ITEM 7. MANAGEMENT’S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company’s
financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related
thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain
information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ
materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Cautionary
Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report on Form 10-K.
Overview
We are a blank check company incorporated in Delaware
on February 19, 2021, and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization
or similar business combination with one or more target businesses, which we refer to herein as our “Business Combination.”
Recent Developments
On September 19, 2023, we held a special meeting
of our stockholders (the “Meeting”) at which the Company’s stockholders approved (A) an amendment (the “Charter
Amendment”) to the Company’s Second Amended and Restated Certificate of Incorporation to extend the date by which the Company
has to consummate its initial business combination from September 20, 2023 to January 19, 2024 (or such earlier date as determined by
the Company’s Board of Directors); and (B) an amendment (the “Trust Amendment”) to the Company’s Investment Management
Trust Agreement dated December 15, 2021, with Continental Stock Transfer & Trust Company, as trustee (as amended, the “Trust
Agreement”), to allow the trustee to liquidate the Trust Account at such time as may be determined by the Company as set forth in
the Charter Amendment. In connection with the Meeting, the holders of 9,239,192 shares of redeemable Class A common stock exercised their
right to redeem their shares for cash at a redemption price of approximately $10.4762 per share, for an aggregate redemption amount of
approximately $96,791,644. Following the redemptions, 15,630,150 shares of redeemable Class A common stock remained outstanding.
Between September 7 and 15, 2023, we entered into
non-redemption agreements with unaffiliated third parties in exchange for each such party agreeing not to redeem public shares in connection
with the Meeting. In exchange for the foregoing commitments not to redeem public shares, the Company agreed to issue or cause to be issued
an aggregate of 1,610,000 Class A Shares at the time of the Company’s initial business combination. In addition, the Company agreed
that it will not utilize any funds from the Trust Account to pay any potential excise taxes that may become due pursuant to the IR Act
upon a redemption of public shares, including in connection with the Charter Amendment, an initial business combination or liquidation
of the Company.
Following the Meeting on September 19, 2023, the
Sponsor determined to convert all the outstanding shares of Class B common stock to shares of Class A common stock on a one-for-one basis
(the “Class B Conversion”). Notwithstanding the Class B Conversion, the Sponsor, as well as the Company’s officers and
directors, will not be entitled to receive any funds held in the Trust Account with respect to any shares of Class A common stock issued
to such holders as a result of the Class B Conversion, and no additional amounts will be deposited into the Trust Account in respect of
shares of Class A common stock held by the Sponsor.
On January 19, 2024, we held a special meeting
of our stockholders (the “January Meeting”) at which the Company’s stockholders approved (A) an amendment (the “January
Charter Amendment”) to the Company’s Second Amended and Restated Certificate of Incorporation to extend the date by which
the Company has to consummate its initial business combination from January 19, 2024 to December 20, 2024 (or such earlier date as determined
by the Company’s Board of Directors); and (B) an amendment (the “January Trust Amendment”) to the Trust Agreement to
allow the trustee to liquidate the Trust Account at such time as may be determined by the Company as set forth in the January Charter
Amendment. In connection with the January Meeting, the holders of 10,872,266 shares of redeemable Class A common stock exercised their
right to redeem their shares for cash at a redemption price of approximately $10.6224 per share, for an aggregate redemption amount of
approximately $115,489,643. Following the redemptions, 4,757,884 shares of redeemable Class A common stock remained outstanding.
On January 17, 2024, we entered into non-redemption
agreements with unaffiliated third parties in exchange for each such party agreeing not to redeem public shares in connection with the
January Meeting. In exchange for the foregoing commitments not to redeem public shares, we agreed to issue or cause to be issued an aggregate
of 1,112,500 Class A Shares at the time of our initial business combination.
On July 24, 2024, the Company and Fold, Inc. (“Fold”)
announced that they have entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, EMLD
Merger Sub Inc., a wholly-owned subsidiary of the Company (“Merger Sub”), and Fold, pursuant to which, among other things,
Merger Sub will be merged with and into Fold with Fold surviving the merger as a wholly-owned subsidiary of the Company (the “Merger”
and, together with the other transactions contemplated by the Merger Agreement, the “Transactions”).
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On December 17, 2024, we held a special meeting
of our stockholders (the “Third Extension Meeting”) at which the Company’s stockholders approved (A) an amendment (the
“Third Charter Amendment”) to the Company’s Second Amended and Restated Certificate of Incorporation to extend the date
by which the Company has to consummate its initial business combination from December 20, 2024 to December 20, 2025 (or such earlier date
as determined by the Company’s Board of Directors); and (B) an amendment (the “Third Trust Amendment”) to the Trust
Agreement to allow the trustee to liquidate the Trust Account at such time as may be determined by the Company as set forth in the Third
Charter Amendment. In connection with the Third Extension Meeting, the holders of 112,068 shares of redeemable Class A common stock exercised
their right to redeem their shares for cash at a redemption price of approximately $11.01878 per share, for an aggregate redemption amount
of approximately $1.2 million. Following the redemptions, 4,645,816 shares of redeemable Class A common stock remain outstanding. As of
December 31, 2024, we recorded $1,167,245 of excise tax liability calculated as 1% of the shares redeemed on January 19, 2024 and December
17, 2024.
On February 14, 2025, we completed our Business
Combination with Fold.
