UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(MARK ONE)
For the fiscal year ended
OR
For the transition period from to
Commission File Number:
(Exact name of registrant as specified in its charter) |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
Grand Duchy of |
||
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: +
Securities registered pursuant to Section 12(b) of the Act:
None**
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☐
Indicate by check mark whether the
registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to
submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an 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 | ☐ | |
☒ | Smaller reporting company | |||
Emerging growth company |
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 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
As of March 31, 2021 (the last business
day of the registrant’s most recently completed second fiscal quarter), the aggregate market value of the common stock held by non-affiliates
of the registrant was approximately $
As of November 29, 2021, the day prior to effecting the Codere Business Combination (as defined below), there were
shares of Class A common stock, par value $0.0001 per share, and shares of Class B common stock, par value $0.0001 per share, issued and outstanding. As of February 16, 2022, there were 100 shares of common stock, par value $0.01 per share, issued and outstanding.
* | The company changed its name from DD3 Acquisition Corp. II to Codere Online U.S. Corp. on November 30, 2021. |
** | Removed from listing and/or registration under Section 12(b) of the Act pursuant to the Form 25 filed by the Nasdaq Stock Market LLC on November 30, 2021. |
Explanatory Note
References throughout this Annual Report on Form 10-K to “we,” “us,” “our,” “the company” or “our company” are to Codere Online U.S. Corp. (f/k/a DD3 Acquisition Corp. II), unless the context otherwise requires.
Subsequent to the period covered by this report, on November 30, 2021, the merger of our company and Codere Online U.S. Corp., a Delaware corporation (“Merger Sub”), was completed pursuant to the terms of the Business Combination Agreement, dated June 21, 2021 (the “Business Combination Agreement”), by and among our company, Codere Newco, S.A.U., a corporation (sociedad anónima unipersonal) registered and incorporated under the laws of Spain (“Codere Newco”), Servicios de Juego Online S.A.U., a corporation (sociedad anónima unipersonal) registered and incorporated under the laws of Spain (“SEJO”), Codere Online Luxembourg, S.A., a limited liability company (société anonyme) governed by the laws of the Grand Duchy of Luxembourg (“Holdco”), and Merger Sub, which among other things provided for the merger of Merger Sub with and into our company, with our company surviving such merger. In connection with the consummation of the business combination contemplated by the Business Combination Agreement (the “Codere Business Combination”), our company was renamed “Codere Online U.S. Corp.” and became a direct, wholly-owned subsidiary of Holdco.
CODERE ONLINE U.S. CORP. (f/k/a DD3 ACQUISITION CORP. II)
Annual Report on Form 10-K for the year ended September 30, 2021
Table of Contents
i
CERTAIN TERMS
Unless otherwise stated in this Annual Report on Form 10-K (this “report”) or the context otherwise requires:
● | references to “Baron” refer to Baron Global Advantage Fund, Baron Emerging Markets Fund and Destinations International Equity Fund, certain funds affiliated with Baron Capital Group, Inc., collectively; |
● | references to our “common stock” refer to our Class A common stock, par value $0.0001 per share, and our Class B common stock, par value $0.0001 per share, collectively; |
● | references to “contingent forward purchase agreements” refer to the agreements providing for the sale of up to 5,000,000 forward purchase shares to forward purchase investors in a private placement to close immediately prior the closing of our initial business combination; |
● | references to “EarlyBirdCapital” refer to EarlyBirdCapital, Inc.; |
● | references to “equity-linked securities” refer to any debt or equity securities issued in a transaction, including but not limited to a private placement of equity or debt, that are convertible, exercisable or exchangeable for shares of common stock. |
● | references to “forward purchase investors” refer to Baron and MG; |
● | references to “forward purchase shares” refer to the up to 5,000,000 shares of Class A common stock to be issued to the forward purchase investors pursuant to the contingent forward purchase agreements; |
● | references to “founder shares” refer to shares of our Class B common stock, par value $0.0001 per share, issued prior to our initial public offering and the shares of our Class A common stock issued upon the conversion thereof (for the avoidance of doubt, such shares of Class A common stock will not be “public shares”); |
● | references to our “initial stockholders” refer to the holders of our founder shares; |
● | references to our “management” or our “management team” refer to our officers and directors; |
● | references to “MG” refer to MG Partners Multi-Strategy Fund LP; |
● | references to “private shares” and “private warrants” refer to shares of our Class A common stock and warrants which were sold as part of the private units; |
● | references to “private units” refer to units that were sold in private placements in connection with our initial public offering; |
● | references to “public shares” refer to shares of our Class A common stock sold as part of the units in our initial public offering (whether purchased in our initial public offering or thereafter in the open market); |
● | references to “public stockholders” refer to the holders of our public shares, including our sponsor, officers and directors to the extent they purchase public shares, provided that their status as “public stockholders” shall only exist with respect to such public shares; |
● | references to “public warrants” refer to our redeemable warrants sold as part of the units in our initial public offering (whether purchased in our initial public offering or thereafter in the open market) that are sold to third parties that are not the initial purchasers or their permitted transferees; |
● | references to our “sponsor” refer to DD3 Sponsor Group, LLC, a Delaware limited liability company; and |
● | references to “we,” “us,” “our,” “the company” or “our company” refer to Codere Online U.S. Corp. (f/k/a DD3 Acquisition Corp. II), a Delaware corporation. |
ii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this report may constitute “forward-looking statements” for purposes of the federal securities laws, including, without limitation, statements under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Our forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about:
● | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the Codere Business Combination; |
● | our potential ability to obtain additional financing following consummation of the Codere Business Combination; |
● | the uncertainty resulting from the recent COVID-19 pandemic and other events (such as terrorist attacks, natural disasters or a significant outbreak of other infectious diseases); |
● | the lack of a market for our securities; |
● | our expectations regarding the time during which we will be an “emerging growth company” under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”); or |
● | our financial performance following the Codere Business Combination. |
The forward-looking statements contained in this report are based on our expectations and beliefs as of the date of this report concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under “Item 1A. Risk Factors” and elsewhere in this report. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
iii
PART I
Item 1. Business.
Overview
As of September 30, 2021, we were a blank check company formed under the laws of the State of Delaware on September 30, 2020. We were incorporated for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities, which we refer to in this report as our initial business combination.
On October 13, 2020, we issued 2,875,000 founder shares to our sponsor for an aggregate purchase price of $25,000, or approximately $0.009 per share, in connection with our organization. On December 7, 2020, we effected a stock dividend of 287,500 shares with respect to our Class B common stock, resulting in there being an aggregate of 3,162,500 founder shares outstanding. On December 10, 2020, in connection with the underwriters’ partial exercise of their over-allotment option and waiver of the remaining portion of such option, simultaneously with the consummation of our initial public offering, our sponsor forfeited an aggregate of 37,500 founder shares to us at no cost, and 3,125,000 founder shares remain outstanding at September 30, 2021, representing an adjusted purchase price of approximately $0.008 per share.
The registration statements on Form S-1 (File Nos. 333-250212 and 333-251190) for our initial public offering became effective on December 7, 2020. On December 10, 2020, we consummated our initial public offering of 12,500,000 units, inclusive of 1,500,000 units sold to the underwriters upon the underwriters’ election to partially exercise their over-allotment option, at a price of $10.00 per unit, generating total gross proceeds of $125,000,000. Each unit consisted of one share of Class A common stock and one-half of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment. The warrants became exercisable 30 days after the consummation of our initial business combination and will expire five years after the consummation of our initial business combination, or earlier upon redemption or liquidation.
Simultaneously with the consummation of our initial public offering, including the partial exercise of the over-allotment option, we consummated the private placement of an aggregate of 370,000 private units to our sponsor and the forward purchase investors at a price of $10.00 per private unit, generating total proceeds of $3,700,000 (the “private placement”). Among the private units, our sponsor purchased an aggregate of 296,000 private units and the forward purchase investors purchased an aggregate of 74,000 private units.
A total of $125,000,000 (or $10.00 per unit sold in our initial public offering) of the net proceeds from our initial public offering and the private placement was placed in a trust account established for the benefit of our public stockholders (the “trust account”), with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in money market funds meeting certain conditions of Rule 2a-7 of the Investment Company Act which invest only in direct U.S. government treasury obligations. We incurred $2,966,508 in transaction costs, including $2,500,000 of underwriting fees and $466,508 of other offering costs, in connection with our initial public offering. As of September 30, 2021, we had marketable securities held in the trust account of $125,056,567 (including approximately $50,181 of interest income, net of unrealized gain) and cash of $268,360 held outside the trust account.
1
As of September 30, 2021, our units, Class A common stock and warrants traded on the Nasdaq Capital Market (“Nasdaq”) under the symbols “DDMXU,” “DDMX” and “DDMXW,” respectively. Our units commenced public trading on December 8, 2020, and our Class A common stock and warrants commenced separate public trading on January 27, 2021. On November 30, 2021, the Nasdaq Stock Market LLC filed a Form 25 (Notification of Removal from Listing) with the SEC relating to the delisting of our units, Class A common stock and warrants. As a result, our units, Class A common stock and warrants are no longer listed on the Nasdaq.
Codere Business Combination
On June 21, 2021, we entered into the Business Combination Agreement with Codere Newco, SEJO, Holdco and Merger Sub, which provided for the Codere Business Combination that resulted, among other things, in the Company and SEJO becoming wholly-owned subsidiaries of Holdco, as described in more detail in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations”. In connection with the Codere Business Combination, Holdco filed a registration statement on Form F-4 (File No. 333-258759) (as subsequently amended, the “Form F-4”) with the U.S. Securities and Exchange Commission (the “SEC”) on August 12, 2021 that included a proxy statement with respect to our special meeting of stockholders, which was held on November 18, 2021to approve the Business Combination Agreement, among other matters, as well as a prospectus of Holdco with respect to the issuance of Holdco securities in the Codere Business Combination.
Pursuant to the Business Combination Agreement, following the effectiveness of (i) the contribution and exchange, effective at 10:00 a.m. New York time on November 29, 2021 (the “Exchange Effective Time”), by Codere Newco of its ordinary shares of SEJO, all with a nominal value of €1.00 per share, (the “SEJO Ordinary Shares”) to Holdco in exchange for additional ordinary shares of Holdco, with a nominal value of €1.00 per share (the “Holdco Ordinary Shares”), which were subscribed for by Codere Newco (the “Exchange”), as contemplated by and pursuant to the Contribution and Exchange Agreement, dated as of June 21, 2021, by and between Holdco, SEJO and Codere Newco (the “Contribution and Exchange Agreement”) and (ii) the merger of Merger Sub with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Holdco (the “Merger”) at 12:01 a.m. New York time on November 30, 2021 (the “Merger Effective Time”), the parties consummated the Codere Business Combination and SEJO and the Company became direct wholly-owned subsidiaries of Holdco. Pursuant to the Business Combination Agreement, each of the following transactions occurred in the following order:
● | pursuant to the Contribution and Exchange Agreement, Codere Newco, effective on the Exchange Effective Time, contributed its SEJO Ordinary Shares constituting all the issued and outstanding share capital of SEJO to Holdco in exchange for additional Holdco Ordinary Shares, which were subscribed for by Codere Newco. As a result of the Exchange, SEJO became a wholly-owned subsidiary of Holdco and Holdco continued to be a wholly-owned subsidiary of Codere Newco at the Exchange Effective Time; |
● | after the Exchange and immediately prior to the Merger Effective Time, each share of the Company’s Class B common stock automatically converted into and exchanged for one share of the Company’s Class A common stock (the “Class B Conversion”); |
● | on the Closing (as defined below) date, pursuant to the Merger, Merger Sub merged with and into the Company, with the Company surviving such merger and becoming a direct wholly-owned subsidiary of Holdco and, in connection therewith, the Company’s corporate name changed to “Codere Online U.S. Corp.”; |
2
● | in connection with the Merger, all shares of the Company’s Class A common stock issued and outstanding immediately prior to the Merger Effective Time, but after the Class B Conversion, were contributed to Holdco in exchange for the Merger Consideration (as defined in the Business Combination Agreement) in the form of one Holdco Ordinary Share for each share of the Company’s Class A common stock pursuant to the share capital increase of Holdco by way of the issuance of one Holdco Ordinary Share in consideration of each share of the Company’s Class A common stock issued and outstanding immediately prior to the Merger Effective Time (which for the avoidance of doubt did not include shares of the Company’s Class A common stock as to which redemption rights were exercised) (the “Holdco Capital Increase”), as set forth in the Business Combination Agreement; and |
● | as of the Merger Effective Time, each warrant of the Company that was outstanding immediately prior to the Merger Effective Time no longer represented a right to acquire one share of the Company’s DD3 Class A common stock and instead represented the right to acquire one Holdco Ordinary Share on substantially the same terms. |
Codere Newco held 30,000,000 Holdco Ordinary Shares upon consummation of the Exchange.
At the Merger Effective Time, each share of the Company’s Class A common stock issued and outstanding immediately prior to the Merger Effective Time was exchanged for one validly issued and fully paid Holdco Ordinary Share.On November 30, 2021, the Nasdaq Stock Market LLC filed a Form 25 (Notification of Removal from Listing) with the SEC relating to the delisting of our units, warrants and Class A common stock. As a result, our units, warrants and Class A common stock were delisted on the Nasdaq. On December 14, 2021, we filed a Form 15 certifying the deregistration of our units, warrants and Class A common stock under Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and suspension of our duty to file reports under Sections 13 and 15(d) of the Exchange Act. The Company’s reporting obligations under Section 15(d) of the Exchange Act have been suspended.
Employees
As of September 30, 2021, we had three executive officers. As of February 16, 2022, we have two executive officers. These individuals are not obligated to devote any specific number of hours to our matters and devoted only as much time as they deem necessary to our affairs. We expect our executive officers to devote such amount of time as they reasonably believe is necessary to our business.
Periodic Reporting and Audited Financial Statements
We have filed electronically with the SEC this Annual Report on Form 10-K and our Quarterly Reports on Form 10-Q (including our amended Quarterly Reports on Form 10-Q/A) and Current Reports on Form 8-K pursuant to Section 13(a) or 15(d) of the Exchange Act. Such reports and other information filed by the company with the SEC are available free of charge on the SEC’s website at www.sec.gov.
We are an emerging growth company as defined in the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some investors find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile.
In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Securities Act”), for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
We will remain an emerging growth company for up to five years. However, if our annual gross revenue is $1.07 billion or more, if our non-convertible debt issued within a three-year period exceeds $1 billion or the market value of our shares of common stock that are held by non-affiliates exceeds $700 million on the last day of the second fiscal quarter of any given fiscal year, we would cease to be an emerging growth company as of the following fiscal year.
3
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates exceeds $250 million as of the end of that year’s second fiscal quarter, and (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the end of that year’s second fiscal quarter.
