemption is outside the control of the issuer. If the stock subject to mandatory redemption provisions represents the only shares in the reporting entity, it must report instruments in the liabilities section of its statement of financial position. The stock subject must then describe them as shares subject to mandatory redemption, so as to distinguish the instruments from other financial statement liabilities.
Recent Accounting Pronouncements
In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-03, Fair Value Measurement (Topic 820) (“ASU 2022-03”). The amendments in ASU 2022-03 clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments also clarify that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The amendments in this Update also require additional disclosures for equity securities subject to contractual sale restrictions. The provisions in this Update are effective for fiscal years beginning after December 15, 2023, for public business entities. Early adoption is permitted. The Company does not expect to early adopt this ASU. The Company is currently evaluating the impact of adopting this guidance on the balance sheets, results of operations and cash flows.
In August 2020, FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effective January 1, 2022 and should be applied on a full or modified retrospective basis.
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 unaudited condensed financial statements.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of shares of common stock outstanding during the period. In order to determine the net income (loss) attributable to both the Class A common stock and Class B common stock, the Company first considered the total income (loss) allocable to both sets of shares. Subsequent to calculating the total income (loss) allocable to both sets of shares, the Company split the amount to be allocated pro rata between Class A and Class B common stock for the period from January 1, 2022, through June 30, 2022, reflective of the respective participation rights.
The following table reflects the calculation of basic and diluted net income per common share:
Three month ended | Six month ended | |||||
| June 30, 2022 |
| June 30, 2022 | |||
Earnings per Share calculation |
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Class B shares outstanding |
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Class A shares Issued upon IPO |
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Net Income available to stockholders | $ | | $ | | ||
| Class A |
| Class B |
| Class A |
| Class B | |||||
Allocation of Net Income available to ordinary shares | $ | | $ | | $ | | $ | | ||||
Weighted Average Shares outstanding |
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EPS | | | | | ||||||||
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As of June 30, 2022,
NOTE 3 ─ PUBLIC OFFERING
At the IPO, the Company sold
A total of $
NOTE 4 ─ RELATED PARTY TRANSACTIONS
Founder Shares
On October 23, 2020, our Co-Sponsor, FSC Sponsor LLC, acquired
On September 21, 2021, the Company effected a -for-10 reverse stock split of all issued and outstanding shares of our Class B common stock, which reduced the number of and shares of Class B common stock from
The Founder Shares included an aggregate of up to
The Co-Sponsors and initial stockholders have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur of (i) one year after the date of the consummation of our initial Business Combination or (ii) the date on which we consummate a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of Class A common stock for cash, securities or other property. Any permitted transferees will be subject to the same restrictions and other agreements of the initial stockholders with respect to any Founder Shares.
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Private Placement
Concurrently with the closing of the IPO, our Co-Sponsors, anchor investors and I-Bankers purchased an aggregate of
The Private Placement Units (including the underlying Private Placement Rights, Private Placement Warrants, the Private Placement Shares and the shares of Class A common stock issuable upon conversion of the Private Placement Rights and the exercise of the Private Placement Warrants) will not be transferable, assignable or salable until
Promissory Notes – Related Party
Our liquidity needs have been satisfied prior to the completion of the IPO through a capital contribution from our initial stockholders of $
Working Capital Loans
In addition, in order to finance transaction costs in connection with a Business Combination, the Co-Sponsors, an affiliate of the Co-Sponsors, or certain of the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $
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Administrative Services Arrangement
The Company entered into an agreement, commencing on the effective date of the Initial Public Offering through the earlier of the Company’s consummation of a Business Combination and its liquidation, to pay Celtic Asset & Equity Partners, Ltd. a monthly fee of $
NOTE 5 ─ COMMITMENTS AND CONTINGENCIES
Registration Rights
The holders of the Founder Shares, the Private Placement Units (and their underlying securities), the Representative Shares, the Representative Warrants (and their underlying securities) and any Units that may be issued upon conversion of the Working Capital Loans (and their underlying securities) will be entitled to registration rights pursuant to a registration rights agreement requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A common stock). The holders of the majority of these securities are entitled to make up to
Underwriting Agreement
The Company had granted the Underwriters a option from the date of IPO to purchase up to
Simultaneously with the closing of the IPO, the Underwriters exercised the over-allotment option in full. As such, the Underwriters were paid an underwriting discount and commission of $
NOTE 6 ─ SHAREHOLDERS’ EQUITY
The Company is authorized to issue a total of
As of June 30, 2022, there were shares of Class A common stock issued and , which includes
Of the
As of June 30, 2022,
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Rights
As of June 30, 2022, there were
Each holder of a right will receive (1/10) of one share of Class A common stock upon consummation of a Business Combination. In the event the Company will not be the surviving entity upon completion of the Company’s initial Business Combination, each holder of a Public Right will automatically receive the 1/10 share of Class A common stock underlying such Public Right (without paying any additional consideration); and each holder of a Private Placement Right or right underlying Units to be issued upon conversion of the Working Capital Loans will be required to affirmatively convert its rights in order to receive the 1/10 share of Class A common stock underlying each right (without paying any additional consideration). If the Company is unable to complete an initial Business Combination within the required time period and public stockholders redeem the public shares for the funds held in the Trust Account, holders of rights will not receive any such funds in exchange for their rights and the rights will expire worthless. The Company will not issue fractional shares upon conversion of the rights. If, upon conversion of the rights, a holder would be entitled to receive a fractional interest in a share, the Company will, upon exchange, comply with Section 155 of the Delaware General Corporation Law. Any fractional shares will be rounded down to the nearest whole share, and any rounding down and extinguishment may be done with or without any in lieu cash payment or other compensation being made to the holder of the relevant rights.
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 rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.
Public Warrants and Private Placement Warrants
As of June 30, 2022, there were
Each warrant entitles the holder thereof to purchase one share of Class A common stock at a price of $
We will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act with respect to the shares of Class A common stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No warrant will be exercisable and we will not be obligated to issue shares of Class A common stock upon exercise of a warrant unless the Class A common stock issuable upon such warrant exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the warrants. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will we be required to net cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing such warrant will have paid the full purchase price for the unit solely for the share of Class A common stock underlying such unit.
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We have not registered the shares of Class A common stock issuable upon exercise of the warrants. However, we have agreed that as soon as practicable, but in no event later than 15 business days after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants, to cause such registration statement to become effective and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the shares of Class A common stock issuable upon exercise of the warrants is not effective by the th day after the closing of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we will have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption. Notwithstanding the above, if our Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, we may, at our 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 we so elect, we will not be required to file or maintain in effect a registration statement, and in the event we do not so elect, we will use our best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available.
Once the warrants become exercisable, we may call the warrants for redemption (excluding the Private Placement Warrants but including any outstanding Representative Warrants):
| ● | in whole and not in part; |
| ● | at a price of $ |
| ● | upon not less than days’ prior written notice of redemption (the “-day redemption period”) to each warrant holder; and |
| ● | if, and only if, the reported last sale price of the Class A common stock equals or exceeds $ |
If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were offered by us in our initial public offering.
We have established the last of the redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise price. If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be entitled to exercise its warrant prior to the scheduled redemption date. However, the price of the Class A common stock may fall below the $
Private Placement Warrants
Except as described below, the Private Placement Warrants have terms and provisions that are identical to those of our Public Warrants, including as to exercise price, exercisability and exercise period. The Private Placement Warrants (including the Class A common stock issuable upon exercise of the Private Placement Warrants) will not be transferable, assignable or salable until
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If holders of the Private Placement Warrants elect to exercise them on a cashless basis, they would pay the exercise price by surrendering their warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” shall mean the average reported last sale price of the Class A common stock for the
Representative Warrants and Representative Shares
Upon the closing of the IPO, the Company issued to the Underwriters Representative Warrants exercisable for
At June 30, 2022, the fair value of Representative Warrants was estimated to be approximately $
The Underwriters agreed not to transfer, assign or sell any of the Representative Shares without the Company’s prior written consent until the completion of the Business Combination. In addition, the Underwriters agreed (i) to vote such shares in favor of any proposed Business Combination, (ii) to waive its redemption rights with respect to such shares in connection with the completion of the initial Business Combination, and (iii) to waive its rights to liquidating distributions from the Trust Account with respect to the Representative Shares if the Company fails to complete its initial Business Combination within Combination Period. The shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following December 14, 2021 pursuant to FINRA Rule 5110(e)(1).
NOTE 7 – RECURRING FAIR VALUE MEASUREMENTS
At June 30, 2022, the Company’s warrant liability was valued at $
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Offering Costs Associated with IPO
The Company complies with the requirements of the ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A— “Expenses of Offering.” Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the IPO. Offering costs associated with the warrant liabilities are expensed, and offering costs associated with the shares of Class A common stock are charged to shareholders’ equity. Offering costs are charged to shareholder’s equity or the statement of operations based on the relative value of the Public Warrants and the Private Warrants to the proceeds received from the Units sold upon the completion of the IPO.
Accordingly, upon completion of the proposed Public Offering, offering costs allocated to derivative warrant liabilities of $
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description |
| June 30, 2022 |
| Level 1 |
| Level 2 |
| Level 3 | |||
Assets: |
|
|
|
|
|
|
|
| |||
Marketable investments in Trust Account | $ | | $ | |
| |
| | |||
Warrant Liabilities: |
|
|
|
|
|
|
|
| |||
Private Placement Warrants | $ | |
| |
| | $ | | |||
Public Warrants | $ | | $ | |
|
|
|
| |||
Representative Warrants | $ | | | | $ | | |||||
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The Company utilizes the Black-Scholes Option pricing model to value the Private Placement Warrants and the Representative Warrants at each reporting period, with changes in fair value recognized in the statement of operations. The estimated fair value of the Warrant liability is determined using Level 3 inputs. With respect to the Public Warrants, a shift from Level 3 classification (at December 31, 2021) to Level 1 (at June 30, 2022) has happened, triggered by the commencement of separate trading of the warrants as from January 10, 2022.