Results of Operations
Our only activities through December 31, 2024,
were organizational activities, those necessary to prepare for the initial public offering (the “Public Offering”), described
below, identifying a target company for a Business Combination and consummating the acquisition of Fold. We do not expect to generate
any operating revenues until after the completion of the Business Combination. We generate non-operating income in the form of interest
income on marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial
reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the year ended December 31, 2024, we had a
net loss of $1,868,532, which consisted of general and administrative expenses of $2,920,423, non-redemption agreement expense of $838,825,
provision for income tax of $628,508 and interest expense of $434,696, offset by interest income earned on investments held in Trust Account
of $2,953,920.
For the year ended December 31, 2023, we had net income of $4,443,634,
which consisted of interest income earned on investments held in Trust Account of $11,207,609, partially offset by operating and formation
costs of $3,730,488, provision for income tax of $2,325,087 and non-redemption agreement expense of $708,400.
Liquidity and Capital Resources
On December 20, 2021, we consummated the Public
Offering of 22,000,000 units generating gross proceeds of $220,000,000. Each unit consists of one share of Class A common stock and one-half
of one redeemable warrant, with each whole warrant entitling the holder thereof to purchase one share of Class A common stock for $11.50
per share, subject to adjustment. On January 11, 2022, the underwriter partially exercised its over-allotment option, resulting in the
sale on January 14, 2022 of an additional 2,869,342 units for total gross proceeds of $28,693,420.
Simultaneously with the closing of the Public
Offering, we consummated the sale of 890,000 Private Placement Units at a price of $10.00 per Private Placement Unit in a private placement
to our Sponsor, generating gross proceeds of $8,900,000. On January 14, 2022, the underwriter partially exercised its over-allotment option,
resulting in the sale of an additional 86,081 Private Placement Units to our Sponsor for total gross proceeds of $860,810, bringing the
total aggregate gross proceeds of the Private Placement to $9,760,810.
We incurred $14,181,568 in IPO transaction costs,
including $4,973,868 of underwriting fees ($660,000 of which was reimbursed to us to pay the advisory fee due to CCM), $8,704,270 of deferred
underwriting fees and $503,430 of other offering costs.
Following the Public Offering, the partial exercise
of the over-allotment option, and the sale of the Private Placement Units, a total of $251,180,354 ($10.10 per Unit) was initially placed
in the Trust Account and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company
Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less, or in money market funds meeting
certain conditions under Rule 2a-7 of the Investment Company Act, as determined by us, until the earlier of: (i) the consummation of a
Business Combination or (ii) the distribution of the funds in the Trust Account to the Company’s stockholders, as described below.
As of December 31, 2024, we had $906,043 in cash held outside of trust
and a working capital deficit of $8,366,213. Prior to the completion of our Public Offering, our liquidity needs had been satisfied through
a capital contribution from the Sponsor of $25,000 and a loan to us of up to $300,000 by our Sponsor under an unsecured promissory note
which was repaid on December 27, 2021.
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In order to finance transaction costs in connection
with an intended initial Business Combination, the Sponsor or an affiliate of the Sponsor or certain of our officers and directors may,
but are not obligated to, loan us funds as may be required (the “Working Capital Loans”). If we complete the initial Business
Combination, we expect to repay such loaned amounts out of the proceeds of the Trust Account released to us. The Sponsor originally agreed
to loan us up to an aggregate principal amount of $1,500,000 under the Promissory Note. On October 16, 2023, the Company and the Sponsor
amended the Promissory Note to increase the aggregate principal amount of the Promissory Note from $1,500,000 to $3,000,000 (described
in Note 5). At December 31, 2024 and 2023, $3,000,000 and $2,025,000 of such Working Capital Loans were outstanding, respectively. As
a result of the Business Combination the Working Capital Loans were repaid.
On October 25, 2024, the Company issued a promissory
note (the “October Note”) to Frontier SPV, LLC (“Frontier”), an affiliate of the Company’s sponsors. Pursuant
to the October Note, Frontier agreed to loan the Company up to an aggregate principal amount of $2,000,000. The October Note is non-interest
bearing and all outstanding amounts under the October Note will be due on the date on which the Company consummates a Business Combination.
No portion of the amounts outstanding under the October Note may be converted into units or shares. As of December 31, 2024 and 2023,
there was $1,218,651 and $0 outstanding under the October Note, respectively. As a result of the Business Combination the October Note
was repaid.
On October 31, 2024, the Company issued a promissory
note (the “Tax Note”) to Frontier. Pursuant to the Tax Note, Frontier agreed to loan the Company an aggregate principal amount
of $973,116, which was used to satisfy the Company’s excise tax liability. The Tax Note is non-interest bearing and all outstanding
amounts under the Tax Note will be due on the date on which the Company consummates a Business Combination. No portion of the amounts
outstanding under the Tax Note may be converted into units or shares. As of December 31, 2024 and 2023, there was $973,116 and $0 outstanding
under the Tax Note, respectively. As a result of the Business Combination the Tax Note was repaid.
