S-4/A 1 fs42020a1_insuranceacq.htm REGISTRATION STATEMENT

As filed with the Securities and Exchange Commission on August 19, 2020

Registration No. 333-239896

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

____________________________________

AMENDMENT NO. 1

TO

FORM S-4
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

____________________________________

INSURANCE ACQUISITION CORP.
(Exact name of registrant as specified in its charter)

____________________________________

Delaware

 

6770

 

82-5325852

(State or other jurisdiction of incorporation or organization)

 

(Primary Standard Industrial Classification Code Number)

 

(I.R.S. Employer
Identification No.)

____________________________________

2929 Arch Street, Suite 1703
Philadelphia, PA 19104
-2870
(215) 701
-9555
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

2929 Arch Street, Suite 1703
Philadelphia, PA 19104
-2870
Attn: John M. Butler
President and Chief Executive Officer
(215) 701
-9555
(Name, address, including zip code, and telephone number, including area code, of agent for service)

____________________________________

Copies to:

Sean M. Donahue

Jeffrey A. Letalien

Morgan, Lewis & Bockius LLP

1111 Pennsylvania Avenue, NW

Washington, DC 20004-2541

(202) 538-3557

Martin C. Glass

Jeffrey R. Shuman

Jenner & Block LLP

919 Third Avenue

New York, NY 10022-3908

(212) 891-1672

____________________________________

Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective and after all conditions under the Merger Agreement to consummate the proposed merger are satisfied or waived.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box. £

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer:

 

£

 

Accelerated filer:

 

£

   

Non-accelerated filer:

 

S

 

Smaller reporting company:

 

S

           

Emerging growth company

 

S

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. £

If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer) £

Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer) £

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

 

The information in this proxy statement/prospectus is not complete and may be changed. We may not issue these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED AUGUST 19, 2020

INSURANCE ACQUISITION CORP.

2929 Arch Street, Suite 1703
Philadelphia, Pennsylvania 19104

PRELIMINARY PROXY STATEMENT/PROSPECTUS FOR SPECIAL MEETING IN LIEU OF
2020 ANNUAL MEETING OF STOCKHOLDERS AND PROSPECTUS FOR
44,001,000 SHARES OF COMMON STOCK OF INSURANCE ACQUISITION CORP.

Dear Insurance Acquisition Corp. Stockholders:

On June 29, 2020, Insurance Acquisition Corp., which we refer to as we, us, our, INSU, or the Company, IAC Merger Sub, Inc., our direct wholly owned subsidiary, which we refer to as Merger Sub, and Shift Technologies, Inc., which we refer to as Shift, entered into an Agreement and Plan of Merger, as amended by the First Amendment to Agreement and Plan of Merger, dated August 19, 2020, which we refer to as the Merger Agreement, pursuant to which we will acquire Shift by the merger of Merger Sub with and into Shift with Shift continuing as the surviving entity and a wholly owned subsidiary of the Company, which we refer to collectively as the Merger.

At the special meeting in lieu of the 2020 annual meeting of stockholders, which we refer to as the special meeting, our stockholders will be asked to consider and vote upon a proposal to approve the Merger and adopt the Merger Agreement, which we refer to as the Merger Proposal. If the Merger is completed, the stockholders of Shift, which we refer to as the Shift stockholders, will exchange their shares of Shift common stock for shares of our Class A common stock, par value $0.0001 per share, which we refer to as common stock. The aggregate consideration to be paid in the Merger will consist of (i) 38,000,000 shares of common stock, which we refer to as the Merger Shares, subject to downward adjustment based on the Converted Option Share Equivalent Number (as defined hereinbelow), and possible downward adjustment based on the Net Asset Amount (as defined hereinbelow), in accordance with the terms of the Merger Agreement, and (ii) 6,000,000 shares of common stock, which we refer to as the Additional Shares that will be deposited into an escrow account at the closing of the Merger. Because the number of Merger Shares is subject to downward adjustment, our stockholders will not know, at the time of the vote on the Merger Agreement at the special meeting, the number of Merger Shares that will be received by Shift stockholders. If the reported closing sale price of our common stock does not exceed $12.00 per share for 20 out of any 30 consecutive trading days during the first 12 months following the closing of the Merger, which we refer to as the First Threshold, then fifty percent (50%) of the Additional Shares will be returned to the Company (and either placed into treasury or retired, in the discretion of the Company). If the First Threshold is reached, such Additional Shares will be released from escrow to the respective Shift stockholders that are the holders thereof. If the reported closing sale price of our common stock does not exceed $15.00 per share for 20 out of any 30 consecutive trading days during the first 30 months following the closing of the Merger, which we refer to as the Second Threshold, then fifty percent (50%) of the Additional Shares will be returned to the Company (and either placed into treasury or retired, in the discretion of the Company). If the Second Threshold is reached, such Additional Shares will be released from escrow to the respective Shift stockholders that are the holders thereof. Additionally, if we undergo a transaction or series of transactions that result in a change of control or sale of substantially all of the assets of the Company during such 12-month period or such 30-month period, respectively, if not previously achieved, the First Threshold or the Second Threshold, or both, respectively, will be considered achieved if the sale price in such change of control meets or exceeds a price of $10.00 per share..

This prospectus registers the 38,000,000 Merger Shares and the 6,000,000 Additional Shares. It also registers 1,000 shares that may be issued to Shift stockholders as a result of rounding up for any fractional shares. Accordingly, this prospectus registers an aggregate of 44,001,000 shares of INSU common stock.

The number of shares which comprise the common stock consideration will be based on a $10.00 per share value for our common stock. The amount of common stock to be issued as consideration in the Merger is subject to downward adjustment, as set forth in the Merger Agreement, (i) if the Net Asset Amount at the time of Closing is less than the Net Asset Floor (as defined hereinbelow), by the number of shares equal to the amount by which the Net Asset Amount is less than the Net Asset Floor divided by $10.00, and (ii) by the Converted Option Share Equivalent Number (as defined hereinbelow). At the effective time of the Merger, all options to acquire Shift common stock then outstanding, which we refer to herein as Shift Options, will be converted into options to purchase shares of our common stock, which we refer to herein as Converted Options. Each Converted Option will continue to be subject to substantially the same terms and conditions as were applicable to such Shift Option prior to the effective time of the Merger, except that (i) each Converted Option will be exercisable for that number of shares of our common stock equal to the product (rounded down to the nearest whole number) of (a) the number of shares of Shift common stock subject to the Shift Option immediately before the effective time of the Merger and (b) the quotient obtained by dividing (1) (x) the Closing Date Merger Consideration per share of Shift common stock, expressed in dollars minus (y) the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger, by (2) (x) $10.00 minus (y) the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger, and (ii) the per share exercise price for each share of our common stock issuable upon exercise of the Converted Option shall be equal to the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger. For additional information, see the sections in the accompanying proxy statement/prospectus entitled “Proposal No. 1 — The Merger Proposal — The Merger Agreement — Merger Consideration.Pursuant to the Merger Agreement, the aggregate Merger consideration will be delivered to the Shift stockholders. A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A.

 

Our stockholders will also be asked to consider and vote upon proposals (a) to approve and adopt certain amendments to our current charter, the Amended and Restated Certificate of Incorporation of Insurance Acquisition Corp., which we refer to as our charter, with such amendments to be effective as of the effective time of the Merger and the consummation of the business combination, which we refer to as the Effective Time, to (i) increase the number of shares of our authorized common stock, which we refer to as Proposal 2, (ii) create an additional class of directors so that there will be three classes of directors with staggered terms of office, and make certain related changes, which we refer to as Proposal 3, (iii) provide that certain transactions are not “corporate opportunities” and that each of Highland Capital Partners 9 Limited Partnership, which we refer to as HCP 9, Highland Capital Partners 9-B Limited Partnership, which we refer to as HCP 9-B or Highland Entrepreneurs’ Fund 9 Limited Partnership, which we refer to as HEF and, together with HCP 9 and HCP 9-B, the Highland Entities, or any of their managers, officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries (other than the Company and its subsidiaries) (collectively, the “Exempted Persons”) are not subject to the doctrine of corporate opportunity, which we refer to as Proposal 4, and (iv) provide for additional changes, principally including changing our name from “Insurance Acquisition Corp.” to “Shift Technologies, Inc.,” and remove provisions applicable only to special purpose acquisition companies, which we refer to as Proposal 5, each of which Proposal Nos. 2 through 5 we refer to as a Charter Proposal and collectively the Charter Proposals, (b) to approve, (i) for purposes of complying with Nasdaq Listing Rule 5635(a) and (b), the issuance of more than 20% of our issued and outstanding common stock and the resulting change of control in connection with the Merger, and (ii) for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of up to 19,800,000 shares of our common stock in connection with the PIPE Investment, upon the completion of the Merger, which we collectively refer to as the Nasdaq Proposal, (c) to approve and adopt the Shift Technologies, Inc. 2020 Omnibus Equity Compensation Plan (an equity-based incentive plan), including the authorization of the initial share reserve thereunder, a copy of which is attached to this proxy statement/prospectus as Annex B, which we refer to as the Incentive Plan Proposal, (d) to elect three directors to serve on our board of directors, in accordance with our certificate of incorporation, until the earlier of the Effective Time and the 2022 annual meeting of stockholders, and until their respective successors are duly elected and qualified or until their earlier resignation, removal or death, which we refer to as the Existing Director Election Proposal, (e) to elect, effective as of, and contingent upon, the Effective Time, one Class I director, two Class II directors, and three Class III directors, to serve on our board of directors, in accordance with the Business Combination Charter (as defined below) until the 2021, 2022, and 2023 annual meetings of stockholders, respectively, and until their respective successors are duly elected and qualified or until their earlier resignation, removal or death, which we refer to as the Business Combination Director Election Proposal, and (f) to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes received to pass the resolution to approve the Merger Proposal, the Charter Proposals, the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal and/or the Business Combination Director Election Proposal, which we refer to as the Adjournment Proposal. A copy of our proposed second amended and restated certificate of incorporation incorporating the Charter Proposals, which we refer to as the Business Combination Charter, is attached as Annex C to this proxy statement/prospectus. Each of these proposals is more fully described in this proxy statement/prospectus.

Our common stock, units and warrants are currently listed on The Nasdaq Capital Market under the symbols “INSU,” “INSUU” and “INSUW,” respectively. We will apply to continue the listing of our common stock and warrants on The Nasdaq Capital Market under the symbols “SFT” and “SFTTW,” respectively, upon the closing of the Merger.

Pursuant to our charter, we are providing holders of the shares of common stock included in the units issued in our initial public offering, which we refer to as our public stockholders, with the opportunity, upon the closing of the Merger and subject to the limitations described in this proxy statement/prospectus, to redeem their shares of our common stock for cash equal to their pro rata share of the aggregate amount on deposit in our trust account (as of two business days prior to the consummation of the Merger). For illustrative purposes, based on funds in our trust account of approximately $154 million on June 30, 2020, stockholders would have received a redemption price of approximately $10.15 per share of our common stock. Public stockholders may elect to redeem their shares even if they vote for the Merger Proposal.

We are providing this proxy statement/prospectus and the accompanying proxy card to our stockholders in connection with the solicitation of proxies to be voted at the special meeting and at any adjournments or postponements of the special meeting. The special meeting will be held at [•] [AM./P.M.] Eastern Time on [      ], 2020 at [•]. Whether or not you plan to attend the special meeting, we urge you to read this proxy statement/prospectus (including the annexes) carefully, including the section entitled “Risk Factors” beginning on page 31.

Your vote is very important, regardless of the number of shares of our common stock you own. To ensure your representation at the special meeting, please take time to vote by following the instructions contained in this proxy statement/prospectus and on your proxy card. Please vote promptly whether or not you expect to attend the special meeting. Submitting a proxy now will not prevent you from being able to vote in person at the special meeting.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted FOR each of the proposals presented at the special meeting. If you fail to return your proxy card and do not attend the special meeting in person, if you abstain from voting, or if you hold your shares in “street name” through a broker or other nominee and fail to give such nominee voting instructions (a “broker non-vote”), it will have the same effect as a vote “AGAINST” the Merger Proposal and the Charter Proposals but will have no effect on the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal, the Business Combination Director Election Proposal or the Adjournment Proposal. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a proxy from your broker or bank.