Inherent in the Black-Scholes pricing model are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield. The Company estimates the volatility of its common shares based on historical industry volatility that matches the expected remaining life of the warrants. The risk-free interest rate is based on the U.S. Treasury zero-coupon yield curve on the grant date for a maturity similar to the expected remaining life of the warrants. The expected life of the warrants is assumed to be equivalent to their remaining contractual term. The dividend rate is based on the historical rate, which the Company anticipates to remain at zero. In addition, management includes assumptions regarding the probability of a successful Business Combination.
The aforementioned Private Placement Warrant liabilities are not subject to qualified hedge accounting. Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period in which the change in valuation technique or methodology occurs.
Due to the current market conditions for special purpose acquisition companies, the observable market price for the Public Warrants as of June 30, 2022 was below what an option pricing model would return even with negligible volatility (>
At June 30, 2022 in accordance with the market price of a Public Warrant, the fair value of a Private Warrant was $
The aforementioned Public Warrant liabilities are not subject to qualified hedge accounting. Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period in which the change in valuation technique or methodology occurs.
On January 10, 2022 the Units issued in the Public Offering were split and the Public Shares, Public Warrants and Public Rights started to trade separately. With an observable market quote in an active market the Public Warrants transferred from Level 3 to Level 1 classification in the period ended June 30, 2022.
At June 30, 2022 the market price and accordingly the fair value of a Public Warrant was $
The aforementioned Representative Warrant liabilities are not subject to qualified hedge accounting. Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period in which the change in valuation technique or methodology occurs.
The following table provides quantitative information regarding Level 3 fair value measurements:
| at June 30, 2022 |
| at December 31, 2021 | ||||
Stock Price | $ | | $ | | |||
Exercise Price | $ | $ | |||||
Redemption Trigger Price | $ | $ | |||||
Term (years) |
| |
| | |||
Risk Free Rate |
| | % |
| | % | |
Volatility |
| % |
| | % | ||
Probability Factor |
| | % |
| | % | |
Fair Value 1 Representative Warrant | $ | | $ | | |||
At June 30, 2022, the fair value of a Representative Warrant was $
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NOTE 8 ─ SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the unaudited condensed financial statements were available to be issued. The Company did not identify any subsequent events that would have required adjustment or disclosure in the unaudited condensed financial statements.
On August 17, 2022, the Company entered into the Securities Purchase Agreement pursuant to which the Company established an equity line of credit, of which the Company has drawn $
The promissory note bears interest at the rate of
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Unless otherwise stated in this Quarterly Report on Form 10-Q, or unless the context otherwise requires, references to:
| ● | “we,” “us,” “our,” “company” or “our company” are to Financial Strategies Acquisition Corp; |
| ● | “management” or our “management team” are to our directors and officers; |
| ● | our “co-sponsors” are to FSC Sponsor LLC, a Delaware limited liability company, and Celtic Sponsor VII LLC, a Delaware limited liability company and an affiliate of Celtic Asset & Equity Partners, Ltd.; |
| ● | our “advisor” are to Celtic Asset & Equity Partners, Ltd.; |
| ● | our “anchor investors” are to Greentree Financial Group Inc., Sea Otter Securities Group LLC, Sixth Borough Capital Fund LP (and certain members of its general partner), and certain accounts managed by Eagle Point Credit Management LLC; |
| ● | our “common stock” are to our Class A common stock, par value $0.0001 per share and our Class B common stock, par value $0.0001 per share, collectively; |
| ● | our “founder shares” are to shares of our Class B common stock initially purchased by our initial stockholders in a private placement prior to the initial public offering of our units (the “Initial Public Offering”), and the shares of our Class A common stock issuable upon the conversion thereof; |
| ● | our “initial stockholders” are to our co-sponsors, anchor investors, Celtic Asset & Equity Partners, Ltd., Caliente Management L.L.C., Frio Investment, L.L.C., and any other holders of our founder shares prior to the Initial Public Offering (or their permitted transferees); |
| ● | “I-Bankers” are to I-Bankers Securities, Inc., the representative of the underwriters of the Initial Public Offering; |
| ● | “private placement units” are to the units issued to our co-sponsors, anchor investors and I-Bankers in a private placement that closed simultaneously with the closing of the Initial Public Offering (the “Private Placement”), each private placement unit consisting of one private placement share, one private placement right and one private placement warrant; |
| ● | “private placement rights” are to the rights included within the private placement units sold in the Private Placement; |
| ● | “private placement shares” are to the shares of our common stock included within the private placement units sold in the Private Placement; |
| ● | “private placement warrants” are to the warrants included within the private placement units sold in the Private Placement; |
| ● | “public rights” are to the rights sold as part of the units in the Initial Public Offering; |
| ● | “public shares” are to shares of our Class A common stock sold as part of the units in the Initial Public Offering; |
| ● | “public stockholders” are to the holders of our public shares; |
| ● | “public warrants” are to our redeemable warrants sold as part of the units in the Initial Public Offering, to the private placement warrants if held by third parties other than one of our co-sponsors, anchor investors or the underwriters (or permitted transferees), and to any private placement warrants issued upon conversion of working capital loans that are sold to third parties that are not initial stockholders, anchor investors, or executive officers or directors (or permitted transferees), in each case, following the consummation of our initial business combination; |
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| ● | “representative’s shares” are to the 373,750 shares of our Class A common stock issued to the representative of the underwriters and/or its designees upon the closing of the Initial Public Offering; |
| ● | “representative’s warrants” are to the warrants, exercisable for 800,400 shares of Class A common stock, issued to the representative of the underwriters and/or its designees upon the closing of the Initial Public Offering; |
| ● | “rights” are to the rights, which includes the public rights as well as the private placement rights; |
| ● | “warrants” are to our warrants, which includes the public warrants as well as the private placement warrants and representative’s warrants; and |
| ● | the “trust account” are to a trust account in the United States established for the benefit of our public stockholders and maintained by Continental Stock Transfer & Trust Company, acting as trustee, into which $101,050,500 in proceeds from the Initial Public Offering and the Private Placement were placed. |
On September 21, 2021, we effected a 7-for-10 reverse stock split of all issued and outstanding shares of our Class B common stock which reduced the number of issued and outstanding shares of Class B common stock from 2,875,000 shares to 2,012,500 shares. On October 13, 2021 we effected a 7.2-for-7 forward stock split of all issued and outstanding shares of our Class B common stock which increased the number of issued and outstanding shares of Class B common stock from 2,012,500 shares to 2,070,000 shares. On November 23, 2021 we effected a 87-for-72 forward stock split of all issued and outstanding shares of our Class B common stock which increased the number of issued and outstanding shares of Class B common stock from 2,070,000 shares to 2,501,250 shares. Unless otherwise indicated, all share and per share information contained herein has been adjusted to give effect to such stock splits.
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and the notes related thereto in “PART I. Financial Information” of this Quarterly Report on Form 10-Q. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “PART II. Other Information, Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.
Overview
We are a blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses. We intend to effectuate our initial business combination using cash from the proceeds of the Initial Public Offering (as defined below) and the Private Placement (as defined below), the proceeds of the sale of our shares in connection with our initial business combination (including pursuant to forward purchase agreements or backstop agreements we may enter into in the future), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
On December 14, 2021, we completed our initial public offering of 10,005,000 public units, including the exercise in full of the underwriters’ option to purchase an additional 1,305,000 public units to cover over-allotments (the “Initial Public Offering”). On December 14, 2021, our co-sponsors, anchor investors and I-Bankers purchased 504,950 private placement units in a private placement (the “Private Placement”) at a price of $10.00 per private placement unit, generating gross proceeds of $5,049,500. An aggregate of $100,050,000 in gross proceeds has been generated from the Initial Public Offering.
As indicated in the accompanying unaudited condensed financial statements, at June 30, 2022, we had $1,433 in cash ($365,399 at December 31,2021), $407,720 in prepayments ($826,027 at December 31, 2021) and $68,962 in accounts payable ($44,515 at December 31, 2021). We expect to continue to incur significant costs in the pursuit of our initial business combination plans. On August 17, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Greg Gaylor, as trustee of the William C Gaylor and Dorothy J Gaylor Rev. Trust (the “Purchaser”). Pursuant to the Securities Purchase Agreement, the Company sold to the Purchaser, for an aggregate purchase price of $200,000, a promissory note in the aggregate principal amount of $200,000, 20,000 shares of Class A common stock and warrants to purchase 2,000 shares of Class A common stock, and the Purchaser committed to purchase upon the same terms at the request of the Company up to $150,000 of additional securities, consisting of an additional promissory note in the aggregate principal amount of up to $150,000, and to purchase up to an additional 15,000 shares of Class A common stock and warrants to purchase up to 1,500 shares of Class A common stock.
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The promissory note bears interest at the rate of 10% per annum, and the warrants issued are identical to the private warrants issued as part of the Private Placement Units.
We cannot assure you that our efforts to raise further capital if needed or to complete our initial business combination will be successful.
Changes in Directors and Management
As previously disclosed, since our IPO, there have been several changes in our board of directors and management. The following is a list of current directors, officers and promoters of the Company, along with certain biographical information.
Name |
| Age |
| Title |
Timo Vainionpää | 62 | Interim Chief Executive Officer, Chairman | ||
Horst Rzepka | 55 | Chief Financial Officer, Director | ||
Jamie Khurshid | 46 | Director | ||
Daniel Minkowitz | 43 | Independent Director | ||
Stefan Nolte | 61 | Independent Director | ||
Alexander Schinzing | 49 | Company Secretary, Promoter | ||
Greg Gaylor | 64 | Promoter |
Timo Vainionpää has served as our interim Chief Executive Officer, director and chairman of the board of directors since June 2022. Mr. Vainionpää is a veteran executive and entrepreneur in the international telecommunications sector. He is both the owner and the President of AurorA International Telecommunications Inc (“AurorA”) since its inception in August 1994, a provider of wholesale international telecommunications services from its base in Canada. AurorA has worked with the premier telecommunications carriers worldwide such as Tata Communications, Teleglobe, Deutsche Telekom, France Telecom, MCI Communications and Sprint International. Mr. Vainionpää is also the owner and President of Amitel Corp. since 2008, a firm which assists telecommunications operators with cloud-based SaaS billing, data privacy, security, payment processing, merchant services and cloud contact centers as a service. He has a passion for providing customers with premium quality services and for fighting telecom fraud. Prior to founding these businesses, Mr. Vainionpää was the VP of Network Services and Business Development at ACC TelEnterprises from Aug 1991 to Sept 1994. Mr. Vainionpää received his Bachelor of Applied Science in Electrical Engineering from the University of Waterloo.