As of December 31, 2024, we had cash, investments
and marketable securities held in the Trust Account of $51,289,643. On September 19, 2023, we held the Meeting at which the Company’s
stockholders approved (A) the Charter Amendment to the Company’s Second Amended and Restated Certificate of Incorporation to extend
the date by which the Company has to consummate its initial business combination from September 20, 2023 to January 19, 2024 (or such
earlier date as determined by the Company’s Board of Directors); and (B) the Trust Amendment to the Trust Agreement to allow the
trustee to liquidate the Trust Account at such time as may be determined by the Company as set forth in the Charter Amendment. In connection
with the Meeting, the holders of 9,239,192 shares of redeemable Class A common stock exercised their right to redeem their shares for
cash at a redemption price of approximately $10.4762 per share, for an aggregate redemption amount of approximately $96,791,644. On January
19, 2024, we held the January Meeting at which the Company’s stockholders approved (A) the January Charter Amendment to the Company’s
Second Amended and Restated Certificate of Incorporation to extend the date by which the Company has to consummate its initial business
combination from January 19, 2024 to December 20, 2024 (or such earlier date as determined by the Company’s Board of Directors);
and (B) the January Trust Amendment to the Trust Agreement to allow the trustee to liquidate the Trust Account at such time as may be
determined by the Company as set forth in the January Charter Amendment. In connection with the January Meeting, the holders of 10,872,266
shares of redeemable Class A common stock exercised their right to redeem their shares for cash at a redemption price of approximately
$10.6224 per share, for an aggregate redemption amount of approximately $115,489,643. On December 17, 2024, we held the Third Extension
Meeting at which the Company’s stockholders approved (A) the Third Charter Amendment to the Company’s Second Amended and Restated
Certificate of Incorporation to extend the date by which the Company has to consummate its initial business combination from December
20, 2024 to December 20, 2025 (or such earlier date as determined by the Company’s Board of Directors); and (B) an amendment to
the Trust Agreement to allow the trustee to liquidate the Trust Account at such time as may be determined by the Company as set forth
in the Third Charter Amendment. In connection with the Third Extension Meeting, the holders of 112,068 shares of redeemable Class A common
stock exercised their right to redeem their shares for cash at a redemption price of approximately $11.01878 per share, for an aggregate
redemption amount of approximately $1.2 million. Following the redemptions, 4,645,816 shares of redeemable Class A common stock remain
outstanding.
On January 3, 2024, we entered into a subscription
agreement with Polar Multi-Strategy Master Fund (“Polar”), Emerald ESG Sponsor LLC (“ESG Sponsor”), Emerald ESG
Advisors, LLC (“ESG Advisors”) and Emerald ESG Funding, LLC (“ESG Funding” and collectively with ESG Sponsor and
ESG Advisors, the “Sponsors”), to cover working capital requirements of the Company and costs related to a possible extension
of the Company’s trust liquidation date (the “Subscription Agreement”). Pursuant to the terms and subject to the conditions
of the Subscription Agreement, Polar agreed to contribute up to $550,000 to ESG Funding (the “Capital Contribution”). An initial
capital call of $350,000 took place within five (5) business days of the signing of the Subscription Agreement, and a second capital call
of $200,000 took place on April 2, 2024. As a result of the Business Combination, Polar received $550,000 and 550,000 shares of common
stock of the Company in full payment of the Company’s obligations under the Subscription Agreement.
We
completed our Business Combination with Fold on February 14, 2025, and have raised sufficient capital for our operations.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities,
which would be considered off-balance sheet arrangements as of December 31, 2024. We do not participate in transactions that create relationships
with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established
for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements,
established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
Other than the below, we do not have any long-term
debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities.
We entered into an administrative services agreement
pursuant to which we pay the Sponsor or its designee a monthly fee of $30,000 for office space, administrative and shared personnel support
services to the Company. We began incurring these fees on December 16, 2021 and will continue to incur these fees monthly until the earlier
of the completion of the Business Combination and our liquidation. For the year ended December 31, 2024, we incurred $360,000 for the
administrative support services. As of December 31, 2024, $646,452 of the administrative support fees are in accrued expenses in the accompanying
balance sheets.
The holders of the founder shares, private placement
units (including securities contained therein) and units that may be issued upon conversion of working capital loans (including securities
contained therein) are entitled to registration rights pursuant to a registration rights agreement requiring us to register such securities
for resale (in the case of the founder shares, only after conversion to the Class A common stock). The holders of these securities are
entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the holders have certain
“piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the initial
Business Combination and rights to require us to register for resale such securities pursuant to Rule 415 under the Securities Act.
We granted the underwriter of the Public Offering
a 45-day option to purchase up to 3,300,000 additional Units to cover over-allotments, if any, at the Public Offering price less the underwriting
discounts and commissions. On January 14, 2022, the underwriter purchased an additional 2,869,342 Units pursuant to the over-allotment
option.
The underwriter earned a cash underwriting discount
of two percent (2%) of the gross proceeds of the Units sold in the Public Offering and pursuant to the over-allotment option, or $4,973,868.
Additionally, the underwriter was entitled to a deferred underwriting discount of 3.5% of the gross proceeds of the Units sold in the
Public Offering and pursuant to the over-allotment option, or $8,704,270. The deferred underwriting discount was to become payable to
the underwriter from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the
terms of the underwriting agreement. On October 18, 2023, we entered into an agreement with the underwriter in which the underwriter waived
any entitlement it may have to the deferred underwriting discount in respect of any Business Combination. As a result, the Company recorded
$8,704,270 to additional paid-in capital in relation to the waiver of the deferred underwriter fee in the accompanying balance sheets.