On November 30, 2021, the Nasdaq Stock Market LLC filed a Form 25 (Notification of Removal from Listing) with the SEC relating to the delisting of our units, warrants and Class A common stock. As a result, our units, warrants and Class A common stock were delisted on the Nasdaq. On December 14, 2021, we filed a Form 15 certifying the deregistration of our units, warrants and Class A common stock under Section 12(g) of the Exchange Act and suspension of our duty to file reports under Sections 13 and 15(d) of the Exchange Act. The Company’s reporting obligations under Section 15(d) of the Exchange Act have been suspended. As a result, this Form 10-K will be the last report filed by the Company with the SEC unless circumstances change in the future (e.g., an increase in stockholders above the applicable threshold) and reporting obligations are re-activated.
Item 1A. Risk Factors.
As a smaller reporting company, we are not required to include risk factors in this report. Factors that could cause our actual results to differ materially from those in this report are any of the risks described in our final prospectus for our initial public offering filed with the SEC on December 10, 2020 and our final proxy statement with respect to our special meeting of stockholders to approve the Business Combination Agreement filed with the SEC on October 27, 2021 (the “Proxy Statement”). Except as set forth below, as of the date of this report, there have been no material changes with respect to risk factors previously disclosed in such filings. We may disclose changes to such factors or disclose additional factors from time to time in our filings with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition.
We have identified material weaknesses in our internal control over financial reporting with respect to our previously issued and current financial statements. These material weaknesses could adversely affect Holdco’s and our ability to report our results of operations and financial condition accurately and in a timely manner.
Following the issuance of the statement by the staff of the SEC regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants issued by Special Purpose Acquisition Companies (“SPACs”)” (the “Staff Statement”) and prior to the consummation of the Codere Business Combination, the audit committee of our board of directors, in consultation with our management, concluded that, in light of the Staff Statement, it was appropriate to restate our previously issued balance sheet as of December 10, 2020 and our financial statements as of December 31, 2020 and for the period from September 30, 2020 (inception) through December 31, 2020. As part of such processes, we identified a material weakness in our internal control over financial reporting related to the proper accounting classification and valuation of complex financial instruments.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented, or detected and corrected on a timely basis. Effective internal controls are necessary for us to provide reliable financial reports and prevent fraud.
4
Subsequent to the consummation of the Codere Business Combination, the internal control structure of the Company ceased to be in operation. Instead, the relevant internal control structure after completion of the Codere Business Combination is that of Holdco. After consultation with the Company’s independent registered public accounting firm, Holdco’s management and audit committee identified a material weakness in the Company’s internal control over financial reporting with respect to the Company’s previously issued financial statements related to the Company’s application of ASC 480-10-S99-3A to its accounting and classification of the public shares. Holdco and the Company concluded the Company’s previously issued financial statements should be restated to classify all shares of the Company’s Class A common stock subject to possible redemption in temporary equity. On January 26, 2022, Holdco’s audit committee authorized management to restate the Company’s previously issued (i) unaudited financial statements as of December 31, 2020 and for the period from September 30, 2020 (inception) through December 31, 2020, (ii) unaudited financial statements as of March 31, 2021 and for the period from September 30, 2020 (inception) through March 31, 2021 and (iii) unaudited financial statements as of June 20, 2021 and for the period from September 30, 2020 (inception) through June 30, 2021 (collectively, the “Affected Periods”), where Holdco concluded that the control deficiency that resulted in the incorrect classification of the public shares constituted a material weakness related to the proper accounting classification and valuation of complex financial instruments. Historically, a portion of the public shares was classified as permanent equity to maintain stockholders’ equity greater than $5 million on the basis that the Company would not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001, as described in its Amended and Restated Certificate of Incorporation in effect prior to the consummation of the Codere Business Combination (the “Amended and Restated Certificate of Incorporation”). Pursuant to such re-evaluation of the Company’s application of ASC 480-10-S99-3A to its accounting and classification of the public shares, Holdco and the Company determined that the public shares included certain provisions that required classification of all of the public shares as temporary equity regardless of the net tangible assets redemption limitation that was contained in the Amended and Restated Certificate of Incorporation, resulting in the filing of amendments to the Company’s quarterly reports on Form 10-Q/A for each of the Affected Periods with the SEC on January 27, 2022. The Company has also revised its interpretation of net tangible assets to include temporary equity in net tangible assets. In addition, in connection with the change in presentation for the public shares, the Company determined it should restate its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares of common stock. Additionally, the Company’s previously issued financial statements as of December 31, 2020 and for the period from September 30, 2020 (inception) through December 31, 2020 were restated to classify private warrants as derivative liabilities measured at fair value on the Company’s balance sheet.
As a result, financial statements issued with respect to the Affected Periods prior to date of the amendments to the Company’s quarterly reports on Form 10-Q/A should not be relied upon. Holdco will present this restatement in a prospective manner in all future filings. Under this approach, the previously issued financial statements of the Company included in the Proxy Statement and in Holdco’s registration statement on Form F-4 (File No. 333-258759) initially filed by Holdco with the SEC on August 12, 2021, as amended, will not be amended to reflect the Company’s restated financial statements for the Affected Periods, but historical amounts presented in the current and future filings will reflect the Company’s restated financial statements, as applicable.
Additionally, in connection with the preparation of our financial statements for the period from September 30, 2020 (inception) through September 30, 2021, we have identified an accrual that was not initially recorded in the current financial statements for such period. The accrual is recorded in the current financial statements and appropriately reflected. As part of such processes, we identified a material weakness in our internal control over financial reporting related to the process of recording accounts payable and accrued expenses.
As described above, the relevant internal control structure after completion of the Codere Business Combination is that of Holdco. Holdco is in the process of implementing enhancements to its internal control system to combine and streamline the management of its financial, accounting, human resources and other functions. Holdco can give no assurance that the measures Holdco has taken to remediate these material weakness surrounding the Company’s historical financial statements will prevent any future material weaknesses or deficiencies in internal control over financial reporting or that the Company or Holdco will not face litigation or other disputes which may include, among others, claims invoking the federal and state securities laws, contractual claims or other claims arising from the material weakness in the Company’s internal control over financial reporting and the preparation of its financial statements, the restatement of the Company’s historical financial information and the Company’s financial information not restated included in historical public filings. In the future, those controls and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of financial statement and any additional remediation measures may be time consuming and costly.
Item 1B. Unresolved Staff Comments.
Not applicable.
5
Item 2. Properties.
As of September 30, 2021, we maintained our principal executive offices at Pedregal 24, 3rd Floor, Interior 300, Colonia Molino del Rey, Del. Miguel Hidalgo, 11040 México City, México. The cost for this space was included in the $10,000 per-month administrative fee our sponsor began charging us for general and administrative services, including office space, utilities and administrative support, commencing on December 7, 2020, pursuant to a letter agreement between us and our sponsor. Since the consummation of the Codere Business Combination on November 30, 2021, our principal executive offices are located at 7 rue Robert Stümper, Luxembourg, Grand Duchy of Luxembourg, L-2557. We consider our office space adequate for our operations.
Item 3. Legal Proceedings.
To the knowledge of our management, there is no material litigation, arbitration, governmental proceeding or any other legal proceeding currently pending or known to be contemplated against us or any members of our management team in their capacity as such.
Item 4. Mine Safety Disclosures.
Not applicable.
6
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities.
Market Information
As of September 30, 2021, our units, Class A common stock and warrants traded on the Nasdaq Capital Market under the symbols “DDMXU,” “DDMX” and “DDMXW,” respectively. Each unit consisted of one share of Class A common stock and one-half of one warrant. Our units commenced public trading on December 8, 2020, and our Class A common stock and warrants commenced separate public trading on January 27, 2021. On November 30, 2021, the Nasdaq Stock Market LLC filed a Form 25 (Notification of Removal from Listing) with the SEC relating to the delisting of our units, Class A common stock and warrants. As a result, our units, Class A common stock and warrants are no longer listed on the Nasdaq.
Holders of Record
On September 30, 2021, there were approximately six holders of record of our units, one holder of record of our Class A common stock, one holder of record of our Class B common stock and one holder of record of our warrants. Such numbers do not include beneficial owners holding our securities through nominee names. As of February 16, 2022, Holdco was the sole holder of record of our common stock.
Dividends
The Company has never declared or paid cash dividends on its common stock and does not anticipate paying cash dividends in the foreseeable future.
Recent Sales of Unregistered Securities
On October 13, 2020, we issued 2,875,000 founder shares to our sponsor for an aggregate purchase price of $25,000, or approximately $0.009 per share, in connection with our organization. On December 7, 2020, we effected a stock dividend of 287,500 shares with respect to our Class B common stock, resulting in there being an aggregate of 3,162,500 founder shares outstanding. On December 10, 2020, in connection with the underwriters’ partial exercise of their over-allotment option and waiver of the remaining portion of such option, simultaneously with the consummation of our initial public offering, our sponsor forfeited an aggregate of 37,500 founder shares to us at no cost, and 3,125,000 founder shares remain outstanding at September 30, 2021, representing an adjusted purchase price of approximately $0.008 per share.
Simultaneously with the consummation of our initial public offering, including the partial exercise of the over-allotment option, we consummated the private placement of an aggregate of 370,000 private units to our sponsor and the forward purchase investors at a price of $10.00 per private unit, generating total proceeds of $3,700,000. Among the private units, our sponsor purchased an aggregate of 296,000 private units and the forward purchase investors purchased an aggregate of 74,000 private units. The private units were identical to the units sold in our initial public offering, except that if held by the initial purchasers or their permitted transferees, the underlying private warrants (i) may have been exercised on a cashless basis and (ii) were not subject to redemption. If the private units were held by holders other than the initial purchasers or their permitted transferees, then the private warrants would have been redeemable by us and exercisable by the holders on the same basis as the warrants included in the units sold in our initial public offering. In addition, the private units (and the securities underlying the private units) were not transferable, assignable or salable until after the completion of our initial business combination, subject to certain limited exceptions.
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In connection with the Codere Business Combination, (i) Baron elected to purchase an aggregate of 2,500,000 shares of the Company’s Class A common stock for an aggregate purchase price of $25,000,000, at a price of $10.00 per each share of the Company’s Class A common stock, pursuant to the terms of the Forward Purchase Agreement, dated as of November 17, 2020, by and between the Company and Baron, as amended on June 21, 2021 (the “Baron Forward Purchase Agreement”), and (ii) MG elected to purchase an aggregate of 2,500,000 shares of the Company’s Class A common stock for an aggregate purchase price of $25,000,000, at a price of $10.00 per each share of the Company’s Class A common stock, pursuant to the terms of the Forward Purchase Agreement, dated as of November 19, 2020, by and between DD3 and MG, as amended on June 21, 2021 (the “MG Forward Purchase Agreement”), in each case in a private placement that occurred immediately prior to the Merger.
Contemporaneously with the execution and delivery of the Business Combination Agreement, the Company entered into two separate Subscription Agreements with DD3 Capital Partners S.A. de C.V. (“DD3 Capital”) and Larrain Investment Inc. (“Larrain”) (the “Subscription Agreements”), in each case to which Holdco is also a party, pursuant to which the Company issued and sold, in a private placement that closed immediately prior to the Merger, (i) an aggregate of 500,000 shares of the Company’s Class A common stock, for an aggregate purchase price of $5,000,000, at a price of $10.00 per each share of the Company’s Class A common stock, to DD3 Capital and its permitted transferees, and (ii) an aggregate of 1,224,000 shares of the Company’s Class A common stock, for an aggregate purchase price of $12,240,000, at a price of $10.00 per each share of the Company’s Class A common stock, to Larrain and its permitted transferees.
The foregoing issuances were made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act. No underwriting discounts or commissions were paid with respect to such issuances.
In connection with the Merger, all shares of the Company’s Class A common stock issued and outstanding immediately prior to the Merger Effective Time, but after the Class B Conversion, were contributed to Holdco in exchange for the Merger Consideration in the form of one Holdco Ordinary Share for each share of the Company’s Class A common stock pursuant to the Holdco Capital Increase, as set forth in the Business Combination Agreement. As of the Merger Effective Time, each warrant of the Company that was outstanding immediately prior to the Merger Effective Time no longer represented a right to acquire one share of the Company’s DD3 Class A common stock and instead represented the right to acquire one Holdco Ordinary Share on substantially the same terms.
Use of Proceeds
On December 10, 2020, we consummated our initial public offering of 12,500,000 units, inclusive of 1,500,000 units sold to the underwriters upon the underwriters’ election to partially exercise their over-allotment option, at a price of $10.00 per unit, generating total gross proceeds of $125,000,000. Each unit consists of one share of Class A common stock and one-half of one redeemable warrant, each whole warrant entitling the holder thereof to purchase one share of Class A common stock at an exercise price of $11.50 per share, subject to adjustment. The warrants will become exercisable 30 days after the consummation of our initial business combination and will expire five years after the consummation of our initial business combination, or earlier upon redemption or liquidation.
EarlyBirdCapital acted as sole book-running manager of our initial public offering. The securities in the offering were registered under the Securities Act on registration statements on Form S-1 (File Nos. 333-250212 and 333-251190). The registration statements became effective on December 7, 2020.
We paid a total of $2,500,000 in underwriting discounts and commissions and $466,508 for other costs and expenses related to our initial public offering. Concurrent with the closing of our initial public offering, we repaid our sponsor $105,747 in satisfaction of an outstanding loan.
After deducting the underwriting discounts and commissions and the offering expenses, the total net proceeds from our initial public offering, including the partial exercise of the over-allotment option, and the private placement of private units was $125,733,492, of which $125,000,000 was placed in the trust account.
For a description of the use of the proceeds generated in our initial public offering, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report. There has been no material change in the planned use of proceeds from our initial public offering as described in our final prospectus filed with the SEC on December 10, 2020.
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Item 6. [Reserved]
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited financial statements and the notes related thereto contained elsewhere in this report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this report.
Overview
As of September 30, 2021, we were a blank check company formed under the laws of the State of Delaware on September 30, 2020. We were incorporated for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities. On June 21, 2021, we entered into the Business Combination Agreement and on November 30, 2021 the Codere Business Combination was consummated.
Recent Developments
Codere Business Combination
On June 21, 2021, we entered into the Business Combination Agreement with Codere Newco, SEJO, Holdco and Merger Sub, which provided for the Codere Business Combination that resulted, among other things, in the Company and SEJO becoming wholly-owned subsidiaries of Holdco. In connection with the Codere Business Combination, Holdco filed the Form F-4 with the SEC that includes a proxy statement with respect to our special meeting of stockholders which was held on November 18, 2021 to approve the Business Combination Agreement, among other matters, as well as a prospectus of Holdco with respect to the issuance of Holdco securities in the Codere Business Combination.