Horst Rzepka has served as our Chief Financial Officer since August 2021, and as a member of our board of directors since December 2021. Mr. Rzepka has held numerous senior finance positions in his twenty-five-year corporate career, serving as CFO and finance director in privately held companies as well as local subsidiaries of publicly listed national and international corporations in the global telecommunications industry. Mr. Rzepka has served with Lebara GmbH, TelCommunication Services AG (formerly Tele2 Switzerland), COLT Telecom AG, RSL Com Schweiz AG, Unisource AG and Unisource Carrier Services AG and AT&T GIS Switzerland (formerly NCR Switzerland). He was a co-owner and the CFO of Ortel Mobile Switzerland GmbH from November 2012 until the company was acquired by Sunrise Communications AG, the second largest Swiss telecom provider, in June 2013. He subsequently served as Director of Finance for Sunrise Communications AG, and as CFO of YOL Communications GmbH and YOL Services AG, two subsidiaries of Sunrise Communications from July 2013 until June 2017. Mr. Rzepka has a broad experience in corporate finance, business and financial planning, systems and process implementation and contract negotiation. He has orchestrated multiple M&A transactions as buyer and vendor with subsequent business integrations and has been involved in numerous startups and restructurings. While having spent most of his corporate career in the Telecom industry, most recently as a financial consultant for SME’s, startups and boutique business ventures, he has operated in a wide range of traditional and new industries, focusing on new technologies. Mr. Rzepka graduated from the University of Zurich with an M.B.A. in 1992.
Jamie Khurshid has served as a member of our board of directors since June 2021. Mr. Khurshid is a London based senior financial markets expert, with a career spanning over two decades as an investment banker with Credit Suisse from September 1998 to June 2008, with Goldman Sachs from June 2008 to May 2010, with the Royal Bank of Scotland from May 2008 until June 2013, and subsequently from July 2013 to July 2014 as a senior partner with Cinnober Financial Technology, the world’s leading independent exchange and clearing house technology provider. Mr. Khurshid played an important role in the development of European regulatory transparency in financial markets and is known for setting up two consortium ventures, first with IHS Markit, from September 2006 to September 2007 where he was responsible for the negotiation and acquisition of Boat Services Ltd., Europe’s longest running independent regulatory and transparency services vehicle since the introduction of MiFID in 2007, and the London Stock Exchange Group’s (LSEG) Turquoise MTF from April 2007 to April 2008. Most recently, Mr. Khurshid is recognized for defining and successfully delivering the first voluntary transparency regime for the global bullion market on behalf of the London Bullion Market Association, authorized by the
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Bank of England with oversight from the UK FCA. He has served since July 2018 as a board advisor for Quantum Technology Solutions in London, an information technology, financial services, platform for algorithm trading, execution systems, and regulatory and risk compliance. He is the cofounder of Digital RFQ, one of Europe’s leading digital asset execution service providing global counterparts with unique access to global liquidity and a suite of institutional products and services. Mr. Khurshid graduated from the University of Reading (United Kingdom) with a B.S. in Environmental Science with honors in 1997.
Daniel Minkowitz has served as one of our independent directors since June 2022. Mr. Minkowitz is an experienced businessman and real estate developer, having founded and led several companies. He is also a seasoned investor, with emphasis in cryptocurrency, fintech, wearable technology, renewable energy, special purpose acquisition companies and early state technology. Mr. Minkowitz has served as chairman and chief executive officer of Mink Development, LLC (“Mink Development”) since he founded the firm in March 2010. Mink Development is a real estate development, acquisition, and investment firm based in New York City and Miami that specializes in luxury residential, hospitality, and mixed-use projects. Mr. Minkowitz has also served as founder, chairman and chief executive officer of Mink Holdings Inc., another real estate development company, since its founding in March 2016, and as the founder and chief executive officer of Mink Capital Partners LP, an investment firm focused on cryptocurrency, fintech, wearable technology, renewable energy, special purpose acquisition companies and early state technology companies, since its founding September 2020. From September 2018 to May 2020, Mr. Minkowitz served as chief executive officer of Standard Power Group, a non-residential real estate leasing company focused on providing infrastructure to advanced data processing companies, and from July 2005 until its sale in December 2010, he served as chief executive officer of Renato Watches Inc, a premium watch company he founded. Mr. Minkowitz attended New York University from 1997 to 1999, where he studied business.
On May 28, 2021, Mr. Minkowitz filed for bankruptcy protection under Chapter 13 of Title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of Florida. Mr. Minkowitz filed a notice of voluntary dismissal of such bankruptcy case with the court on June 11, 2021, and the case was subsequently discharged and closed by the court on July 26, 2021. In addition, Mr. Minkowitz served as managing member and chief executive officer of MDVE12 LLC, a single asset real estate company, since he founded the company in May 2018. On September 13, 2021, MDVE12 LLC filed for bankruptcy protection under Chapter 11 of Title 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Florida, which bankruptcy proceedings were closed on December 3, 2021.
Stefan Nolte has served as one of our independent directors since April 2021. Mr. Nolte has been serving as the managing partner of Shanda Consult of Nicosia, Cyprus, an international business consulting firm he founded in November 2009, responsible for compliance with the auspices of CySEC, the Cyprus Securities and Exchange Commission. Shanda Consult has a wide range of partners in the European Union, in the Mediterranean and in the Middle East, and offers an integrated range of business and advisory services designed to facilitate cross-border industrial investments, and to improve competitiveness and performance. From December 1999 to February 2006, Mr. Nolte was the managing director of the European Business Bank Ltd. In Cyprus, an investment bank with activities primarily in the Middle East, South East Asia and the Far East. He has served as the president of the Cyprus Germany Business Association since June 2016, and as a member of the board of the Cyprus Kuwait Business Association since May 2015. Since 1984, Mr. Nolte built up his practical experience in business, investment consultancy and project management in many countries including Turkey, Morocco, Malta, Iran, Dubai, Singapore, Hong Kong, Taiwan and China. During his years in Turkey, Mr. Nolte established the Izmir Branch of the Turkish Foundation for Medium Size Enterprises (TOSYÖV), and he acted as its general coordinator from 1993 to 1995. Mr. Nolte obtained a finance degree from the University of Istanbul in 1988.
Alexander Schinzing is our Company Secretary and may be deemed to be a promoter of the Company. Mr. Schinzing is the managing director of Celtic Asset & Equity Partners, Ltd. (“Celtic”), which is a co-sponsor of Financial Strategies Acquisition Corp. Alexander and his firm, Celtic, have been involved in the preparation of several publicly traded special purpose acquisition companies (“SPACs”). Additionally, he has been a member of the Institute of Directors in Ireland since August 2019. From November 2009 until June 2019, he was a managing consultant at The Tax Saving Corporation where he focused on the strategic development of companies, defining new business structures, analysis of tax structures, relocation of existing companies and incorporation of new companies. From November 2016 until October 2018, he also served as Vice-Chairman of the R.O.M AG supervisory board. Earlier in his career, Mr. Schinzing worked at KPMG Consulting AG in 2000 prior to working for Westlaw, a subsidiary of Thomson Reuters, in 2004. Mr. Schinzing received his law degree from the Georg-August-University in 1999.
Greg Gaylor may be deemed to be a promoter of the Company. Mr. Gaylor is a serial entrepreneur, and an international business consultant in mergers and acquisitions for Celtic. He has served in this capacity with Celtic since 2017. Mr. Gaylor has more than 37 years of experience in corporate finance and the U.S. capital markets. Mr. Gaylor has consulted on the origination and successful initial public offerings of three SPACs and mergers involving two SPACs, and has cofounded or sponsored three public companies on Nasdaq
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since 1996. In April 1999, Mr. Gaylor was convicted of theft by misapplication of funds involving a real estate partnership for which Mr. Gaylor served as the general partner from 1987-1990. Mr. Gaylor maintained his actual innocence in the matter. Mr. Gaylor graduated with honors with a degree in finance from Southern Methodist University in Dallas in May 1980.
Results of Operations and Known Trends or Future Events
We did not commence operations until after the closing of our Initial Public Offering in December 2021, and we have not engaged in any significant operations, nor generated any operating revenues to date. We will not generate any operating revenues until after the completion of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents. There has been no significant change in our financial or trading position and no material adverse change has occurred since the date of our audited financial statements. We have incurred and we expect to continue to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as expenses as we conduct due diligence on prospective business combination candidates. For the three and six months ended June 30, 2022, we had operating losses of $397,292 and $880,720, respectively, for each period consisting mainly of legal and consulting fees, franchise tax provisions, directors and officers liability insurance premiums and administrative expenses. Such operating losses have been offset by interest earned on marketable securities held in the trust account of $128,350 and $137,275, respectively, and by a reduction of the derivative warrant liability of $925,135 and $8,458,021, respectively, triggered by the shift of the public warrants from Level 3 classification to Level 1 classification.
Liquidity and Capital Resources
As indicated in the accompanying unaudited condensed financial statements, at June 30, 2022, we had $1,433 in cash. We have incurred and expect to continue to incur significant costs in pursuit of our financing and acquisition plans. Even though on August 17, 2022, we raised additional funds for our working capital needs, we cannot assure you that our efforts to raise further capital if needed or to complete our initial business combination will be successful.