 

The Merger Proposal is conditioned on the approval of Proposal 2 and the Nasdaq Proposal. In addition, (i) Proposal 2 is conditioned on the approval of the Merger Proposal and the Nasdaq Proposal, (ii) each of Proposal 3, Proposal 4, Proposal 5, the Incentive Plan Proposal and the Business Combination Director Election Proposal is conditioned on the approval of the Merger Proposal, Proposal 2 and the Nasdaq Proposal, (iii) the Business Combination Director Election Proposal is conditioned on the approval of Proposal 3, and (iv) the Nasdaq Proposal is conditioned on the Merger Proposal and Proposal 2. Neither the Existing Director Election Proposal nor the Adjournment Proposal is conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that if either the Merger Proposal or the Nasdaq Proposal is not approved by our stockholders, or if any other proposal is not approved by our stockholders and we and Shift do not waive the applicable closing condition under the Merger Agreement, then the Merger will not be consummated.

Our board of directors unanimously recommends that our stockholders vote “FOR” the Merger Proposal and “FOR” the other proposals presented in this proxy statement/prospectus. In considering the recommendation of our board of directors, you should keep in mind that our directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of our stockholders generally. For additional information, see the section entitled “Proposal No. 1 — The Merger Proposal —Interests of Certain Persons in the Merger.

 

Sincerely,

   

/s/ John M. Butler

   

John M. Butler

President and Chief Executive Officer

This proxy statement/prospectus incorporates by reference important business and financial information about the Company from documents that are not included in or delivered with this proxy statement/prospectus. You can obtain documents incorporated by reference in this proxy statement/prospectus and other filings of the Company with the Securities and Exchange Commission by visiting its website at www.sec.gov or requesting them in writing or by telephone from the Company at the following address:

2929 Arch Street, Suite 1703
Philadelphia, PA 19104
-2870
Attn: John M. Butler
President and Chief Executive Officer
(215) 701
-9555

You will not be charged for any of these documents that you request. Stockholders requesting documents should do so by             , 2020 in order to receive them before the special meeting.

This proxy statement/prospectus is dated [•], 2020, and is first being mailed to our stockholders on or about [•], 2020.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED OF THE TRANSACTIONS DESCRIBED IN THIS PROXY STATEMENT/PROSPECTUS OR ANY OF THE SECURITIES TO BE ISSUED IN THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.

 

INSURANCE ACQUISITION CORP.

2929 Arch Street, Suite 1703
Philadelphia, Pennsylvania 19104

NOTICE OF SPECIAL MEETING IN LIEU OF 2020 ANNUAL MEETING
OF STOCKHOLDERS OF INSURANCE ACQUISITION CORP.
To Be Held on [•], 2020

To the Stockholders of Insurance Acquisition Corp.:

NOTICE IS HEREBY GIVEN that a special meeting in lieu of the 2020 annual meeting of stockholders, which we refer to as the special meeting, of Insurance Acquisition Corp., a Delaware corporation, will be held on [•], 2020, at [•] [A.M./P.M.], Eastern Time, at [•]. You are cordially invited to attend the special meeting, which will be held to consider and vote upon the following matters:

(1)    The Merger Proposal — to consider and vote upon a proposal to approve the Merger and adopt the Merger Agreement;

(2)    The Charter Proposals — to consider and vote upon proposed amendments to our charter to (i) increase the number of our authorized shares of common stock (referred to herein as Proposal 2), (ii) create an additional class of directors so that there will be three classes of directors with staggered terms of office, and make certain related changes (referred to herein as Proposal 3), (iii) provide that certain transactions are not “corporate opportunities” and that the Highland Entities and their affiliates are not subject to the doctrine of corporate opportunity (referred to herein as Proposal 4), and (iv) provide for additional changes, principally including changing our corporate name from “Insurance Acquisition Corp.” to “Shift Technologies, Inc.” and removing provisions applicable only to special purpose acquisition companies (referred to herein as Proposal 5);

(3)    The Nasdaq Proposal — to consider and vote upon a proposal to approve: (i) for purposes of complying with Nasdaq Listing Rule 5635(a) and (b), the issuance of more than 20% of our issued and outstanding common stock and the resulting change of control in connection with the Merger; and (ii) for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of up to 19,800,000 shares of common stock in connection with the PIPE Investment, upon the completion of the Merger;

(4)    The Incentive Plan Proposal — to consider and vote upon a proposal to adopt the Shift Technologies, Inc. 2020 Omnibus Equity Compensation Plan, including the authorization of the initial share reserve thereunder, which we refer to as the Omnibus Plan;

(5)     The Existing Director Election Proposal — to consider and vote upon a proposal to elect Daniel G. Cohen, John C. Chrystal and Stephanie Gould Rabin as directors to serve on our board of directors as Class I directors under our charter until the earlier of the Effective Time and the 2022 annual meeting of stockholders, and until their respective successors are duly elected and qualified or until their earlier resignation, removal or death;

(6)     The Business Combination Director Election Proposal — to consider and vote upon a proposal to elect, effective as of and contingent upon the Effective Time, Victoria McInnis as a Class I director, Adam Nash and Emily Melton as Class II directors, and George Arison, Tobias Russell, and Manish Patel as Class III directors, to serve on our board of directors in accordance with the Business Combination Charter until the 2021, 2022, and 2023 annual meetings of stockholders, respectively, and until their respective successors are duly elected and qualified or until their earlier resignation, removal or death; and

(7)     The Adjournment Proposal — to consider and vote upon a proposal to approve the adjournment of the special meeting by the chairman thereof to a later date, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Merger Proposal, the Charter Proposals, the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal and/or the Business Combination Director Election Proposal.

These items of business are described in the accompanying proxy statement/prospectus, which we encourage you to read in its entirety before voting. Only holders of record of our common stock at the close of business on [], 2020 are entitled to notice of the special meeting and to vote and have their votes counted at the special meeting and any adjournments or postponements of the special meeting.

 

All Company stockholders are cordially invited to attend the special meeting in person. To ensure your representation at the special meeting, however, we urge you to complete, sign, date and return the enclosed proxy card as soon as possible. If you are a stockholder of record, you may also cast your vote in person at the special meeting. If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the special meeting. If you fail to return your proxy card and do not attend the special meeting in person, if you abstain from voting, or if you hold your shares in “street name” through a broker or other nominee and fail to give such nominee voting instructions (a “broker non-vote”), it will have the same effect as a vote “AGAINST” the Merger Proposal and the Charter Proposals but will have no effect on the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal, the Business Combination Director Election Proposal or the Adjournment Proposal. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a proxy from your broker or bank. Public stockholders may elect to redeem their public shares even if they vote “FOR” the Merger Proposal.

The Merger Proposal is conditioned on the approval of Proposal 2 and the Nasdaq Proposal. In addition, (i) Proposal 2 is conditioned on the approval of the Merger Proposal and the Nasdaq Proposal, (ii) each of Proposal 3, Proposal 4, Proposal 5, the Incentive Plan Proposal, and the Business Combination Director Election Proposal is conditioned on the approval of the Merger Proposal, Proposal 2 and the Nasdaq Proposal, (iii) the Business Combination Director Election Proposal is conditioned on the approval of Proposal 3, and (iv) the Nasdaq Proposal is conditioned on the Merger Proposal and Proposal 2. Neither the Existing Director Election Proposal nor the Adjournment Proposal is conditioned on the approval of any other proposal set forth in the accompanying proxy statement/prospectus. It is important for you to note that if either the Merger Proposal or the Nasdaq Proposal is not approved by our stockholders, or if any other proposal is not approved by our stockholders and we and Shift do not waive the applicable closing condition under the Merger Agreement, then the Merger will not be consummated.

After careful consideration, our board of directors has determined that the Merger Proposal, the Charter Proposals, the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal, the Business Combination Director Election Proposal and the Adjournment Proposal are fair to and in the best interests of the Company and our stockholders and unanimously recommends that you vote or give instruction to vote “FOR” the Merger Proposal and “FOR” the other proposals presented in the accompanying proxy statement/prospectus. In considering the recommendation of our board of directors, you should keep in mind that our directors and executive officers may have interests in the Merger that are different from, or in addition to, the interests of our stockholders generally. For additional information, see the section in the accompanying proxy statement/prospectus entitled “Proposal No. 1 — The Merger Proposal — Interests of Certain Persons in the Merger.”

A complete list of the Company’s stockholders of record entitled to vote at the special meeting will be available for ten days before the special meeting at the principal executive offices of the Company for inspection by stockholders during ordinary business hours and during the special meeting for any purpose germane to the special meeting.

Your vote is important regardless of the number of shares you own. Whether you plan to attend the special meeting or not, please sign, date and return the enclosed proxy card as soon as possible in the envelope provided. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly voted.

Your attention is directed to the proxy statement/prospectus accompanying this notice (including the annexes thereto) for a more complete description of the Merger and related transactions and each of our proposals. Whether or not you plan to attend the special meeting, we urge you to read the accompanying proxy statement/prospectus (including the annexes) carefully, including the section entitled “Risk Factors” beginning on page 31 thereof. If you have any questions regarding the accompanying proxy statement/prospectus or need assistance voting your shares, please call our proxy solicitor, Morrow Sodali LLC at (800) 662-5200 if you are a stockholder or collect at (203) 658-9400 if you are a broker or bank.

Philadelphia, Pennsylvania

 

By Order of the Board of Directors,

[•], 2020

 

/s/ Daniel G. Cohen

   

Daniel G. Cohen

Chairman of the Board of Directors

 

TABLE OF CONTENTS

 

Page

FREQUENTLY USED TERMS

 

1

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS

 

4

SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

 

15

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF COMPANY

 

23

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF SHIFT

 

24

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

26

COMPARATIVE SHARE INFORMATION

 

28

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

29

RISK FACTORS

 

31

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

 

66

SPECIAL MEETING OF COMPANY STOCKHOLDERS

 

74

EXTENSION AMENDMENT

 

78

PROPOSAL NO. 1— THE MERGER PROPOSAL

 

79

PROPOSAL NO. 2 — AUTHORIZATION TO INCREASE THE COMPANY’S AUTHORIZED CAPITAL STOCK

 

116

PROPOSAL NO. 3 — CLASSIFICATION OF THE BOARD OF DIRECTORS

 

118

PROPOSAL NO. 4 — AUTHORIZATION TO PROVIDE FOR CERTAIN EXEMPTIONS FROM THE DOCTRINE OF CORPORATE OPPORTUNITY

 

120

PROPOSAL NO. 5 APPROVAL OF ADDITIONAL AMENDMENTS TO OUR CHARTER IN CONNECTION WITH THE MERGER

 

122

PROPOSAL NO. 6 — THE NASDAQ PROPOSAL

 

125

PROPOSAL NO. 7 — THE INCENTIVE PLAN PROPOSAL

 

127

PROPOSAL NO. 8 — THE EXISTING DIRECTOR ELECTION PROPOSAL

 

136

PROPOSAL NO. 9 — THE BUSINESS COMBINATION DIRECTOR ELECTION PROPOSAL

 

137

PROPOSAL NO. 10 — THE ADJOURNMENT PROPOSAL

 

138

MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES

 

139

INFORMATION ABOUT THE COMPANY

 

146

COMPANY’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

155

INFORMATION ABOUT SHIFT

 

160

SHIFT’S MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

179

MANAGEMENT FOLLOWING THE MERGER

 

205

DESCRIPTION OF SECURITIES

 

212

BENEFICIAL OWNERSHIP OF SECURITIES

 

218

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

223

INFORMATION ON SECURITIES AND DIVIDENDS

 

228

LEGAL MATTERS

 

229

EXPERTS

 

229

APPRAISAL RIGHTS

 

229

DELIVERY OF DOCUMENTS TO STOCKHOLDERS

 

229

TRANSFER AGENT AND REGISTRAR

 

229

SUBMISSION OF STOCKHOLDER PROPOSALS

 

229

FUTURE STOCKHOLDER PROPOSALS

 

230

WHERE YOU CAN FIND MORE INFORMATION

 

230

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FREQUENTLY USED TERMS

Unless otherwise stated or unless the context otherwise requires, the terms we, us, our, and the Company refer to Insurance Acquisition Corp., and the terms combined company and post-combination company refer to Insurance Acquisition Corp. and Shift Technologies, Inc. following the consummation of the Merger. Furthermore, in this document:

Business Combination Charter” means the proposed Second Amended and Restated Certificate of Incorporation of the Company, which will become the Company’s certificate of incorporation upon the approval of the Charter Proposals, the Merger Proposal, the Nasdaq Proposal and the Incentive Plan Proposal, the consummation of the Merger, and filing with the Secretary of State of the State of Delaware. A copy of the Business Combination Charter is attached hereto as Annex C.