On November 30, 2021, the Nasdaq Stock Market LLC filed a Form 25 (Notification of Removal from Listing) with the SEC relating to the delisting of our units, warrants and Class A common stock. As a result, our units, warrants and Class A common stock were delisted on the Nasdaq. On December 14, 2021, we filed a Form 15 certifying the deregistration of our units, warrants and Class A common stock under Section 12(g) of the Exchange Act and suspension of our duty to file reports under Sections 13 and 15(d) of the Exchange Act. The Company’s reporting obligations under Section 15(d) of the Exchange Act have been suspended.
Business Combination Agreement
Pursuant to the Business Combination Agreement, following the effectiveness of the transactions contemplated by the Exchange at the Exchange Effective Time and the Merger on the Merger Effective Time, the parties consummated the Codere Business Combination and SEJO and the Company became direct wholly-owned subsidiaries of Holdco. Pursuant to the Business Combination Agreement, each of the following transactions occurred in the following order:
● | pursuant to the Contribution and Exchange Agreement, Codere Newco, effective on the Exchange Effective Time, contributed its SEJO Ordinary Shares constituting all the issued and outstanding share capital of SEJO to Holdco in exchange for additional Holdco Ordinary Shares, which were subscribed for by Codere Newco. As a result of the Exchange, SEJO became a wholly-owned subsidiary of Holdco and Holdco continued to be a wholly-owned subsidiary of Codere Newco at the Exchange Effective Time; |
● | after the Exchange and immediately prior to the Merger Effective Time, each share of the Company’s Class B common stock automatically converted into and exchanged for one share of the Company’s Class A common stock pursuant to the Class B Conversion; |
● | on the Closing Date, pursuant to the Merger, Merger Sub merged with and into the Company, with the Company surviving such merger and becoming a direct wholly-owned subsidiary of Holdco and, in connection therewith, the Company’s corporate name changed to “Codere Online U.S. Corp.”; |
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● | in connection with the Merger, all shares of the Company’s Class A common stock issued and outstanding immediately prior to the Merger Effective Time, but after the Class B Conversion, were contributed to Holdco in exchange for the Merger Consideration (as defined in the Business Combination Agreement) in the form of one Holdco Ordinary Share for each share of the Company’s Class A common stock pursuant to the Holdco Capital Increase, as set forth in the Business Combination Agreement; and |
● | as of the Merger Effective Time, each warrant of the Company that was outstanding immediately prior to the Merger Effective Time no longer represented a right to acquire one share of the Company’s DD3 Class A common stock and instead represented the right to acquire one Holdco Ordinary Share on substantially the same terms. |
Codere Newco held 30,000,000 Holdco Ordinary Shares upon consummation of the Exchange.
At the Merger Effective Time, each share of the Company’s Class A common stock issued and outstanding immediately prior to the Merger Effective Time was exchanged for one validly issued and fully paid Holdco Ordinary Share.
The terms of the Business Combination Agreement and other related ancillary agreements entered into in connection with the closing of the Codere Business Combination (the “Closing”) are summarized in more detail in our Current Report on Form 8-K filed with the SEC on June 22, 2021 and in the Form F-4.
Warrant Amendment Agreement
In connection with the Closing of the Codere Business Combination, the Company, Holdco and Continental Stock Transfer & Trust Company, as warrant agent, entered into an agreement at Closing (the “Warrant Amendment Agreement”) to amend the warrant agreement, dated as of December 7, 2020, by and between the Company and Continental, as warrant agent, governing the Company’s warrants entered into by the Company, Holdco and Continental, as warrant agent (the “Original Warrant Agreement”), pursuant to which, among others, as of the Merger Effective Time, (i) each of the issued Company’s warrants that was outstanding immediately prior to the Merger Effective Time ceased to represent a right to acquire one share of the Company’s Class A common stock and instead represented the right to acquire one Holdco Ordinary Share on substantially the same terms as set forth in the Original Warrant Agreement and (ii) the Company assigned to Holdco all of the Company’s right, title and interest in and to the Original Warrant Agreement and Holdco assumed, and agreed to pay, perform, satisfy and discharge in full, all of the Company’s liabilities and obligations under the Original Warrant Agreement arising from and after the Merger Effective Time.
Subscription Agreements
Contemporaneously with the execution and delivery of the Business Combination Agreement, the Company entered into two separate Subscription Agreements with DD3 Capital and Larrain, in each case to which Holdco is also a party, pursuant to which the Company issued and sold, in a private placement that closed immediately prior to the Merger, (i) an aggregate of 500,000 shares of the Company’s Class A common stock, for an aggregate purchase price of $5,000,000, at a price of $10.00 per each share of the Company’s Class A common stock, to DD3 Capital and its permitted transferees, and (ii) an aggregate of 1,224,000 shares of the Company’s Class A common stock, for an aggregate purchase price of $12,240,000, at a price of $10.00 per each share of the Company’s Class A common stock, to Larrain and its permitted transferees (collectively, the “PIPE” and the shares of the Company’s Class A common stock issued in connection with the PIPE, the “PIPE Shares”).
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Forward Purchase Agreements
In connection with the Codere Business Combination, (i) Baron elected to purchase an aggregate of 2,500,000 shares of the Company’s Class A common stock for an aggregate purchase price of $25,000,000, at a price of $10.00 per each share of the Company’s Class A common stock, pursuant to the terms of the Baron Forward Purchase Agreement, and (ii) MG elected to purchase an aggregate of 2,500,000 shares of the Company’s Class A common stock for an aggregate purchase price of $25,000,000, at a price of $10.00 per each share of the Company’s Class A common stock, pursuant to the terms of the MG Forward Purchase Agreement, in each case in a private placement that occurred immediately prior to the Merger. Among other terms, (i) we agreed not to enter into any agreement with any other investor or prospective investor on terms that are more favorable to such other investor or prospective investor than the terms provided to Baron or MG, as applicable, and (ii) certain closing conditions were amended in part to align with the closing conditions in the Business Combination Agreement, including that the terms of the Business Combination Agreement (as the same existed on the date of the amendments to the forward purchase agreements) shall not have been amended or modified in a manner, and no waiver thereunder shall have occurred, that would reasonably be expected to be materially adverse to the economic benefits that Baron or MG would reasonably expect to receive under their respective forward purchase agreement, without Baron’s or MG’s written consent, as applicable.
Baron Support Agreement
Contemporaneously with the execution and delivery of the Business Combination Agreement, we entered into the Investor Support Agreement with Baron (the “Baron Support Agreement”), pursuant to which Baron irrevocably waived its redemption rights with respect to 996,069 public shares acquired by Baron in our initial public offering (the “Baron IPO Shares”) and agreed not to (a) redeem, or exercise any of its redemption rights with respect to, any Baron IPO Shares in connection with our special meeting of stockholders to approve the Business Combination Agreement and the Codere Business Combination and (b) to certain transfer restrictions with respect to the Baron IPO Shares. The Baron Support Agreement and the obligations of Baron under the Baron Support Agreement automatically terminated upon the Closing of the Codere Business Combination. The Baron Support Agreement was subject to customary conditions, covenants, representations and warranties.
Pursuant to the Business Combination Agreement, we undertook not to amend, modify, waive or otherwise change any of the Baron Support Agreement, Forward Purchase Agreements and Subscription Agreements without the prior written consent of SEJO, such consent not to be unreasonably withheld, delayed or conditioned.
Results of Operations
We have neither engaged in any operations nor generated any revenues as of the end of the period covered by this report. Our only activities through September 30, 2021 were organizational activities, those necessary to prepare for our initial public offering, described below, and, after our initial public offering, identifying a target company for our initial business combination. We do not expect to generate any operating revenues. At September 30, 2021, we generate non-operating income in the form of interest income on marketable securities held in the trust account, and we incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with searching for, and completing, our initial business combination, including the Codere Business Combination.
For the period from September 30, 2020 (inception) through September 30, 2021, we had a net loss of $1,580,128, which consisted of operating costs of $1,521,995, a change in fair value of warrant liability of $114,700 offset by interest earned on marketable securities held in the trust account of $50,181 and an unrealized gain on marketable securities held in the trust account of $6,386.
Liquidity and Management’s Plan
Until the consummation of our initial public offering, our only source of liquidity was an initial purchase of founder shares by our sponsor and loans from our sponsor.
On December 10, 2020, we consummated our initial public offering of 12,500,000 units, at $10.00 per unit, which included the partial exercise by the underwriters of their over-allotment option in the amount of 1,500,000 units, generating gross proceeds of $125,000,000. Simultaneously with the closing of our initial public offering, we consummated the private placement of an aggregate of 370,000 private units to our sponsor and the forward purchase investors at a price of $10.00 per private unit, generating gross proceeds of $3,700,000.
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Following our initial public offering, including the partial exercise of the over-allotment option, and the private placement, a total of $125,000,000 was placed in the trust account. We incurred $2,966,508 in transaction costs, including $2,500,000 of underwriting fees and $466,508 of other offering costs.
For the period from September 30, 2020 (inception) through September 30, 2021, net cash used in operating activities was $530,132. Net loss of $1,580,128 was affected by interest earned on marketable securities held in the trust account of $50,181 and an unrealized gain on marketable securities held in the trust account of $6,386, offset by a change in fair value of warrant liability of $114,700 and offering costs allocable to warrant liability of $396. Changes in operating assets and liabilities used $991,467 of cash for the period.
As of September 30, 2021, we had marketable securities held in the trust account of $125,056,567 (including approximately $50,181 of interest income, net of unrealized gain) consisting of securities held in a money market fund that invests in U.S. Treasury securities with a maturity of 185 days or less. Interest income on the balance in the trust account may be used by us to pay taxes. Through September 30, 2021, we did not withdraw any interest earned on the trust account to pay our taxes. We used substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account (less income taxes payable), to complete our initial business combination and to pay our expenses relating thereto, including a fee payable to EarlyBirdCapital upon consummation of our initial business combination for assisting us in connection with our initial business combination, as described below.
As of September 30, 2021, we had cash of $268,360 held outside the trust account. We used the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete our initial business combination.
Management believed that the funds which the Company had available at September 30, 2021 were insufficient to sustain operations for a period of at least one (1) year from the issuance date of this financial statement. Accordingly, substantial doubt about the Company’s ability to continue as a going concern existed.
On June 21, 2021, the Company entered into the Business Combination Agreement and subsequently on November 30, 2021, the Codere Business Combination closed, which provided the Company access to additional capital that is sufficient to sustain operations and meet obligations as they become due within one year. As such, substantial doubt has been alleviated.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of September 30, 2021.
Contractual Obligations
As of September 30, 2021, we did not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or other long-term liabilities, other than an agreement to pay our sponsor a monthly fee of $10,000 for office space, utilities and administrative support. We began incurring these fees on December 7, 2020 and continued to incur these fees monthly until the Closing.
We engaged EarlyBirdCapital as an advisor in connection with our initial business combination to assist us in holding meetings with our stockholders to discuss the potential business combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing our securities in connection with our initial business combination, assist us in obtaining stockholder approval for our initial business combination and assist us with our press releases and public filings in connection with our initial business combination. We paid EarlyBirdCapital a cash fee for such services upon the consummation of our initial business combination in an amount of 3.5% of the gross proceeds of our initial public offering, or $4,375,000.
We are also party to the forward purchase agreements and have entered into the Business Combination Agreement, the Subscription Agreements and the Baron Support Agreement in connection with the Codere Business Combination, among other agreements in connection with the Codere Business Combination, as described above.
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Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in conformity with United States generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liabilities
We account for the private warrants in accordance with the guidance contained in Accounting Standards Codification (“ASC”) 815 under which the private warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Under ASC 815-40, the private warrants are not indexed to our common stock in the manner contemplated by ASC 815-40 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. Accordingly, we classify the private warrants as liabilities at their fair value and adjust the private warrants to fair value at each reporting period. These liabilities are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The private warrants are valued using a modified Black Scholes model.
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. Our Class A common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2021, Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equity section of our condensed balance sheet.
Net Loss Per Common Share
Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Shares of common stock subject to possible redemption at September 30, 2021, which are not currently redeemable and are not redeemable at fair value, have been excluded from the calculation of basic net loss per common share since such shares, if redeemed, only participate in their pro rata share of the trust account earnings. We have not considered the effect of the public warrants or the private warrants in the calculation of diluted loss per share, since the exercise of the warrants is contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. As a result, diluted net loss per common share is the same as basic net loss per common share for the periods presented.
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. We are currently assessing the impact, if any, that ASU 2020-06 would have on our financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this item.
Item 8. Financial Statements and Supplementary Data.
Our financial statements and notes thereto begin on page F-1 of this report and are incorporated herein by reference.
Item 9. Changes and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial and accounting officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of September 30, 2021. Based on this evaluation, our principal executive officer and principal financial and accounting officer has concluded that, as of September 30, 2021, our disclosure controls and procedures were not effective, due solely to the material weaknesses in our internal control over financial reporting described below.
Our internal control over financial reporting did not result in the proper accounting classification and valuation of complex financial instruments, including warrants and shares subject to possible redemption, as described in Note 2 of the notes to the financial statements included elsewhere in this report, which due to the impact on our financial statements we determined to be material weaknesses. Additionally, we have identified an accrual that was not initially recorded in the current financial statements for the period from September 30, 2020 (inception) through September 30, 2021. The accrual is recorded in the current financial statements and is appropriately reflected. Due to the impact on our financial statements, we determined the adjustment is indicative of a material weakness.
Subsequent to the Closing of the Codere Business Combination on November 30, 2021, the internal control structure of the Company ceased to be in operation and instead, the relevant internal control structure after Closing of the Codere Business Combination is that of Holdco.
Changes in Internal Control over Financial Reporting
Except as set forth below, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fourth quarter of the fiscal year covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
On January 27, 2022, the Company filed amended 10-Q/A Quarterly Reports for the periods ending December 31, 2020, March 31, 2021 and June 30, 2021 to restate the financial statements to correct accounting errors related to the classification Private Placement Warrants and shares subject to possible redemption. Due solely to the events that led to the restatements of our previously issued financial statements, our management identified material weaknesses in our internal control over financial reporting related to the accounting for complex financial instruments, as described above.
Additionally, in connection with the preparation of our financial statements for the period from September 30, 2020 (inception) through September 30, 2021, we have identified an accrual that was not initially recorded in the current financial statements for such period. The accrual is recorded in the current financial statements and appropriately reflected. As part of such processes, we identified a material weakness in our internal control over financial reporting related to the process of recording accounts payable and accrued expenses.
In light of these material weaknesses, we performed additional analysis as deemed necessary to ensure that our financial statements were prepared in accordance with GAAP. Accordingly, our management believes that the financial statements included in this report present fairly in all material respects our financial position, results of operations and cash flows for the period presented.
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Subsequent to the Closing of the Codere Business Combination on November 30, 2021, the internal control structure of the Company ceased to be in operation and instead, the relevant internal control structure after Closing of the Codere Business Combination is that of Holdco.