Prior to the consummation of the Initial Public Offering, our liquidity needs were satisfied through a capital contribution from our initial stockholders of $25,000 for founder shares and loans of $450,000, comprised of a $200,000 unsecured promissory note from our co-sponsor, FSC Sponsor LLC, of which $200,000 has been drawn upon, and a convertible loan of $250,000 from an investor in FSC Sponsor LLC under an unsecured promissory note, of which $250,000 has been drawn upon.
Net proceeds from (i) the sale of the units in our Initial Public Offering, after deducting offering expenses of approximately $811,403 ($332,315 of which have been prepaid with the proceeds from the promissory notes) and underwriting discounts and commissions of $2,501,250, (ii) the private sale of the private placement units for a purchase price of $10.00 and (iii) the sale of representative shares to the Underwriters were $102,122,900. Of this amount, $101,050,500 is being held in the trust account. After payment of $661,028 for directors and officers liability insurance, the remaining amount of $411,372 was released to the Company’s current account. The proceeds held in the trust account have been or will be 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.
We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account, to complete our initial business combination. We may withdraw interest to pay franchise and income taxes and up to $100,000 in dissolution expenses. We estimate our annual franchise tax obligations, based on the number of shares of our common stock authorized and outstanding after the completion of our Initial Public Offering, to be $200,000, which is the maximum amount of annual franchise taxes payable by us as a Delaware corporation per annum, and which we may pay from funds from the Initial Public Offering and the Private Placement held outside of the trust account or from interest earned on the funds held in our trust account and released to us for this purpose. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. We expect the interest earned on the amount in the trust account will be sufficient to pay our income taxes. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our initial 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.
As of June 30, 2022, we held $1,433 outside the trust account. On August 17, 2022, we raised additional funds in the amount of $200,000 pursuant to the Securities Purchase Agreement. We expect to use these funds 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
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or their representatives or owners, review corporate documents and material agreements of prospective target businesses and structure, negotiate and complete an initial business combination.
As of June 30, 2022, we had working capital of $7,222. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our co-sponsors or an affiliate of our co-sponsors or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts.
In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such working capital loans may be convertible into private placement-equivalent units at a price of $10.00 per unit (which, for example, would result in the holders being issued 150,000 units if $1,500,000 of notes were so converted), at the option of the lender. The units would be identical to the private placement units. The terms of such working capital loans by our co-sponsors or their affiliates, or our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. We do not expect to seek loans from parties other than our officers and directors, co-sponsors or an affiliate of our co-sponsors, as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
Our primary liquidity requirements as of June 30, 2022 include approximately $300,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting successful business combinations; $100,000 for legal and accounting fees related to regulatory reporting requirements; $50,000 for listing and filing fees and expenses; and approximately $50,000 for working capital that will be used for miscellaneous expenses and reserves (including taxes net of anticipated interest income).
These amounts are estimates and may differ materially from our actual expenses. In addition, we could use a portion of the funds held outside the trust account to pay commitment fees for financing, fees to consultants to assist us with our search for a target business or as a down payment or to fund a “no-shop” provision (a provision designed to keep target businesses from “shopping” around for transactions with other companies on terms more favorable to such target businesses) with respect to a particular proposed initial business combination, although we do not have any current intention to do so. If we entered into an agreement where we paid for the right to receive exclusivity from a target business, the amount that would be used as a down payment or to fund a “no-shop” provision would be determined based on the terms of the specific business combination and the amount of our available funds at the time. Our forfeiture of such funds (whether as a result of our breach or otherwise) could result in our not having sufficient funds to continue searching for, or conducting due diligence with respect to, prospective target businesses.
We cannot exclude the possibility that we will need to raise additional funds in order to meet the expenditures required for operating our business. If our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our initial business combination or because we become obligated to redeem a significant number of our public shares upon completion of our initial business combination, in which case we may issue additional securities or incur debt in connection with such business combination. In addition, we intend to target businesses larger than we could acquire with the net proceeds of the Initial Public Offering and the sale of the private placement units, and may as a result be required to seek additional financing to complete such proposed initial business combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our initial business combination. If we are unable to complete our initial business combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the trust account. In addition, following our initial business combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.
As of June 30, 2022, we did not have any off-balance sheet arrangements as defined in Item 303(b)(1)(ii) of Regulation S-K and did not have any commitments or contractual obligations.
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Critical Accounting Estimates
The preparation of unaudited condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) 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 unaudited condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We account for the warrants issued in connection with our initial public offering in accordance with Accounting Standards Codification (“ASC”) 815-40, Derivatives and Hedging—Contracts in Entity’s Own Equity (“ASC 815”), under which the warrants do not meet the criteria for equity classification and must be recorded as liabilities. As the warrants meet the definition of a derivative as contemplated in ASC 815, the Warrants are measured at fair value at inception and at each reporting date in accordance with ASC 820, Fair Value Measurement, with changes in fair value recognized in the Statement of Operations in the period of change.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Shares of conditionally redeemable Class A common stock (including Class A common stock 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 our control) are classified as temporary equity. At all other times, shares of Class A common stock are classified as shareholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at June 30, 2022, 10,005,000 shares of Class A common stock subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the accompanying balance sheet.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a “smaller reporting company” as defined by Rule 12b-2 of the Exchange Act, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures that are designed with the objective of ensuring that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized, and reported within the time period specified in the Securities and Exchange Commission (“SEC”) rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to the company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Our management evaluated, under the supervision and with the participation of our current principal executive officer and our current principal financial and accounting officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of June 30, 2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of June 30, 2022, our disclosure controls and procedures were effective.
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We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As of June 30, 2022, to the knowledge of our management, there was no material litigation, arbitration or governmental proceeding currently pending against us, any of our management team in their capacity as such or against any of our property, and we and our management team have not been subject to any such proceeding.
Item 1A. Risk Factors
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial business combination and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial business combination and results of operations.
On March 30, 2022, the SEC issued proposed rules relating to, among other items, disclosures in business combination transactions involving special purpose acquisition companies (“SPACs”) and private operating companies; the financial statement requirements applicable to transactions involving shell companies; the use of projections in SEC filings in connection with proposed business combination transactions; the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940, as amended, including a proposed rule that would provide SPACs a safe harbor from treatment as an investment company if they satisfy certain conditions that limit a SPAC’s duration, asset composition, business purpose and activities. These rules, if adopted, whether in the form proposed or in a revised form, may increase the costs of and the time needed to negotiate and complete an initial business combination, and may constrain the circumstances under which we could complete an initial business combination.
Other than above, there have been no material changes to the risk factors as identified in our Annual Report on Form 10-K, filed on March 31, 2022.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities
Use of Proceeds from the Initial Public Offering
On December 14, 2021, we consummated our Initial Public Offering of 10,005,000 units, which amount included the exercise in full of the underwriters’ option to purchase an additional 1,305,000 units to cover over-allotments. Each public unit consisted of one share of Class A common stock of the Company, $0.0001 par value per share, one redeemable warrant, with each public warrant entitling the holder thereof to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment, and one public right, with each public right entitling the holder thereof to receive one-tenth (1/10) of one share of Class A common stock upon our consummation of an initial business combination. The units were sold at a price of $10.00 per unit, and the Initial Public Offering generated gross proceeds of $100,050,000. I-Bankers acted as the sole book-running manager of the Initial Public Offering. The units sold in the Initial Public Offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-260434). The SEC declared the registration statement effective on December 9, 2021.
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Simultaneously with the consummation of the Initial Public Offering and the full exercise of the overallotment option, we sold 504,950 private placement units at a price of $10.00 per private placement unit to our co-sponsors, anchor investors and I-Bankers in the Private Placement, generating gross proceeds of $5,049,500. Each private placement unit consists of one private placement share, one redeemable private placement warrant to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment, and one private placement right to receive one-tenth (1/10) of one share of common stock upon the consummation by the Company of an initial business combination. The private placement warrants are substantially similar to the public warrants, except that the private placement warrants, so long as they are held by our co-sponsors, initial stockholders or their permitted transferees, (i) will not be redeemable by us, (ii) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of the Company’s initial business combination, (iii) may be exercised by the holders on a cashless basis and (iv) will be entitled to registration rights. No underwriting discounts or commissions were paid with respect to such sale. The private placement units were issued pursuant to Section 4(a)(2) of the Securities Act, as the transactions did not involve a public offering.
The net proceeds from the Initial Public Offering, together with certain of the proceeds from the Private Placement, $101,050,500 in the aggregate, were placed in the trust account. Except for the withdrawal from interest earned the proceeds in the trust account to fund taxes payable and up to $100,000 to pay dissolution expenses, or upon the redemption by public stockholders of common stock in connection with certain amendments to our amended and restated certificate of incorporation, none of the funds held in the trust account will be released until the earlier of the completion of our initial business combination or the redemption of 100% of the public shares and issued by us in the Initial Public Offering if we are unable to consummate an initial business combination within 12 months (or, if extended by resolution of our board of directors, up to 18 months) from the closing of the Initial Public Offering. The proceeds held in the trust account will be invested only in U.S. government securities 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.
We will likely use substantially all of the net proceeds of the Initial Public Offering and the Private Placement, including the funds held in the trust account, in connection with our initial business combination and to pay our expenses relating thereto, including a fee equal to 3.5% of the total gross proceeds raised in the Initial Public Offering payable to I-Bankers for marketing services relating to the initial business combination (the “Marketing Fee”), payable upon consummation of our initial business combination. To the extent that our capital stock is used in whole or in part as consideration to effect our initial business combination, the proceeds held in the trust account which are not used to consummate a business combination will be disbursed to the combined company and will, along with any other net proceeds not expended, be used as working capital to finance the operations of the target business. Such working capital funds could be used in a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions.
We paid a total of $2,501,250 in underwriting discounts and commissions and $811,403 for other costs and expenses relating to the Initial Public Offering. Upon the consummation of our initial business combination we will pay I-Bankers the Marketing Fee of $3,501,750.