Business Combination Outside Date” means September 22, 2020, or if the Extension Amendment is approved, November 3, 2020, or such later date as may be approved by our stockholders in accordance with our charter.

Cantor” means Cantor Fitzgerald & Co., the underwriter for our IPO.

charter” means our current charter, the Amended and Restated Certificate of Incorporation of the Company.

Closing” means the closing of the Merger in accordance with, and subject to the terms and conditions of the Merger Agreement.

Closing Date” means the date on which the Merger is completed in accordance with, and subject to the terms and conditions of the Merger Agreement.

Company common stock,” “INSU common stock,” or “our common stock” means Class A common stock, par value $0.0001 per share, of the Company.

Converted Option Share Equivalent Number” means that number of shares of our common stock equal to the product (rounded down to the nearest whole number) of (a) the number of shares of Shift common stock subject to Shift Options immediately before the effective time of the Merger and (b) the quotient obtained by dividing (1) (x) the Closing Date Merger Consideration per share of Shift common stock, expressed in dollars minus (y) the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger, by (2) (x) $10.00 minus (y) the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger.

downward adjustment” means, if not otherwise described when used, a reduction in the number of shares of Company common stock issued as Closing Date Merger Consideration, as set forth in the Merger Agreement, (i), if the Net Asset Amount (as defined hereinbelow) at the time of Closing is less than the Net Asset Floor (as defined hereinbelow), by the number of shares equal to the amount by which the Net Asset Amount is less than the Net Asset Floor, divided by $10.00, and (ii) by the Converted Option Share Equivalent Number. As further described in the definitions of such terms and elsewhere in this proxy statement/prospectus, the Net Asset Amount will be determined as of the Closing Date, the Net Asset Floor changes in amount over time based on the timing of the Closing Date, and the Converted Option Share Equivalent Number will be determined as of the Closing Date, and as a result it is not possible to determine the effect of these potential adjustments on the Closing Date Merger Consideration until the occurrence of the Closing. As of the date of this Amendment No. 1, no adjustment to the Closing Date Merger Consideration is anticipated in respect of the Net Asset Amount adjustment; and the Converted Option Share Equivalent Number is estimated to be 2.91 million. These projected amounts and numbers will change over time, and as noted above will not be determined until the Closing. As an example, (a) if the Closing Date is on or prior to September 30, 2020, the Net Asset Floor would be negative $11,525,000, and if the Net Asset Amount is negative $19,000,000, then the Closing Date Merger Consideration would be adjusted downward by 747,500 shares of Company common stock (i.e., the result of ($19,000,000 minus 11,525,000)/$10.00), and (b) if the Closing Date is after September 30, 2020, the Net Asset Floor would be negative $18,525,000, and if the Net Asset Amount is negative $19,000,000, then the Closing Date Merger Consideration would be adjusted downward by 47,500 shares of Company common stock (i.e., the result of ($19,000,000 minus 18,525,000)/$10.00). Because the number of Merger Shares is subject to downward adjustment, our stockholders will not know, at the time of the vote on the Merger Agreement at the special meeting, the number of Merger Shares that will be received by Shift stockholders.

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Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Extension Amendment” means the proposed amendment to our charter to extend the period of time for which we are required to consummate a business combination from September 22, 2020 until November 3, 2020. If for any reason the Merger is not reasonably expected to occur prior to November 3, 2020, we are contractually obligated to either amend the existing Extension Amendment, or solicit our stockholders for a new Extension Amendment, seeking to further extend the outside date for consummating a business combination to a date that is no earlier than January 11, 2021.

founder shares” means the 5,163,333 shares of our Class B common stock issued to the initial stockholders prior to our IPO.

initial stockholders” or “initial holders” means our Sponsor and any other holders of founder shares.

IPO” means our initial public offering of 15,065,000 of our units, each unit consisting of one share of our Class A common stock and one-half of one warrant, where each whole warrant entitles the holder to purchase one share of our Class A common stock, which was consummated on March 22, 2019.

Merger” means the business combination of Shift and the Company through the merger of Merger Sub with and into Shift, with Shift being the surviving entity and a wholly owned subsidiary of the Company, pursuant to the Merger Agreement.

Merger Agreement” means the Agreement and Plan of Merger, dated as of June 29, 2020, as amended by that certain First Amendment to Agreement and Plan of Merger, dated as of August 19, 2020, and as it may be further amended, by and among the Company, Merger Sub and Shift.

Merger Consideration” means the aggregate consideration to be paid in the Merger to the Shift stockholders, in exchange for its shares of Shift common stock, which will consist of the Closing Date Merger Consideration and the Additional Shares. If, after the date of the Merger Agreement and prior to the effective time of the Merger, the Company undergoes a change in its capitalization (such as a stock split, share dividend or recapitalization affecting the Company common stock), the Merger Agreement provides for an equitable adjustment in the number of shares comprising the Merger Consideration.

Merger Sub” means IAC Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of the Company.

“Net Asset Amount” means the sum of, as of 12:01 a.m. Eastern time on the Closing Date, (i) the aggregate amount of the assets of Shift and its subsidiaries (including cash) minus (iii) the aggregate amount of the liabilities of Shift and its subsidiaries, exclusive of certain non-material items and transaction expenses of Shift, as further described in the Merger Agreement.

Net Asset Floor” means negative $11,525,000 if the Closing Date is on or prior to September 30, 2020, and negative $18,525,000 if the Closing Date is after September 30, 2020.

Omnibus Plan” means the Shift Technologies, Inc. 2020 Omnibus Equity Compensation Plan (an equity-based incentive plan) attached to this proxy statement/prospectus as Annex B.

PIPE Investment” refers to the Company entering into subscription agreements with certain investors for such investors to purchase up to 19,800,000 shares of the Company’s common stock.

“PIPE Investors” means the investors of the PIPE Investment.

placement shares” means the 425,000 shares of Company common stock included in the placement units purchased separately in the private placement by our Sponsor and Cantor.

placement units” means the 425,000 units purchased by our Sponsor and Cantor in the private placement, each placement unit consisting of one placement share and one-half of one placement warrant.

placement warrants” means the warrants to purchase an aggregate of 212,500 shares of our Class A common stock included within the placement units purchased by our Sponsor and Cantor in the private placement.

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private placement” means the private placement of 425,000 units purchased by our Sponsor (375,000 units) and Cantor (50,000 units), which was consummated simultaneously with the completion of our IPO, at a purchase price of $10.00 per unit for a total purchase price of $4.25 million.

public shares” means the shares of our Class A common stock sold as part of the units in our IPO (whether they were purchased in the IPO or thereafter in the open market).

public stockholders” means the holders of our public shares, which may include our initial stockholders, Cantor and members of our management team if and to the extent they have purchased public shares, provided that any such holder’s status as a “public stockholder” shall only exist with respect to such public shares.

public warrants” means the 7,532,500 warrants included in the units issued in our IPO, each of which is exercisable for one share of our common stock in accordance with its terms.

Securities Act” means the Securities Act of 1933, as amended.

special meeting” means the special meeting in lieu of the 2020 annual meeting of stockholders of the Company that is the subject of this proxy statement/prospectus and any adjournments or postponements thereof.

Sponsor” refers collectively to Insurance Acquisition Sponsor, LLC, a Delaware limited liability company, and Dioptra Advisors, LLC, a Delaware limited liability company. The manager of each entity is Cohen & Company, LLC, a Delaware limited liability company.

Sponsor Additional PIPE Shares” means up to an additional 1,300,000 shares of our common stock that Cohen & Company, LLC is permitted to purchase under its PIPE Subscription Agreement, subject to certain limitations described in such PIPE Subscription Agreement.

trust account” refers to the trust account into which $150,650,000 of the net proceeds of the IPO and private placement were deposited for the benefit of the public stockholders.

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the special meeting, including with respect to the proposed Merger. The following questions and answers do not include all the information that may be important to you. Whether or not you plan to attend the special meeting, we urge you to read this proxy statement/prospectus (including the annexes) carefully, including the section entitled “Risk Factors” beginning on page 31.

Q:     Why am I receiving this proxy statement/prospectus?

A:     Our stockholders are being asked to consider and vote upon a proposal to approve the Merger and adopt the Merger Agreement, among other proposals. We have entered into the Merger Agreement with Shift which provides for our business combination with Shift pursuant to the merger of Merger Sub with and into Shift with Shift continuing as the surviving entity and a wholly owned subsidiary of the Company. Pursuant to the Merger Agreement, the aggregate consideration to be paid in the Merger will consist of (i) up to 38,000,000 shares of common stock, subject to downward adjustment in accordance with the terms of the Merger Agreement, and (ii) 6,000,000 shares of common stock (the “Additional Shares”) that will be deposited into an escrow account at the Closing. If the reported closing sale price of our common stock does not exceed $12.00 per share for 20 out of any 30 consecutive trading days during the first 12 months following the Closing (the “First Threshold”), then fifty percent (50%) of the Additional Shares will be returned to the Company (and either placed into treasury or retired, in the discretion of the Company). If the First Threshold is reached, such Additional Shares will be released from escrow to the respective Shift stockholders that are the holders thereof. If the reported closing sale price of our common stock does not exceed $15.00 per share for 20 out of any 30 consecutive trading days during the first 30 months following the Closing (the “Second Threshold”), then fifty percent (50%) of the Additional Shares will be returned to the Company (and either placed into treasury or retired, in the discretion of the Company). If the Second Threshold is reached, such Additional Shares will be released from escrow to the respective Shift stockholders that are the holders thereof. Additionally, if we undergo a transaction or series of transactions that result in a change of control or sale of substantially all of the assets of the Company during such 12-month period or such 30-month period, respectively, if not previously achieved, the First Threshold or the Second Threshold, or both, respectively, will be considered achieved if the sale price in such change of control meets or exceeds a price of $10.00 per share. The Shift stockholders are entitled to vote all of the Additional Shares while they are held in escrow. For additional information, see the sections in this proxy statement/prospectus entitled “Proposal No. 1 — The Merger Proposal — The Merger Agreement — Merger Consideration.” A copy of the Merger Agreement is attached to this proxy statement/prospectus as Annex A.

Our common stock, units and warrants are currently listed on The Nasdaq Capital Market under the symbols “INSU,” “INSUU” and “INSUW,” respectively. We will apply to continue the listing of our common stock and warrants on The Nasdaq Capital Market under the symbols “SFT” and “SFTTW,” respectively, upon the Closing. At the Closing, each of our units that are not already trading separately will separate into its component share of common stock and one-half of one warrant to purchase one share of our common stock.

This proxy statement/prospectus and its annexes contain important information about the proposed Merger and the other matters to be acted upon at the special meeting. Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement/prospectus and its annexes, which we urge you to do.

Q:     What is being voted on at the special meeting?

A:     Our stockholders are being asked to vote on the following proposals:

Proposal 1 — The Merger Proposal — A proposal to approve and adopt the Merger and the Merger Agreement;

Proposals 2, 3, 4, and 5 — The Charter Proposals — Proposals to amend our charter to (i) increase the number of our authorized common stock (Proposal 2), (ii) create an additional class of directors so that there will be three classes of directors with staggered terms of office, and to make certain related changes (Proposal 3), (iii) provide that certain transactions are not “corporate opportunities” and that the Highland Entities and their affiliates are not subject to the doctrine of corporate opportunity (Proposal 4), and (iv) provide for additional changes, principally changing our corporate name from “Insurance Acquisition Corp.” to “Shift Technologies, Inc.” and removing provisions applicable only to special purpose acquisition companies (Proposal 5);

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Proposal 6 — The Nasdaq Proposal — A proposal to approve: (i) for purposes of complying with applicable Nasdaq Listing Rule 5635 (a) and (b), the issuance of more than 20% of our issued and outstanding common stock and the resulting change of control in connection with the Merger; and (ii) for purposes of complying with Nasdaq Listing Rule 5635(d), the issuance of up to 19,800,000 shares of common stock in connection with the PIPE Investment, upon the completion of the Merger;

Proposal 7 — The Incentive Plan Proposal — A proposal to adopt the Shift Technologies, Inc. 2020 Omnibus Equity Compensation Plan, including the authorization of the initial share reserve thereunder;

Proposal 8 — The Existing Director Election Proposal — A proposal to elect three directors to serve on our board of directors until the 2022 annual meeting of stockholders, and until their respective successors are duly elected and qualified or until their earlier resignation, removal or death;

Proposal 9 — The Business Combination Director Election Proposal — A proposal to elect, effective as of, and contingent upon, the Effective Time, one Class I director, two Class II directors, and three Class III directors to serve on our board of directors, in accordance with the Business Combination Charter, with two vacancies, until the 2021, 2022, and 2023 annual meetings of stockholders, respectively, and until their respective successors are duly elected and qualified or until their earlier resignation, removal or death; and

Proposal 10 — The Adjournment Proposal — A proposal to approve the adjournment of the special meeting to a later date, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the special meeting, there are not sufficient votes to approve the Merger Proposal, the Charter Proposals, the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal and the Business Combination Director Election Proposal.

