Fold Holdings, Inc. quarterly report, Q3 FY2023

Business context and reporting period

The supplied filing is FTAC Emerald Acquisition Corp.’s unaudited Form 10-Q for the quarter ended September 30, 2023—not a filing identifying Fold Holdings, Inc. as the registrant. FTAC was a SPAC seeking a business combination and had not begun operating activities or generated operating revenue.

Financial results and liquidity

Operating revenue and operating margins are not applicable: the company’s income was primarily interest earned on trust investments. Nine-month earnings improved from a loss in 2022, principally as trust interest rose. The statements report no non-redemption agreement expense in 2022; the 2023 expense was $708,400.

At September 30, 2023, cash outside the trust was $25,623, trust investments were $164.00 million, and the working-capital deficit was $2.83 million. Current liabilities were $2.94 million, including a $1.50 million non-interest-bearing sponsor note; total liabilities were $12.80 million. Stockholders’ deficit was $11.54 million. The filing reports no long-term debt obligations.

Material changes and unusual items

• At a September 19, 2023 vote, shareholders extended the business-combination deadline from September 20, 2023 to January 19, 2024. Holders redeemed 9,239,192 shares for approximately $96.79 million; 15,630,150 redeemable public shares remained.
• The company recorded a $967,916 excise-tax liability related to the redemptions. Trust assets and redeemable shares declined from $254.25 million and 24.87 million shares at December 31, 2022 to $164.00 million and 15.63 million shares at September 30, 2023.
• The sponsor converted 8,615,141 founder shares from Class B to Class A. Separately, non-redemption agreements provide for 1,610,000 Class A shares to be issued at the business-combination closing, creating potential dilution.
• After quarter-end, the sponsor note limit was increased to $3.00 million; the company drew a total of $325,000 on October 27 and 30. On October 18, the underwriter waived its $8.70 million deferred underwriting discount for any business combination.

Outlook, risks and contingencies

Management intended to complete a business combination by January 19, 2024, but stated success was uncertain. Failure to complete one by that date would require liquidation and dissolution. Management concluded these circumstances raised substantial doubt about the company’s ability to continue as a going concern. Only $25,623 of cash was held outside the trust at quarter-end, and additional financing might be needed. The filing names no target or transaction guidance.

Trust assets are generally reserved for a business combination or shareholder redemptions, subject to permitted tax withdrawals and potential creditor claims. The company also disclosed sponsor-related administrative fees of $30,000 per month and advisory fees payable at a business-combination closing, with reimbursement arrangements described in the filing. Management reported effective disclosure controls and no material change in internal control during the quarter; no legal proceedings were reported.

Important facts for investors to verify

• Confirm the registrant’s identity: the supplied filing is for FTAC Emerald Acquisition Corp., not Fold Holdings, Inc.
• Verify whether the company completed a business combination by the January 19, 2024 deadline and the resulting status of the trust and public shares.
• Review post-quarter sponsor borrowing, including the increased note limit and subsequent draws, and assess available cash outside the trust.
• Assess dilution from the 1,610,000 promised investor shares, founder-share conversion, and outstanding warrants.
• Check the treatment and payment source for the excise-tax liability and confirm the underwriter’s deferred-fee waiver.