Item 3. Defaults upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
On August 17, 2022, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Greg Gaylor, as trustee of the William C Gaylor and Dorothy J Gaylor Rev. Trust (the “Purchaser”). Pursuant to the Securities Purchase Agreement, the Company sold to the Purchaser, for an aggregate purchase price of $200,000, a promissory note in the aggregate principal amount of $200,000 (the “Note”), 20,000 shares of Class A common stock (the “Shares”) and warrants to purchase 2,000 shares of Class A common stock (the “Placement Warrants”), and the Purchaser committed to purchase upon the same terms at the request of the Company up to $150,000 of additional securities, consisting of an additional promissory note in the aggregate principal amount of up to $150,000, an additional 15,000 shares of Class A common stock and warrants to purchase up to 1,500 shares of Class A common stock. Mr. Gaylor may be deemed to be a promoter of the Company.
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The Note bears interest at the rate of 10% per annum and will mature upon the earlier of thirty days from the date that the Company consummates an initial business combination and one year from the date of issuance. The Placement Warrants are identical to the Company’s publicly trading warrants except that the Placement Warrants, so long as they are held by the Purchaser or its permitted transferees, (i) will not be redeemable by us, (ii) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holders until 30 days after the completion of the Company’s initial business combination, (iii) may be exercised by the holders on a cashless basis and (iv) will be entitled to registration rights. In connection with the Securities Purchase Agreement, the Purchaser entered into a letter agreement with the Company (the “Letter Agreement”) pursuant to which the Purchaser has agreed, among other things: (i) to waive any redemption rights with respect the Shares in connection with the consummation of a business combination or a stockholder vote to approve the same or amend the Company’s charter, (ii) to waive any rights to liquidating distributions from the trust account with respect to the Shares, (iii) not to transfer any Shares or Private Warrants until 30 days after the completion of a business combination, and (iv) to vote any shares of the Company held by him in favor of an initial business combination.
The sale of the Shares and Placement Warrants is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 4(a)(2) thereof and Regulation D thereunder. The Company has not engaged in general solicitation or advertising with regard to the issuance and sale of the Shares and Placement Warrants and has not offered securities to the public in connection with such issuance and sale. The Company relied, in part, upon representations from the Purchaser that the Purchaser is an accredited investor as defined in Regulation D under the Securities Act.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
EXHIBIT INDEX | ||
| ||
3.1 | ||
3.2 | ||
10.1 | ||
10.2 | ||
10.3 | ||
31.1* | ||
31.2* | ||
32.1** | ||
101.INS | Inline XBRL Instance Document | |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
104* | Cover Page Interactive Data File - The cover page iXBRL tags are embedded within the inline XBRL document. | |
* | Filed herewith. |
** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Financial Strategies Acquisition Corp. | ||
Date: August 17, 2022 | By: | /s/ Timo Vainionpää |
Name: Timo Vainionpää | ||
Title: Interim Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer) | ||
By: | /s/ Horst Rzepka | |
Name: Horst Rzepka | ||
Title: Chief Financial Officer (Principal Financial and Accounting Officer) |
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Exhibit 10.1
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is made as of August 17, 2022, by and among Financial Strategies Acquisition Corp., a Delaware corporation (the “Company”), having its principal place of business at 2626 Cole Avenue, Suite 300, Dallas, Texas 75204, and the undersigned subscriber (the “Subscriber”).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Subscriber, and the Subscriber desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and the Subscriber hereby agree as follows:
1. Purchase and Sale.
1.1. Purchase and Issuance of the Securities. Upon the terms and subject to the conditions of this Agreement, the Subscriber hereby agrees to purchase from the Company, and the Company hereby agrees to sell to Subscriber, on the Closing Date (as defined in Section 1.3) and in consideration of the payment of the Purchase Price (as defined in Section 1.2) (i) an aggregate of 20,000 shares (the “Shares”) of the Company’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), (ii) warrants registered in the name of the Subscriber to purchase up to 2,000 shares of Class A Common Stock at an exercise price of $11.50 per share, substantially in the form set forth on Exhibit A hereto (the “Private Placement Warrants”), and (iii) a promissory note, duly executed by the Company, in the principal amount of $200,000, bearing interest at 10.0% per annum, substantially in the form set forth on Exhibit B hereto (the “Promissory Note,” and together with the Shares and Private Placement Warrants, the “Securities”). The shares of Class A Common Stock underlying the Private Placement Warrants are hereinafter referred to as the “Warrant Shares.” This Agreement, together with the Letter Agreement (as defined in Section 2.4), the Promissory Note and the Private Placement Warrants, and all exhibits and schedules thereto and any other documents or agreements executed in connection with the transactions contemplated hereunder, are referred to as the “Transaction Documents.”
1.2. Total Purchase Price. Subscriber shall pay an aggregate of $200,000 (the “Purchase Price”) by wire transfer of immediately available funds or by such other method as may be reasonably acceptable to the Company.
1.3. Additional Subscriber Commitment. Within 5 business days after the Company’s written request, for a period of one year commencing on the date hereof, Subscriber agrees to pay up to an aggregate of $150,000 to the Company (the “Additional Subscription Amount”) in exchange for (i) a promissory note, bearing interest at 10.0% per annum, in the principal amount of up to $150,000, (ii) up to 15,000 shares of Class A Common Stock and (iii) warrants to purchase up to 1,500 shares of Class A Common Stock; each of (i), (ii) and (iii) above shall be issued in substantially the same form as the Securities to be sold on the Closing Date, shall be subject to the same terms, covenants and conditions as set forth herein, and shall be issued to the Subscriber, in each instance, in proportion to the total amount of the Additional Subscription Amount drawn by the Company at such time.
1.4. Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, the closing of the sale of the Securities (the “Closing”) shall occur at the offices of Haynes and Boone,
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LLP or such other location as the parties shall mutually agree (such date, the “Closing Date”). At the Closing, upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company shall instruct its transfer agent to deliver to the Subscriber the Securities against payment of the Purchase Price as set forth in Section 1.5.
1.5. Deliveries.
(a) At the Closing, the Company shall deliver or cause to be delivered to the Subscriber the following:
(i) this Agreement duly executed by the Company;
(ii) a copy of the irrevocable instructions to the Company’s transfer agent (the instructing the transfer agent to deliver the Shares registered in the name of the Subscriber;
(iii) a Certificate in the name of Subscriber representing the Private Placement Warrants, duly executed by the Company and the Company’s warrant agent;
(iv) the Promissory Note, duly executed by the Company;
(v) the Letter Agreement (as defined in Section 2.3) between the Subscriber and the Company, duly executed by the Company; and
(b) On or prior to the Closing Date, the Subscriber shall deliver or cause to be delivered to the Company the following:
(i) this Agreement duly executed by the Subscriber;
(ii) the Purchase Price by wire transfer to the account specified in writing by the Company; and
(iii) the Letter Agreement (as defined in Section 2.3) between the Subscriber and the Company, dated as of the date hereof, duly executed by the Subscriber;
(iv) an accredited investor questionnaire relating to the Subscriber’s status as an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the Securities Act, duly completed and executed by the Subscriber; and
(v) an Internal Revenue Service Form W-8 or Form W-9, as applicable.
2. Representations and Warranties of the Subscriber.
The Subscriber represents and warrants to the Company that:
2.1. Organization; Authority. The Subscriber is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the
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Transaction Documents and performance by the Subscriber of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of the Subscriber. Each Transaction Document to which it is a party has been duly executed by the Subscriber, and when delivered by the Subscriber in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Subscriber, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
2.2. No Government Recommendation or Approval. Subscriber understands that no federal or state agency has passed upon or made any recommendation or endorsement of the Company or the offering of the Securities, as contemplated by this Agreement.
2.3. Accredited Investor. Subscriber represents that it is an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act, and acknowledges that the sale contemplated hereby is being made in reliance, among other things, on a private placement exemption to “accredited investors” under the Securities Act and similar exemptions under state law.
2.4. Intent. Subscriber is purchasing the Securities solely for investment purposes, for such Subscriber’s own account (and/or for the account or benefit of its members or affiliates, as permitted, pursuant to the terms of an agreement (the “Letter Agreement”) to be entered into with respect to the Securities between the Subscriber and the Company), and not with a view to the distribution thereof and Subscriber has no present arrangement to sell the Securities to or through any person or entity except as may be permitted under the Letter Agreement. Subscriber shall not engage in hedging transactions with regard to the Securities unless in compliance with the Securities Act and the rules promulgated thereunder.
2.5. Restrictions on Transfer. Subscriber acknowledges and understands the Securities are being offered in a transaction not involving a public offering in the United States within the meaning of the Securities Act. Subscriber acknowledges and understands that the Securities are “restricted securities” and have not been registered under the Securities Act and, if in the future Subscriber decides to offer, resell, pledge or otherwise transfer the Securities, such Securities may be offered, resold, pledged or otherwise transferred only (A) pursuant to an effective registration statement filed under the Securities Act, (B) pursuant to an exemption from registration under Rule 144 promulgated under the Securities Act, if available, or (C) pursuant to any other available exemption from the registration requirements of the Securities Act, and in each case in accordance with any applicable securities laws of any state or any other jurisdiction. Notwithstanding the foregoing, Subscriber acknowledges and understands the Securities are subject to transfer restrictions as described in Section 8 hereof. Subscriber agrees that if any transfer of its Securities or any interest therein is proposed to be made, as a condition precedent to any such transfer, a Subscriber may be required to deliver to the Company an opinion of counsel satisfactory to the Company with respect to such transfer. Absent registration or another available exemption from registration, Subscriber agrees it will not resell the Securities (unless otherwise permitted pursuant to the Letter Agreement, as described in the Registration Statement). Subscriber further acknowledges that because the Company is a shell company, Rule 144 may not be available to Subscriber for the resale of the Securities until the one year anniversary following consummation of the initial Business Combination of the Company, despite technical compliance with the requirements of Rule 144 and the release or waiver of any contractual transfer restrictions.
2.6. Sophisticated Investor.
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(i) Subscriber, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.
(ii) Subscriber is aware that an investment in the Securities is highly speculative and subject to substantial risks because, among other things, the Securities are subject to transfer restrictions and have not been registered under the Securities Act and therefore cannot be sold unless subsequently registered under the Securities Act or an exemption from such registration is available. Subscriber is able to bear the economic risk of its investment in the Securities for an indefinite period of time.