Q:     Are the proposals conditioned on one another?

A:     The Merger Proposal is conditioned on the approval of Proposal 2 and the Nasdaq Proposal. In addition, (i) Proposal 2 is conditioned on the approval of the Merger Proposal and the Nasdaq Proposal, (ii) each of Proposal 3, Proposal 4, Proposal 5, the Incentive Plan Proposal and the Business Combination Director Election Proposal is conditioned on the approval of the Merger Proposal, Proposal 2 and the Nasdaq Proposal, (iii) the Business Combination Director Election Proposal is conditioned on the approval of Proposal 3, and (iv) the Nasdaq Proposal is conditioned on the Merger Proposal and Proposal 2. Neither the Existing Director Election Proposal nor the Adjournment Proposal is conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that if either the Merger Proposal or the Nasdaq Proposal is not approved by our stockholders, or if any other proposal is not approved by our stockholders and we and Shift do not waive the applicable closing condition under the Merger Agreement, then the Merger will not be consummated.

Q:     Why is the Company providing stockholders with the opportunity to vote on the Merger?

A:     Our charter requires that we provide all holders of public shares with the opportunity to have their public shares redeemed upon the consummation of our initial business combination in conjunction with either a tender offer or a stockholder vote. For business and other reasons, we have elected to provide our stockholders with the opportunity to have their public shares redeemed in connection with a stockholder vote rather than pursuant to a tender offer. Therefore, we are seeking to obtain the approval of our stockholders of the Merger Proposal in order to provide our public stockholders with the opportunity to redeem their public shares in connection with the Closing.

Q:     What will happen in the Merger?

A:     At the Closing, Merger Sub will merge with and into Shift with Shift continuing as the surviving entity and a wholly owned subsidiary of the Company. The Shift stockholders will exchange their shares of Shift common stock for shares of our common stock in the Merger, and Shift optionholders will have their Shift Options converted into Converted Options to purchase shares of our common stock. Upon consummation of the Merger, we will change our name to Shift Technologies, Inc. and Shift will change its name to Shift Platform, Inc.

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Q:     What equity stake will current stockholders of the Company and the current Shift stockholders hold in the Company immediately following the closing of the Merger?

A:     We anticipate that, upon completion of the Merger, assuming that none of our stockholders exercise redemption rights and that an aggregate of 44,000,000 shares of our common stock will be issued as consideration in the Merger (which assumes no downward adjustment) and an aggregate of 18,500,000 shares of our common stock will be issued in connection with the PIPE Investment upon the completion of the Merger (which assumes no issuance of the Sponsor Additional PIPE Shares), our existing stockholders will hold in the aggregate approximately 25.3% of our outstanding common stock (18.0% held by our public stockholders and 7.3% held by our Sponsor, directors, and other holders of founder shares), the PIPE investors will hold approximately 22.1% of our outstanding common stock, and the current Shift stockholders will hold approximately 52.6% of our outstanding common stock. If 10,311,878 shares of our common stock are redeemed for cash, which assumes the maximum redemption of our shares, upon completion of the Merger, our existing stockholders will hold in the aggregate approximately 15.9% of our outstanding common stock (6.8% held by our public stockholders and 9.1% held by our Sponsor, directors, and other holders of founder shares), the PIPE Investors will hold approximately 26.1% of our outstanding common stock, and the Shift stockholders will hold approximately 58.0% of our outstanding common stock. These ownership percentages do not take into account (1) any warrants to purchase our common stock that will be outstanding following the Merger, (2) any equity awards that may be issued under our proposed Omnibus Plan following the Merger, (3) any downward adjustments to the Merger Consideration pursuant to the Merger Agreement based on the Converted Option Share Equivalent Number or the Net Asset Amount, or (4) the Sponsor Additional PIPE Shares. If the actual facts are different than these assumptions (which is likely), the ownership percentages held by each of our existing stockholders, Cantor and the Shift stockholders will be different.

See the section entitled “Summary — Impact of the Merger on the Company’s Public Float” and Unaudited Pro Forma Combined Financial Information” for further information.

Q:     What will happen with respect to outstanding options to acquire common stock of Shift?

A:     At the effective time of the Merger, all options to acquire Shift common stock then outstanding, which we refer to herein as Shift Options, will be converted into options to purchase shares of our common stock, which we refer to herein as Converted Options. Each Converted Option will continue to be subject to substantially the same terms and conditions as were applicable to such Shift Option prior to the effective time of the Merger, except that (i) each Converted Option will be exercisable for that number of shares of our common stock equal to the product (rounded down to the nearest whole number) of (a) the number of shares of Shift common stock subject to the Shift Option immediately before the effective time of the Merger, and (b) the quotient obtained by dividing (1) (x) the Closing Date Merger Consideration per share of Shift common stock, expressed in dollars minus (y) the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger, by (2) (x) $10.00 minus (y) the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger, and (ii) the per share exercise price for each share of our common stock issuable upon exercise of the Converted Option shall be equal to the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger.

Q:     Will the Company obtain new financing in connection with the Merger?

A:     In connection with the Merger, there will be a PIPE Investment of $185 million, subject to an increase to up to $198 million. As such, on or about the date of the Merger Agreement, the Company entered into subscription agreements with the PIPE Investors for the sale of 18,500,000 shares of Company common stock to the PIPE Investors upon the completion of the Merger. In addition, Cohen & Company, LLC is permitted under its PIPE Subscription Agreement to increase its subscription and purchase the Sponsor Additional PIPE Shares, or any portion thereof, subject to certain limitations.

Q:     What conditions must be satisfied to complete the Merger?

A:     There are a number of closing conditions in the Merger Agreement, including that our stockholders have approved the Merger and adopted the Merger Agreement. For a summary of the conditions that must be

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satisfied or waived prior to completion of the Merger, see the section entitled “Proposal No. 1 — The Merger Proposal — The Merger Agreement — Conditions to Closing of the Merger.”

Q:     Why is the Company proposing the Charter Proposals?

A:     We are asking our stockholders to approve these proposals to amend our charter in connection with the Merger and the terms of the Merger Agreement. The proposed charter amendments that we are asking our stockholders to approve provide for (1) an increase in the number of authorized shares of our common stock so that we will have sufficient authorized shares to issue as consideration in the Merger and to reserve for issuance under the Omnibus Plan, if such plan is approved, and for future issuances of common stock, (2) create an additional class of directors so that there will be three classes of directors with staggered terms of office, and to make certain related changes, (3) certain exemptions to the doctrine of corporate opportunity, and (4) additional changes, principally the change of our name to “Shift Technologies, Inc.” and the removal of provisions in our charter applicable only to special purpose acquisition companies. Pursuant to the Merger Agreement, approval of the Charter Proposals is a condition to consummation of the Merger. In addition, the Merger Proposal is conditioned on approval of Proposal 2.

Q:     Why is the Company proposing the Nasdaq Proposal?

A:     We are proposing the Nasdaq Proposal in order to comply with Nasdaq Listing Rules 5635(a) and (b), which require stockholder approval of the issuance of shares of stock in certain transactions that result in (1) the issuance of 20% or more of the voting power outstanding or shares of common stock outstanding before such issuance of stock and (2) a change of control. Pursuant to the Merger Agreement, based on Shift’s current capitalization, we anticipate issuing an aggregate of up to 44,000,000 shares of common stock, subject to downward adjustment (which total number includes the Additional Shares), to the current Shift stockholders as consideration in the Merger. Because the issuance of such shares of our common stock (1) will constitute more than 20% of our outstanding common stock and more than 20% of outstanding voting power prior to such issuance and (2) will result in a change of control of the Company, we are required to obtain stockholder approval of such issuance pursuant to Nasdaq Listing Rules 5635(a) and (b).

We are also proposing the Nasdaq Proposal in order to comply with Nasdaq Listing Rule 5635(d), which requires stockholder approval for a transaction other than a public offering involving the sale, issuance or potential issuance by an issuer of common stock (or securities convertible into or exercisable for common stock) at a price that is less than the lower of (a) the closing price immediately preceding the signing of the binding agreement or (b) the average closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement, if the number of shares of common stock (or securities convertible into or exercisable for common stock) to be issued equals 20% or more of the common stock, or 20% or more of the voting power, outstanding before the issuance.

The Merger Proposal is conditioned on approval of the Nasdaq Proposal.

Q:     Why is the Company proposing the Incentive Plan Proposal?

A:     The purpose of the Omnibus Plan is to provide eligible employees, directors and consultants the opportunity to receive stock-based incentive awards in order to encourage such persons to contribute materially to the growth of the combined company and align their economic interests with those of our stockholders. Nasdaq Listing Rule 5635(c) requires that we obtain stockholder approval of certain equity compensation plans. Further, Section 422 of the Internal Revenue Code requires shareholder approval of the equity plans intended to provide for grants of incentive stock options. Accordingly, we are proposing the Incentive Plan Proposal to request such stockholder approval of the Omnibus Plan, including the authorization of the initial share reserve thereunder. In addition, pursuant to the Merger Agreement, approval of the Incentive Plan Proposal is a condition to consummation of the Merger.

Q:     What happens if I sell my shares of Company common stock before the special meeting?

A:     The record date for the special meeting is [•], 2020, and is earlier than the date on which we expect the Merger to be completed. If you transfer your shares of common stock after the record date, but before the special meeting, unless the transferee obtains a proxy from you to vote those shares, you will retain your right to vote at the special meeting. However, you will not be able to seek redemption of your shares because you will no longer be able to deliver them for cancellation upon consummation of the Merger. If you transfer your shares

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of our common stock before the record date, you will have no right to vote those shares at the special meeting or redeem those shares for a pro rata portion of the proceeds held in our trust account. Regardless of whether you transfer your shares of common stock before or after the record date, your transferee will be entitled to exercise redemption rights with respect to the shares purchased by following the procedures set forth in this proxy statement/prospectus.

Q:     What constitutes a quorum at the special meeting?

A:     A quorum will be present at the special meeting if a majority of the shares of our common stock outstanding and entitled to vote at the special meeting is represented at the meeting in person or by proxy. If a stockholder fails to vote his, her or its shares in person or by proxy, or if a broker fails to vote in person or by proxy shares held by it in nominee name, such shares will not be counted for the purposes of establishing a quorum. If a stockholder who holds his, her or its shares in “street name” through a broker or other nominee fails to give voting instructions to such broker or other nominee (a “broker non-vote”) on all of the proposals set forth in this proxy statement/prospectus, such shares will not be counted for the purposes of establishing a quorum. An abstention from voting, shares represented at the special meeting in person or by proxy but not voted on one or more proposals, or a broker non-vote, so long as the stockholder has given the broker or other nominee voting instructions on at least one of the proposals in this proxy statement/prospectus, will each count as present for the purposes of establishing a quorum. In the absence of a quorum, the chairman of the special meeting may adjourn the special meeting. As of the record date for the special meeting, the presence in person or by proxy of [•] shares of our common stock is required to achieve a quorum.

Q:     What vote is required to approve the proposals presented at the special meeting?

A:     The approval of the Merger Proposal requires the affirmative vote of holders of a majority of the outstanding shares of our common stock, or [•] shares of our common stock. Accordingly, a stockholder’s failure to vote by proxy or to vote in person at the special meeting, an abstention from voting or a broker non-vote will each have the same effect as a vote “AGAINST” the Merger Proposal.

The approval of each Charter Proposal requires the affirmative vote of holders of a majority of the outstanding shares of our common stock. Accordingly, a stockholder’s failure to vote in person or by proxy, a broker non-vote or an abstention on a Charter Proposal will have the same effect as a vote “AGAINST” such proposal.

