Business context and reporting period
The supplied filing is FTAC Emerald Acquisition Corp.’s unaudited Form 10-Q for the quarter ended September 30, 2022—not a filing identified as Fold Holdings, Inc. FTAC Emerald was a blank-check company seeking a business combination and had not begun operations or generated operating revenue.
Financial position and results
- Q3 2022: Net income was $467,516, or $0.01 per Class A and Class B share. The result reflected $1,132,965 of trust-account interest, offset by $445,778 of operating and formation costs and $219,671 of income tax expense.
- Nine months 2022: Net loss was $85,517. Trust-account interest of $1,497,305 was more than offset by $1,318,814 of operating and formation costs and $264,008 of income tax expense.
- Revenue and margins: No operating revenue; operating margin is not meaningful for this pre-combination SPAC.
- Assets and liquidity at September 30: Total assets were $254.3 million, including $252.4 million in the trust account, $390,946 in cash outside the trust, and a $1.155 million reimbursement receivable. Reported working capital was $642,950, excluding franchise and income tax payables.
- Liabilities and debt: Total liabilities were $10.2 million, including $8.7 million of deferred underwriting discount payable only if a business combination is completed and $1.2 million of deferred advisory fee. No working-capital loans or other borrowings were outstanding.
- Cash flow: Nine-month operating cash outflow was $1.07 million; investing cash outflow was $28.74 million; financing cash inflow was $28.98 million. Cash decreased by $836,968 to $390,946.
- Redeemable shares: 24,869,342 Class A shares were classified as temporary equity at a redemption value of $252.2 million, approximately $10.14 per share.
Changes versus comparable periods
Q3 2022 net income compared with no reported net income in Q3 2021; the filing attributes the current-quarter result principally to trust interest, which was absent in the prior-year quarter. For the nine-month period, the net loss increased from $208 in the 2021 inception-to-September period to $85,517 in 2022. Comparability is limited because the company began operations in 2021 and remained a pre-combination SPAC.
Compared with December 31, 2021, trust investments increased from $222.2 million to $252.4 million, while cash declined from $1.23 million to $390,946. The trust balance and redeemable-share carrying value increased following the January 2022 partial over-allotment and accretion to redemption value.
Outlook, risks and unusual items
- Management intended to complete a business combination by June 20, 2023. Failure to do so would require liquidation and dissolution; management stated this creates substantial doubt about the company’s ability to continue as a going concern.
- Management said it expected existing outside-trust funds to cover expenditures through the earlier of a combination or one year from the report date, but warned that underestimated search and transaction costs or significant redemptions could require additional financing.
- Potential redemptions after December 31, 2022 could trigger the Inflation Reduction Act’s 1% excise tax, potentially reducing funds available for a transaction. The actual exposure was uncertain.
- The company had no business-combination agreement or revenue reported in this filing. The deferred underwriting discount and certain advisory fees would become payable at a completed combination.
- Management reported effective disclosure controls as of September 30, 2022 and no material changes in internal control over financial reporting during the quarter. No legal proceedings were reported.
Important facts for investors to verify
- Confirm the filing and issuer identity: the source document names FTAC Emerald Acquisition Corp., while the request metadata names Fold Holdings, Inc.
- Check subsequent filings for whether a business combination was completed by the June 20, 2023 deadline, or whether the company liquidated or extended its deadline.
- Review trust-account assets, redemption elections, and the potential effect of any excise tax or transaction financing on funds available to public shareholders.
- Verify the terms and payment of deferred underwriting and advisory fees, and any later sponsor or working-capital loans.
- Assess the going-concern uncertainty and the limited operating cash outside the trust account; the trust funds were generally restricted pending a business combination, redemption, or liquidation.