Business Context and Reporting Period
This Form 8-K Current Report, dated June 29, 2020, is filed by Cohen & Company Inc. (the "Company"). The report discloses a material event involving Insurance Acquisition Corp. (Nasdaq: INSU), a special purpose acquisition company (SPAC) sponsored by a subsidiary of the Company.
Key Financial Metrics and Transaction Details
The filing does not provide standard financial metrics such as revenue, profit, cash flow, or debt for Cohen & Company Inc. for a specific reporting period. Instead, it details the financial structure of a proposed merger:
- Transaction: Merger Agreement between Insurance Acquisition Corp. (IAC) and Shift Technologies, Inc. (Shift).
- PIPE Investment: Institutional investors, including a Company subsidiary, committed to purchase up to 18,500,000 shares of IAC Class A Common Stock at $10.00 per share.
- Company Subsidiary Commitment: The Company's subsidiary agreed to purchase 200,000 shares, with an option to increase this by up to 1,300,000 shares.
- Net Tangible Asset Requirement: IAC must have at least $5,000,001 of net tangible assets immediately following the closing.
- Company Ownership Post-Merger: The Company expects to own between 1.8 million and 2.3 million shares of IAC Class A Common Stock (Sponsor Shares) in addition to PIPE shares.
Material Changes and Conditions
The filing announces the execution of the Merger Agreement on June 29, 2020. Consummation of the transaction is subject to several material conditions:
- Approval by IAC and Shift stockholders.
- No material adverse effect on either party since the agreement date.
- Expiration or termination of applicable Hart-Scott-Rodino Antitrust waiting periods.
- Meeting the $5,000,001 net tangible asset threshold post-closing.
Outlook, Risks, and Contingencies
Management commentary is limited to the terms of the agreement and standard forward-looking statements. Key risks and contingencies include:
- Termination Risk: Events or changes in circumstances could lead to the termination of the Merger Agreement.
- Approval Risk: Failure to obtain necessary stockholder approvals or regulatory clearances.
- Private Placement Risk: Inability to complete the PIPE investment.
- Legal Risk: Potential legal proceedings against IAC, Shift, or their officers following the announcement.
- Share Restrictions: Sponsor Shares and PIPE shares are subject to resale restrictions under securities laws. Founder shares have specific vesting schedules tied to stock price milestones ($12.00, $13.50, $15.00, and $17.00).
Investor Verification Checklist
- Verify the status of stockholder approvals for both IAC and Shift.
- Confirm the final amount of the PIPE investment and whether the Company's subsidiary exercised its option to purchase additional shares.
- Monitor the net tangible asset calculation of IAC immediately prior to closing to ensure the $5,000,001 threshold is met.
- Review the final registration statement for the resale of shares purchased by the Company's subsidiary.
- Assess any material adverse effects on Shift or IAC that may have occurred since June 29, 2020.