The approval of each of the Nasdaq Proposal, the Incentive Plan Proposal and the Adjournment Proposal require the affirmative vote of holders of a majority of the total votes cast on such proposal. In order to be elected as a director as described in the Existing Director Election Proposal or the Business Combination Director Election Proposal, a nominee must receive a plurality of all the votes cast at the special meeting, which means that the nominees with the most votes are elected. Accordingly, neither a stockholder’s failure to vote in person or by proxy, a broker non-vote nor an abstention will be considered a “vote cast,” and thus will have no effect on the outcome of the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal, the Business Combination Director Election Proposal or the Adjournment Proposal.

Q:     May the initial stockholders, the Company’s directors, officers, advisors or their respective affiliates purchase shares in connection with the Merger?

A:     At any time prior to the special meeting, our initial stockholders, directors, officers, advisors or their respective affiliates may purchase shares of our common stock on the open market, and may purchase shares in privately negotiated transactions from stockholders who vote, or indicate an intention to vote, against the Merger Proposal, or who have elected to redeem, or indicate an intention to redeem, their shares in connection with the Merger. Any such privately negotiated purchases may be effected at purchase prices that are in excess of fair market value or in excess of the per-share pro rata portion of the trust account. Our initial stockholders, directors, officers, advisors and their respective affiliates may also enter into transactions with stockholders and others to provide them with incentives to acquire shares of our common stock, to vote their shares in favor of the Merger Proposal or to not redeem their shares in connection with the Merger. While the exact nature of such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such persons against potential loss in value of their shares, including the granting of put options and the transfer to such persons of shares or warrants for nominal value.

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Our initial stockholders, directors, officers or their respective affiliates will not effect any such purchases when they are in possession of any material non-public information relating to the Company or Shift, during a restricted period under Regulation M under the Exchange Act or in a transaction which would violate Section 9(a)(2) or Rule 10b-5 under the Exchange Act.

Q:     How many votes do I have at the special meeting?

A:     Our stockholders are entitled to one vote at the special meeting for each share of Class A common stock and Class B common stock held of record as of [•], 2020, the record date for the special meeting. As of the close of business on the record date, there were [•] outstanding shares of our Class A common stock and [•] outstanding shares of our Class B common stock.

Q:     How will the initial stockholders and the Company’s directors and officers vote?

A:     In connection with our IPO, we entered into an agreement with each of our initial stockholders, our executive officers and our directors, pursuant to which they agreed to vote any shares of our common stock owned by them in favor of a proposed initial business combination. As of the date of this proxy statement/prospectus, our initial stockholders, executive officers and directors own approximately 26.8% of our issued and outstanding shares of common stock, including all of the founder shares. None of our initial stockholders, executive officers or directors have entered into agreements, and are not currently in negotiations, to purchase or sell shares prior to the record date.

In addition, following the execution and delivery of the Merger Agreement, on July 1, 2020, our Sponsor entered into a Voting Agreement with us and Shift, which we refer to as the Voting Agreement, pursuant to which the parties thereto agreed to vote any shares of our common stock owned by them (representing as of the date hereof approximately 26.5% of the outstanding shares of our common stock) in favor of the Merger Proposal and other proposals described in this proxy statement/prospectus and presented at the special meeting.

Q:     What interests do the Company’s current officers and directors have in the Merger?

A:     Our directors and executive officers have interests in the Merger that are different from or in addition to (and which may conflict with) the interests of our stockholders including the following:

•        our Sponsor, officers and directors will hold our common stock following the Merger, subject to lock-up agreements;

•        our Sponsor, officers and directors will hold placement warrants to purchase shares of our common stock, following the Merger and subject to lock-up agreements;

•        our Sponsor, officers and certain of our directors paid an aggregate of $4,275,000 for their founder shares, placement shares and placement warrants and such securities are expected to have a significantly higher value at the time of the Merger, and will have little or no value if we do not complete the Merger;

•        our Sponsor, officers and directors have waived their redemption rights with respect to their founder shares, placement shares and public shares in connection with the Merger, and have waived their redemption and liquidation rights with respect to their founder shares and placement shares if we are unable to complete a business combination by our Business Combination Outside Date;

•        if we are unable to complete a business combination by our Business Combination Outside Date, Cohen & Company, LLC, the manager of our sponsor, will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities to which we owe money for services rendered or contracted for or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account, and excluding any claims under our indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act;

•        our Sponsor has agreed to loan us funds in an amount up to $750,000 for working capital requirements and to finance transaction costs in connection with an initial business combination, and any amounts outstanding under this loan will not be repaid if we are unable to complete a business combination by our Business Combination Outside Date;

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•        the initial stockholders will have the collective right to appoint a board observer of the combined company; and

•        the continued indemnification of our current directors and officers and the continuation of directors’ and officers’ liability insurance after the Merger.

These interests may influence our directors in making their recommendation that you vote in favor of the Merger Proposal and the other proposals set forth in this proxy statement/prospectus.

Q:     What happens if I vote against the Merger Proposal?

A:     Pursuant to our current charter, if the Merger Proposal is not approved and we do not otherwise consummate an alternative business combination by our Business Combination Outside Date, we will be required to dissolve and liquidate our trust account by returning the then remaining funds in such account to the public stockholders. Our current charter does not provide any means to extend our Business Combination Outside Date deadline for completing a business combination, meaning any such extension would involve an amendment to our charter that would need to be approved by our stockholders.

Q:     Do I have redemption rights?

A:     If you are a holder of public shares, you may redeem your public shares for cash equal to a pro rata share of the aggregate amount on deposit in the trust account as of two business days prior to the consummation of the Merger (including any portion of the interest earned thereon which was not previously used or distributed to us for working capital purposes or to pay dissolution expenses or taxes), upon the consummation of the Merger. A public stockholder, together with any of his, her or its affiliates or any other person with whom such holder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, in excess of 20% of the outstanding public shares.

Q:     How will the redemption price be determined?

A:     For illustrative purposes, based on funds in the trust account of approximately $154 million on June 30, 2020, the estimated per share redemption price would have been approximately $10.15. Additionally, shares properly tendered for redemption will only be redeemed if the Merger is consummated; otherwise holders of such shares will only be entitled to a pro rata portion of the trust account (including any portion of the interest earned thereon which was not previously used or distributed to us for working capital purposes or to pay dissolution expenses or taxes) upon our liquidation.

Q:     Do the initial stockholders or the Company’s directors and officers have redemption rights in connection with the Merger?

A:     No. Our initial stockholders and Cantor have waived their redemption rights with respect to their founder shares and placement shares in connection with the Merger, and our initial stockholders have also waived their redemption rights with respect to any public shares they hold in connection with the Merger. All such shares held by our initial stockholders and Cantor will be excluded from the pro rata calculation used to determine the per-share redemption price.

Q:     Will how I vote affect my ability to exercise redemption rights?

A:     No. You may exercise your redemption rights regardless of whether, or how, you vote your shares of our common stock on the Merger Proposal or any other proposal described in this proxy statement/prospectus. As a result, the Merger Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a potentially less-liquid trading market, fewer stockholders, potentially less cash and the potential inability to meet the listing standards of Nasdaq.

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Q:     How do I exercise my redemption rights?

A:     In order to exercise your redemption rights, you must, prior to 5:00 p.m., Eastern Time on [•], 2020 (two business days before the special meeting), (x) submit a written request, which includes the name of the beneficial owner of the shares to be redeemed, to our transfer agent that we redeem your public shares for cash, and (y) deliver your stock to our transfer agent physically or electronically through Depository Trust Company, or DTC. The address of Continental Stock Transfer & Trust Company, our transfer agent, is listed under the question “Who can help answer my questions?” below.

Any demand for redemption, once made, may be withdrawn at any time until the date of the special meeting. If you deliver your shares for redemption to our transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that our transfer agent return the shares to you (physically or electronically). You may make such request by contacting our transfer agent at the address listed under the question “Who can help answer my questions?” below.

Q:     What are the U.S. federal income tax consequences of exercising my redemption rights?

A:     The U.S. federal income tax consequences of exercising your redemption rights depend on your particular facts and circumstances. See the section entitled “Material U.S. Federal Income Tax Consequences — Tax Consequences of a Redemption of Company Common Stock.” You are urged to consult with your own tax advisor regarding the tax consequences of exercising your redemptions rights.

Q:     If I am a Company warrant holder, can I exercise redemption rights with respect to my warrants?

A:     No. The holders of our warrants have no redemption rights with respect to our warrants or any shares of our common stock underlying our warrants.

Q:     Do I have appraisal rights if I object to the proposed Merger?

A:     No. There are no appraisal rights available to holders of our common stock in connection with the Merger.

Q:     What happens to the funds held in the trust account upon consummation of the Merger?

A:     If the Merger is consummated, the funds held in the trust account will be released to us, and those funds will be used to pay or fund (i) the redemption price for shares of our common stock redeemed by our stockholders who properly exercise redemption rights, (ii) up to $6.4 million in deferred underwriting compensation payable to Cantor as the underwriters of our IPO, (iii) fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees, and other professional fees) that were incurred by or on behalf of the Company, Merger Sub and Shift in connection with the Merger and the other transactions contemplated by the Merger Agreement, (iv) the repayment of loans from our Sponsor in an aggregate amount not to exceed $750,000 for working capital purposes and to pay expenses to identify an acquisition target and consummate the Merger and related transactions (see the section entitled “Certain Relationships and Related Transactions — Company Related Person Transactions” for additional information), and (v) general corporate purposes of the combined company, which may include, but not be limited to, working capital for operations, repayment of indebtedness, capital expenditures and future acquisitions.

Q:     What happens if the Merger is not consummated?

A:     There are certain circumstances under which the Merger Agreement may be terminated. See the section entitled “Proposal No. 1 — The Merger Proposal — The Merger Agreement — Termination” for information regarding the parties’ specific termination rights.

If, as a result of the termination of the Merger Agreement or otherwise, we are unable to complete the Merger or another business combination transaction by our Business Combination Outside Date, our charter provides that we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem all public shares then outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released to us for working capital purposes, the payment of taxes or dissolution expenses, divided by the number of then outstanding

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public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

We expect that the amount of any distribution our public stockholders will be entitled to receive upon our dissolution will be approximately the same as the amount they would have received if they had redeemed their shares in connection with the Merger, subject in each case to our obligations under Delaware law to provide for claims of creditors and other requirements of applicable law. Holders of our founder shares and placement shares have waived any right to any liquidation distribution with respect to those shares.

In the event of liquidation, there will be no distribution with respect to our outstanding warrants. Accordingly, the warrants will expire worthless.

Q:     When is the Merger expected to be completed?

A:     We currently anticipate that the Merger will be consummated within two business days following the special meeting, provided that all other conditions to the consummation of the Merger have been satisfied or waived in accordance with the Merger Agreement. In any event, we expect the Closing to occur in [•] 2020.

For a description of the conditions to the consummation of the Merger, see the section entitled “Proposal No. 1 — The Merger Proposal — The Merger Agreement — Conditions to Closing of the Merger.”

Q:     What do I need to do now?

A:     Whether or not you plan to attend the special meeting, we urge you to read this proxy statement/prospectus (including the annexes) carefully, including the section entitled “Risk Factors” beginning on page 31, and to consider how the Merger will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

Q:     How do I vote?

A:     If you were a holder of record of our common stock on [•], 2020, the record date for the special meeting, you may vote in person at the special meeting or any adjournment thereof, or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided in accordance with the instructions set forth on the enclosed proxy card. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should follow the instructions provided to you by your broker, bank or nominee to ensure that votes related to the shares you beneficially own are properly represented and voted at the special meeting. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the special meeting and vote in person, obtain a legal proxy from your broker, bank or nominee.

Q:     What will happen if I abstain from voting or fail to vote at the special meeting?

A:     At the special meeting, if you abstain from voting with respect to a particular proposal, your shares will be counted as present for purposes of establishing a quorum. For purposes of approving the proposals, failure to vote or an abstention will each have the same effect as a vote “AGAINST” each of the Merger Proposal and the Charter Proposals. A failure to vote or an abstention will have no effect on the outcome of each of the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal, the Business Combination Director Election Proposal and the Adjournment Proposal.

Q:     What will happen if I sign and return my proxy card without indicating how I wish to vote?

A:     Signed and dated proxies received by us without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented at the special meeting or any adjournment thereof.

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Q:     If I am not going to attend the special meeting in person, should I return my proxy card instead?

A:     Yes. Whether you plan to attend the special meeting or not, please read this proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided in accordance with the instructions set forth on the enclosed proxy card.

Q:     If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?