Management’s Report on Internal Control Over Financial Reporting
This report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
Item 9B. Other Information.
None.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
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PART III
Item 10. Directors, Executive Officers and Corporate Governance.
As of September 30, 2021 and until the Merger Effective Time, our directors and executive officers were as follows:
Name | Age | Position | ||
Dr. Martin M. Werner | 58 | Chairman and Chief Executive Officer | ||
Jorge Combe | 43 | Chief Operating Officer and Director | ||
Daniel Salim | 29 | Chief Financial Officer | ||
Dr. Guillermo Ortiz | 73 | Director | ||
Daniel Valdez | 39 | Director | ||
Pedro Solís Cámara | 61 | Director | ||
Luis Campos | 68 | Director |
Dr. Martin M. Werner was our Chief Executive Officer and Chairman of the Board since our inception in September 2020 until the Merger Effective Time. Since January 2021, Dr. Werner has also served as the Chief Executive Officer and Chairman of the Board of DD3 Acquisition Corp. III (“DD3 Acquisition III”). Dr. Werner served as the Chief Executive Officer and Chairman of DD3 Acquisition Corp. (“DD3 Acquisition I”) from July 2018 until the consummation of its business combination with Betterware de México, S.A.B de C.V. (NASDAQ: BWMX) (“Betterware”) in March 2020, and continues to serve as a member of Betterware’s board of directors. He is a co-founding partner of DD3 Capital, a private investment and financial services firm headquartered in Mexico City that provides a wide range of financial services to clients including, among others, merger and acquisitions advisory, equity and debt capital raising advisory and advisory in highly structured debt financing and financial restructurings. Prior to founding DD3 Capital in 2016, Dr. Werner worked at Goldman Sachs for 16 years (2000 – 2016) becoming a Managing Director in 2000 and a Partner in 2006. He was co-head of the Investment Banking Division for Latin America and the country head of the Mexico office. From 2011 to December 2019, Dr. Werner served as the Chairman of the board of directors of Red de Carreteras de Occidente, one of Mexico’s largest private concessionaires operating more than 760 kilometers of toll roads, which was previously owned by Goldman Sachs Infrastructure Partners I, L.P., from 2007 until its sale to Abertis Infraestructuras, S.A. and GIC Special Investments Pte Ltd. Prior to his time with Goldman Sachs, Dr. Werner served in the Mexican Treasury Department as the General Director of Public Credit from 1995 to 1997, and as Deputy Finance Minister from 1997 to 1999. Among his numerous activities, he was in charge of restructuring Mexico’s public debt during the financial crisis of 1994 and 1995. Dr. Werner is the second largest investor of Banca Mifel, a leading mid-market Mexican bank with $3.3 billion in assets and a credit portfolio of $2.0 billion. He was previously a member of the Board of Directors of Grupo Comercial Chedraui, a leading supermarket chain in Mexico and the United States, and is currently a member of the Board of Directors of Empresas ICA, a leading infrastructure construction company in Mexico, and of Grupo Aeroportuario del Centro Norte, one of Mexico’s largest airport operators. He is a member of Yale University’s School of Management Advisory Board. Dr. Werner holds a bachelor’s degree in economics from Instituto Tecnológico Autónomo de Mexico (“ITAM”) and a Ph.D. in economics from Yale University.
Jorge Combe was our Chief Operating Officer and one of our directors since our inception in September 2020 until the Merger Effective Time. Since January 2021, Mr. Combe has also served as the Chief Operating Officer and as a director of DD3 Acquisition III. Mr. Combe served as the Chief Operating Officer from July 2018, and also as a director from October 2018, of DD3 Acquisition I until the consummation of its business combination with Betterware in March 2020. He co-founded DD3 Capital together with Dr. Werner in 2016 and is a managing partner. Prior to co-founding DD3 Capital, he was a Managing Director in the Investment Banking Division of Goldman Sachs in Mexico City from 2010 to 2017. While at Goldman Sachs, Mr. Combe covered companies across the Latin American region and led several initial equity offerings, mergers and acquisitions, structured financing notes and debt offerings transactions in the Mexican and Latin American markets. Prior to joining Goldman Sachs, Mr. Combe was a vice president in the investment banking division in Merrill Lynch from 2009 to 2010. From 2008 to 2009, he worked at GP Investimentos, one of the leading Brazilian private equity firms, where Mr. Combe was part of the founding investment team, analyzing multiple investment opportunities as well as supervising the portfolio company, Fogo de Chao. Prior to joining GP Investimentos, Mr. Combe worked for Credit Suisse as an associate in the equity capital markets group where he was involved in over 20 equity offerings for Latin American companies. Mr. Combe began his career at Banco Banorte as floor equity trader, where he held various positions in Mexico and New York. Mr. Combe is a member of the Board of Directors of Quiero Casa, a leading real estate residential developer in Mexico. He earned an MBA from the Wharton Business School at the University of Pennsylvania and a Bachelor of Science in economics from ITAM.
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Daniel Salim was our Chief Financial Officer since our inception in September 2020 until the Merger Effective Time. Since January 2021, Mr. Salim has also served as the Chief Financial Officer of DD3 Acquisition III. Mr. Salim served as the Chief Financial Officer of DD3 Acquisition I from July 2018 until the consummation of its business combination with Betterware in March 2020. Since 2017, Mr. Salim has also been a member of the DD3 Capital team analyzing the deal flow and execution of mergers and acquisitions, equity raising, advisory and debt raising. From 2015 to 2017, Mr. Salim worked for Bank of Tokyo-Mitsubishi in its Latin America Corporate & Investment Banking Group, where he evaluated project finance and acquisition opportunities involving Mexican blue-chip and state-owned companies, across Latin America, in the renewable energy, petrochemicals and oil and gas sectors. From 2013 to 2015, he served as an analyst at HR Ratings, a local rating agency covering medium and large companies in the retail, real estate, consumer, manufacturing and entertainment industries. Mr. Salim received a Bachelor in Finance and Accounting from Universidad Anahuac Norte and is currently a chartered financial analyst candidate.
Dr. Guillermo Ortiz, who served as one of our independent directors since December 2020 until the Merger Effective Time, also served as an independent director of DD3 Acquisition I from October 2018 until the consummation of its business combination with Betterware in March 2020, and continues to serve as a member of Betterware’s board of directors. Dr. Ortiz is currently a member of the Board of BTG Pactual Mexico and has also served as Chairman of BTG Pactual Latin America ex-Brazil, a leading Brazilian financial services company with operations throughout Latin America, the U.S. and Europe, since 2015. Prior to joining BTG, from 2010 to 2015, he was Chairman of the Board of Grupo Financiero Banorte-Ixe, the largest independent Mexican financial institution. In 2009, Dr. Ortiz served as chairman of the Bank of International Settlements based in Basile, Switzerland. Dr. Ortiz served two consecutive six-year terms as Governor of Mexico’s Central Bank from 1998 to 2009. From 1994 to 1997, Dr. Ortiz served as Secretary of Finance and Public Credit in the Mexican Federal Government where he guided Mexico through the “Tequila” crisis and contributed to the stabilization of the Mexican economy, helping return the nation to growth in 1996. He previously served on the Board of Directors of the International Monetary Fund, the World Bank, the Interamerican Development Bank and Wetherford International, a leading company in the oil and equipment industry. Dr. Ortiz is Chairman of the Board of each of the Pe Jacobsson Foundation, a member of Group of Thirty, the Center for Financial Stability, the Globalization and Monetary Policy Institute, the Federal Reserve Bank of Dallas and China’s International Finance Forum. He is also a member of the Board of Directors of a number of Mexican companies, including Grupo Aeroportuario del Sureste, one of Mexico’s largest airport operators, and Vitro, a leading glass manufacturing company in Mexico. Dr. Ortiz is also a member of the Quality of Life Advisory Board of the Government of Mexico City. Dr. Ortiz holds a bachelor’s degree in economics from Universidad Nacional Autónoma de México (UNAM), a master’s degree and a Ph.D. in economics from Stanford University.
Daniel Valdez, who served as one of our independent directors since December 2020 until the Merger Effective Time, has also served as a director (alternate) for Betterware since December 2018, when his co-led special purpose vehicle, Promotora Forteza, S.A. de C.V., acquired a minority stake in the business. He is a Managing Partner of Alternative Investments and Portfolio Manager (Public Equities) for Morales y Guerra Capital Asesores S.A. de C.V. (“MG Capital”). Mr. Valdez has also served as an independent member of investment committees for several public and private investment trusts, including Altum Capital. Prior to joining MG Capital, he held Senior Analyst positions at prominent hedge funds: Sigma Capital Management from 2012 to 2014; Eton Park Capital Management from 2011 to 2012; and Surveyor Capital (Citadel) from 2010 to 2011. Prior to joining Surveyor Capital, Mr. Valdez worked as an Investment Banking Associate for Morgan Stanley in New York from 2008 to 2010. While at Morgan Stanley, he joined the Technology, Media & Telecom group executing several initial equity offerings, mergers and acquisitions, and debt offerings transactions. Mr. Valdez earned an MBA from the Harvard Business School and a Bachelor of Science from Stanford University.
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Pedro Solís Cámara who served as one of our independent directors since December 2020 until the Merger Effective Time, is a founding partner and director of Solís Cámara y Cia, S.C. and Solís Cámara, López Guerrero, S.C., which are tax advisory firms headquartered in Mexico City and formed in 1991. Prior to founding Solís Cámara y Cia, S.C. and Solís Cámara, López Guerrero, S.C., Mr. Solís Cámara worked at Galaz, Carstens, Chavero y Yamazaki (currently Deloitte) from 1981 to 1986, where he was the head of Grupo SARE’s tax department. From 1986 to 1991, he worked as an independent tax advisor at Solís Cámara, Escobar y Compañia, S.C. Mr. Solís Cámara has also worked in the academic field as a part-time professor at ITAM from 1985 to 2015 and has participated as a speaker and panel member at numerous conferences on tax issues. From 1995 and 1996, he served as a member of the Fiscal Advisory Council on property tax of the Treasury of Distrito Federal, and from 2013 to 2014, he was part of the training group of the Tax Administration System (SAT). Mr. Solís Cámara served as a director of DD3 Acquisition I from October 2018 until the consummation of its business combination with Betterware in March 2020. Mr. Solís Cámara is an active partner and member of the Fiscal Commission of Colegio de Contadores Públicos de México, A.C. Additionally, he is a member of Instituto Mexicano de Contadores Públicos, A.C., of the IFA Grupo Mexico and of the International Fiscal Association. Currently, Mr. Solís Cámara is an investor and advisor to several companies, including Bardahl de Mexico S.A. de C.V., Grupo Ambrosia, La Era Natural, Don Apoyo, S.A.P.I. de C.V., Grupo Dinero Práctico, Grupo Gicsa S.A.B. de C.V., Day Asesores, Fibra Plus and Latam Hotel Corporation LTD. Mr. Solís Cámara earned his bachelor’s degree in accounting from ITAM in 1983 and his degree in tax law from ITAM in 1985.
Luis Campos, who served as one of our independent directors since December 2020 until the Merger Effective Time, has been in the direct to consumer business for almost 25 years. He has been Chairman of Betterware since 2001. Prior to Betterware, Mr. Campos served as Chairman of Tupperware Americas from 1994 to 1999, Chairman of Sara Lee – House of Fuller Mexico from 1991 to 1993, and Chairman of Hasbro Mexico from 1984 to 1990. Mr. Campos is an active member of the “Consejo Consultivo” of Banamex and he was an active member of the Direct Selling Association, The Latin America Regional Managers’ Club and The Conference Board, and a board member of the Economic Development Commission of Mid Florida, Casa Alianza-Covenant House, The Metro Orlando International Affairs Commission, SunTrust Bank and Casa de Mexico de la Florida Central, Inc. Mr. Campos earned a bachelor’s degree in public accounting from the National Polytechnic Institute of Mexico in 1974.
On November 30, 2021, effective as of the Merger Effective Time, the foregoing directors and executive officers resigned as directors and officers, as applicable of the Company. Following the Merger Effective Time, our directors and executive officers are as follows:
Name | Age | Position | ||
Gonzalo de Osma Bucero | 49 | President, Treasurer and Director | ||
Moshe Edree | 55 | Director | ||
Oscar Iglesias | 47 | Director | ||
Arie Rubinstein | 53 | Vice President and Secretary |
Gonzalo de Osma. Mr. de Osma has been our President and Treasurer and has served as a member of the Company’s board since the Merger Effective Time. Mr. de Osma also currently serves as the Chief Accounting Officer of Holdco. Mr. de Osma has been Codere Group’s Digital Division Chief Financial Officer and member of its Board of Directors since September 2018. Mr. De Osma had various roles in his more than 14-year career at Codere Group and, prior to joining the Digital Division, he was Chief Financial Officer and member of the Board of Directors and Steering Committee of the Codere Group’s Mexican Business unit where it supervised a diversified portfolio, including gaming halls, racetrack, an exhibition center and an amusement park. At that moment, Mr. De Osma lead negotiations on the first international bank loan granted to a Mexican gaming company. In 2017, Mr. De Osma actively participated in the valuation, negotiation and final purchase of a minority stake in the main Mexican Subsidiary of the Codere Group. Previously, he was responsible for the successful merger integration of the joint business under which the Codere Group operated in Mexico. Additionally, he has led several M&A projects, productivity initiatives and implemented cost reductions. Mr. De Osma earned a Bachelor in Business Administration by the University of Wales.
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Moshe Edree. Mr. Edree has served as a member of the Company’s board since the Merger Effective Time. Mr. Edree currently serves as the Managing Director of Holdco and as a member of the Holdco Board. Mr. Edree has served as SEJO’s Chief Executive Officer since January 1, 2022. He has also served as Chief Operating Officer and Director in one of the subsidiaries of the Codere Group since 2018, for which he planned and executed a reorganization process and took on responsibility for developing Codere Online. Mr. Edree had various roles in his around two decades of experience in management and directorship in the online gaming world. Between 2012 and 2016, Mr. Edree held an ownership interest as a shareholder of the company that provided services to Ladbrokes to set up its online division. He took a leading role in establishing Ladbroke’s online division and optimizing its digital processes. Between 2010 and 2014, Mr. Edree served as non-executive director of NetPlay TV PLC. Between 2009 and 2012, he also served as Chief Operating Officer of Playtech Turnkey Solution, where he also provided strategic guidance on planning, business and market development for Playtech B2C Partnership. Previously, he was a shareholder and held the office of CEO at IMIntermedia Ltd. Mr. Edree was also a shareholder and partner of Europartners and, since 2012, has served as chairman of Amandi Energy, Ghana. Mr. Edree is founder, owner and holds the office of Chief Executive Officer at Media Serve Ltd. He also serves as director in the board of directors of Top Archive Ltd and Twin City Ltd and provides services to Marketplay Ltd as an advisor to its board of directors on marketing and strategy. In addition, since 2010, Mr. Edree has been a shareholder of Luckyfishgames.com, where he oversaw the creation of this platform focusing on soft casino games tailored to social networks. Mr. Edree earned a Bachelor of Science from the Tel Aviv University and the Holon Institute of Technology in Israel, as well as a Bachelor of Arts from the Pratt University in New York, and a Master of Science in Project Management from the University of Bridgeport (Connecticut).