We engaged Cohen & Company Capital Markets,
a division of J.V.B. Financial Group, LLC (“CCM”), to provide financial advisory services in connection with the Public Offering.
We paid CCM a fee in an amount equal to 0.3% of the aggregate proceeds of the Public Offering (excluding the proceeds of the exercise
of the over-allotment option) net of underwriter’s expenses, upon the closing of the Public Offering. We also engaged CCM to act
as an advisor in connection with the Business Combination for which it will earn an advisory fee of 0.525% of the proceeds of the Public
Offering (excluding the proceeds of the exercise of the over-allotment option) payable at closing of the Business Combination. CCM will
also be entitled to an advisory fee equal to 0.825% of the aggregate proceeds of the exercise of the over-allotment option, payable at
the closing of the Business Combination. The underwriter had agreed to reimburse us for the fee to CCM as it becomes payable out of the
underwriting commission. Accordingly, a reimbursement receivable and deferred advisory fee of $1,155,000 had been reflected in the accompanying
balance sheets. On October 18, 2023, we entered into an agreement with the underwriter in which the underwriter waived any entitlement
it may have to the deferred underwriting discount in respect of any Business Combination. As a result, we reversed the reimbursement receivable
and recognized $1,155,000 of advisory fee expenses as of December 31, 2023.
Critical Accounting Policies and Estimates
The preparation of the financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements.
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Making estimates requires management to exercise
significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances
that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. We
have identified the following as our critical accounting policies and estimates:
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject
to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing
Liabilities from Equity.” Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured
at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are within the control
of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) is classified
in temporary equity. At all other times, common stock is classified as stockholders’ equity. Our Class A common stock sold in the
Public Offering and over-allotment feature certain redemption rights that are considered to be outside of our control and subject to the
occurrence of uncertain future events. Accordingly, as of December 31, 2024 and 2023, 4,645,816 and 15,630,150 shares of Class A common
stock are presented at redemption value as temporary equity, outside of the stockholders’ deficit section of our balance sheets,
respectively.
We recognize changes in redemption value immediately
as they occur and adjust the carrying value of Class A common stock to equal the redemption value at the end of each reporting period.
Increases or decreases in the carrying amount of redeemable Class A common stock are affected by charges against additional paid in capital
and accumulated deficit. This method would view the end of the reporting period as if it were also the redemption date for the security.
Net (Loss) Income Per Common Share
We historically had two classes of shares, which
are referred to as Class A common stock and Class B common stock. Earnings and losses are shared pro rata between the two classes of shares.
Accretion associated with the redeemable shares of Class A common stock is excluded from earnings per share as the redemption value approximates
fair value. We have not considered the effect of the warrants in the calculation of diluted net (loss) income per share, if any, since
their exercise is contingent upon future events. As a result, diluted net (loss) income per share of common stock is the same as basic
net (loss) income per share of common stock.
Recent Accounting Standards
Management does not believe that any recently
issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
In November 2023, the FASB issued ASU 2023-07, Segment
Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this ASU require disclosures,
on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating officer decision maker
(“CODM”), as well as the aggregate amount of other segment items included in the reported measure of segment profit or loss.
The ASU requires that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the
reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. Public entities
will be required to provide all annual disclosures currently required by Topic 280 in interim periods, and entities with a single
reportable segment are required to provide all the disclosures required by the amendments in this ASU and existing segment disclosures
in Topic 280. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal
years beginning after December 15, 2024, with early adoption permitted.
Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company,
we are not required to provide the information required by this Item.
Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
This information appears following Item 15 of this Annual
Report and is included herein by reference.
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Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
Item 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures
that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act,
such as this Annual Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules
and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated
to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding
required disclosure. Our management evaluated, with the participation of our chief executive officer and chief financial officer (our
“Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2024, pursuant to Rule 13a-15(b)
under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that as of December 31, 2024, our disclosure controls
and procedures were effective.
We do not expect that our
disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how
well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures
are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the
benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no
evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and
instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions.
Management’s Report on Internal Controls
Over Financial Reporting
Our management is responsible
for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under
the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because
of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness
of our internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria
set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated
Framework (2013 Framework). Based on this assessment, management believes that, as of December 31, 2024, our internal control
over financial reporting was effective.
This Annual Report does not
include an attestation report of our independent registered public accounting firm, because as an “emerging growth company”
under the JOBS Act our independent registered public accounting firm is not required to issue such an attestation report.
Changes in Internal Control Over Financial
Reporting
There were no changes in our
internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most
recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B.
OTHER INFORMATION
None.
Item
9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
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PART III
Item 10.
DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE.