A:     No. Under the rules of various national and regional securities exchanges, your broker, bank, or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank, or nominee. We believe the proposals presented at the special meeting will be considered non-discretionary and therefore your broker, bank, or nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your bank, broker, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker, or nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will be counted as present for the purpose of determining the existence of a quorum at the special meeting so long as a stockholder has given the broker or other nominee voting instructions on at least one of the proposals set forth in this proxy statement/prospectus. However, broker non-votes will not be counted as “votes cast” at the special meeting. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

Q:     May I change my vote after I have mailed my signed proxy card?

A:     Yes. You may change your vote by sending a later-dated, signed proxy card to our transfer agent at the address listed under “Who can help answer my questions?” below so that it is received by the transfer agent prior to the special meeting, or attend the special meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to Amanda Abrams by email at aabrams@cohenandcompany.com or in writing to Insurance Acquisition Corp., 2929 Arch Street, Suite 1703, Philadelphia, Pennsylvania 19104, or by telephone at (215) 701-9555, which must be received by Ms. Abrams prior to the special meeting.

Q:     What should I do if I receive more than one set of voting materials?

A:     You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

Q:     Who will solicit and pay the cost of soliciting proxies?

A:     We will pay the cost of soliciting proxies for the special meeting. We have engaged Morrow Sodali LLC, which we refer to as Morrow, to assist in the solicitation of proxies for the special meeting. We will pay Morrow a fee of $25,000 plus a per call fee for any incoming or outgoing stockholder calls for such services, which fee also includes Morrow acting as the inspector of elections at the special meeting. We will reimburse Morrow for reasonable out-of-pocket expenses and will indemnify Morrow and its affiliates against certain claims, liabilities, losses, damages and expenses. We will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of our common stock for their expenses in forwarding soliciting materials to beneficial owners of our common stock and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

Q:     What are the material U.S. federal income tax consequences of the Merger to Shift Stockholders?

A:     It is the opinion of Morgan, Lewis & Bockius LLP (“Morgan Lewis”), the Company’s U.S. federal income tax counsel, that the Merger will be treated as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”), for U.S. federal income tax purposes. The Morgan Lewis opinion is subject to the limitations and qualifications described herein, and has been delivered prior

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to the consummation of the Merger and the exercise of redemption rights by stockholders of the Company and therefore is prospective and dependent on the occurrence or nonoccurrence of future events. If the Merger so qualifies as a “reorganization,” a U.S. holder of Shift common stock generally will not recognize any gain or loss as a result of the Merger. The obligations of Shift and the Company to complete the Merger are not conditioned upon the receipt of an opinion at Closing from either Morgan Lewis or Jenner & Block LLP (“Jenner” or “Jenner Block”) to the effect that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes. For a more detailed discussion of the material U.S. federal income tax consequences of the Merger, see “Material U.S. Federal Income Tax Consequences — Tax Consequences of the Merger to U.S. Holders of Shift Common Stock.

The consequences of the Merger to any particular stockholder will depend on that stockholder’s particular facts and circumstances. Accordingly, stockholders are urged to consult their tax advisors to determine the tax consequences of the Merger, including the applicability and effect of U.S. federal, state, local and non-U.S. income and other tax laws in light of their particular circumstances.

Q:     Who can help answer my questions?

A:     If you have questions about the proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card you should contact:

John M. Butler, President and Chief Executive Officer
Insurance Acquisition Corp.
2929 Arch Street, Suite 1703
Philadelphia, Pennsylvania 19104
Tel: (215) 701-9555

You may also contact our proxy solicitor at:

Morrow Sodali LLC
470 West Avenue
Stamford, Connecticut 06902
Tel: (800) 662-5200 or banks and brokers can call collect at (203) 658-9400
Email: INSU.info@investor.morrowsodali.com

To obtain timely delivery, our stockholders must request the materials no later than five business days prior to the special meeting.

You may also obtain additional information about us from documents filed with the Securities and Exchange Commission (the “SEC”) by following the instructions in the section entitled “Where You Can Find More Information.”

If you intend to seek redemption of your public shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) prior 5:00 p.m., Eastern Time, on [•], 2020 (two business days before the special meeting) in order for their shares to be redeemed. If you have questions regarding the certification of your position or delivery of your stock, please contact:

Continental Stock Transfer & Trust Company

1 State Street, 30th floor

New York, NY 10004

Attention: Mark Zimkind

E-mail: mzimkind@continentalstock.com

If you have other questions please contact:

Amanda Abrams

Insurance Acquisition Corp.
2929 Arch Street, Suite 1703
Philadelphia, PA 19104
Tel: (215) 701-9693
Email: aabrams@cohenandcompany.com

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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS

This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that may be important to you. To better understand the proposals to be considered at the special meeting, including the Merger Proposal, whether or not you plan to attend the special meeting, we urge you to read this proxy statement/prospectus (including the annexes) carefully, including the section entitled “Risk Factors” beginning on page 31. See also the section entitled “Where You Can Find More Information.”

Unless otherwise specified, all share amounts and share calculations: (i) assume no exercise of redemption rights by our public stockholders, (ii) assume that an aggregate of 44,000,000 shares of our common stock will be issued to the Shift stockholders, as consideration in the Merger, and (iii) do not include (a) any warrants to purchase our common stock that will be outstanding following the Merger, (b) any equity awards that may be issued under our proposed Omnibus Plan following the Merger, (c) any downward adjustments to the merger consideration that will result from the terms of the Merger Agreement, or (d) the Sponsor Additional PIPE Shares.

Parties to the Merger

Insurance Acquisition Corp.

We are a Delaware special purpose acquisition company formed in March 2018 for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.

Our securities are traded on The Nasdaq Capital Market under the ticker symbols “INSU,” “INSUU” and “INSUW.” We will apply to continue the listing of our common stock and warrants on The Nasdaq Capital Market under the symbols “SFT” and “SFTTW,” respectively, upon the Closing. Following the Merger, we expect to change our name to Shift Technologies, Inc.

The mailing address of our principal executive office is 2929 Arch Street, Suite 1703, Philadelphia, Pennsylvania 19104, and our telephone number is (215) 701-9555.

For additional information regarding the Company, see the section in this proxy statement/prospectus entitled “Information About the Company.”

IAC Merger Sub, Inc.

Merger Sub is a Delaware corporation, and our direct wholly owned subsidiary, incorporated by us on June 23, 2020 to facilitate the Merger. In the Merger, Merger Sub will merge with and into Shift, with Shift being the surviving entity. The Shift stockholders will exchange their shares of Shift common stock for shares of our common stock as consideration in the Merger. Following the Merger, Shift will change its name to Shift Platform, Inc.

The mailing address of Merger Sub’s principal executive office is 2929 Arch Street, Suite 1703, Philadelphia, Pennsylvania 19104, and its telephone number is (215) 701-9555.

Shift Technologies, Inc.

Shift is a Delaware corporation incorporated in December 2013. In the Merger, Merger Sub will merge with and into Shift, with Shift being the surviving entity. The Shift stockholders will exchange their shares of Shift common stock for shares of our common stock as consideration. Following the Merger, Shift will change its name Shift Platform, Inc.

The mailing address of Shift’s principal executive office is 2525 16th Street, Suite 316, San Francisco, California, 94103, and its telephone number is 1-(855) 575-6739.

For additional information regarding Shift, see the section in this proxy statement/prospectus entitled “Information About Shift.”

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The Merger Proposal

The Merger Agreement provides for the business combination of Shift and the Company pursuant to the merger of Merger Sub with and into Shift with Shift continuing as the surviving entity and a wholly owned subsidiary of the Company. The following summary of the Merger and the Merger Agreement is qualified in its entirety by reference to the complete text of the Merger Agreement, a copy of which is attached as Annex A to this proxy statement/prospectus.

In the Merger, the Shift stockholders will exchange their shares of Shift common stock for shares of our common stock. The aggregate consideration to be paid in the Merger will consist of:

•        assuming no downward adjustments, an estimated 38,000,000 shares of our common stock, which we refer to as the Closing Date Merger Consideration; and

•        the Additional Shares, which will consist of 6,000,000 shares of common stock that will be deposited into an escrow account. If the reported closing sale price of our common stock does not exceed $12.00 per share for 20 out of any 30 consecutive trading days during the first 12 months following the Closing (the “First Threshold”), then fifty percent (50%) of the Additional Shares will be returned to the Company (and either placed into treasury or retired, in the discretion of the Company). If the First Threshold is reached, such Additional Shares will be released from escrow to the respective Shift stockholders that are the holders thereof. If the reported closing sale price of the Company common stock does not exceed $15.00 per share for 20 out of any 30 consecutive trading days during the first 30 months following the Closing (the “Second Threshold”), then fifty percent (50%) of the Additional Shares will be returned to the Company (and either placed into treasury or retired, in the discretion of the Company). If the Second Threshold is reached, such Additional Shares will be released from escrow to the respective Shift stockholders that are the holders thereof. Additionally, if we undergo a transaction or series of transactions that result in a change of control or sale of substantially all of the assets of the Company during such 12-month period or such 30-month period, respectively, if not previously achieved, the First Threshold or the Second Threshold, or both, respectively, will be considered achieved if the sale price in such change of control meets or exceeds a price of $10.00 per share.

We refer to the Closing Date Merger Consideration and the Additional Shares together as the Merger Consideration. If, after the date of the Merger Agreement and prior to the effective time of the Merger, the Company undergoes a change in its capitalization (such as a stock split, share dividend or recapitalization affecting the Company common stock), the Merger Agreement provides for an equitable adjustment in the number of shares comprising the Merger Consideration.

The number of shares of our common stock to be issued in the Merger will be based on a $10.00 per share value for our common stock. The amount of common stock to be issued as consideration in the Merger is subject to adjustment, as set forth in the Merger Agreement, (i) if the Net Asset Amount at the time of Closing is less than the Net Asset Floor, by the number of shares equal to the amount by which the Net Asset Amount is less than the Net Asset Floor divided by $10.00, and (ii) by the Converted Option Share Equivalent Number. At the effective time of the Merger, all options to acquire Shift common stock then outstanding, which we refer to herein as Shift Options, will be converted into options to purchase shares of our common stock, which we refer to herein as Converted Options. Each Converted Option will continue to be subject to substantially the same terms and conditions as were applicable to such Shift Option prior to the effective time of the Merger, except that (i) each Converted Option will be exercisable for that number of shares of our common stock equal to the product (rounded down to the nearest whole number) of (a) the number of shares of Shift common stock subject to the Shift Option immediately before the effective time of the Merger and (b) the quotient obtained by dividing (1) (x) the Closing Date Merger Consideration per share of Shift common stock, expressed in dollars minus (y) the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger, by (2) (x) $10.00 minus (y) the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger, and (ii) the per share exercise price for each share of our common stock issuable upon exercise of the Converted Option shall be equal to the exercise price per share of Shift common stock of such Shift Option immediately before the effective time of the Merger. For additional information, see the sections in the accompanying proxy statement/prospectus entitled “Proposal No. 1 — The Merger Proposal — The Merger Agreement — Merger Consideration.

We intend to pay the fees and expenses related to the Merger with the cash held in our trust account and the cash obtained in connection with the PIPE Investment. To the extent not used for the redemption price for any

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properly redeemed shares of our common stock, or fees and expenses related to the Merger and the transactions contemplated by the Merger Agreement, the proceeds from the trust account and the PIPE Investment will be used for general corporate purposes, which may include, but not be limited to, working capital for operations, repayment of indebtedness, capital expenditures and future acquisitions.

See the section entitled “Proposal No. 1 — The Merger Proposal” for more information regarding the Merger and the Merger Proposal.

Opinion of Northland to the Company’s Board of Directors

In connection with the Merger, our financial advisor, Northland Capital Markets, which we refer to as Northland, delivered a written opinion, dated June 26, 2020, which we refer to as the Opinion, to our board of directors that, as of June 26, 2020, and subject to and based on the assumptions made, procedures followed, matters considered, limitations of the review undertaken and qualifications contained in the Opinion, (i) the Merger Consideration to be paid by us in the Merger pursuant to the Merger Agreement was fair to us, from a financial point of view, and (ii) the fair market value of Shift implied by the various financial analyses Northland conducted in connection with the Opinion equaled or exceeded 80% of the amount held by us in trust for the benefit of our public stockholders (excluding any deferred underwriters’ fees and taxes payable on the income earned on the trust account).