2.7. Independent Investigation. Subscriber, in making the decision to purchase the Securities, has relied upon an independent investigation of the Company and has not relied upon any information or representations made by any third parties or upon any oral or written representations or assurances from the Company, its officers, directors or employees or any other representatives or agents of the Company, other than as set forth in this Agreement. The Subscriber acknowledges that it has had the opportunity to review the Transaction Documents (including all exhibits and schedules thereto), as well as the Company’s public filings with the Securities and Exchange Commission and the Subscriber is familiar with the business, operations and financial condition of the Company and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and receive answers from, the Company’s officers and directors concerning the Company and the terms and conditions of the offering of the Securities; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) has had full access to such other information concerning the Company as such Subscriber has requested. Subscriber confirms that all documents that it has requested have been made available and that the Subscriber has been supplied with all of the additional information concerning this investment which such Subscriber has requested that is necessary to make an informed investment decision with respect to the investment.
2.8. No Conflicts. The execution, delivery and performance of this Agreement and the consummation by Subscriber of the transactions contemplated hereby do not violate, conflict with or constitute a default under (i) Subscriber’s respective charter documents, (ii) any agreement or instrument to which Subscriber is a party or (iii) any law, statute, rule or regulation to which Subscriber is subject, or any agreement, order, judgment or decree to which Subscriber is subject. To the extent that any claim, proceeding, suit, or other action is brought against Subscriber in connection with moneys used to fund the Purchase Price, Subscriber shall, at the option and in the sole discretion of the Company (which option may be exercised by written notice to the Subscriber, such notice the “Clawback Notice”), surrender the Shares and Private Placement Warrants, without consideration, to the Company or its designated agent within three business days of receipt of a Clawback Notice from the Company.
2.9. No Legal Advice from Company. Subscriber acknowledges it has had the opportunity to review this Agreement and the transactions contemplated by this Agreement and the other agreements entered into between the parties hereto with Subscriber’s own legal counsel and investment and tax advisors. Except for any statements or representations of the Company made in this Agreement and the other agreements entered into between the parties hereto, Subscriber is relying solely on such review, counsel and advisors and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.
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2.10. Reliance on Representations and Warranties. Subscriber understands the Securities are being offered and sold to Subscriber in reliance on exemptions from the registration requirements under the Securities Act, and analogous provisions in the laws and regulations of various states, and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of Subscriber set forth in this Agreement in order to determine the applicability of such provisions.
2.11. No General Solicitation. Subscriber is not subscribing for the Securities as a result of or subsequent to any general solicitation or general advertising, including but not limited to any advertisement, article, notice or other communication published in any newspaper, magazine, or similar media or broadcast over television or radio, or presented at any seminar or meeting or in a registration statement with respect to Company’s initial public offering (the “IPO”) filed with the Securities and Exchange Commission (“SEC”).
2.12. Legend. Subscriber acknowledges and agrees the certificates evidencing each of the Securities shall bear a restrictive legend (the “Legend”), in form and substance substantially as set forth in Section 4 hereof.
2.13. Certain Transactions. Other than consummating the transactions contemplated hereunder, the Subscriber has not, nor has any person acting on behalf of or pursuant to any understanding with the Subscriber, directly or indirectly executed any purchases or sales, including short sales, of the securities of the Company during the period commencing as of the time that the Subscriber first received a term sheet (written or oral) from the Company or any other person representing the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution hereof.
2.14 Confidentiality. Subscriber agrees that for two years from the date hereof, it will keep confidential and will not disclose, divulge, or use for any purpose (other than to monitor or make decisions with respect to its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement, unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 2.14 by the Subscriber), (b) is or has been independently developed or conceived by the Subscriber without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Subscriber by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that the Subscriber may disclose confidential information (i) to its representatives, including attorneys, accountants, consultants, and other professionals, to the extent reasonably necessary to obtain their services in connection with monitoring its investment in the Company; or (ii) as may otherwise be required by law, regulation, rule, court order or subpoena, provided that the Subscriber promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure. Subscriber acknowledges and agrees that the Company may seek equitable relief (including injunctive relief) against the Subscriber and its representatives to prevent the breach or threatened breach of this Section 2.14 and to secure its enforcement.
3. Representations, Warranties and Covenants of the Company.
The Company represents and warrants to, and agrees with, Subscribers that:
3.1. Valid Issuance of Capital Stock. The total number of shares of all classes of capital stock which the Company has authority to issue is 100,000,000 shares of Class A Common Stock, 10,000,000
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shares of Class B Common Stock, $0.0001 par value per share (the “Class B Common Stock”), and 1,000,000 shares of preferred stock, $0.0001 par value per share (“Preferred Stock”). As of the date hereof, the Company has issued and outstanding 10,883,700 shares of Class A Common Stock, 2,501,250 shares of Class B Common Stock, and no shares of Preferred Stock. All of the issued shares of capital stock of the Company have been duly authorized, validly issued, and are fully paid and non-assessable.
3.2 Title to Securities. Upon issuance in accordance with, and payment pursuant to, the terms hereof and that certain warrant agreement entered into between the Company and Continental Stock Transfer & Trust Company, as warrant agent (the “Warrant Agreement”), and the Amended and Restated Certificate of Incorporation of the Company, as the case may be, the Shares and Private Placement Warrants will be valid and binding obligations on the Company, and the Shares will be duly and validly issued, fully paid and non-assessable. On the date of issuance of the Securities, the Shares and Warrant Shares shall have been reserved for issuance. Upon issuance in accordance with, and payment pursuant to, the terms hereof and the Warrant Agreement, as the case may be, Subscriber will have or receive good title to the Shares and Private Placement Warrants, free and clear of all liens, claims and encumbrances of any kind, other than (i) transfer restrictions hereunder and pursuant to the Letter Agreement and (ii) transfer restrictions under federal and state securities laws. Upon delivery in accordance with the terms of the Private Placement Warrants, and the Warrant Shares, as the case may be, will be duly and validly issued, fully paid and nonassessable.
3.3. Organization and Qualification. The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power to own its properties and assets and to carry on its business as now being conducted.
3.4. Authorization; Enforcement. (i) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement and to issue the Securities in accordance with the terms hereof, (ii) the execution, delivery and performance of this Agreement by the Company and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary corporate action, and no further consent or authorization of the Company or its Board of Directors or stockholders is required, and (iii) this Agreement constitutes valid and binding obligations of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization, or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by equitable principles of general application and except as enforcement of rights to indemnity and contribution may be limited by federal and state securities laws or principles of public policy.
3.5. No Conflicts. The execution, delivery and performance of this Agreement and the consummation by the Company of the transactions contemplated hereby do not (i) result in a violation of the Company’s certificate of incorporation or by-laws, (ii) conflict with, or constitute a default under any agreement or instrument to which the Company is a party or (iii) any law statute, rule or regulation to which the Company is subject or any agreement, order, judgment or decree to which the Company is subject. Other than any SEC or state securities filings which may be required to be made by the Company subsequent to the Closing, and any registration statement which may be filed pursuant thereto, the Company is not required under federal, state or local law, rule or regulation to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency or self-regulatory entity in order for it to perform any of its obligations under this Agreement or issue the Shares, Private Placement Warrants, Warrant Shares, in accordance with the terms hereof.
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4. Legends.
4.1. Legend. The Company will issue the Shares and Private Placement Warrants, and when issued, the Warrant Shares, purchased by the Subscriber in the name of the Subscriber. The Securities will bear the following Legend and appropriate “stop transfer” instructions:
“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE.”
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO LOCKUP PURSUANT TO A LETTER AGREEMENT BETWEEN THE HOLDER AND FINANCIAL STRATEGIES ACQUISITION CORP. AND MAY ONLY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE TERM OF THE LOCKUP PURSUANT TO THE TERMS SET FORTH IN THE LETTER AGREEMENT.”
4.2. Subscriber’s Compliance. Nothing in this Section 4 shall affect in any way Subscriber’s obligations and agreements to comply with all applicable securities laws upon resale of the Securities.
4.3. Company’s Refusal to Register Transfer of the Securities. The Company shall refuse to register any transfer of the Securities, if in the sole judgment of the Company, such purported transfer would not be made (i) pursuant to an effective registration statement filed under the Securities Act, or pursuant to an available exemption from the registration requirements of the Securities Act and (ii) in compliance herewith and with the Letter Agreement.
5. Waiver of Liquidation Distributions.
In connection with the Securities purchased pursuant to this Agreement, Subscriber hereby waives any and all right, title, interest or claim of any kind in or to any distributions of the amounts in the Trust Account with respect to the Securities, whether (i) in connection with the exercise of redemption rights if the Company consummates the Business Combination, (ii) in connection with any tender offer conducted by the Company prior to a Business Combination, (iii) upon the Company’s redemption of shares of Common Stock sold in the Company’s IPO upon the Company’s failure to timely complete the Business Combination or (iv) in connection with a stockholder vote to approve an amendment to the Company’s second amended and restated certificate of incorporation (A) to modify the substance or timing of the Company’s obligation to redeem 100% of the Company’s public shares if the Company does not timely complete the Business Combination or (B) with respect to any other provision relating to stockholders’ rights or pre-Business Combination activity. In the event a Subscriber purchases shares of Class A Common Stock in the open market, any shares so purchased shall be eligible to receive the redemption value of such shares of Class A Common Stock upon the same terms offered to all other purchasers of Class A Common Stock in the IPO in the event the Company fails to consummate the Business Combination.
6. Terms of the Private Placement Warrants. Each Private Placement Warrant shall have the terms set forth in the Warrant Agreement.
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7. Voting Agreement. Subscriber agrees to vote the Shares in accordance with the terms of the Letter Agreement.
8. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement shall be governed by and construed in accordance with the laws of the State of New York for agreements made and to be wholly performed within such state. The parties hereto hereby waive any right to a jury trial in connection with any litigation pursuant to this Agreement and the transactions contemplated hereby.