Directors and Executive Officers
Our directors and executive
officers are as follows:
Name Age Title
Executive Officers
Will Reeves 36 Chief Executive Officer and Director
Wolfe Repass 35 Chief Financial Officer
Nicolleta Goncalves 33 Vice President of Risk and Compliance
Thomas Dickman 34 Chief Technology Officer
Non-Employee Directors
Lesley Goldwasser 63 Director
Kirstin Hill 46 Director
Andrew Hohns 45 Director
Jonathan Kirkwood 42 Director
Erez Simha 61 Director
Bracebridge H. Young, Jr. 67 Director
Executive Officers
Will Reeves
Mr. Reeves has served as our Chief Executive Officer
and as a Class II member of the Board since February 2025. Mr. Reeves co-founded Legacy Fold in 2019 and has served as Chief Executive
Officer of Legacy Fold and as a Director since its inception. Over the past eight years, Mr. Reeves has held product leadership positions
at Thesis, Inc., A3Ventures, LLC and BYND, leading digital transformation and the development of innovation projects for Google and other
Fortune 500 technology companies. Prior to founding Legacy Fold, Mr. Reeves was the Head of Payments at Thesis, Inc. from May 2018 to
September 2019, where he led the development and strategic direction of the Bitcoin venture studio’s innovative payment and financial
technologies. Mr. Reeves also has extensive experience in consumer finance. Prior to joining Thesis, Inc., Mr. Reeves played a key role
at A3 Ventures, advancing mobility and commerce through the corporate innovation and investment arm of American Automobile Association.
Mr. Reeves holds a B.A. in Rhetoric and Political Science from the University of California, Berkeley. We believe Mr. Reeves is well qualified
to serve on the Board because of his background in product development, consumer finance and bitcoin and his operational and historical
expertise gained from serving as Legacy Fold’s Chief Executive Officer since August 2019.
Wolfe Repass
Mr. Repass has served as our Chief Financial Officer
since February 2025. Mr. Repass has served as Legacy Fold’s Chief Financial Officer since October 2024, prior to which he served
as Legacy Fold’s Vice President of Finance and Operations beginning in September 2023, and has held various roles in the Finance
and Operations department of Legacy Fold since joining Legacy Fold in May 2021. While at Legacy Fold, Mr. Repass has played a key role
in establishing its financial, accounting, and operational foundations. Mr. Repass has more than 13 years of experience in finance and
accounting, including roles as the Director of International Accounting for PopSockets LLC and as a Senior Manager of Accounting Operations
at Robinhood Markets LLC. From July 2011 to June 2020, Mr. Repass held various positions within the assurance department of PricewaterhouseCoopers
LLP (“PwC”), most recently, as Senior Manager. While at PwC, Mr. Repass specialized in providing PCAOB-compliant audit services,
including Sarbanes–Oxley Act compliance, for multiple Fortune 250 clients and spent two years in Singapore providing U.S. GAAP reporting
services for multiple foreign entities and U.S. subsidiaries. Mr. Repass holds a B.S. in Accounting from Bradley University and is a licensed
Certified Public Accountant in the state of Colorado.
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Nicolleta Goncalves
Ms. Goncalves has served as our Vice President
of Risk and Compliance since February 2025. Ms. Goncalves has held various positions at Legacy Fold since 2022, serving as Director of
Risk and Compliance until September 2023 when she began serving as Legacy Fold’s Vice President of Risk and Compliance. Ms. Goncalves
works with internal and external stakeholders to ensure compliance with regulatory requirements and industry best practices. Ms. Goncalves
has over eight years of experience in the FinTech and Crypto space. She holds a Chainalysis KYT Certificate (CKC) and Certified Anti-Money
Laundering Specialist (CAM) credentials. Prior to joining Legacy Fold, Ms. Goncalves held positions at Zoro Card and Metallicus. Ms. Goncalves
holds a B.A. in Public Relations from Bradley University.
Thomas Dickman
Mr. Dickman has served as our Chief Technology
Officer since February 2025. Mr. Dickman has held various positions at Legacy Fold since its founding in 2019, serving as Senior Software
Engineer until September 2023 when he began serving as Legacy Fold’s Chief Technology Officer. Mr. Dickman oversees Fold’s
technology vision, strategy, and infrastructure, while ensuring that technology investments align with business goals and drive innovation.
Mr. Dickman has more than a decade of experience in the software engineering field, including extensive leadership experience. Prior to
joining Legacy Fold, Mr. Dickman held positions at RetailMeNot. Inc. and Northrop Grumman. Mr. Dickman holds a B.S. in Electrical Engineering
and an M.S. in Computer Engineering from the University of Cincinnati.
Non-Employee Directors
Lesley Goldwasser
Ms. Goldwasser has served as a Class III member of the Board since
February 2025. Ms. Goldwasser has been a Managing Partner of GreensLedge Capital Markets LLC (“GreensLedge”) since September 2013.
Prior to joining GreensLedge, Ms. Goldwasser was associated with Credit Suisse Group AG (“Credit Suisse”) as a Managing Director
from September 2010 to November 2013, where she had global responsibility for the Hedge Fund Strategic Services unit. Before
Credit Suisse, Ms. Goldwasser spent 12 years at Bear Stearns where she was co-head of Global Debt and Equity Capital Markets units
and had global responsibility for structured products. Prior to her tenure at Bear Stearns, Ms. Goldwasser spent 12 years at Credit
Suisse in a variety of management positions, including responsibility for both the Asset Backed and Non-Agency Mortgage Trading Desks.
Ms. Goldwasser has been a member of the Board of Directors of TipTree Inc. (Nasdaq: TIPT), a financial services company, since January 2015,
and currently serves as the lead Independent Director. She served as a director of FinTech Acquisition Corp. V, a blank check company,
from December 2020 through its liquidation in December 2022. She also served as a director of FTAC Parnassus Acquisition Corp.,
a blank check company, from March 2021 through its liquidation in March 2023. She is the former lead Independent Director of
Flagstar Bancorp (NYSE: FBC). Ms. Goldwasser is a graduate of the University of Cape Town, South Africa. We believe that Ms. Goldwasser’s
extensive experience in the financial services industry makes her qualified to serve as a member of the Board.
