QUANTUM FINTECH ACQUISITION CORP MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K) | MarketScreener

The statements in the discussion and analysis regarding industry outlook, our
expectations regarding the performance of our business and the forward-looking
statements are subject to numerous risks and uncertainties, including, but not
limited to, the risks and uncertainties described in “Risk Factors” and
“Cautionary Note Regarding Forward-Looking Statements.” Our actual results may
differ materially from those contained in or implied by any forward-looking
statements. You should read the following discussion together with the sections
entitled “Risk Factors”,” “Business” and the audited consolidated financial
statements, including the related notes, appearing elsewhere in this Annual
Report. All references to years, unless otherwise noted, refer to our fiscal
years, which end on December 31.

Overview

We are a blank check company formed under the laws of the State of Delaware on
October 1, 2020, for the purpose of entering into a merger, share exchange,
asset acquisition, stock purchase, recapitalization, reorganization or other
similar business combination with one or more businesses or entities. We intend
to effectuate our business combination using cash from the proceeds of the
initial public offering and the sale of the private warrants, our capital stock,
debt or a combination of cash, stock and debt.

We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a business
combination will be successful.

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Significant Events and Transactions

We entered into the Merger Agreement with TradeStation on November 4, 2021.
Pursuant to the Merger Agreement, and assuming the satisfaction or waiver of
various closing conditions, including approval of the Merger Agreement by our
stockholders, TSG Merger Sub, Inc. will merge with and into the Company, with
the Company continuing as the surviving corporation and a wholly owned
subsidiary of TradeStation.

Additionally, we and TradeStation entered into Subscription Agreements, each
dated as of November 4, 2021, with the PIPE Investors pursuant to which, among
other things, we agreed to issue and sell, in private placements to close
immediately prior to the Closing, an aggregate of 12,500,000 Company PIPE
Shares, including 5,000,000 shares to Monex Group, Inc. The PIPE Investment will
be consummated substantially concurrently with the Closing, subject to the terms
and conditions contemplated by the Subscription Agreements. The Company PIPE
Shares will be converted in the Merger into an equal number of shares of
TradeStation common stock.

Additionally, we entered into a Sponsor Support Agreement with TradeStation,
Monex and the initial stockholders, pursuant to which, among other things, the
initial stockholder agreed to vote any of the shares of Company Common Stock
held by them in favor of the TradeStation Business Combination and not to redeem
any such shares at the special meeting of stockholders to be held in connection
with the TradeStation Business Combination. In addition, the insiders agreed not
to transfer (i) their TradeStation common stock following the Closing, subject
to certain exceptions, until the earlier of (A) (1) in the case of Co-Sponsors,
12 months from Closing and (2) in the case of our directors and officers, 6
months from Closing and (B) subsequent to the Closing, the date on which the
last reported sale price of TradeStation common stock exceeds $12.50 per share
for 20 out of any 30 consecutive trading days and (ii) their TradeStation
warrants following the Closing, subject to certain exceptions, until the earlier
of (A) 30 days from Closing and (B) February 4, 2022.

Refer to Note 6 of our financial statements for further details on the
TradeStation Business Combination, the Merger Agreement, the Subscription
Agreements and the Sponsor Support Agreement.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date.
Our only activities through December 31, 2021 were organizational activities,
the initial public offering, which is described below, and subsequent to the
initial public offering, identifying a target company for a business
combination. We do not expect to generate any operating revenues until after the
completion of our 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, 2021, we had a net loss of $6,668,793, which
consists of an unrealized gain on marketable securities held in our trust
account of $2,395, interest earned on marketable securities held in trust
account of $56,233, offset by operating costs of $3,404,429 and change in fair
value of warrant liability of $3,322,992.

For the period from October 1, 2020 (inception) through December 31, 2020, we
had a net loss of $5,420, which consisted of formation and operating costs.

Liquidity and Capital Resources

On February 9, 2021, we consummated our initial public offering of 17,500,000
units, each unit consisting of one share of common stock, par value $0.0001 per
share, and one warrant to purchase one-half of one share of common stock at an
exercise price of $11.50, at $10.00 per unit, generating gross proceeds of
$175,000,000. Simultaneously with the closing of our initial public offering, we
consummated the sale of 5,562,500 private warrants at a price of $1.00 per
private warrant in a private placement to the co-sponsors, generating gross
proceeds of $5,562,500.

