Business Context and Reporting Period
Fifth Wall Acquisition Corp. I (FWAA), a special purpose acquisition company, filed this Form 8-K regarding events dated April 21, 2021. FWAA entered into a merger agreement with SmartRent.com, Inc. and Einstein Merger Corp. I, a wholly owned subsidiary of FWAA. At closing, Einstein Merger Corp. I will merge with SmartRent, with SmartRent surviving as a wholly owned subsidiary of FWAA, which will change its name to SmartRent, Inc.
Transaction and Key Financial Terms
| Item | Disclosure |
|---|---|
| PIPE financing | 15.5 million FWAA common shares at $10 per share for aggregate gross proceeds of $155 million, subject to closing conditions. |
| Merger consideration | SmartRent equity holders will receive FWAA Class A common stock based on the contractual per-share merger consideration. SmartRent options, warrants, and restricted stock units will be assumed and converted into FWAA equity awards. |
| Minimum funding condition | SmartRent’s closing condition requires FWAA’s trust account, net of redemptions, plus PIPE proceeds to equal or exceed $250 million. |
| Minimum net tangible assets | FWAA must have at least $5,000,001 in net tangible assets at closing. |
| Operating metrics | The filing does not provide clear historical or current revenue, profit, cash flow, margin, debt, liquidity, or balance-sheet values for SmartRent or FWAA. |
Material Changes Versus the Prior Comparable Period
The filing is a transaction announcement rather than an earnings report and does not present comparative-period financial statements or operating results. The material change is FWAA’s execution of the proposed business combination, related lock-up, sponsor, support, and PIPE agreements.
Agreement Terms, Outlook, and Risks
- Closing is subject to FWAA and SmartRent stockholder approvals, regulatory clearance under the Hart-Scott-Rodino Act, the absence of legal restraints and material adverse effects, delivery of PCAOB-audited SmartRent financial statements, and other customary conditions.
- The merger agreement may generally be terminated by mutual consent, for uncured breaches, if closing has not occurred within eight months after signing, following a final order preventing the transaction, or if required stockholder approvals or SmartRent audited financial statements are not delivered by specified deadlines.
- SmartRent security holders agreed to vote in favor of the merger and against competing transactions. Certain SmartRent holders will be subject to a six-month post-closing lock-up.
- FWAA’s sponsor agreed to waive certain anti-dilution and conversion rights. Its founder shares will be subject to staged one-, two-, and three-year lock-ups, with potential early release based on stock-price thresholds of $12, $15, and $17.50, respectively.
- The company expects to file a Form S-4 containing a proxy statement/prospectus. The filing does not provide a definitive closing date or binding operating guidance.
- Forward-looking matters include anticipated closing timing, post-closing cash, product expansion, new product releases, global availability, customer growth, and use of capital. These statements are subject to substantial uncertainty.
- Principal risks include failure to obtain approvals or complete the PIPE financing, stockholder redemptions, inability to satisfy Nasdaq listing requirements, failure to realize merger benefits, execution and competitive risks, customer retention and growth risks, COVID-19 and economic effects, transaction costs, litigation, regulatory changes, and inaccurate projections or assumptions.
- The filing states that projected, annualized, pro forma, estimated, and committed-unit figures are illustrative and are not forecasts. Historical presentation of zero customer churn is also expressly described as non-predictive.
Most Important Facts to Verify
- Whether FWAA and SmartRent stockholders approve the transaction and whether HSR and other regulatory conditions are satisfied.
- The amount remaining in FWAA’s trust account after redemptions and whether trust funds plus PIPE proceeds meet the $250 million minimum.
- Completion and quality of SmartRent’s PCAOB-audited financial statements and the financial information included in the Form S-4.
- The final merger exchange ratio, fully diluted share count, ownership percentages, and dilution from converted options, warrants, restricted stock units, PIPE shares, and sponsor securities.
- Whether the $155 million PIPE financing closes and whether the combined company meets Nasdaq listing requirements.
- SmartRent’s actual historical revenue, profitability, cash burn, liquidity, debt, customer concentration, churn, backlog or committed units, and other operating metrics, which are not clearly provided in this Form 8-K.