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Kirstin Hill
Ms. Hill has served as a Class III member of the Board since February
2025. Ms. Hill currently serves as President and Chief Operating Officer of Social Finance, a national nonprofit and registered investment
advisor. Previously, Ms. Hill spent 25 years at Bank of America/Merrill Lynch, most recently as Chief Operating Officer for Merrill
Lynch Wealth Management, overseeing growth strategy, digital platforms, client service, sales performance, advisor compensation and field
operations. Ms. Hill holds a bachelor’s degree from Harvard University. We believe that Ms. Hill’s significant experience
in securities and banking regulation compliance makes her qualified to serve as a member of the Board.
Andrew Hohns
Dr. Hohns has served as a member of the Board since December 2021.
Dr. Hohns is Chief Executive Officer of Newmarket, a registered investment advisor he founded in 2020. Newmarket manages capital
on behalf of institutional investors worldwide, specializing in structured credit opportunities. In 2022, Newmarket established Battery
Finance, a subsidiary focused on institutional investment strategies related to bitcoin. Dr. Hohns is a regular speaker at industry conferences,
with expertise in infrastructure, securitization, socially responsible investment, impact investment, development finance, and bitcoin.
Prior to establishing Newmarket, Dr. Hohns was a Managing Director at Mariner Investment Group from 2012 through 2020, and a Managing
Director at Cohen & Company from 2005 through 2012. He was a Director of INSU Acquisition Corp II from September 2020 to February
2021. Since 2016, Dr. Hohns has served as a Director of UNICEF USA. Dr. Hohns holds a B.S. in Economics from the Wharton School at
the University of Pennsylvania, a Masters in Liberal Arts from the School of Arts and Sciences at the University of Pennsylvania, and
a PhD in Applied Economics and Managerial Sciences from the Wharton School at the University of Pennsylvania We believe that Mr. Hohns’
experience in structured finance and investment management makes him qualified to serve as a member of the Board.
Jonathan Kirkwood
Dr. Kirkwood has served as a Class II member of the Board since February
2025. Dr. Kirkwood co-founded Ten31 LLC, a leading Bitcoin investment platform, in 2020 and has served as its Managing Partner since its
inception. As Managing Partner of Ten31 LLC, Dr. Kirkwood leverages his extensive experience in fintech and bitcoin investment management,
strategic advisory, and business development to oversee the deployment of over $130 million across 35 companies within the Bitcoin ecosystem.
Dr. Kirkwood’s expertise in capital raising, regulatory compliance and portfolio management have been critical in guiding high-risk,
high-uncertainty ventures to successful outcomes. His leadership spans various sectors, including bitcoin mining, exchanges, payments,
security software and hardware, and AI-driven tools. Dr. Kirkwood sits on the board of directors of Start9 Labs Inc., a user-friendly
platform provider for personal servers, and Battery Finance, a subsidiary of Newmarket focused on institutional investment strategies
related to bitcoin. Dr. Kirkwood holds a B.S. in Biology from the University of Evansville, an M.D. from Ross University School of Medicine
and an M.B.A. from Ball State University. We believe Dr. Kirkwood’s strategic insight, leadership experience and industry expertise
make him well qualified to serve as a member of the Board.
Erez Simha
Mr. Simha has served as a Class III member of the Board since
February 2025. Mr. Simha brings over 20 years of experience and a proven track record of scaling high-tech disruptive companies
in multiple industries, including food-tech, blockchain, 3D printing, and digital assets. Mr. Simha currently serves as a senior
financial advisor to a payment processing workforce solution private company and as a board member and treasurer of The Village LTD, a
501(c) nonprofit corporation. From 2022 through 2023, Mr. Simha served as the Chief Financial Officer at Genius Group (NYSE: GNS).
From 2020 through 2022, Mr. Simha served as a director and President and Chief Financial Officer at Apifiny Group (NASDAQ: MFH).
From 2019 through 2020, Mr. Simha served as Chief Financial Officer and Chief Operating Officer at Kangaroo (Roo Inc.). From 2017
through 2019, Mr. Simha served as Chief Financial Officer and Chief Operating Officer at Food-Tech. From 2011 through 2017, Mr. Simha
served as Chief Financial Officer and Chief Operating Officer at STRATASYS LTD (NASDAQ: SSYS). From 2004 through 2011, Mr. Simha
served in various capacities, including Vice President of Customer Support, Finance and Operations, Orbotech Pacific Vice President of
Finance and Operations, Corporate Vice President of Finance and Chief Financial Officer, at Orbotech LTD. (NASDAQ: ORBK). Mr. Simha
holds a Bachelors Degree in Economics and Accounting and a Masters Degree in Business Administration and Finance from Tel Aviv University.
He is a Certified Public Accountant. We believe that Mr. Simha’s experience in SPAC transactions, public company reporting
requirements and GAAP and IFRS reports makes him qualified to serve as a member of the Board.
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Bracebridge H. Young Jr.
Mr. Young has served as a Class I member of the Board since February
2025 and also currently serves as Vice Chairman of Bracebridge Capital, a Boston based hedge fund. In addition, Mr. Young serves
as a member of the board of advisors of Newmarket Investment Advisors and Upwell, a technology-enabled water asset management company.
