FTAC Emerald Acquisition Corp.(FLD) - 2021 Q4 - Annual Report

Part I Business FTAC Emerald Acquisition Corp. is a blank check company focused on ESG sector business combinations, having completed its IPO in December 2021 and aiming for a merger by June 2023 - The company is a blank check company targeting a business combination in ESG-related sectors such as clean/renewable energy, water sustainability, agricultural technology, shared economy software, and next-generation mobility[23][24][31] Initial Public Offering (IPO) and Trust Account Details | Metric | Value | | :--- | :--- | | IPO Gross Proceeds | $248,693,420 | | Private Placement Gross Proceeds | $9,760,810 | | Amount Placed in Trust Account | $251,180,354 | | Value per Unit in Trust | $10.10 | | Business Combination Deadline | June 20, 2023 (or Sept 20, 2023 with extension) | - The management team is led by Chairman Betsy Z. Cohen, who has extensive experience with multiple prior SPACs, including FinTech I-VI and FTAC Olympus, which are viewed as positive factors for attracting potential target businesses[32][33][56] - The company must complete a business combination with a target having a fair market value of at least 80% of the assets held in the trust account at the time of signing a definitive agreement, as required by NASDAQ rules[61][70] - Public stockholders have redemption rights to receive a pro-rata share of the trust account (approx. $10.10 per share) upon the consummation of a business combination or if the company fails to complete one within the specified timeframe; however, redemptions are limited to ensure net tangible assets remain above $5,000,001[93][102] Risk Factors The company faces significant risks as a SPAC, including failure to complete a business combination, conflicts of interest, and intense competition - There is a risk of failing to complete an initial business combination within the completion window (June/Sept 2023), which would result in the redemption of public shares at ~$10.10 per share and the expiration of warrants as worthless[144][145] - The sponsor paid a nominal price (~$0.003 per share) for founder shares, creating a significant potential for profit even if the stock price declines post-combination, which may incentivize them to complete a riskier business combination than public stockholders would prefer[157][159] - The company's officers and directors have fiduciary duties to other entities, including other SPACs (e.g., FinTech V, FinTech VI, FTAC Athena, FTAC Hera), which may create conflicts of interest in presenting business opportunities[217][219][457] - The ability of public stockholders to redeem shares may reduce the cash available for a business combination, potentially making the company unattractive to targets or hindering its ability to complete a desirable transaction[141][142] - The company faces intense competition from other SPACs and private equity firms, which has increased recently, potentially making it harder and more expensive to find an attractive target[151][152] - If the company is deemed an "investment company" under the Investment Company Act of 1940, it would face burdensome compliance requirements and restrictions that could hinder the completion of a business combination[227][228] Unresolved Staff Comments The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments as of the report date[268] Properties The company does not own real estate, maintaining executive offices under a $30,000 monthly administrative services agreement with its sponsor - The company's executive office space is provided by its sponsor for a fee of $30,000 per month[269] Legal Proceedings No material legal proceedings are pending against the company or its management team - There are no material legal proceedings pending against the company[270] Mine Safety Disclosure This item is not applicable to the company - Mine safety disclosures are not applicable[271] Part II Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's securities are listed on NASDAQ, with no dividends paid, and details the use of $258.5 million in IPO and private placement proceeds - The company's securities trade on the NASDAQ Global Market under symbols EMLDU (Units), EMLD (Class A Common Stock), and EMLDW (Warrants)[274] - No cash dividends have been paid to date, and none are intended prior to the completion of an initial business combination[276] Use of Proceeds from IPO and Private Placement | Item | Amount (USD) | | :--- | :--- | | Gross Proceeds from IPO | $248,693,420 | | Gross Proceeds from Private Placement | $9,760,810 | | Total Transaction Costs | $14,181,568 | | - Underwriting Discounts & Commissions (Paid) | $4,973,868 | | - Underwriting Discounts & Commissions (Deferred) | $8,704,270 | | - Other Offering Costs | $503,430 | | Amount Placed in Trust Account | $251,180,354 | | Cash Held Outside Trust (for working capital) | $1,227,914 | [RESERVED]](index=64&type=section&id=Item%206.%20%5BRESERVED%5D) As a smaller reporting company, the company is not required to provide information for this item - The company is not required to provide information for this item due to its status as a smaller reporting company[284] Management's Discussion and Analysis of Financial Condition and Results of Operations Since inception, the company has generated no revenue, reporting a net loss of $99,988, with $1.2 million cash for working capital and $222.2 million in trust - For the period from inception (Feb 19, 2021) to Dec 31, 2021, the company had a net loss of $99,988, consisting of $100,518 in operating costs offset by $530 in interest income[291] - As of December 31, 2021, the company had $1,227,914 in cash held outside the trust account for working capital purposes[296] - The company pays its sponsor a monthly fee of $30,000 per month for administrative services, which began on December 16, 2021[303] - The underwriter is entitled to a deferred underwriting discount of 3.5% of gross proceeds ($8,704,270), payable from the trust account only upon completion of a business combination[306] - Critical accounting policies include the classification of Class A common stock subject to redemption as temporary equity outside of the stockholders' deficit section on the balance