Oscar Iglesias. Mr. Iglesias has served as a member of the Company’s board since the Merger Effective Time. Mr. Iglesias currently serves as the Chief Financial Officer of Holdco and as a member of the Holdco Board. Mr. Iglesias has served since 2015 as Deputy CFO of Codere Group and, since 2017, as Director of Corporate Development. Mr. Iglesias has served as officer and as a member of the board of directors of multiple subsidiaries of the Codere Group and continues to serve as a member of the board of directors of CCJV S.A.P.I. de C.V. and HR Mexico City Project Co. S.A.P.I. de C.V., two subsidiaries of the Codere Group. His previous experience includes CFO and Head of Corporate Development for Franklyn Hotels & Resorts (Barcelona), principal with the private equity group WL Ross & Co. LLC (New York), and roles within the investment banking and equity research departments of Bear, Stearns & Co. Inc. (New York). Mr. Iglesias graduated from the McIntire School of Commerce at the University of Virginia and has an MBA from Columbia Business School. Oscar is a citizen of both the United States and Spain.
Arie Rubinstein. Mr. Rubinstein has been our Vice President and Secretary since the Merger Effective Time. Mr. Rubinstein joined Codere Group’s legal department for the Online division in September 2020 and currently serves as Deputy General Counsel of Codere Online. Mr. Rubinstein is a senior legal counsel with more than 20 years of experience providing in-house legal counseling in corporate, commercial and secretarial matters mainly for global Israeli private and public companies traded at NASDAQ, NYSE and TASE with operations worldwide. Prior to Codere, Mr. Rubinstein served as Chief Legal Officer of the biotech dental industry company Alpha Bio Tec. Ltd., a subsidiary of Danaher Corp. traded at Nasdaq. Prior to Alpha Bio Tec., Mr. Rubinstein served as Senior Corporate and Commercial Legal Counsel at the headquarters of Israel Chemicals Ltd. (ICL), an Israeli based public company in the chemicals industry, traded at NYSE and TASE, providing in-house legal counseling on corporate, secretarial, commercial and M&A matters. Prior to ICL, Mr. Rubinstein served as General Counsel and Company Secretary of On Track Innovations Ltd. (OTIV), an Israeli based hi-tech fin-tech company traded at Nasdaq, where he provided in-house legal counseling on corporate, commercial and all other legal matters in respect to the company and its subsidiaries operations worldwide, as well as serving as the company’s secretary, director in the subsidiaries companies, and compliance officer. Prior to his in-house counseling work, Mr. Rubinstein worked many years as senior associate in leading law firms in Israel, among them, Avi Neeman & Co. law firm, G. Horowitz & Co. law firm and others. Mr. Rubinstein although was born and raised partly in Mexico, has been residing for many years in Israel where he started his legal profession. Mr. Rubinstein holds a Bachelor of Laws (LLB) degree from the College of Management Academic (COMA) Law School of Tel-Aviv, Israel, is licensed as public notary by the Israeli Ministry of Justice, a certificated mediator and member of the Israeli Bar Association.
Number and Terms of Office of Officers and Directors
As of September 30, 2021 and until the Merger Effective Time, we had six directors. Our board of directors was divided into three classes with only one class of directors being elected in each year and each class (except for those directors appointed prior to our first annual meeting of stockholders) serving a three-year term. The term of office of the first class of directors, consisting of Messrs. Valdez and Campos, would expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Dr. Ortiz and Mr. Solís Cámara, would expire at our second annual meeting of stockholders. The term of office of the third class of directors, consisting of Dr. Werner and Mr. Combe, would expire at our third annual meeting of stockholders. We may not have hold an annual meeting of stockholders until after the consummation of our initial business combination.
Prior to the completion of our initial business combination, any vacancy on our board of directors may have been filled by a nominee chosen by holders of a majority of our founder shares.
Our officers were appointed by our board of directors and served at the discretion of our board of directors, rather than for specific terms of office. Our board of directors was authorized to appoint persons to the offices set forth in our bylaws in effect prior to the Merger Effective Time as it deemed appropriate. Our bylaws provided that our officers may consist of a Chairman of the Board, Chief Executive Officer, President, Chief Financial Officer, Treasurer, Secretary and such other officers (including without limitation, Vice Presidents and Assistant Secretaries) as may be determined by our board of directors.
Following the Merger Effective Time, we have three (3) directors. Our directors are elected at the annual meeting of the stockholders. Each director so elected shall hold office until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.
Any vacancy on our board of directors may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.
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Our officers are appointed by our board of directors and serve until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that the principal officers of the Company shall be a President, one or more Vice Presidents, a Treasurer and a Secretary who shall have the duty, among other things, to record the proceedings of the meetings of stockholders and directors in a book kept for that purpose and such other officers as may be determined by our board of directors.
Committees of the Board of Directors
As of September 30, 2021 and until the Merger Effective Time, our board of directors had three standing committees: an audit committee, a nominating committee, and a compensation committee, each of which was composed solely of independent directors. Each committee operated under a charter that was approved by our board of directors and had the composition and responsibilities described below. Upon the Closing of the Codere Business Combination, the audit committee, the nominating committee, and the compensation committee were disbanded, at which point the Company’s board of directors assumed the duties of such committees.
Audit Committee
As of September 30, 2021 and until the Merger Effective Time, the audit committee of our board of directors consisted of Mr. Solís Cámara (chairman), Dr. Ortiz and Mr. Valdez, each of whom was an independent director under Nasdaq’s listing standards. Each member of the audit committee was financially literate, and our board of directors had determined that Mr. Solís Cámara qualified as an “audit committee financial expert” as defined in applicable SEC rules because he met the requirement for past employment experience in finance or accounting, requisite professional certification in accounting or comparable experience. The audit committee’s duties, which were specified in our audit committee charter, included, but were not limited to:
● | reviewing and discussing with management and the independent auditor the annual audited financial statements, and recommending to the board whether the audited financial statements should be included in our annual reports; |
● | discussing with management and the independent auditor significant financial reporting issues and judgments made in connection with the preparation of our financial statements; |
● | discussing with management major risk assessment and risk management policies; |
● | monitoring the independence of the independent auditor; |
● | verifying the rotation of the lead (or coordinating) audit partner having primary responsibility for the audit and the audit partner responsible for reviewing the audit as required by law; |
● | reviewing and approving all related party transactions; |
● | inquiring and discussing with management our compliance with applicable laws and regulations; |
● | pre-approving all audit services and permitted non-audit services to be performed by our independent auditor, including the fees and terms of the services to be performed; |
● | appointing or replacing the independent auditor; |
● | determining the compensation and oversight of the work of the independent auditor (including resolution of disagreements between management and the independent auditor regarding financial reporting) for the purpose of preparing or issuing an audit report or related work; |
● | establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or reports which raise material issues regarding our financial statements or accounting policies; and |
● | approving reimbursement of expenses incurred by our management team in identifying potential target businesses. |
Upon the Closing of the Codere Business Combination, the audit committee was disbanded, at which point the Company’s board of directors assumed the duties of such committee.
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Nominating Committee
As of September 30, 2021 and until the Merger Effective Time, the nominating committee of our board of directors consisted of Dr. Ortiz (chairman), Mr. Valdez and Mr. Campos, each of whom was an independent director under Nasdaq’s listing standards. The nominating committee was responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considered persons identified by its members, management, stockholders, investment bankers and others. Upon the Closing of the Codere Business Combination, the nominating committee was disbanded, at which point the Company’s board of directors assumed the duties of such committee.
Guidelines for Selecting Director Nominees
The guidelines for selecting nominees, which were specified in our nominating committee charter, generally provided that persons to be nominated:
● | should have demonstrated notable or significant achievements in business, education or public service; |
● | should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and |
● | should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders. |
The nominating committee considered a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on our board of directors. The nominating committee may have required certain skills or attributes, such as financial or accounting experience, to meet specific board needs that aroused from time to time and also considered the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The nominating committee did not distinguish among nominees recommended by stockholders and other persons.
Compensation Committee
As of September 30, 2021 and until the Merger Effective Time, the compensation committee of our board of directors consisted of Dr. Ortiz (chairman), Mr. Valdez and Mr. Solís Cámara, each of whom was an independent director under Nasdaq’s listing standards. The compensation committee’s duties, which were specified in our compensation committee charter, included, but are not limited to:
● | reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation; |
● | reviewing and approving the compensation of all of our other executive officers; |
● | reviewing our executive compensation policies and plans; |
● | implementing and administering our incentive compensation equity-based remuneration plans; |
● | assisting management in complying with our proxy statement and annual report disclosure requirements; |
● | approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our executive officers and employees (if any); |
● | if required, producing a report on executive compensation to be included in our annual proxy statement; and |
● | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
Upon the Closing of the Codere Business Combination, the audit committee was disbanded, at which point the Company’s board of directors assumed the duties of such committee.
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Code of Ethics
Prior to Closing of the Codere Business Combination, we adopted a code of ethics applicable to all of our executive officers, directors and employees (if any). The code of ethics codified the business and ethical principles that govern all aspects of our business prior to Closing. We filed a copy of our code of ethics, audit committee charter, nominating committee charter and compensation committee charter as exhibits to our registration statements on Form S-1 (File Nos. 333-250212 and 333-251190) for our initial public offering, which exhibits are incorporated by reference as exhibits to this report. You may review these documents by accessing our public filings at the SEC’s website at www.sec.gov.
Subsequent to the Closing of the Codere Business Combination on November 30, 2021, the relevant code of ethics applicable to our directors and senior management is that of Holdco, which is included as an exhibit to this report.
Item 11. Executive Compensation.
No director or executive officer has received any cash compensation for services rendered to us. Commencing on December 7, 2020 through Closing, we were obligated to pay our sponsor $10,000 per month for providing us with general and administrative services, including office space, utilities and administrative support. However, this arrangement was solely for our benefit and is not intended to provide our officers or directors compensation in lieu of a salary.
Other than the $10,000 per month administrative fee and the repayment of loans from our sponsor, no compensation or fees of any kind, including finder’s, consulting fees and other similar fees, have been or will be paid to our sponsor, members of our board of directors or management team prior to Closing of the Codere Business Combination, members of our current board of directors or management team, or their respective affiliates, for services rendered prior to or in connection with the consummation of our initial business combination, including the Codere Business Combination (regardless of the type of transaction that it is).
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table sets forth information regarding the beneficial ownership of our common stock as of September 30, 2021, by:
● | each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; |
● | each of our executive officers and directors; and |
● | all our executive officers and directors as a group. |
Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of our warrants. The calculation of the percentage of beneficial ownership is based on 15,995,000 shares of common stock outstanding on September 30, 2021, consisting of 12,870,000 shares of Class A common stock and 3,125,000 shares of Class B common stock.
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Class A Common Stock | Class B Common Stock(2) | Approximate | ||||||||||||||||||
Name and Address of Beneficial Owner(1) | Number of Shares Beneficially Owned | Approximate Percentage of Class | Number of Shares Beneficially Owned | Approximate Percentage of Class | Percentage of Outstanding Shares of Common Stock | |||||||||||||||
DD3 Sponsor Group, LLC(3) | 296,000 | 2.3 | % | 3,125,000 | 100.0 | % | 21.4 | % | ||||||||||||
Dr. Martin M. Werner(4) | — | — | — | — | — | |||||||||||||||
Jorge Combe(3) | 296,000 | 2.3 | % | 3,125,000 | 100.0 | % | 21.4 | % | ||||||||||||
Daniel Salim(4) | — | — | — | — | — | |||||||||||||||
Dr. Guillermo Ortiz(4) | — | — | — | — | — | |||||||||||||||
Daniel Valdez(4) | — | — | — | — | — | |||||||||||||||
Pedro Solís Cámara(4) | — | — | — | — | — | |||||||||||||||
Luis Campos(4) | — | — | — | — | — | |||||||||||||||
All directors and executive officers as a group (7 individuals) | 296,000 | 2.3 | % | 3,125,000 | 100.0 | % | 21.4 | % | ||||||||||||
Hartree Partners, LP(5) | 1,500,000 | 11.7 | % | — | — | 9.4 | % | |||||||||||||
Baron Global Advantage Fund(6) | 1,037,000 | 8.1 | % | — | — | 6.5 | % | |||||||||||||
Castle Creek Arbitrage, LLC(7) | 753,898 | 5.9 | % | — | — | 4.7 | % | |||||||||||||
BlueCrest Capital Management Limited(8) | 663,546 | 5.2 | % | — | — | 4.1 | % |
(1) | Unless otherwise noted, the business address of each of the following entities or individuals is Pedregal 24, 3rd Floor, Interior 300, Colonia Molino del Rey, Del. Miguel Hidalgo, 11040 Mexico City, Mexico. |
(2) | Shares of our Class B common stock automatically converted into shares of our Class A common stock upon Closing of the Codere Business Combination. |
(3) | Represents securities held directly by our sponsor and indirectly by Jorge Combe as sole manager of our sponsor. Mr. Combe disclaims beneficial ownership of such securities except to the extent of his pecuniary interest therein. |
(4) | Such individual does not beneficially own any of shares of our common stock. However, such individual has a pecuniary interest in shares of our common stock through an ownership interest in our sponsor. |
(5) | According to a Schedule 13G/A filed with the SEC on September 27, 2021 on behalf of Hartree Partners, LP. The business address for this stockholder is 1185 Avenue of the Americas, New York, NY 10036. |
(6) | Represents securities held (i) directly by Baron and an affiliated fund and (ii) with respect to securities held directly by Baron Global Advantage Fund (“BGA”), indirectly by Mr. Ronald Baron, the Chief Executive Officer of BGA. Baron also has an economic interest in our sponsor and therefore in certain of the founder shares held by our sponsor. Each of Baron, such affiliated fund and Mr. Baron disclaims beneficial ownership of all such securities except to the extent of their pecuniary interest therein. The business address for this stockholder is 767 Fifth Avenue, 48th Floor, New York, NY 10153. |
(7) | According to a Schedule 13G filed with the SEC on February 16, 2021 on behalf of Castle Creek Arbitrage, LLC (“Castle Creek”), Mr. Allan Weine, CC ARB West, LLC and CC Arbitrage, Ltd. Castle Creek serves as a registered investment adviser whose clients are CC Arb West, LLC and CC Arbitrage, Ltd. Mr. Weine is the managing member of Castle Creek. By virtue of these relationships, each of Castle Creek and Mr. Weine may be deemed to beneficially own the 634,782 and 119,116 shares directly owned by CC ARB West, LLC and CC Arbitrage, Ltd., respectively. The business address of each of the reporting persons is 190 South LaSalle Street, Suite 3050, Chicago, Illinois 60603. |
(8) | According to a Schedule 13G filed with the SEC on February 5, 2021 on behalf of BlueCrest Capital Management Limited (the “Investment Manager”) and Michael Platt. The Investment Manager serves as investment manager to Millais Limited (the “Fund”), and Mr. Platt serves as principal, director, and control person of the Investment Manager. Millais USA LLC acts as sub-investment manager of the Fund and reports to the Investment Manager. Each of the Investment Manager and Mr. Platt may be deemed the beneficial owner of the 663,546 shares held for the account of the Fund. The business address of each of the reporting persons is Ground Floor, Harbour Reach, La Rue de Carteret, St Helier, Jersey, Channel Islands JE2 4HR. |
As of February 16, 2022, the Company was a wholly-owned subsidiary of Holdco. As of February 16, 2022, none of our directors or executive officers beneficially owned any equity securities of the Company.