Mr. Young served as President and Chief Executive Officer of EMLD from June 2021 to February 2025. Mr. Young served as Chief
Executive Officer at Eclat Impact in 2016. From 2000 through 2015, Mr. Young served as Chief Executive Officer and Partner at Mariner
Investment Group. He joined Mariner directly from Goldman Sachs, where he began on the Commercial Paper trading desk in 1980 and subsequently
served as Head Trader of Institutional Liquid Assets, Co-Head of the Money Market Sales and Trading Department in New York,
Partner in charge of Fixed-Income in Tokyo, Head of Fixed-Income and foreign exchange sales in London, and, finally, Partner
and Head of European Debt Capital Markets in New York. Mr. Young serves on the board of directors of Social Finance USA, a Boston-based nonprofit
organization dedicated to mobilizing investment capital to drive social change, serves on the boards of directors for Social Progress
Imperative, a non-profit best known for measuring a government’s social and environmental performance, Cultivo, a platform
designed to finance the regeneration of nature, and TerViva, an agricultural innovation company partnering with farmers to grow and harvest
Pongamia. Mr. Young received a B.A from Bowdoin College in 1977 and an M.B.A. from New York University’s Stern School
of Business in 1983. We believe that Mr. Young’s experience in corporate leadership and private equity makes him qualified
to serve as a member of the Board.
Board Composition
Our business and affairs are organized under the direction of the Board.
The Board consists of seven members and Dr. Kirkwood serves as Chairman of the Board. The primary responsibilities of the Board are to
provide oversight, strategic guidance, counseling and direction to our management. The Board meets on a regular basis and additionally
as required.
In accordance with the terms of our Charter, the Board is divided into
three classes, Class I, Class II and Class III, with only one class of directors being elected each year and each
class serving a three-year term. There is no cumulative voting with respect to the election of directors, with the result that the holders
of more than 50% of the shares voted for the election of directors can elect all of the directors. The Board is divided into the following
classes:
At each annual meeting of stockholders to be held after the initial
classification, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification
until the third annual meeting following their election and until their successors are duly elected and qualified, or their earlier resignation,
removal, disqualification or death. This classification of the Board may have the effect of delaying or preventing changes in our control
or management. Our directors may be removed for cause by the affirmative vote of the holders of at least 66 2/3% of our voting stock.
Role of the Board in Risk Oversight/Risk Committee
One of the key functions of the Board is informed oversight of our
risk management process. The Board does not have a standing risk management committee, but rather administers this oversight function
directly through the Board as a whole, as well as through various standing committees of the Board that address risks inherent in their
respective areas of oversight. In particular, the Board is responsible for monitoring and assessing strategic risk exposure and the audit
committee has the responsibility to consider and discuss our major financial risk exposures and the steps management will take to monitor
and control such exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken.
The audit committee also monitors compliance with legal and regulatory requirements. Our compensation committee assesses and monitors
whether our compensation plans, policies and programs comply with applicable legal and regulatory requirements.
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Board Committees
The Board has established an audit committee, a compensation committee
and a nominating and corporate governance committee. The Board has adopted a charter for each of these committees, which comply with the
applicable requirements of current Nasdaq rules. In addition, from time to time, special committees may be established under the direction
of the Board when the board deems it necessary or advisable to address specific issues. We intend to comply with future requirements to
the extent applicable to us. Copies of the charters for each committee are available on the investor relations portion of our website,
https://foldapp.com/.
Audit Committee
Our audit committee consists of Mr. Simha, Ms. Goldwasser and Ms. Hill.
The Board has determined that each of the members of the audit committee satisfies the independence requirements of Nasdaq listing rules and
Rule 10A-3 under the Exchange Act. Each member of the audit committee can read and understand fundamental financial statements
in accordance with applicable audit committee requirements. In arriving at this determination, the Board examined each audit committee
member’s scope of experience and the nature of their prior and/or current employment. Mr. Simha serves as the chair of the audit
committee. The Board has determined that Mr. Simha qualifies as an audit committee financial expert within the meaning of SEC regulations
and meets the financial sophistication requirements of Nasdaq listing rules. In making this determination, the Board considered Mr. Simha’s
formal education and previous experience in financial roles. Both our independent registered public accounting firm and management periodically
meet privately with the audit committee.
The functions of the audit committee include, among other things:
● reviewing our financial reporting processes and disclosure controls;
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● preparing the report that the SEC requires in our annual proxy statement;
The composition and function of the audit committee complies with all
applicable requirements of the Sarbanes-Oxley Act, SEC rules and regulations and Nasdaq listing rules.
Compensation Committee
Our compensation committee consists of Dr. Kirkwood and Mr. Young.
Dr. Kirkwood serves as the chair of the compensation committee. The Board has determined that each of the members of the compensation
committee is a non-employee director, as defined in Rule 16b-3 promulgated under the Exchange Act and satisfies the independence
requirements of Nasdaq. The functions of the committee include, among other things:
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● administering our equity incentive plans and other benefit plans;
The composition and function of the compensation committee complies
with all applicable requirements of the Sarbanes-Oxley Act, SEC rules and regulations and Nasdaq listing rules.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Mr. Young
and Ms. Hill. Ms. Hill serves as the chair of the nominating and corporate governance committee. The Board has determined that each of
the members of the nominating and corporate governance committee satisfy the independence requirements of Nasdaq. The functions of this
committee include, among other things:
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The composition and function of the nominating and corporate governance
committee complies with all applicable requirements of the Sarbanes-Oxley Act, SEC rules and regulations and Nasdaq listing rules.