sheet[312] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is not required to provide information for this item - The company is not required to provide information for this item due to its status as a smaller reporting company[317] Financial Statements and Supplementary Data This section presents audited financial statements for 2021, showing total assets of $225.2 million, a net loss of $99,988, and key accounting policies - The financial statements were audited by WithumSmith+Brown, PC, which issued an unqualified opinion[321] Balance Sheet Summary as of December 31, 2021 | Category | Amount (USD) | | :--- | :--- | | Assets | | | Cash | 1,227,914 | | Investments held in Trust Account | 222,200,530 | | Total Assets | 225,170,164 | | Liabilities & Equity | | | Total Liabilities (incl. deferred underwriting) | 8,948,582 | | Class A common stock subject to possible redemption | 222,200,000 | | Total Stockholders' Deficit | (5,978,418) | | Total Liabilities, Redeemable Common Stock and Stockholders' Deficit | 225,170,164 | Statement of Operations Summary (Feb 19, 2021 - Dec 31, 2021) | Item | Amount (USD) | | :--- | :--- | | Formation and operating costs | (100,518) | | Interest income earned on investments | 530 | | Net Loss | (99,988) | | Basic and diluted net loss per common stock | (0.02) | - All 22,000,000 public shares of Class A common stock are classified as temporary equity subject to possible redemption at a value of $10.10 per share[358][370] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes or disagreements with its accountants on financial disclosure or auditing matters - There were no disagreements with accountants on accounting and financial disclosure[404] Controls and Procedures Management concluded disclosure controls were effective as of December 31, 2021, with no material changes to internal controls reported - The company's disclosure controls and procedures were deemed effective as of December 31, 2021[405] - A management report on internal control over financial reporting is not included, as permitted for newly public companies[407] Other Information The company reports no other information for this item - No information was reported under this item[409] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections The company reports no information for this item - No information was reported under this item[410] Part III Directors, Executive Officers, and Corporate Governance The company is led by an experienced team, including Chairman Betsy Cohen, with a board comprising independent directors and established governance committees - The executive team includes Betsy Cohen (Chairman), Bracebridge H. Young, Jr. (President & CEO), and Douglas Listman (CFO)[413] - The board is divided into two classes with two-year terms; the Audit and Compensation committees are composed entirely of independent directors: Andrew Hohns (Chair), Tensie Whelan, and Lisa Shalett[421][425][428] - The company has determined that Andrew Hohns qualifies as an "audit committee financial expert"[427] Executive Compensation No cash compensation has been paid to officers or directors, with the sponsor receiving $30,000 monthly for administrative services - Officers and directors have not received any cash compensation for services rendered[432] - The company pays its sponsor or designee $30,000 per month for office space, administrative, and shared personnel support services[432] Security Ownership of Certain Beneficial Owners and Management As of March 21, 2022, sponsor entities hold significant voting power, with several institutional investors owning over 5% of Class A common stock Security Ownership as of March 21, 2022 | Name of Beneficial Owners | Class A Shares | % of Class A | Class B Shares | % of Class B | Combined Voting Power % | | :--- | :--- | :--- | :--- | :--- | :--- | | Directors and Executive Officers | | | | | | | Betsy Cohen (via Sponsor entities) | 976,081 | 3.8% | 8,615,141 | 100.0% | 27.8% | | All directors and officers as a group (8) | 976,081 | 3.8% | 8,615,141 | 100.0% | 27.8% | | 5% or Greater Beneficial Owners | | | | | | | Saba Capital Management, L.P. | 1,600,000 | 6.4% | – | – | 4.6% | | Integrated Core Strategies (US) LLC | 1,550,000 | 6.2% | – | – | 4.5% | | Taconic Capital Advisors L.P. | 1,509,900 | 5.8% | – | – | 4.4% | | Sculptor Capital LP | 1,505,492 | 5.8% | – | – | 4.4% | | Emerald ESG Sponsor, LLC | 976,081 | 3.8% | 4,349,402 | 50.5% | 15.5% | | Emerald ESG Advisors, LLC | – | – | 4,265,739 | 49.5% | 12.4% | Certain Relationships and Related Transactions, and Director Independence The company has multiple related-party transactions with its sponsor, including administrative fees and potential loans, alongside disclosed conflicts of interest and independent director determinations - The sponsor purchased 8,615,141 founder shares for $25,000 and 976,081 placement units for $9.76 million[446][448] - The sponsor may provide up to $2.0 million in working capital loans, convertible into units at $10.00 per unit[451] - Significant conflicts of interest exist as officers and directors, particularly Betsy Cohen, have fiduciary duties to other SPACs, including FinTech V, FinTech VI, FTAC Hera, and FTAC Athena[457][461] - The board has determined that Tensie Whelan, Andrew Hohns, Therese Rein, and Lisa Shalett are independent directors under NASDAQ rules[462] Principal Accountant Fees and Services The company's independent auditor is WithumSmith+Brown, PC, with $97,714 in audit fees incurred for the period ending December 31, 2021 Accountant Fees (Feb 19, 2021 - Dec 31, 2021) | Service Category | Fees Paid (USD) | | :--- | :--- | | Audit Fees | $97,714 | | Audit-Related Fees | $0 | | Tax Fees | $0 | | All Other Fees | $0 | Part IV Exhibits and Financial Statement Schedules This section lists financial statements and key exhibits, including underwriting, governance, and sponsor agreements, filed as part of the Annual Report - The report includes financial statements and schedules as required[470] - Key exhibits filed include the Underwriting Agreement, Warrant Agreement, Administrative Services Agreement, and Registration Rights Agreement[472] Form 10-K Summary This item is not applicable to the company - A Form 10-K summary is not applicable[473]