On February 12, 2021, in connection with the underwriters’ exercise of their
over-allotment option in full, we consummated the sale of an additional
2,625,000 units at a price of $10.00 per unit, generating total gross proceeds
of $26,250,000. In addition, we consummated the sale of an additional 590,625
private warrants at $1.00 per private warrant, generating gross proceeds of
$590,625.

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Following the initial public offering, the full exercise of the over-allotment
option, and the sale of the private warrants, a total of $201,250,000 was placed
in the trust account. We incurred $5,017,526 in initial public offering related
costs, including $4,528,125 of underwriting fees and $489,401 of other costs.

For the year ended December 31, 2021, cash used in operating activities was
$1,072,107. Net loss of $6,668,793 was affected by unrealized gain on marketable
securities held in the trust account of $2,395, interest earned on marketable
securities held in the trust account of $56,233, the change in fair value of
warrant liability of $3,322,992 and transaction costs allocated to the warrant
liabilities of $9,348. Changes in operating assets and liabilities provided
$2,322,974 of cash for operating activities.

For the period from October 1, 2020 (inception) through December 31, 2020, cash
used in operating activities was $25,313. Net loss of $5,420 was affected by the
changes in operating assets and liabilities, which used $19,893 of cash from
operating activities.

As of December 31, 2021, we had marketable securities of $201,308,628 (including
$58,628 of interest income and unrealized gains) held in the trust account,
invested in U.S. government treasury bills, notes or bonds having a maturity of
185 days or less and/or (ii) in money market funds meeting certain conditions
under Rule 2a-7 of the Investment Company Act, as determined by us. Interest
income on the balance in the trust account may be used by us to pay taxes and
dissolution expenses up to $100,000. Through December 31, 2021, we have not
withdrawn any interest earned from the trust account.

We intend to use substantially all of the funds held in the trust account,
including any amounts representing interest earned on the trust account (less
income taxes payable), to complete our business combination. To the extent that
our capital stock or debt is used, in whole or in part, as consideration to
complete our business combination, the remaining proceeds held in the trust
account will be used as working capital to finance the operations of the target
business or businesses, make other acquisitions and pursue our growth
strategies.

As of December 31, 2021, we had cash of $63,179 and working capital deficit of
$2,181,274. We intend to use the funds held outside the trust account primarily
to identify and evaluate target businesses, perform business due diligence on
prospective target businesses, travel to and from the offices, plants or similar
locations of prospective target businesses or their representatives or owners,
review corporate documents and material agreements of prospective target
businesses, and structure, negotiate and complete a business combination.

In order to fund working capital deficiencies or finance transaction costs in
connection with a business combination, Quantum Ventures or an affiliate of
Quantum Ventures, or certain of our officers and directors may, but are not
obligated to, loan us funds as may be required. If we complete a business
combination, we would repay such loaned amounts. In the event that a business
combination does not close, we may use a portion of the working capital held
outside the trust account to repay such loaned amounts but no proceeds from our
trust account would be used for such repayment. Up to $1,500,000 of such loans
may be convertible into warrants at a price of $1.00 per warrant. The warrants
would be identical to the private warrants.

In October 2021, Quantum Ventures committed to provide us up to $2,000,000 in
working capital loans. In February 2022, Quantum Ventures committed to provide
us up to an additional $1,000,000 for a total of $3,000,000 in working capital
loans. Refer to Note 5 of our financial statements. Through the date of this
filing, there have been no amounts advanced to us under the working capital
loans. We may raise additional capital through loans or additional investments
from Quantum Ventures or its stockholders, officers, directors, or third
parties.

We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking in-depth due diligence
and negotiating a business combination are less than the actual amount necessary
to do so, we may have insufficient funds available to operate our business prior
to our business combination. Moreover, we may need to obtain additional
financing either to complete our business combination or because we become
obligated to redeem a significant number of our public shares upon consummation
of our business combination, in which case we may issue additional securities or
incur debt in connection with such business combination.

Based on the foregoing, we believe we will have sufficient cash available to
meet its needs through the earlier of consummation of a business combination or
through the liquidation date of February 9, 2023, which is the current
liquidation date by virtue of us entering into a Merger Agreement on November 4,
2021.