Limitation on Liability and Indemnification of Directors and
Officers
Our Charter eliminates the liability of our officers and directors
for monetary damages to the fullest extent permitted by applicable law. The DGCL provides that officers and directors of a corporation
will not be personally liable for monetary damages for breach of their fiduciary duties, except for liability:
● for any unlawful payment of dividends or redemption of shares by directors; or
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If the DGCL is amended to authorize corporate action further eliminating
or limiting the personal liability of officers and directors, then the liability of our officers and directors will be eliminated or limited
to the fullest extent permitted by the DGCL, as so amended.
Our Bylaws require us to indemnify and advance expenses, to the fullest
extent permitted by applicable law, to our directors, officers and agents. We maintain a directors’ and officers’ insurance
policy pursuant to which our directors and officers are insured against liability for actions taken in their capacities as directors and
officers. Finally, our Charter prohibits any retroactive changes to the rights or protections or increasing the liability of any officer
or director in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification.
In addition, we have entered into separate indemnification agreements
with each of our directors and executive officers. These agreements, among other things, require us to indemnify our directors and executive
officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or executive
officer in any action or proceeding arising out of their services as one of our directors or executive officers or any other company or
enterprise to which the person provides services at our request.
We believe these provisions in the Charter and the Bylaws are necessary
to attract and retain qualified persons as directors and officers.
Insider Trading Policy
The Company has adopted insider trading policies and procedures
governing the purchase, sale, and/or other dispositions of the Company’s securities by directors, officers and employees that are
reasonably designed to promote compliance with insider trading laws, rules and regulations, and any listing standards applicable to the
Company. A copy of the Company’s Insider Trading Policy has been filed as Exhibit 19 to this Annual Report.
Code of Business Conduct for Employees, Executive Officers and
Directors
The Board has adopted a Code of Conduct, applicable to all of our employees,
executive officers and directors. The Code of Conduct is available on our website at https://foldapp.com/. Information contained
on or accessible through our website is not a part of this Annual Report and the inclusion of our website address is an inactive textual
reference only. The nominating and corporate governance committee of the Board is responsible for overseeing the Code of Conduct and must
approve any waivers of the Code of Conduct for employees, executive officers and directors. Any amendments to the Code of Conduct, or
any waivers of its requirements, will be disclosed on our website.
Non-Employee Director Compensation
The Board expects to review director compensation periodically to ensure
that director compensation remains competitive such that the Company is able to recruit and retain qualified directors. In connection
with the consummation of the Business Combination, we approved and implemented the Director Compensation Program for our non-employee
directors.
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Item 11.
EXECUTIVE COMPENSATION.
Throughout this section, unless otherwise noted,
“the company,” “we,” “us,” “our” and similar terms refer to Fold prior to the Business
Combination.
This section discusses the material components of
the executive compensation program for Fold’s executive officers who are named in the “2024 Summary Compensation Table”
below. In 2024, Fold’s “named executive officers” and their positions at year-end were as follows:
● Will Reeves, Chief Executive Officer;
● Wolfe Repass, Chief Financial Officer; and
● Nicoletta Goncalves, Vice President of Risk and Compliance.
This discussion may contain forward-looking statements
that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation
programs that the Company adopts following the completion of the Business Combination may differ materially from the currently planned
programs summarized in this discussion.
2024 Summary Compensation Table
The following table sets forth information concerning
the compensation of Fold’s named executive officers for the year ended December 31, 2024.
Chief Executive Officer
Chief Financial Officer
Nicolleta Goncalves
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NARRATIVE TO SUMMARY COMPENSATION TABLE
2024 Salaries
The named executive officers receive a base salary
to compensate them for services rendered to Fold. The base salary payable to each named executive officer is intended to provide a fixed
component of compensation reflecting the executive’s skill set, experience, role and responsibilities. During 2024, Fold’s
named executive officers’ annual base salaries were as follows: Mr. Reeves: $200,000; Mr. Repass: $195,250; and Ms. Goncalves:
$199,000. The Summary Compensation Table above shows the actual base salaries paid to each named executive officer in fiscal year 2024.
2024 Bonuses
In 2024, Mr. Reeves received a $37,500 performance
bonus, which he was eligible to earn based on quarterly revenue generated by Fold from certain of its customers. None of our other named
executive officers earned or were eligible to earn cash bonuses in 2024.
Equity Compensation
Certain of Fold’s named executive officers
currently hold Fold RSUs covering shares of common stock. In January 2024, Mr. Repass and Ms. Goncalves were granted awards of 1,000
Fold RSUs and 51,000 Fold RSUs, respectively, and in August 2024, Messrs. Reeves and Repass were granted awards of 671,642 Fold RSUs and
89,552 Fold RSUs, respectively, in each case, under the 2019 Plan. Such Fold RSUs vest upon satisfaction of both a service-based vesting
requirement and a liquidity event vesting requirement, as follows: (i) one-fourth of the Fold RSUs satisfy the service-based vesting