The full text of the Opinion, which describes the assumptions made, procedures followed, matters considered, limitations on the review undertaken and qualifications contained in such Opinion, is attached to this proxy statement/prospectus as Annex D and is incorporated herein by reference. We urge you to read the Opinion carefully in its entirety. Northland’s Opinion does not constitute a recommendation to any holder of shares of our common stock as to how such holder should vote or act with respect to the Merger Agreement or the Merger Proposal, whether such holder should exercise its redemption rights with respect to its shares of our common stock or as to any other matter.

Redemption Rights

Pursuant to our charter, holders of our public shares may elect to have their shares redeemed for cash at a redemption price per share calculated in accordance with our charter. As of June 30, 2020, this would have amounted to approximately $10.15 per share. If a holder of public shares properly exercises his, her or its redemption rights, then such holder will be exchanging his, her or its shares of our common stock for cash and will no longer own such shares. See the section entitled “Special Meeting of Company Stockholders — Redemption Rights and Procedures” for the procedures to be followed if you wish to redeem your shares for cash and not continue to own our common stock following consummation of the Merger.

Notwithstanding the foregoing, a holder of public shares, together with any of its affiliates or any other person with whom such holder is acting in concert or as a “group” (as defined in Section 13(d)(3) of the Exchange Act) will be restricted from exercising redemption rights with respect to 20% or more of the public shares.

Neither the Merger will be consummated nor will any public shares be redeemed if public stockholders redeem public shares in an amount that would cause our net tangible assets to be less than $5,000,001 or that would cause us to have less than $100 million in cash on hand at the time of the Merger, taking into account the PIPE Investment, among other things.

Any redemptions by our public stockholders will decrease the funds in the trust account available to us to consummate the Merger and the other transactions contemplated by the Merger Agreement.

Impact of the Merger on the Company’s Public Float

We anticipate that, upon completion of the Merger, assuming that none of our stockholders exercise redemption rights and that an aggregate of 44,000,000 shares of our common stock will be issued as consideration in the Merger, (1) our Sponsor, directors, and other holders of founder shares will hold approximately 7.3% of our outstanding common stock, (2) our public stockholders will hold approximately 18.0% of our outstanding common stock, (3) the PIPE Investors will hold approximately 22.1% of our outstanding common stock, and (4) the Shift stockholders will hold approximately 52.6% of our outstanding common stock. If 10,311,878 shares of our

17

common stock are redeemed for cash, upon completion of the Merger, (1) our Sponsor, directors, and other holders of founder shares will hold approximately 9.1% of our outstanding common stock, (2) our public stockholders will hold approximately 6.8% of our outstanding common stock, (3) the PIPE Investors will hold approximately 26.1% of our outstanding common stock, and (4) the Shift stockholders will hold approximately 58.0% of our outstanding common stock. These ownership percentages do not take into account (1) any warrants to purchase our common stock that will be outstanding following the Merger, (2) any equity awards that may be issued under our proposed Omnibus Plan following the Merger, (3) any downward adjustments to the Merger Consideration pursuant to the Merger Agreement, or (4) the Sponsor Additional PIPE Shares. If any shares of our common stock are redeemed by our public stockholders in connection with the Merger, the percentage of our outstanding common stock held by our public stockholders will decrease and the percentage of our outstanding common stock held by each of our initial stockholders, Cantor and the Shift stockholders will increase. Similarly, if the number of shares issued as Closing Date Merger Consideration is less than our estimates, the percentage of our outstanding common stock held by our public stockholders, our initial stockholders and Cantor will increase and the percentage of our outstanding common stock held by the Shift stockholders will decrease.

Board of Directors of the Company Following the Merger

Upon consummation of the Merger, our board of directors will consist of three classes of directors (Class I, Class II, and Class III) and change in size from four to six members, with two vacancies (one vacancy in Class I and one vacancy in Class II). Each of our incumbent directors, Daniel Cohen, John Chrystal, Stephanie Gould Rabin and Sasson Posner, have advised us that they will resign from our board of directors upon the Closing.

See the section entitled “Management Following the Merger” for additional information.

Regulatory Matters

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, which we refer to as the HSR Act, and the related rules and regulations issued by the Federal Trade Commission, which we refer to as the FTC, certain transactions, including the Merger, may not be consummated until notifications have been given and specified information and documentary material have been furnished to the FTC and the United States Department of Justice, which we refer to as the DOJ, and the applicable waiting periods have expired or been terminated. The completion of the Merger is conditioned upon the expiration or early termination of the HSR Act waiting period. We and Shift have filed our respective notification and report forms under the HSR Act with the DOJ and the FTC. The initial 30-day waiting period will expire on August 15, 2020. See the section entitled “Proposal No. 1 — The Merger Proposal — The Merger Agreement — Covenants of the Parties” for additional information.

Tax Consequences of the Merger

For a description of the material U.S. federal income tax consequences of the Merger, see the section entitled “Material U.S. Federal Income Tax Consequences.

Accounting Treatment

The Merger will be accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, INSU, who is the legal acquirer, will be treated as the “acquired” company for financial reporting purposes and Shift will be treated as the accounting acquirer. This determination was primarily based on Shift expecting to have a majority of the voting power of the post-combination company, Shift’s senior management comprising substantially all of the senior management of the post-combination company, the relative size of Shift compared to INSU, and Shift’s operations comprising the ongoing operations of the post-combination company. Accordingly, for accounting purposes, the Merger will be treated as the equivalent of a capital transaction in which Shift is issuing stock for the net assets of INSU. The net assets of INSU will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to Merger will be those of Shift.

Appraisal Rights

Appraisal rights are not available to our stockholders in connection with the Merger.

18

Extension Amendment

On August 14, 2020, we filed a definitive proxy statement soliciting the approval of our stockholders for a proposal to amend our charter to extend the period of time for which we are required to consummate a business combination from September 22, 2020 until November 3. 2020. For additional information, see the section entitled “Extension Amendment.”

Reasons for the Merger

Our board of directors has unanimously approved the Merger Agreement and the transactions contemplated thereby, including the Merger, has determined that the Merger Agreement and the transactions contemplated thereby, are fair to and in the best interests of the Company and our stockholders, and unanimously recommends that our stockholders vote “FOR” the Merger Proposal. For a description of the reasons considered by our board of directors in deciding to recommend adoption of the Merger Agreement, see the sections entitled “Proposal No. 1 — The Merger Proposal — Reasons for the Approval of the Merger” and “Proposal No. 1 — The Merger Proposal — Recommendation of the Board.”

Proposals Related to the Company’s Proposed Second Amended and Restated Certificate of Incorporation

In connection with the Merger Proposal, and in order to allow us to complete the Merger, we are asking you to approve amendments to our charter:

•        To increase the number of shares of our authorized common stock.

•        To create an additional class of directors so that there will be three classes of directors with staggered terms of office.

•        To provide for certain exemptions from the doctrine of corporate opportunity.

•        To provide for additional changes, principally changing the Company’s corporate name from “Insurance Acquisition Corp.” to “Shift Technologies, Inc.” and removing provisions applicable only to special purpose acquisition companies.

See the sections entitled “Proposal No. 2 — Authorization to Increase our Authorized Capital Stock,” “Proposal No. 3 — Classification of the Board of Directors,” “Proposal No. 4 — Authorization to Provide for Certain Exemptions from the Doctrine of Corporate Opportunity,” and “Proposal No5 — Approval of Additional Amendments to our Charter in Connection with the Merger” for more information.

The Nasdaq Proposal

In connection with the Merger Proposal, and in order to allow us to complete the Merger, we are asking you to approve, for purposes of complying with Nasdaq Listing Rule 5635(a) and (b), the issuance of more than 20% of our issued and outstanding common stock and the resulting change of control in connection with the Merger. In addition, under Nasdaq Listing Rule 5635(d), prior stockholder approval is required for the issuance, other than in a public offering, of securities convertible into common stock at a price less than the greater of book or market value of the common stock if the securities are convertible into 20% or more of a company’s common stock, and we are therefore asking you to approve the issuance of our shares of common stock in connection with the PIPE Investment. See the section entitled “Proposal No6 — The Nasdaq Proposal” for more information.

The Incentive Plan Proposal

Our proposed Omnibus Plan will be effective upon the Closing, subject to approval by our stockholders at the special meeting. The proposed Omnibus Plan will reserve 12%, or approximately [•], of our shares of common stock for issuance in accordance with the plan’s terms. The purpose of the Omnibus Plan is to provide eligible employees, directors and consultants the opportunity to receive stock-based incentive awards in order to encourage them to contribute materially to our growth and to align the economic interests of such persons with those of our stockholders. The summary of the Omnibus Plan above is qualified in its entirety by reference to the complete text of the Omnibus Plan, a copy of which is attached as Annex B to this proxy statement/prospectus. You are encouraged to read the Omnibus Plan in its entirety. See the section entitled “Proposal No7 — The Incentive Plan Proposal” for more information.

19

The Existing Director Election Proposal

We are asking you to consider and vote upon a proposal to elect Daniel G. Cohen, John C. Chrystal and Stephanie Gould Rabin to serve as Class I directors on our board of directors until the earlier of the Effective Time and the 2022 annual meeting of stockholders, and until their respective successors are duly elected and qualified or until their earlier resignation, removal or death. See the section entitled “Proposal No8 — The Existing Director Election Proposal” for more information.

The Business Combination Director Election Proposal

Each of the members of our board of directors intends to resign from our board of directors upon the Closing. We are asking you to consider and vote upon a proposal to elect, effective as of, and contingent upon, the Effective Time, Victoria McInnis as a Class I director, Adam Nash and Emily Melton as Class II directors, and George Arison, Tobias Russell, and Manish Patel as Class III directors, to serve on our board of directors in accordance with the Business Combination Charter, with two vacancies (one Class I vacancy and one Class II vacancy), until the 2021, 2022, and 2023 annual meetings of stockholders, respectively, and until their respective successors are duly elected and qualified or until their earlier resignation, removal or death. See the section entitled “Proposal No9 — The Business Combination Director Election Proposal” for more information.

The Adjournment Proposal

If, based on the tabulated vote, there are not sufficient votes at the time of the special meeting to permit us to approve the Merger Proposal, the Charter Proposals, the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal, and/or the Business Combination Director Election Proposal, the Adjournment Proposal allows us to adjourn the special meeting to a later date, if necessary, to permit further solicitation of proxies. See the section entitled “Proposal No10 — The Adjournment Proposal” for more information.

Quorum and Required Vote for Proposals for the Special Meeting

A quorum of our stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting if a majority of the shares of our common stock outstanding and entitled to vote at the special meeting is represented at the meeting in person or by proxy. An abstention from voting, shares represented at the special meeting in person or by proxy but not voted on one or more proposals or the failure of a stockholder who holds his or her shares in “street name” through a broker or other nominee to give voting instructions to such broker or other nominee on one or more but less than all of the proposals set forth in this proxy statement/prospectus (a “broker non-vote”) will each count as present for the purposes of establishing a quorum. As of the date of this proxy statement/prospectus, our executive officers, directors and affiliates hold approximately 26.8% of our outstanding shares of common stock. All of such shares will be voted in favor of the Merger Proposal and other proposals described in this proxy statement/prospectus and presented at the special meeting.

The approval of the Merger Proposal requires the affirmative vote of holders of a majority of the outstanding shares of our common stock. Accordingly, a stockholder’s failure to vote by proxy or to vote in person at the special meeting, an abstention from voting or a broker non-vote will have the same effect as a vote “AGAINST” the Merger Proposal.

The approval of each Charter Proposal requires the affirmative vote of holders of a majority of the outstanding shares of our common stock. Accordingly, a stockholder’s failure to vote in person or by proxy, a broker non-vote or an abstention on any of the Charter Proposals will have the same effect as a vote “AGAINST” such proposal.

The approval of each of the Nasdaq Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires the affirmative vote of holders of a majority of the total votes cast on such proposal. In order to be elected as a director as described in the Existing Director Election Proposal or the Business Combination Director Election Proposal, a nominee must receive a plurality of all the votes cast at the special meeting, which means that the nominees with the most votes are elected. Accordingly, neither a stockholder’s failure to vote in person or by proxy, a broker non-vote nor an abstention will be considered a “vote cast,” and thus will have no effect on the outcome of the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal, the Business Combination Director Election Proposal or the Adjournment Proposal.