9. Assignment; Entire Agreement; Amendment.
9.1. Assignment. Neither this Agreement nor any rights hereunder may be assigned by any party to any other person other than by the Subscriber to a person agreeing to be bound by the terms hereof, including the waiver contained in Section 5 hereof.
9.2. Entire Agreement. This Agreement and the Letter Agreement sets forth the entire agreement and understanding between the parties as to the subject matter thereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them.
9.3. Amendment. Except as expressly provided in this Agreement and the Letter Agreement, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by all of the parties hereto.
9.4. Binding upon Successors. This Agreement shall be binding upon and inure to the benefit of the parties hereto and to their respective heirs, legal representatives, successors and permitted assigns.
10. Notices.
10.1 Notices. Unless otherwise provided herein, any notice or other communication to a party hereunder shall be sufficiently given if in writing and personally delivered or sent by facsimile or other electronic transmission with copy sent in another manner herein provided or sent by courier (which for all purposes of this Agreement shall include Federal Express or other recognized overnight courier) or mailed to said party by certified mail, return receipt requested, at its address provided for herein or such other address as either may designate for itself in such notice to the other. Communications shall be deemed to have been received when delivered personally, on the scheduled arrival date when sent by next day or 2nd-day courier service, or if sent by facsimile upon receipt of confirmation of transmittal or, if sent by mail, then three days after deposit in the mail. If given by electronic transmission, such notice shall be deemed to be delivered (a) if by electronic mail, when directed to an electronic mail address at which the party has consented to receive notice; (b) if by a posting on an electronic network together with separate notice to the party of such specific posting, upon the later of (1) such posting and (2) the giving of such separate notice; and (c) if by any other form of electronic transmission, when directed to such party.
11. Counterparts.
This Agreement may be executed in one or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.
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12. Survival; Severability.
12.1. Survival. The representations, warranties, covenants and agreements of the parties hereto shall survive the Closing Date.
12.2. Severability. In the event that any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect without said provision; provided that no such severability shall be effective if it materially changes the economic benefit of this Agreement to any party.
13. Headings.
The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be effective as of the date first set forth above.
| COMPANY: | ||
| | ||
| FINANCIAL STRATEGIES ACQUISITION CORP. | ||
| | ||
| By: | /s/ Timo Vainionpää | |
| Name: | Timo Vainionpää | |
| Title: | Interim Chief Executive Officer | |
| | ||
| SUBSCRIBER: | ||
| | ||
| | GREGORY A. GAYLOR, not in his individual capacity but solely as trustee of the William C Gaylor and Dorothy J Gaylor Rev. Trust | |
| | | |
| | By: | |
| | /s/ Gregory A. Gaylor | |
| | Name: | Gregory A. Gaylor |
| | Title: | Trustee |
[Signature Page to Securities Purchase Agreement]
Exhibit 10.2
THIS PROMISSORY NOTE (“NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
PROMISSORY NOTE
Principal Amount: $200,000
Dated as of August 17, 2022
New York, New York
For value received, Financial Strategies Acquisition Corp., a Delaware corporation and blank check company (the “Maker”), promises to pay to the order of Gregory A. Gaylor, as trustee, or his assigns or successor in trust, under the WILLIAM C GAYLOR AND DOROTHY J GAYLOR REV. TRUST (the “Payee”), the principal amount set forth above with simple interest on the outstanding principal amount at the rate of 10.0% per annum, on the terms and conditions described below. All payments on this Note shall be made by check or wire transfer of immediately available funds or as otherwise determined by the Maker to such account as the Payee may from time to time designate by written notice in accordance with the provisions of this Note.
1.Principal. The principal amount of this Note shall be payable by the Maker on the earlier of: (i) thirty days from the date on which Maker consummates an initial business combination, and (ii) one year from the date hereof (such date, the “Maturity Date”). The principal amount may be prepaid at any time. Under no circumstances shall any individual, including but not limited to any officer, director, employee or shareholder of the Maker, be obligated personally for any obligations or liabilities of the Maker hereunder.
2.Interest. Interest shall commence on the date hereof and shall continue on the outstanding principal amount until paid in full. Interest shall be computed on the basis of a year of 365 days for the actual number of days elapsed. All unpaid interest shall be due and payable on the Maturity Date.
3.Application of Payments. All payments shall be applied first to payment in full of any costs incurred in the collection of any sum due under this Note, including (without limitation) reasonable attorney’s fees, then to the payment in full of any late charges and finally to the reduction of the unpaid principal balance of this Note.
4.Events of Default. The following shall constitute an event of default (“Event of Default”):
(a)Failure to Make Required Payments. Failure by Maker to pay the principal amount due pursuant to this Note within five (5) business days of the date specified above.
(b)Voluntary Bankruptcy, Etc. The commencement by Maker of a voluntary case under any applicable bankruptcy, insolvency, reorganization, rehabilitation or other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Maker or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of Maker generally to pay its debts as such debts become due, or the taking of corporate action by Maker in furtherance of any of the foregoing.
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(c)Involuntary Bankruptcy, Etc. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of Maker in an involuntary case under any applicable bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Maker or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days.
5.Remedies.
(a)Upon the occurrence of an Event of Default specified in Section 4(a) hereof, Payee may, by written notice to Maker, declare this Note to be due immediately and payable, whereupon the unpaid principal amount of this Note, and all other amounts payable hereunder, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.
(b)Upon the occurrence of an Event of Default specified in Sections 4(b) and 4(c), the unpaid principal balance of this Note, and all other sums payable with regard to this Note, shall automatically and immediately become due and payable, in all cases without any action on the part of Payee.
6.Waivers. Maker and all endorsers and guarantors of, and sureties for, this Note waive presentment for payment, demand, notice of dishonor, protest, and notice of protest with regard to the Note, all errors, defects and imperfections in any proceedings instituted by Payee under the terms of this Note, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment; and Maker agrees that any real estate that may be levied upon pursuant to a judgment obtained by virtue hereof or any writ of execution issued hereon, may be sold upon any such writ in whole or in part in any order desired by Payee.
7.Unconditional Liability. Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, and agrees that its liability shall be unconditional, without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Payee with respect to the payment or other provisions of this Note, and agrees that additional makers, endorsers, guarantors, or sureties may become parties hereto without notice to Maker or affecting Maker’s liability hereunder.
8.Notices. All notices, statements or other documents which are required or contemplated by this Note shall be made in writing and delivered: (i) personally or sent by first class registered or certified mail, overnight courier service or facsimile or electronic transmission to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number as may be designated in writing by such party or (iii) by electronic mail, to the electronic mail address most recently provided to such party or such other electronic mail address as may be designated in writing by such party. Any notice or other communication so transmitted shall be deemed to have been given on the day of delivery, if delivered personally, on the business day following receipt of written confirmation, if sent by facsimile or electronic transmission, one (1) business day after delivery to an overnight courier service or five (5) days after mailing if sent by mail.
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9.Construction. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
10.Severability. Any provision contained in this Note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
11.Trust Waiver. Notwithstanding anything herein to the contrary, the Payee hereby waives any and all right, title, interest or claim of any kind (“Claim”) in or to any distribution of or from the trust account established in connection with the Maker’s initial public offering (the “IPO”) in which the proceeds of the IPO (including the deferred underwriters discounts and commissions) and the proceeds of the sale of the units issued in a private placement which closed concurrently with the closing of the IPO have been deposited, as described in greater detail in the registration statement and prospectus filed with the Securities and Exchange Commission in connection with the IPO, and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the trust account for any reason whatsoever.
12.Amendment; Waiver. Any amendment hereto or waiver of any provision hereof may be made with, and only with, the written consent of the Maker and the Payee.
13.Assignment. No assignment or transfer of this Note or any rights or obligations hereunder may be made by any party hereto (by operation of law or otherwise) without the prior written consent of the other party hereto and any attempted assignment without the required consent shall be void.
[Signature page follows]
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IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed by the undersigned as of the day and year first above written.
| FINANCIAL STRATEGIES ACQUISITION CORP. | |
| | |
| By: | /s/ Timo Vainionpää |
| | Timo Vainionpää |
| | Interim Chief Executive Officer |
Signature Page to Promissory Note of Financial Strategies Acquisition Corp.
Exhibit 10.3
August 17, 2022
Financial Strategies Acquisitions Corp.
2626 Cole Avenue, Suite 300
Dallas, TX 75204
Re: | Securities Purchase Agreement |
Dear Mr. Gaylor:
This letter (this “Letter Agreement”) is being delivered to you in connection with the Securities Purchase Agreement, dated as of August 17, 2022 (the “Securities Purchase Agreement”), entered into by and between Gregory A. Gaylor, not in his individual capacity but solely as trustee of the William C Gaylor and Dorothy J Gaylor Rev. Trust (the “Trust”), and Financial Strategies Acquisition Corp., a Delaware corporation (the “Company”), pursuant to which the Company issued to you, as trustee of the Trust, (i) a promissory note in the principal amount of $200,000, (ii) 20,000 shares (the “SPA Shares”) of the Company’s Class A common stock, par value $0.0001 per share (“Common Stock”), and (iii) warrants (“SPA Warrants”) to purchase 2,000 shares of Common Stock at a price of $11.50 per share, subject to adjustment (such shares, the “SPA Warrant Shares”). Certain capitalized terms used herein are defined in paragraph 8 hereof.
In order to induce the Company to enter into the Securities Purchase Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, you hereby agree with the Company as follows:
1. You agree that if the Company seeks stockholder approval of a proposed Business Combination, then in connection with such proposed Business Combination, you shall (i) vote any shares of Common Stock owned or controlled directly or indirectly by you in favor of any proposed Business Combination and (ii) not redeem any shares of Common Stock owned by you in connection with such stockholder approval.