23
Item 13. Certain Relationships and Related Transactions, and Director Independence.
On October 13, 2020, we issued 2,875,000 founder shares to our sponsor for an aggregate purchase price of $25,000, or approximately $0.009 per share, in connection with our organization. On December 7, 2020, we effected a stock dividend of 287,500 shares with respect to our Class B common stock, resulting in there being an aggregate of 3,162,500 founder shares outstanding. On December 10, 2020, in connection with the underwriters’ partial exercise of their over-allotment option and waiver of the remaining portion of such option, simultaneously with the consummation of our initial public offering, our sponsor forfeited an aggregate of 37,500 founder shares to us at no cost, and 3,125,000 founder shares remain outstanding at September 30, 2021, representing an adjusted purchase price of approximately $0.008 per share.
On December 10, 2020, the founder shares were placed into an escrow account maintained by Continental Stock Transfer & Trust Company, acting as escrow agent. Subject to certain limited exceptions, these shares will not be transferred, assigned, sold or released from escrow until the earlier of one year after the date of the consummation of our initial business combination and the date on which the closing price of our Class A common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing 150 days after the consummation of our initial business combination, or earlier if, subsequent to our initial business combination, we consummate a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.
Simultaneously with the consummation of our initial public offering, including the partial exercise of the over-allotment option, we consummated the private placement of an aggregate of 370,000 private units to our sponsor and the forward purchase investors at a price of $10.00 per private unit, generating total proceeds of $3,700,000. Among the private units, our sponsor purchased an aggregate of 296,000 private units and the forward purchase investors purchased an aggregate of 74,000 private units. Immediately following the closing of our initial public offering, a total of $125,000,000 of the net proceeds from our initial public offering and the private placement was placed in the trust account, with Continental Stock Transfer & Trust Company acting as trustee. The private units are identical to the units sold in our initial public offering, except that if held by the initial purchasers or their permitted transferees, the underlying private warrants (i) may be exercised on a cashless basis and (ii) are not subject to redemption. If the private units are held by holders other than the initial purchasers or their permitted transferees, then the private warrants will be redeemable by us and exercisable by the holders on the same basis as the warrants included in the units sold in our initial public offering. In addition, the private units (and the securities underlying the private units) are not transferable, assignable or salable until after the completion of our initial business combination, subject to certain limited exceptions.
Our sponsor loaned us an aggregate of $105,747 in connection with the expenses of our initial public offering, pursuant to the terms of a promissory note. We fully repaid the loans from our sponsor at the closing of our initial public offering on December 10, 2020.
Pursuant to an agreement with our sponsor, we pay our sponsor a monthly fee of $10,000 for certain general and administrative services, including office space, utilities and administrative support. We began incurring these fees on December 7, 2020 and will continue to incur these fees monthly until the earlier of the completion of our initial business combination and our liquidation. We believe, based on rents and fees for similar services, that the administrative fee is at least as favorable as we could have obtained from an unaffiliated person.
In connection with our initial public offering, we entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in the Amended and Restated Certificate of Incorporation.
Other than the $10,000 per month administrative fee and the repayment of loans from our sponsor, no compensation or fees of any kind, including finder’s, consulting fees and other similar fees, have been or will be paid to our sponsor, members of our management team or their respective affiliates, for services rendered prior to or in connection with the consummation of our initial business combination (regardless of the type of transaction that it is).
In connection with the Codere Business Combination, (i) Baron elected to purchase an aggregate of 2,500,000 shares of the Company’s Class A common stock for an aggregate purchase price of $25,000,000, at a price of $10.00 per each share of the Company’s Class A common stock, pursuant to the terms of the Baron Forward Purchase Agreement, and (ii) MG elected to purchase an aggregate of 2,500,000 shares of the Company’s Class A common stock for an aggregate purchase price of $25,000,000, at a price of $10.00 per each share of the Company’s Class A common stock, pursuant to the terms of the MG Forward Purchase Agreement, in each case in a private placement that occurred immediately prior to the Merger.
24
Additionally, Baron had an economic interest in the sponsor and therefore in certain of the founder shares held by our sponsor, and MG had the right to acquire, at the original purchase price, certain of the founder shares held by our sponsor immediately prior to the closing of our initial business combination.
Baron also agreed not to have the Baron IPO Shares redeemed and to certain transfer restrictions with respect to such shares pursuant to the Baron Support Agreement.
Contemporaneously with the execution and delivery of the Business Combination Agreement, the Company entered into two separate Subscription Agreements with DD3 Capital and Larrain, in each case to which Holdco is also a party, pursuant to which the Company issued and sold, in a private placement that closed immediately prior to the Merger, (i) an aggregate of 500,000 shares of the Company’s Class A common stock, for an aggregate purchase price of $5,000,000, at a price of $10.00 per each share of the Company’s Class A common stock, to DD3 Capital and its permitted transferees, and (ii) an aggregate of 1,224,000 shares of the Company’s Class A common stock, for an aggregate purchase price of $12,240,000, at a price of $10.00 per each share of the Company’s Class A common stock, to Larrain and its permitted transferees.
The holders of founder shares, as well as certain holders of the private units (and all underlying securities), were entitled to certain registration rights pursuant to a registration rights agreement, dated as of December 7, 2020, among the Company and such holders. Such agreement was terminated and superseded by the Registration Rights and Lock-Up Agreement which the Company, Codere Newco, Holdco, the Sponsor, the forward purchase investors and the other parties thereto entered into at Closing (the “Registration Rights and Lock-Up Agreement”), which provides customary demand and piggyback registration rights. Pursuant to the Registration Rights and Lock-Up Agreement, Holdco agreed that, within 30 calendar days after the Closing date, it will file with the SEC a registration statement to permit the public resale of certain Holdco Ordinary Shares and Holdco warrants (including underlying securities) held by the Holders (as defined in the Registration Rights and Lock-Up Agreement), and that it will use its reasonable best efforts to have the registration statement declared effective as soon as practicable after the filing thereof, but no later than 60 calendar days following the filing deadline, provided that the effectiveness deadline will be extended to 90 calendar days after the filing deadline if the registration statement is reviewed by, and receives comments from, the SEC.
Holdco also granted certain registration rights to DD3 Capital, Larrain and their permitted transferees under the Subscription Agreements.
Related Party Policy
As of September 30, 2021 and until the Merger Effective Time, our code of ethics required us to avoid, wherever possible, all related party transactions that could result in actual or potential conflicts of interests, except under guidelines approved by the board of directors (or the audit committee). Related-party transactions are defined as transactions in which (1) the aggregate amount involved will or may be expected to exceed $120,000 in any calendar year, (2) we or any of our subsidiaries is a participant, and (3) any (a) executive officer, director or nominee for election as a director, (b) greater than 5% beneficial owner of our shares of common stock, or (c) immediate family member, of the persons referred to in clauses (a) and (b), has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10% beneficial owner of another entity). A conflict of interest situation can arise when a person takes actions or has interests that may make it difficult to perform his or her work objectively and effectively. Conflicts of interest may also arise if a person, or a member of his or her family, receives improper personal benefits as a result of his or her position.
Our audit committee, pursuant to its written charter, was responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. The audit committee considered all relevant factors when determining whether to approve a related party transaction, including whether the related party transaction is on terms no less favorable to us than terms generally available from an unaffiliated third-party under the same or similar circumstances and the extent of the related party’s interest in the transaction. No director may have participated in the approval of any transaction in which he is a related party, but that director was required to provide the audit committee with all material information concerning the transaction. We also required each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions.
These procedures were intended to determine whether any such related party transaction impaired the independence of a director or presents a conflict of interest on the part of a director, employee or officer.
25
To further minimize conflicts of interest, we agreed not to consummate an initial business combination with an entity that was affiliated with any of our sponsor, officers or directors unless we had obtained an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions, that the business combination was fair to our unaffiliated stockholders from a financial point of view. We would also have needed to obtain approval of a majority of our disinterested independent directors.
Director Independence
Nasdaq listing standards required that a majority of our board of directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Prior to the Closing of the Codere Business Combination and to the Company’s delisting from Nasdaq, our board of directors determined that Dr. Ortiz and Messrs. Valdez, Solís Cámara and Campos were “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors had regularly scheduled meetings at which only independent directors were present. Any affiliated transactions would have been on terms no less favorable to us than could be obtained from independent parties. Our board of directors would have reviewed and approved all affiliated transactions with any interested director abstaining from such review and approval.
Item 14. Principal Accountant Fees and Services.
Marcum LLP (“Marcum”) acts as our independent registered public accounting firm. The following is a summary of fees paid to Marcum for services rendered.
Audit Fees. Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Marcum in connection with regulatory filings. The aggregate fees billed by Marcum for professional services rendered for the audit of our annual financial statements, review of the financial information included in our Forms 10-Q for the respective periods and other required filings with the SEC for the period from September 30, 2020 (inception) through September 30, 2021 totaled $110,657. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings.
Audit-Related Fees. Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation and consultations concerning financial accounting and reporting standards. We did not pay Marcum for consultations concerning financial accounting and reporting standards for the period from September 30, 2020 (inception) through September 30, 2021.
Tax Fees. We did not pay Marcum for tax planning and tax advice for the period from September 30, 2020 (inception) through September 30, 2021.
All Other Fees. We did not pay Marcum for other services for the period from September 30, 2020 (inception) through September 30, 2021.
Pre-Approval Policy
Prior to Closing of the Codere Business Combination, our board of directors had an audit committee which was composed solely of independent directors. Our audit committee was formed in connection with the consummation of our initial public offering. As a result, our audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee and up to Closing of the Business Combination, the audit committee pre-approved all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
26
PART IV
Item 15. Exhibits and Financial Statement Schedules.
The following documents are filed as part of this report:
(1) | Financial Statements |
(2) | Financial Statement Schedules |
None.
(3) | Exhibits |
27
No. | Description of Exhibit |
* | Filed herewith. |
** | Furnished. |
(1) | Previously filed as an exhibit to our Current Report on Form 8-K filed on December 11, 2020 and incorporated by reference herein. |
(2) | Previously filed as an exhibit to our Current Report on Form 8-K filed on June 22, 2021 and incorporated by reference herein. |
(3) | Previously filed as an exhibit to our Registration Statement on Form S-1 filed on November 19, 2020 and incorporated by reference herein. |
(4) | Previously filed as an exhibit to our Current Report on Form 8-K filed on December 3, 2021 and incorporated by reference herein. |
Item 16. Form 10-K Summary.
Not applicable.
28
CODERE ONLINE U.S. CORP. (f/k/a DD3 ACQUISITION CORP. II)
INDEX TO FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of
Codere Online U.S. Corp. (f/k/a DD3 Acquisition Corp. II)
Opinion on the Financial Statements
We have audited the accompanying balance sheet of Codere Online U.S. Corp. (f/k/a DD3 Acquisition Corp. II) (the “Company”) as of September 30, 2021, the related statements of operations, changes in stockholders’ equity and cash flows for the period from September 30, 2020 (inception) through September 30, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2021, and the results of its operations and its cash flows for the period from September 30, 2020 (inception) through September 30, 2021, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provide a reasonable basis for our opinion.
/s/ Marcum llp
Marcum llp
We have served as the Company’s auditor since 2020.
Boston,
MA
February 16, 2022
F-2
CODERE ONLINE U.S. CORP. (f/k/a DD3 ACQUISITION CORP. II)
BALANCE SHEET
SEPTEMBER 30, 2021
ASSETS | ||||
Current assets | ||||
Cash | $ | |||
Prepaid expenses | ||||
Total Current Assets | ||||
Cash and marketable securities held in Trust Account | ||||
Total Assets | $ | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||
Current liabilities | ||||
Accrued expenses | $ | |||
Total Current Liabilities | ||||
Warrant Liability | ||||
Total Liabilities | ||||
Commitments and contingencies | ||||
Class A common stock subject to possible redemption, | shares at redemption value||||
Stockholders’ Deficit | ||||
Preferred stock, $ | par value; shares authorized; issued and outstanding||||
Class A common stock, $ | par value; shares authorized; issued and outstanding (excluding 12,500,000 shares subject to possible redemption)||||
Class B common stock, $ par value; shares authorized; shares issued and outstanding (1) | ||||
Additional paid-in capital | ||||
Accumulated deficit | ( | ) | ||
Total Stockholders’ Deficit | ( | ) | ||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ |
(1) |
F-3
CODERE ONLINE U.S. CORP. (f/k/a DD3 ACQUISITION CORP. II)
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM SEPTEMBER 30, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2021
Formation and operating costs | $ | |||
Loss from operations | ( | ) | ||
Other income (expense): | ||||
Change in fair value of warrant liability | ( | ) | ||
Interest income on marketable securities held in Trust Account | ||||
Unrealized gain on marketable securities held in Trust Account | ||||
Other expense, net | ( | ) | ||
Net loss | $ | ( | ) | |
Basic and diluted weighted average shares outstanding, Class A common stock subject to redemption | ||||
Basic and diluted net loss per share, Class A common stock subject to redemption | $ | ( | ) | |
Basic and diluted weighted average shares outstanding, Non-redeemable common stock | ||||
Basic and diluted net loss per share, Non-redeemable common stock | $ | ( | ) |
F-4
CODERE ONLINE U.S. CORP. (f/k/a DD3 ACQUISITION CORP. II)
STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE PERIOD FROM SEPTEMBER 30, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2021
Class A Common Stock | Additional | Total | ||||||||||||||||||||||||||||||||||
Subject to Possible Redemption | Class A Common Stock | Class B Common Stock | Paid-in | Accumulated | Stockholders’ | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Capital | Deficit | Equity (Deficit) | ||||||||||||||||||||||||||||
Balance – September 30, 2020 | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Issuance of Class B common stock to Sponsor(1) | — | — | ||||||||||||||||||||||||||||||||||
Sale of | Units— | — | ||||||||||||||||||||||||||||||||||
Deemed capital contribution from issuance of private placement units | — | — | ||||||||||||||||||||||||||||||||||
Warrant liability | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
Forfeiture of Founder Shares | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
Accretion of Class A common stock subject to possible redemption | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||||||||||||||||||
Balance – September 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) |
(1) |
F-5
CODERE ONLINE U.S. CORP. (f/k/a DD3 ACQUISITION CORP. II)
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM SEPTEMBER 30, 2020 (INCEPTION) THROUGH SEPTEMBER 30, 2021
Cash Flows from Operating Activities: | ||||
Net loss | $ | ( | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Interest earned on marketable securities held in Trust Account | ( | ) | ||
Unrealized gain on marketable securities held in Trust Account | ( | ) | ||
Change in change in fair value of warrant liability | ||||
Offering cost allocable to warrant liability | ||||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | ( | ) | ||
Accrued expenses | ||||
Net cash used in operating activities | ( | ) | ||
Cash Flows from Investing Activities: | ||||
Investment of cash in Trust Account | ( | ) | ||
Net cash used in investing activities | ( | ) | ||
Cash Flows from Financing Activities: | ||||
Proceeds from issuance of Class B common stock to the Sponsor | ||||
Proceeds from sale of Units, net of underwriting discounts paid | ||||
Proceeds from sale of Private Units | ||||
Proceeds from promissory note – related party | ||||
Repayment of promissory note – related party | ( | ) | ||
Payments of offering costs | ( | ) | ||
Net cash provided by financing activities | ||||
Net Change in Cash | ||||
Cash – Beginning | ||||
Cash – Ending | $ | |||
Non-Cash Investing and Financing Activities: | ||||
Initial classification of Class A common stock subject to possible redemption | $ |
F-6
CODERE ONLINE U.S. CORP. (f/k/a DD3 ACQUISITION CORP. II)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2021
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Codere Online U.S. Corp. (f/k/a DD3 Acquisition Corp. II) (the “Company”) was incorporated in Delaware on September 30, 2020. The Company was formed for the purpose of entering into a merger, capital stock exchange, asset acquisition, stock purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities (a “Business Combination”).