20

The Merger Proposal is conditioned on the approval of Proposal 2 and the Nasdaq Proposal. In addition, (i) Proposal 2 is conditioned on the approval of the Merger Proposal and the Nasdaq Proposal, (ii) each of Proposal 3, Proposal 4, Proposal 5, the Incentive Plan Proposal and the Business Combination Director Election Proposal is conditioned on the approval of the Merger Proposal, Proposal 2 and the Nasdaq Proposal, (iii) the Business Combination Director Election Proposal is conditioned on the approval of Proposal 3, and (iv) the Nasdaq Proposal is conditioned on the Merger Proposal and Proposal 2. Neither the Existing Director Election Proposal nor the Adjournment Proposal is conditioned on the approval of any other proposal set forth in this proxy statement/prospectus. It is important for you to note that if either the Merger Proposal or the Nasdaq Proposal is not approved by our stockholders, or if any other proposal is not approved by our stockholders and we and Shift do not waive the applicable closing condition under the Merger Agreement, then the Merger will not be consummated. If we do not consummate the Merger and fail to complete an initial business combination by our Business Combination Outside Date, we will be required to dissolve and liquidate our trust account by returning the then remaining funds in such account to the public stockholders.

Recommendation to Company’s Stockholders

Our board of directors believes that each of the Merger Proposal, the Charter Proposals, the Nasdaq Proposal, the Incentive Plan Proposal, the Existing Director Election Proposal, the Business Combination Director Election Proposal and the Adjournment Proposal to be presented at the special meeting is in the best interests of Shift and our stockholders and unanimously recommends that our stockholders vote “FOR” each of the proposals.

Interests of Certain Persons in the Merger

When you consider the recommendation of our board of directors in favor of approval of these proposals, you should also consider that our directors and officers have interests in the Merger that are different from or in addition to (and which may conflict with) your interests as a stockholder, including the following:

•        our Sponsor, officers and directors will hold our common stock following the Merger, subject to lock-up agreements;

•        our Sponsor, officers and directors will hold placement warrants to purchase shares of our common stock following the Merger, subject to lock-up agreements;

•        our Sponsor, officers and certain of our directors paid an aggregate of $4,275,000 for their founder shares, placement shares and placement warrants and that such securities are expected to have a significantly higher value at the time of the Merger and will have little or no value if we do not complete the Merger;

•        our Sponsor, officers and directors have waived their redemption rights with respect to their founder shares, placement shares and public shares in connection with the Merger, and have waived their redemption and liquidation rights with respect to their founder shares and placement shares if we are unable to complete a business combination by our Business Combination Outside Date;

•        if we are unable to complete a business combination by our Business Combination Outside Date, Cohen & Company, LLC, the manager of our sponsor, will be liable to ensure that the proceeds in the trust account are not reduced by the claims of target businesses or claims of vendors or other entities to which we owe money for services rendered or contracted for or products sold to us, but only if such a vendor or target business has not executed a waiver of any and all rights to seek access to the trust account, and excluding any claims under our indemnity of the underwriters of the IPO against certain liabilities, including liabilities under the Securities Act;

•        our Sponsor has agreed to loan us funds in an amount up to $750,000 for working capital requirements and to finance transaction costs in connection with an initial business combination, and any amounts outstanding under this loan will not be repaid if we are unable to complete a business combination by our Business Combination Outside Date;

•        the initial stockholders will have the collective right to appoint a board observer of the combined company; and

•        the continued indemnification of our current directors and officers and the continuation of directors’ and officers’ liability insurance after the Merger.

21

At any time prior to the special meeting, during a period when they are not then aware of any material nonpublic information regarding us, our securities or Shift, our Sponsor, directors, officers and their respective affiliates may purchase our securities on the open market, and may enter into agreements to purchase shares from institutional and other investors who vote, or indicate an intention to vote, against the Merger Proposal, or who have elected to redeem, or indicate an intention to redeem, their shares in connection with the Merger. Any such privately negotiated purchases may be effected at purchase prices that are in excess of fair market value or in excess of the per-share pro rata portion of the trust account. Our initial stockholders, directors, officers, advisors and their respective affiliates may also enter into transactions with stockholders and others to provide them with incentives to acquire shares of our common stock or vote their shares in favor of the Merger Proposal. While the exact nature of such incentives has not been determined as of the date of this proxy statement/prospectus, they might include, without limitation, arrangements to protect such persons against potential loss in value of their shares, including the granting of put options and the transfer to such persons of shares or warrants for nominal value. Our initial stockholders, directors, officers or their respective affiliates will not effect any such purchases when they are in possession of any material nonpublic information relating to us or Shift, during a restricted period under Regulation M under the Exchange Act or in a transaction which would violate Section 9(a)(2) or Rule 10b-5 under the Exchange Act.

The purpose of such purchases and other transactions would be to increase the likelihood that the Merger Proposal is approved and to decrease the likelihood that holders will request redemption of public shares and cause us to have insufficient funds to fund amounts required under the Merger Agreement. Entering into any such arrangements may have a depressive effect on the price of our common stock. For example, if as a result of these arrangements an investor or holder purchases shares for nominal value, the investor or holder may be more likely to sell such shares immediately following the Closing for a price below market value.

If our initial stockholders, directors, officers or their respective affiliates effect any purchases of our common stock, such purchases may cause the Merger Proposal to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares by the persons described above would allow them to exert disproportionate influence over the approval of the Merger Proposal and other proposals to be presented at the special meeting and would likely increase the chances that such proposals would be approved.

As of the date of this proxy statement/prospectus, no such agreements to sell or purchase shares prior to the record date have been entered into with any such investor or holder. We will file a Current Report on Form 8-K to disclose any material arrangements entered into or significant purchases made by any of the aforementioned persons that are not described in this proxy statement/prospectus and that would affect the vote on the Merger Proposal.

Risk Factors

In evaluating the proposals set forth in this proxy statement/prospectus, whether or not you plan to attend the special meeting, we urge you to read this proxy statement/prospectus (including the annexes) carefully, including the section entitled “Risk Factors” beginning on page 31.

22

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF THE COMPANY

The following table sets forth selected historical financial information derived from INSU’s unaudited financial statements as of and for the three and six months ended June 30, 2020 and 2019 and INSU’s audited financial statements as of and for the year ended December 31, 2019 and for the period from March 13, 2018 (inception) through December 31, 2018, each of which is included elsewhere in this proxy statement/prospectus. Such financial information should be read in conjunction with the audited and unaudited financial statements and related notes included elsewhere in this proxy statement/prospectus.

The historical results presented below are not necessarily indicative of the results to be expected for any future period. You should carefully read the following summary financial information in conjunction with the section entitled “Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and INSU’s financial statements and the related notes appearing elsewhere in this proxy statement/prospectus.

(in thousands, except share and per-share data)

 

Three
Months
Ended
June 30,
2020

 

Three
Months
Ended
June 30,
2019

 

Six Months
Ended
June 30,
2020

 

Six Months
Ended
June 30,
2019

 

Year
Ended

December 31,
2019

 

For the
Period from
March 13,

2018
(inception)
Through
December 31,
2018

Statement of Operations Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

1,381

 

 

$

240

 

 

$

1,724

 

 

$

300

 

 

$

764

 

 

$

2

 

Loss from operations

 

 

(1,381

)

 

 

(240

)

 

 

(1,724

)

 

 

(300

)

 

 

(764

)

 

 

(2

)

Other income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income on marketable securities

 

 

38

 

 

 

898

 

 

 

705

 

 

 

958

 

 

 

2,593

 

 

 

 

Provision for income taxes

 

 

1

 

 

 

(179

)

 

 

(132

)

 

 

(182

)

 

 

(502

)

 

 

 

Net income (loss)

 

$

(1,341

)

 

$

479

 

 

$

(1,150

)

 

$

475

 

 

$

1,327

 

 

$

(2

)

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net (loss) income per share, Class A

 

$

0.00

 

 

$

0.04

 

 

$

0.03

 

 

$

0.05

 

 

$

0.13

 

 

$

 

Weighted average shares outstanding, of Class A redeemable common stock, basic and diluted

 

 

15,065,000

 

 

 

15,065,000

 

 

 

15,065,000

 

 

 

15,065,000

 

 

 

15,065,000

 

 

 

 

Basic and diluted net (loss) income per share, Class A and Class B

 

$

(0.24

)

 

$

(0.03

)

 

$

(0.29

)

 

$

(0.04

)

 

$

(0.10

)

 

$

(0.01

)

Weighted average shares outstanding, of Class A and Class B non-redeemable common stock, basic and diluted

 

 

5,588,333

 

 

 

5,203,833

 

 

 

5,588,333

 

 

 

5,397,083

 

 

 

5,462,872

 

 

 

4,508,333

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance Sheet Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

 

 

 

 

 

 

$

308

 

 

$

675

 

 

$

407

 

 

$

25

 

Cash and marketable securities held in Trust Account

 

 

 

 

 

 

 

$

153,689

 

 

$

151,608

 

 

$

153,238

 

 

$

 

Total assets

 

 

 

 

 

 

 

$

154,185

 

 

$

152,445

 

 

$

153,719

 

 

$

126

 

Common stock subject to possible redemption

 

 

 

 

 

 

 

$

140,437

 

 

$

140,737

 

 

$

141,588

 

 

$

 

Total stockholders’ equity

 

 

 

 

 

 

 

$

5,000

 

 

$

5,000

 

 

$

5,000

 

 

$

23

 

23

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF SHIFT

The following table sets forth selected historical consolidated financial information of Shift. Our income statement data for the year ended December 31, 2019, 2018 and 2017 and balance sheet data as of December 31, 2019 and 2018 are derived from our audited consolidated financial statements included elsewhere in this proxy statement/prospectus.

The following information is only a summary and should be read in conjunction with our consolidated financial statements and related notes contained elsewhere in this proxy statement/prospectus and information discussed under “Shift’s Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The historical results included below and elsewhere in this proxy statement/prospectus are not indicative of Shift’s future performance.

Consolidated Statements of Operations and Comprehensive Loss
(in
thousands, except share and per share amounts)

 

Year Ended December 31,

   

2019

 

2018

 

2017

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

Ecommerce revenue – net

 

$

135,277

 

 

$

122,889

 

 

$

88,870

 

Other revenue

 

 

3,150

 

 

 

2,617

 

 

 

1,931

 

Wholesale vehicle revenue

 

 

27,808

 

 

 

6,306

 

 

 

3,737

 

Total revenue

 

 

166,235

 

 

 

131,812

 

 

 

94,538

 

Cost of sales

 

 

167,997

 

 

 

126,423

 

 

 

89,999

 

Gross profit

 

 

(1,762

)

 

 

5,389

 

 

 

4,539

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

71,860

 

 

 

44,697

 

 

 

28,570

 

Depreciation and amortization

 

 

3,221

 

 

 

2,530

 

 

 

1,567

 

Total operating expenses

 

 

75,081

 

 

 

47,227

 

 

 

30,137

 

Loss from operations

 

 

(76,843

)

 

 

(41,838

)

 

 

(25,598

)

Interest expense

 

 

(5,461

)

 

 

(3,171

)

 

 

(261

)

Interest and other income

 

 

1,821

 

 

 

143

 

 

 

213

 

Net loss and comprehensive loss attributable to common stockholders

 

$

(80,483

)

 

$

(44,866

)

 

$

(25,646

)

Net loss per share attributable to common stockholders, basic and diluted

 

$

(2.33

)

 

$

(1.71

)

 

$

(0.89

)

Weighted-average number of shares outstanding used to compute net loss per share attributable to common stockholders, basic and diluted

 

 

34,579,059

 

 

 

26,172,848

 

 

 

28,718,469

 

24

 

Three Months Ended,
June 30,

 

Six Months Ended
June 30,

   

2020

 

2019

 

2020

 

2019

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ecommerce revenue – net

 

$

27,468

 

 

$

35,949

 

 

$

49,384

 

 

$

75,731

 

Other revenue

 

 

1,215

 

 

 

964

 

 

 

1,897

 

 

 

1,673

 

Wholesale vehicle revenue

 

 

3,758

 

 

 

5,547

 

 

 

11,112

 

 

 

15,623

 

Total revenue

 

 

32,441

 

 

 

42,460

 

 

 

62,393

 

 

 

93,027

 

Cost of sales

 

 

28,868

 

 

 

42,841

 

 

 

55,478

 

 

 

93,223

 

Gross profit

 

 

3,573

 

 

 

(381

)

 

 

6,915

 

 

 

(196

)

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

14,633

 

 

 

15,566

 

 

 

28,079

 

 

 

38,032

 

Depreciation and amortization

 

 

1,096

 

 

 

729

 

 

 

2,077

 

 

 

1,296

 

Total operating expenses

 

 

15,729

 

 

 

16,295

 

 

 

30,156

 

 

 

39,328