2. (a) You agree that in the event that the Company fails to consummate a Business Combination within the timeframe set forth in the Company’s amended and restated certificate of incorporation, as it may be amended from time to time (the “Charter”), which timeframe may be extended by up to two times, in the discretion of the Company’s co-sponsors, you shall take all reasonable steps to cause the Company to (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 business days thereafter, subject to lawfully available funds therefor, redeem 100% of the Common Stock sold as part of the Units in the Public Offering (the “Offering Shares”) at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Offering Shares, which redemption will completely extinguish all Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Delaware law to provide for claims of creditors and other requirements of applicable law. You agree not to propose any amendment to the Charter, to modify (i) the substance or timing of the ability of holders of Offering Shares to seek redemption in connection with a Business Combination or amendments to the Charter prior thereto or (ii) (A) the Company’s obligation to redeem 100% of the Offering Shares if the Company does not complete a Business Combination within such time set forth in the Charter or (B) any other provisions relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provides its Public Stockholders with the opportunity to redeem their shares of Common Stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes, divided by the number of then outstanding Offering Shares.
(b) You waive any right, title, interest or claim of any kind in or to any monies held in the Trust Account or any other asset of the Company as a result of any liquidation of the Company with respect to the SPA Shares held by you. Notwithstanding the above, you shall be entitled to liquidating distributions from the Trust Account with
respect to any Offering Shares you have acquired or may acquire in or after the Public Offering if the Company fails to consummate a Business Combination within the time period set forth in the Charter.
(c) You hereby waive, with respect to any shares of Common Stock held by you, if any, whether acquired now or hereafter, any redemption rights you may have in connection with the consummation of a Business Combination or amendments to the Charter prior thereto, including, without limitation, any such rights available in the context of a stockholder vote to approve such Business Combination or a stockholder vote to approve an amendment to the Charter to modify (i) (A) the substance or timing of the Company’s obligation to redeem 100% of the Offering Shares if the Company has not consummated a Business Combination within the time period set forth in the Charter or (B) any other provisions relating to stockholders’ rights or pre-initial Business Combination activity or (ii) in the context of a tender offer made by the Company to purchase shares of Common Stock. You hereby waive your redemption rights with respect to any SPA Shares held by you if the Company fails to consummate a Business Combination within the time period set forth in in the Charter. Notwithstanding the above, you shall be entitled to redemption rights with respect to any Offering Shares you have acquired or may acquire in or after the Public Offering if the Company fails to consummate a Business Combination within the time period set forth in the Charter.
3. You hereby agree and acknowledge that: (i) the Company would be irreparably injured in the event of a breach by you of your obligations under paragraphs 1, 2 and 4(a), as applicable, of this Letter Agreement, (ii) monetary damages may not be an adequate remedy for such breach and (iii) the non-breaching party shall be entitled to injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event of such breach.
4. (a) You agree that you shall not Transfer any SPA Shares, SPA Warrants or SPA Warrant Shares until 30 days after the completion of a Business Combination (the “Lock-up Period”). This Letter Agreement shall not restrict your ability to purchase and sell securities issued in the Public Offering.
(b) Notwithstanding the provisions set forth in paragraph 4(a), Transfers of the SPA Shares, SPA Warrants and SPA Warrant Shares that are held by you or any of your permitted transferees (that have complied with this paragraph 4(b)) are permitted (a) to the Company’s officers or directors, any affiliate or family member of any of the Company’s officers or directors, or any affiliates of the Initial Stockholders or the Representative, or to any members of the Initial Stockholders; (b) in the case of an individual, by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is a member of such individual’s immediate family, an affiliate of such individual or to a charitable organization; (c) in the case of an individual, by virtue of laws of descent and distribution upon the death of such individual; (d) in the case of an individual, pursuant to a qualified domestic relations order; (e) by private sales or transfers made in connection with the consummation of an initial Business Combination at prices no greater than the price at which the shares or warrants were originally purchased; (f) in the event of the Company’s liquidation prior to the completion of an initial Business Combination; or (g) in the event of the Company’s liquidation, merger, capital stock exchange, reorganization or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of Common Stock for cash, securities or other property subsequent to our completion of the initial Business Combination; provided, however, that in the case of clauses (a) through (e), these permitted transferees must enter into a written agreement with the Company agreeing to be bound by the transfer restrictions herein.
5. You represent and warrant that you have never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked. Your biographical information furnished to the Company (including any such information included in any forms, reports, registration statements, prospectuses and other documents (other than preliminary materials) filed by the Company with the Securities and Exchange Commission (collectively, “SEC Filings”)) is true and accurate in all respects and does not omit any material information with respect to your background. Your questionnaire furnished to the Company is true and accurate in all respects. You represent and warrant that: you are not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction; you have never been convicted of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any financial transaction or handling of funds of another person, or (iii) pertaining to any dealings in any securities and you are not currently a defendant in any such criminal proceeding.
6. Except as disclosed in the SEC Filings, you shall not receive any finder’s fee, reimbursement, consulting fee, monies in respect of any repayment of a loan or other compensation prior to, or in connection with, any services rendered in order to effectuate, the consummation of the Company’s initial Business Combination (regardless of the type of transaction that it is).
7. You have full right and power, without violating any agreement to which you are bound (including, without limitation, any non-competition or non-solicitation agreement with any employer or former employer), to enter into this Letter Agreement and to serve as a director on the board of directors of the Company and hereby consent to being named in the Company’s SEC Filings as a director of the Company.
8. As used herein, (i) “Business Combination” shall mean a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Capital Stock” shall mean, collectively, the Common Stock and the Founder Shares; (iii) “Founder Shares” shall mean (a) the 2,501,250 shares of the Company’s Class B common stock, par value $0.0001 per share, initially purchased by FSC Sponsor LLC and Celtic Asset & Equity Partners, Ltd. for an aggregate purchase price of $25,000, or $0.010 per share, prior to the consummation of the Public Offering and subsequently assigned amongst the Initial Stockholders; (iv) “Initial Stockholders” shall mean the Co-Sponsors, Celtic Asset & Equity Partners, Ltd., Frio Investments L.L.C., Caliente Management L.L.C., Sea Otter Securities Group LLC, certain accounts managed by Eagle Point Credit Management LLC, Greentree Financial Group Inc., Sixth Borough Capital Fund LP, James Hopkins, R. Douglas Armstrong, and Robert D. Keyser, Jr.; (v) “Public Offering” shall mean the underwritten initial public offering of 10,005,000 of the Company’s Units, consummated on December 14, 2021; (vi) “Public Stockholders” shall mean the holders of securities issued in the Public Offering; (vii) “Representative” shall mean I-Bankers Securities, Inc., as representative of the Underwriters; (viii) “Right” shall mean a right entitling the holder to receive one-tenth of one share of Common Stock upon the consummation of an initial Business Combination; (ix) “Trust Account” shall mean the trust fund into which a portion of the net proceeds of the Public Offering have been deposited; (x) “Transfer” shall mean the (a) sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder with respect to, any security, (b) entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) public announcement of any intention to effect any transaction specified in clause (a) or (b); (xi) “Underwriters” shall mean the several underwriters of the Public Offering; (xii) “Units” shall mean the Company’s units, each comprised of one share of Common Stock, one redeemable Warrant and one Right; and (xiii) “Warrant” shall mean a warrant entitling the holder thereof to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment.
9. The Company will maintain an insurance policy or policies providing directors’ and officers’ liability insurance, and you shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company’s directors or officers.
10. This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by both parties hereto.
11. No party hereto may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other party. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Letter Agreement shall be binding on you and your successors, heirs and assigns and permitted transferees.
12. Nothing in this Letter Agreement shall be construed to confer upon, or give to, any person or corporation other than the parties hereto any right, remedy or claim under or by reason of this Letter Agreement or of any covenant, condition, stipulation, promise or agreement hereof. All covenants, conditions, stipulations, promises and agreements
contained in this Letter Agreement shall be for the sole and exclusive benefit of the parties hereto and their successors, heirs, personal representatives and assigns and permitted transferees.
13. This Letter Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.
14. This Letter Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Letter Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Letter Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.
15. This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably submit to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum.
16. Any notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or facsimile transmission.
17. This Letter Agreement shall terminate on the earlier of (i) the expiration of the Lock-up Period or (ii) the liquidation of the Company; provided, however, that paragraph 2(b) of this Letter Agreement shall survive such liquidation.
[Signature Page Follows]
| Sincerely, |
| |
| /s/ Gregory A. Gaylor |
| Gregory A. Gaylor, not in his individual capacity but solely as trustee of the William C Gaylor and Dorothy J Gaylor Rev. Trust |
| |
FINANCIAL STRATEGIES ACQUISITION CORP. | | |
| | |
By: | /s/ Timo Vainionpää | |
| Name: Timo Vainionpää | |
| Title: Interim Chief Executive Officer | |
[Signature Page to Letter Agreement]
Exhibit 31.1
CERTIFICATION UNDER SECTION 302
I, Timo Vainionpää, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Financial Strategies Acquisition Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 17, 2022 | |
| |
/s/ Timo Vainionpää | |
Timo Vainionpää | |
Interim Chief Executive Officer and Chairman of the | |
Board of Directors | |
(Principal Executive Officer) | |
Exhibit 31.2
CERTIFICATIONS UNDER SECTION 302
I, Horst Rzepka, certify that:
1. | I have reviewed this Quarterly Report on Form 10-Q of Financial Strategies Acquisition Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: August 17, 2022 | |
| |
/s/ Horst Rzepka | |
Horst Rzepka | |
Chief Financial Officer | |
(Principal Financial Officer and Principal Accounting Officer) | |
Exhibit 32.1
CERTIFICATIONS UNDER SECTION 906
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Financial Strategies Acquisition Corp., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge and in the capacity of an officer, that:
The Quarterly Report for the period ended June 30, 2022 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.
Date: August 17, 2022 | By: | /s/ Timo Vainionpää |
| | Timo Vainionpää |
| | Interim Chief Executive Officer and Chairman of the |
| | Board of Directors |
| | (Principal Executive Officer) |
| | |
Date: August 17, 2022 | By: | /s/ Horst Rzepka |
| | Horst Rzepka |
| | Chief Financial Officer |
| | (Principal Financial Officer and Principal Accounting Officer) |
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