As of September 30, 2021, the Company had not commenced any operations. All activity through September 30, 2021 relates to the Company’s formation, the initial public offering (the “Initial Public Offering”), which is described below, and identifying a target for a Business Combination. We do not expect to generate any operating revenues. The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statements for the Company’s Initial Public Offering were declared effective on December 7, 2020. On December 10, 2020, the Company consummated the Initial Public Offering of 12,500,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), which includes the partial exercise by the underwriters of their over-allotment option in the amount of 1,500,000 Units, at $10.00 per Unit, generating gross proceeds of $125,000,000, which is described in Note 4.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of an aggregate of 370,000 units (each, a “Private Unit” and, collectively, the “Private Units”) at a price of $10.00 per Private Unit in a private placement to DD3 Sponsor Group, LLC (the “Sponsor”) and the Forward Purchase Investors (as defined in Note 5), generating gross proceeds of $3,700,000, which is described in Note 5.
Transaction costs amounted to $2,966,508, consisting of $2,500,000 of underwriting fees and $466,508 of other offering costs.
Following the closing of the Initial Public Offering on December 10, 2020, an amount of $125,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Units was placed in a trust account (the “Trust Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds in the Trust Account, as described below.
The Company’s management had broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Units, although substantially all of the net proceeds were intended to be applied generally toward consummating a Business Combination. The Company was required to complete a Business Combination with one or more target businesses that together had an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding taxes payable on interest earned on the Trust Account) at the time of the agreement to enter into a Business Combination. The Company would only complete a Business Combination if the post-transaction company owned or acquired 50% or more of the outstanding voting securities of the target or otherwise acquired a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act.
The Company was required to provide its public stockholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination, either (i) in connection with a stockholder meeting called to approve such Business Combination or (ii) by means of a tender offer. The public stockholders were entitled to redeem their shares for a pro rata portion of the amount held in the Trust Account, calculated as of two business days prior to the completion of a Business Combination, including any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations. There would be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. As a result, shares of common stock are recorded at their redemption amount and classified as temporary equity, in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, “Distinguishing Liabilities from Equity” (“ASC 480”).
The Company would only proceed
with a Business Combination if the Company had net tangible assets of at least $
F-7
If the Company sought stockholder approval of a Business Combination and it did not conduct conversions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provided that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), would be restricted from converting its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The Company’s Sponsor, initial stockholders, officers and directors agreed (a) to waive their conversion rights with respect to any Founder Shares, Private Shares and Public Shares held by them in connection with the completion of a Business Combination or any amendment to the Amended and Restated Certificate of Incorporation prior thereto and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligations with respect to conversion rights as described in the Company’s final prospectus for its Initial Public Offering or (ii) with respect to any other provision relating to stockholders’ rights or pre-initial Business Combination activity, unless the Company provided the public stockholders with the opportunity to convert their Public Shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding Public Shares.
The Company had until December 10, 2022 to complete a Business Combination (the “Combination Period”). If the Company was unable to complete a Business Combination within the Combination Period, the Company would have (i) ceased all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeemed the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations, divided by the number of then outstanding Public Shares, which redemption would have completely extinguished public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolved and liquidated, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There would be no conversion rights or liquidating distributions with respect to the Company’s warrants, which would expire worthless if the Company failed to complete a Business Combination within the Combination Period.
The Company’s Sponsor, initial stockholders, officers and directors agreed to waive their liquidation rights with respect to the Founder Shares if the Company had failed to complete a Business Combination within the Combination Period. However, if the Company’s Sponsor, initial stockholders, officers or directors acquired Public Shares in or after the Initial Public Offering, such Public Shares would have been entitled to liquidating distributions from the Trust Account if the Company failed to complete a Business Combination within the Combination Period. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution would have been less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company discussed entering into a transaction agreement, reduced the amount of funds in the Trust Account to below (1) $10.00 per Public Share or (2) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets, in each case net of the interest which may be withdrawn to pay the Company’s taxes. This liability would not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver was deemed to be unenforceable against a third party, the Sponsor would not be responsible to the extent of any liability for such third-party claims. The Company would seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company did business, executed agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
Business Combination
On June 21, 2021, we entered into the Business Combination Agreement with Codere Newco, S.A.U., a corporation (sociedad anónima unipersonal) registered and incorporated under the laws of Spain (“Codere Newco”), Servicios de Juego Online S.A.U., a corporation (sociedad anónima unipersonal) registered and incorporated under the laws of Spain (“SEJO”), Codere Online Luxembourg, S.A., a limited liability company (société anonyme) governed by the laws of the Grand Duchy of Luxembourg (“Holdco”) and Codere Online U.S. Corp., a Delaware corporation (“Merger Sub”) (the “Business Combination Agreement”), which provided for the business combination that resulted, among other things, in the Company and SEJO becoming wholly-owned subsidiaries of Holdco (the “Codere Business Combination”). In connection with the Codere Business Combination, Holdco filed a registration statement on Form F-4 (File No. 333-258759) (as subsequently amended, the “Form F-4”) with the U.S. Securities and Exchange Commission (the “SEC”) on August 12, 2021 that included a proxy statement with respect to our special meeting of stockholders which was held on November 18, 2021 to approve the Business Combination Agreement, among other matters, as well as a prospectus of Holdco with respect to the issuance of Holdco securities in the Codere Business Combination.
F-8
Pursuant to the Business Combination Agreement, following the effectiveness of (i) the contribution and exchange, effective at 10:00 a.m. New York time on November 29, 2021 (the “Exchange Effective Time”), by Codere Newco of its ordinary shares of SEJO, all with a nominal value of €1.00 per share, (the “SEJO Ordinary Shares”) to Holdco in exchange for additional ordinary shares of Holdco, with a nominal value of €1.00 per share (the “Holdco Ordinary Shares”), which were subscribed for by Codere Newco (the “Exchange”), as contemplated by and pursuant to the Contribution and Exchange Agreement, dated as of June 21, 2021, by and between Holdco, SEJO and Codere Newco (the “Contribution and Exchange Agreement”) and (ii) the merger of Merger Sub with and into the Company, with the Company surviving the merger as a wholly-owned subsidiary of Holdco (the “Merger”) at 12:01 a.m. New York time on November 30, 2021 (the “Merger Effective Time”), the parties consummated the Codere Business Combination and SEJO and the Company became direct wholly-owned subsidiaries of Holdco. Pursuant to the Business Combination Agreement, each of the following transactions occurred in the following order:
● | pursuant to the Contribution and Exchange Agreement, Codere Newco, effective on the Exchange Effective Time, contributed its SEJO Ordinary Shares constituting all the issued and outstanding share capital of SEJO to Holdco in exchange for additional Holdco Ordinary Shares, which were subscribed for by Codere Newco. As a result of the Exchange, SEJO became a wholly-owned subsidiary of Holdco and Holdco continued to be a wholly-owned subsidiary of Codere Newco at the Exchange Effective Time; |
● | after the Exchange and immediately prior to the Merger Effective Time, each share of the Company’s Class B common stock automatically converted into and exchanged for one share of the Company’s Class A common stock (the “Class B Conversion”); |
● | on the Closing date, pursuant to the Merger, Merger Sub merged with and into the Company, with the Company surviving such merger and becoming a direct wholly-owned subsidiary of Holdco and, in connection therewith, the Company’s corporate name changed to “Codere Online U.S. Corp.”; |
● | in connection with the Merger, all shares of the Company’s Class A common stock issued and outstanding immediately prior to the Merger Effective Time, but after the Class B Conversion, were contributed to Holdco in exchange for the Merger Consideration (as defined in the Business Combination Agreement) in the form of one Holdco Ordinary Share for each share of the Company’s Class A common stock pursuant to the share capital increase of Holdco by way of the issuance of one Holdco Ordinary Share in consideration of each share of the Company’s Class A common stock issued and outstanding immediately prior to the Merger Effective Time (which for the avoidance of doubt did not include shares of the Company’s Class A common stock as to which redemption rights were exercised) (the “Holdco Capital Increase”), as set forth in the Business Combination Agreement; and |
● | as of the Merger Effective Time, each warrant of the Company that was outstanding immediately prior to the Merger Effective Time no longer represented a right to acquire one share of the Company’s DD3 Class A common stock and instead represented the right to acquire one Holdco Ordinary Share on substantially the same terms. |
Codere Newco held 30,000,000 Holdco Ordinary Shares upon consummation of the Exchange.
At the Merger Effective Time, each share of the Company’s Class A common stock issued and outstanding immediately prior to the Merger Effective Time was exchanged for one validly issued and fully paid Holdco Ordinary Share.
The terms of the Business Combination Agreement and other related ancillary agreements entered into in connection with the closing of the Codere Business Combination (the “Closing”) are summarized in more detail in our Current Report on Form 8-K filed with the SEC on June 22, 2021 and in the Form F-4.
Liquidity and Management’s Plans
As of September 30, 2021, the
Company had approximately $
Management was of the belief that the funds which the Company had available at September 30, 2021 were insufficient to sustain operations for a period of at least one (1) year from the issuance date of this financial statement. Accordingly, substantial doubt about the Company’s ability to continue as a going concern existed.
On June 21, 2021, the Company entered into the Business Combination Agreement and subsequently on November 30, 2021, the Codere Business Combination closed, which provided the Company access to additional capital that is sufficient to sustain operations and meet obligations as they become due within one year. As such, substantial doubt has been alleviated.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of the financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
F-9
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations of the SEC.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of the condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of September 30, 2021.
F-10
Marketable Securities Held in Trust Account
At September 30, 2021, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills.
Class A Common Stock Subject to Possible Redemption
The Company accounted for its Class A common stock subject to possible redemption in accordance with the guidance in ASC 480. Shares of Class A common stock subject to mandatory redemption were classified as a liability instrument and were measured at fair value. Conditionally redeemable common stock (including common stock that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) was classified as temporary equity. At all other times, common stock was classified as stockholders’ equity. The Company’s Class A common stock featured certain redemption rights that were considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at September 30, 2021, Class A common stock subject to possible redemption was presented at redemption value as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
Warrant Liabilities
The Company accounted for the Private Warrants (as defined below) in accordance with the guidance contained in ASC 815-40, under which the Private Warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Under ASC 815-40, the Company’s Private Warrants were not indexed to the Company’s common stock in the manner contemplated by ASC 815-40 because the holder of the instrument is not an input into the pricing of a fixed-for-fixed option on equity shares. Accordingly, the Company classified the Private Warrants as liabilities at their fair value and adjusted the Private Warrants to fair value at each reporting period. These liabilities were subject to re-measurement at each balance sheet date until exercised, and any change in fair value was recognized in the statement of operations. The Private Warrants were valued using a modified Black Scholes model.
Offering Costs
The Company accounted for
offering costs in accordance with the guidance contained in ASC 340, Other assets and deferred costs and Staff Accounting Bulletin
Topic 5A, Miscellaneous Accounting – Expenses of the Offering. Under the guidance, costs consisting of legal, accounting
and other expenses that were incurred directly in relation to the Initial Public Offering were deferred and charged to stockholders’
equity upon consummation of the Initial Public Offering. Offering costs also included underwriting discounts and fees that were due upon
consummation of the Initial Public Offering, although these costs were not deferred as they were not incurred until the date of the Initial
Public Offering. The Company incurred $
Income Taxes
The Company followed the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes” (“ASC 740”). Deferred tax assets and liabilities were recognized for the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities were measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates was recognized in income in the period that included the enactment date. Valuation allowances were established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognized accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
F-11
The Company may be subject to potential examination by federal, state and city taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and city tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
Net loss per share was computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Shares of common stock subject to possible redemption at September 30, 2021, which were not redeemable and were not redeemable at fair value, were excluded from the calculation of basic net loss per common share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company had not considered the effect of the warrants sold in the Initial Public Offering and the private placement to purchase an aggregate of
Units in the calculation of diluted loss per share, since the exercise of the warrants was contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive. As a result, diluted net loss per common share was the same as basic net loss per common share for the periods presented.
The Company’s statement of operations included a presentation of net earnings (loss) per share of common stock subject to possible redemption and allocated the net income (loss) into the two classes of stock in calculating net earnings (loss) per common share, basic and diluted. For Class A redeemable common stock, net earnings (loss) per common share was calculated by dividing the net loss by the weighted average number of Class A common stock subject to possible redemption outstanding since original issuance. For Class B non-redeemable common stock, neat earnings (loss) per share was calculated by dividing the net loss by the weighted average number of Class B nonredeemable common stock outstanding for the period. Class B non-redeemable common stock included the Founder Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.