In connection with the Company’s assessment of going concern considerations in
accordance with Financial Accounting Standard Board’s Accounting Standards
Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability
to Continue as a Going Concern,” the date for mandatory liquidation and
dissolution raises substantial doubt about the Company’s ability to continue as
a going concern through February 9, 2023, (the scheduled liquidation date of the
Company if it does not complete a Business Combination prior to such date).
Management’s plan to alleviate the substantial doubt is to complete a business
combination prior to February 9, 2023. The Company entered into a definitive
Merger Agreement on November 4, 2021 (as defined below in Note 6) and is in the
process of completing this Business Combination. Management has assessed the
likelihood of whether it will be able to carry out its plan to complete this
business combination prior to February 9, 2023. Management believes the business
combination will occur prior to the termination set forth in the Merger
Agreement of August 1, 2022 (270 days following the date of the Merger
Agreement), which is before the date of the mandatory liquidation date. As such,
based on these factors and other considerations, Management believes that its
plan alleviates the substantial doubt raised by the date for mandatory
liquidation described above.

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Off-Balance Sheet Arrangements

We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 2021.

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities other than an agreement to pay Quantum
Ventures a monthly fee of $10,000 for office space, utilities and secretarial
support. We began incurring these fees on February 4, 2021 and will continue to
incur these fees monthly until the earlier of the completion of the business
combination and our liquidation.

We engaged Chardan as an advisor in connection with a business combination to
assist us in holding meetings with our stockholders to discuss the potential
business combination and the target business’s attributes, introduce us to
potential investors that are interested in purchasing our securities in
connection with the potential business combination, assist us in obtaining
stockholder approval for the business combination and assist us with our press
releases and public filings in connection with the business combination. We will
pay Chardan a marketing fee for such services upon the consummation of our
initial business combination in an amount equal to, 7,043,750, or 3.5% of the
gross proceeds of the initial public offering, including the proceeds from the
full exercise of the over-allotment option.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, disclosure of contingent assets
and liabilities at the date of the financial statements, and income and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:

Warrant Liability

We account for warrants as either equity-classified or liability-classified
instruments based on an assessment of the warrant’s specific terms and
applicable authoritative guidance in Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing
Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC
815”). The assessment considers whether the warrants are freestanding financial
instruments pursuant to ASC 480, meet the definition of a liability pursuant to
ASC 480, and whether the warrants meet all of the requirements for equity
classification under ASC 815, including whether the warrants are indexed to our
own common stock, among other conditions for equity classification. This
assessment, which requires the use of professional judgment, is conducted at the
time of warrant issuance and as of each subsequent quarterly period end date
while the warrants are outstanding. We have concluded that the public warrants
should be classified as equity instruments, and the private warrants should be
classified as liability instruments.

For issued or modified warrants that meet all of the criteria for equity
classification, the warrants are required to be recorded as a component of
additional paid-in capital at the time of issuance. For issued or modified
warrants that do not meet all the criteria for equity classification, the
warrants are required to be recorded at their initial fair value on the date of
issuance, and each balance sheet date thereafter. Changes in the estimated fair
value of the warrants are recognized as a non-cash gain or loss on the
statements of operations.

Class A Common Stock Subject to Possible Redemption

We account for our common stock subject to possible redemption in accordance
with the guidance in ASC 480. Common stock subject to mandatory redemption is
classified as a liability instrument and measured at fair value. Conditionally
redeemable common stock (including common stock that features redemption rights
that are either within the control of the holder or subject to redemption upon
the occurrence of uncertain events not solely within our control) is classified
as temporary equity. At all other times, common stock is classified as
stockholders’ equity. Our common stock features certain redemption rights that
are considered to be outside of our control and subject to occurrence of
uncertain future events. Accordingly, all shares of common stock subject to
possible redemption are presented at redemption value as temporary equity,
outside of the stockholders’ equity (deficit) section of our balance sheets.

Net Loss Per Common Share

Net loss per common share is computed by dividing net loss by the weighted
average number of common shares outstanding for the period. Accretion associated
with the redeemable shares of common stock is excluded from loss per common
share as the redemption value approximates fair value.

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Recent Accounting Standards

In August 2020, the FASB issued ASU No. 2020-06, “Debt-Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in
Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments
and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies
accounting for convertible instruments by removing major separation models
required under current GAAP. ASU 2020-06 removes certain settlement conditions
that are required for equity contracts to qualify for the derivative scope
exception, and it also simplifies the diluted earnings per share calculation in
certain areas. ASU 2020-06 is effective for fiscal years beginning after
December 15, 2023, including interim periods within those fiscal years, with
early adoption permitted. We are currently assessing the impact, if any, that
ASU 2020-06 would have on its financial position, results of operations or cash
flows.

Management does not believe that any other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our financial statements.

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