The following table reflects the calculation of basic and diluted net loss per common share (in dollars, except per share amounts):
For the Period from September 30, 2020 (Inception) Through September 30, 2021 | ||||
Class A common stock subject to possible redemption | ||||
Numerator: Earnings attributable to Class A common stock subject to possible redemption | ||||
Net loss | $ | ( | ) | |
Net loss attributable to Class A common stock subject to possible redemption | $ | ( | ) | |
Denominator: Weighted average Class A common stock subject to possible redemption | ||||
Basic and diluted weighted average shares outstanding, Class A common stock subject to possible redemption | ||||
Basic and diluted net loss per share, Class A common stock subject to possible redemption | $ | ( | ) | |
Non-Redeemable Class B common stock | ||||
Numerator: Net loss minus net earnings | ||||
Net loss | $ | ( | ) | |
Non-redeemable net loss | $ | ( | ) | |
Denominator: Weighted average non-redeemable Class B common stock | ||||
Basic and diluted weighted average shares outstanding, non-redeemable Class B common stock | ||||
Basic and diluted net loss per share, non-redeemable Class B common stock | $ | ( | ) |
F-12
Concentration of Credit Risk
Financial instruments that
potentially subject the Company to concentrations of credit risk consisted of a cash account in a financial institution, which, at times,
may exceed the Federal Depository Insurance Coverage of $
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement” (“ASC 820”), approximated the carrying amounts represented in the condensed balance sheet, primarily due to their short-term nature.
Recent Accounting Standards
In August 2020, the FASB issued ASU No. 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”), which simplifies accounting for convertible instruments by removing major separation models required under current GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and it also simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. We have not yet assessed the impact, if any, that ASU 2020-06 would have on our financial position, results of operations or cash flows.
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed financial statements.
F-13
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold
Units, which includes a partial exercise by the underwriters of their over-allotment option in the amount of Units, at a price of $ per Unit. Each Unit consists of one share of Class A common stock and one-half of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $ per share, subject to adjustment (see Note 8).
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing
of the Initial Public Offering, the Sponsor and the Forward Purchase Investors purchased an aggregate of
Certain funds affiliated with Baron Capital Group, Inc., which are members of the Sponsor, and MG Partners Multi-Strategy Fund LP (collectively, the “Forward Purchase Investors”) entered into contingent forward purchase agreements with the Company as described in Note 6. Contemporaneously with the execution and delivery of the Business Combination Agreement, the Company entered into two separate Subscription Agreements with DD3 Capital Partners S.A. de C.V. (“DD3 Capital”) and Larrain Investment Inc. (“Larrain”) (the “Subscription Agreements”) as described in Note 6.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On October 13, 2020, the
Sponsor purchased
The Company’s Sponsor, initial stockholders, officers and directors agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier of one year after the date of the consummation of a Business Combination and the date on which the closing price of the Class A common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within a 30-trading day period commencing 150 days after a Business Combination, or earlier if, subsequent to a Business Combination, the Company completes a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.
F-14
Due from Sponsor
As of December 10, 2020,
the Company advanced the Sponsor an aggregate of $
Administrative Services Agreement
The Company entered into
an agreement, commencing on December 7, 2020 through the earlier of the Company’s consummation of a Business Combination and its
liquidation, to pay the Sponsor a total of up to $
Promissory Note — Related Party
On October 13, 2020, the
Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Company could borrow
up to an aggregate principal amount of $
NOTE 6. COMMITMENTS AND CONTINGENCIES
Registration Rights Agreement
The holders of the Founder Shares, as well as certain holders of the Private Units (and all underlying securities), were entitled to certain registration rights pursuant to a registration rights agreement, dated as of December 7, 2020, among the Company and such holders. Such agreement was terminated and superseded by the Registration Rights and Lock-Up Agreement which the Company, Codere Newco, Holdco, the Sponsor, the Forward Purchase Investors and the other parties thereto entered into at Closing (the “Registration Rights and Lock-Up Agreement”), which provides customary demand and piggyback registration rights. Pursuant to the Registration Rights and Lock-Up Agreement, Holdco agreed that, within 30 calendar days after the Closing date, it will file with the SEC a registration statement to permit the public resale of certain Holdco Ordinary Shares and Holdco warrants (including underlying securities) held by the Holders (as defined in the Registration Rights and Lock-Up Agreement), and that it will use its reasonable best efforts to have the registration statement declared effective as soon as practicable after the filing thereof, but no later than 60 calendar days following the filing deadline, provided that the effectiveness deadline will be extended to 90 calendar days after the filing deadline if the registration statement is reviewed by, and receives comments from, the SEC.
Underwriting Agreement
The underwriters were paid
a cash underwriting discount of $
Business Combination Marketing Agreement
The Company engaged the underwriters
as an advisor in connection with a Business Combination to assist the Company in holding meetings with its shareholders to discuss the
potential Business Combination and the target business’ attributes, introduce the Company to potential investors that are interested
in purchasing the Company’s securities in connection with a Business Combination, provide financial advisory services to assist
the Company in the Company’s efforts to obtain any stockholder approval for the Business Combination and assist the Company with
its press releases and public filings in connection with the Business Combination. The Company will pay the underwriters a cash fee for
such services upon the consummation of a Business Combination in an amount equal to, in the aggregate,
F-15
Forward Purchase Agreements
In connection with the Codere
Business Combination, (i) Baron Global Advantage Fund, Baron Emerging Markets Fund and Destinations International Equity Fund, certain
funds affiliated with Baron Capital Group, Inc. (collectively, “Baron”) elected to purchase an aggregate of
Subscription Agreements
Contemporaneously with the
execution and delivery of the Business Combination Agreement, the Company entered into two separate Subscription Agreements with DD3 Capital
and Larrain, in each case to which Holdco is also a party, pursuant to which the Company issued and sold, in a private placement that
closed immediately prior to the Merger, (i) an aggregate of
Warrant Amendment Agreement
In connection with the Closing of the Codere Business Combination, the Company, Holdco and Continental Stock Transfer & Trust Company, as warrant agent, entered into an agreement at Closing (the “Warrant Amendment Agreement”) to amend the warrant agreement, dated as of December 7, 2020, by and between the Company and Continental, as warrant agent, governing the Public Warrants and Private Warrants entered into by the Company, Holdco and Continental, as warrant agent (the “Original Warrant Agreement”), pursuant to which, among others, as of the Merger Effective Time, (i) each of the issued Public Warrants and Private Warrants that was outstanding immediately prior to the Merger Effective Time ceased to represent a right to acquire one share of the Company’s Class A common stock and instead represented the right to acquire one Holdco Ordinary Share on substantially the same terms as set forth in the Original Warrant Agreement and (ii) the Company assigned to Holdco all of the Company’s right, title and interest in and to the Original Warrant Agreement and Holdco assumed, and agreed to pay, perform, satisfy and discharge in full, all of the Company’s liabilities and obligations under the Original Warrant Agreement arising from and after the Merger Effective Time.
Baron Support Agreement
Contemporaneously with the execution and delivery of the Business Combination Agreement, the Company entered into the Investor Support Agreement with Baron (the “Baron Support Agreement”), pursuant to which Baron irrevocably waived its redemption rights with respect to
public shares acquired by Baron in the Company’s Initial Public Offering (the “Baron IPO Shares”) and agreed not to (a) redeem, or exercise any of its redemption rights with respect to, any Baron IPO Shares in connection with the Company’s special meeting of stockholders to approve the Business Combination Agreement and the Codere Business Combination and (b) to certain transfer restrictions with respect to the Baron IPO Shares. The Baron Support Agreement and the obligations of Baron under the Baron Support Agreement automatically terminated upon the Closing of the Codere Business Combination. The Baron Support Agreement was subject to customary conditions, covenants, representations and warranties.
Pursuant to the Business Combination Agreement, the Company undertook not to amend, modify, waive or otherwise change any of the Baron Support Agreement, Forward Purchase Agreements and Subscription Agreements without the prior written consent of SEJO, such consent not to be unreasonably withheld, delayed or conditioned.
F-16
NOTE 7. STOCKHOLDERS’ EQUITY
Preferred Stock — At September 30, 2021, the Company was authorized to issue
shares of preferred stock with a par value of $ per share with such designations, voting and other rights and preferences as may have been determined from time to time by the Company’s board of directors. At September 30, 2021, there were shares of preferred stock issued or outstanding.
Class A Common Stock — At September 30, 2021, the Company was authorized to issue up to
shares of Class A common stock with a par value of $ per share. Holders of Class A common stock were entitled to one vote for each share. At September 30, 2021, there were 12,870,000 shares of Class A common stock issued and outstanding, including shares of Class A common stock subject to possible redemption.
Class B Common Stock — At September 30, 2021, the Company was authorized to issue up to
shares of Class B common stock with a par value of $ per share. Holders of Class B common stock were entitled to one vote for each share. At September 30, 2021, there were shares of Class B common stock issued and outstanding.
At September 30, 2021, only holders of Class B common stock had the right to vote on the election of directors prior to a Business Combination. Holders of Class A common stock and Class B common stock would vote together as a single class on all other matters submitted to a vote of stockholders, except as required by law.
After the Exchange and immediately prior to the Merger Effective Time, each share of the Company’s Class B common stock automatically converted into and exchanged for one share of the Company’s Class A common stock (the Class B Conversion).
At February 16, 2022, the Company is authorized to issue up to
shares of common stock with a par value of $ per share. At February 16, 2022, there were shares of common stock issued and outstanding.
NOTE 8. WARRANTS
In connection with the Closing of the Codere Business Combination, the Company, Holdco and Continental Stock Transfer & Trust Company, as warrant agent, entered into the Warrant Amendment Agreement, pursuant to which, among others, as of the Merger Effective Time, (i) each of the issued Public Warrants and Private Warrants that was outstanding immediately prior to the Merger Effective Time ceased to represent a right to acquire one share of the Company’s Class A common stock and instead represented the right to acquire one Holdco Ordinary Share on substantially the same terms as set forth in the Original Warrant Agreement and (ii) the Company assigned to Holdco all of the Company’s right, title and interest in and to the Original Warrant Agreement and Holdco assumed, and agreed to pay, perform, satisfy and discharge in full, all of the Company’s liabilities and obligations under the Original Warrant Agreement arising from and after the Merger Effective Time.
The Holdco public warrants became exercisable as of December 30, 2021. The Holdco public warrants will expire five years after the consummation of the Codere Business Combination or earlier upon redemption or liquidation.
Under the terms of the Original Warrant Agreement, Public Warrants were only exercisable for a whole number of shares. No fractional shares were issuable upon exercise of the Public Warrants. The Company could redeem the Public Warrants (excluding the Private Warrants):
● | in whole and not in part; | |
● | at a price of $ | |
● | at any time after the warrants become exercisable; | |
● | upon not less than 30 days’ prior written notice of redemption to each warrant holder; |
F-17
● | if, and only if, the reported last sale price of the shares of Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day commencing at any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and | |
● | if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying the warrants. |
If and when the warrants became redeemable by the Company, the Company may have exercised its redemption right even if it were unable to register or qualify the underlying securities for sale under all applicable state securities laws.
Under the terms of the Original Warrant Agreement, if the Company called the Public Warrants for redemption, management would have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the Original Warrant Agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may have been adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants would not have been adjusted for issuances of Class A common stock at a price below its exercise price. Additionally, in no event would the Company have been required to net cash settle the warrants. If the Company had been unable to complete a Business Combination within the Combination Period and the Company liquidated the funds held in the Trust Account, holders of warrants would not have received any of such funds with respect to their warrants, nor will they have received any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants could have expired worthless.
In addition, under the terms
of the Original Warrant Agreement, if (x) the Company issued additional shares of Class A common stock or equity-linked securities for
capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price
of less than $
The Private Warrants were identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants and the shares of Class A common stock that were issuable upon the exercise of the Private Warrants would not have been transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Warrants would have been exercisable on a cashless basis and would be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Warrants were held by someone other than the initial purchasers or their permitted transferees, the Private Warrants would be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
NOTE 9. FAIR VALUE MEASUREMENTS
The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
F-18
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. | |
Level 3: | Unobservable inputs based on the Company’s assessment of the assumptions that market participants would use in pricing the asset or liability. |
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2021, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
Description | Level | September 30, 2021 |
||||
Assets: | ||||||
Marketable securities held in Trust Account | 1 | $ | ||||
Liabilities: | ||||||
Warrant Liability – Private Warrants | 3 | $ |
The Private Warrants are accounted for as liabilities in accordance with ASC 815-40 and are presented within warrant liabilities on the accompanying condensed balance sheet. The Private Warrants are measured at fair value at inception and on a recurring basis, with changes in fair value presented in the condensed statement of operations.
The Private Warrants were valued using a modified Black Scholes model, which is considered to be a Level 3 fair value measurement. The modified Black Scholes model’s primary unobservable input utilized in determining the fair value is the expected volatility of the common stock. The expected volatility as of the valuation dates was implied from the Company’s own Public Warrant pricing.
The following table presents the quantitative information regarding Level 3 fair value measurements of the warrant liability as of September 30, 2021:
Risk-free interest rate | % | |||
Effective expiration date | ||||
Dividend yield | % | |||
Expected volatility | % | |||
Exercise price | $ | |||
Unit Price | $ |
F-19
The following table presents the changes in the fair value of Private Warrants:
Fair value as of September 30, 2020 (inception) | $ | |||
Change in fair value | ||||
Fair value as of September 30, 2021 | $ |
There were no transfers in or out of Level 3 from other levels in the fair value hierarchy during the period from September 30, 2020 (inception) through September 30, 2021.
NOTE 10. INCOME TAX
The Company’s net deferred tax assets at September 30, 2021 is as follows:
September 30, | ||||
2021 | ||||
Startup/organization expenses | $ | |||
Unrealized gains on marketable securities | ( | ) | ||
Net operating loss | ||||
Total deferred tax assets | ||||
Valuation allowance | ( | ) | ||
Deferred tax assets | $ |
The income tax provision for the year ended September 30, 2021 consists of the following:
September 30, | ||||
2021 | ||||
Current expense (benefit) | ||||
Federal | $ | |||
State | ||||
Deferred expense (benefit) | ||||
Federal | ( | ) | ||
State | ||||
Change in Valuation Allowance | ||||
Income tax provision | $ |
As of September 30, 2021, the
Company had a federal net operating loss carryover of $
In assessing the realization of
the deferred tax assets, management considers whether it is more likely than not that some portion of all the deferred tax assets will
not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the
periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled
reversal of deferred tax assets, projected future taxable income and tax planning strategies in making this assessment. After consideration
of all of the information available, management believes that significant uncertainty exists with respect to future realization of the
deferred tax assets and has therefore established a full valuation allowance. For the year ended September 30, 2021, the change in the
valuation allowance was $
F-20
A reconciliation of the federal income tax rate to the Company’s effective tax rate at September 30, 2021 is as follows:
September 30, | ||||
2021 | ||||
Statutory federal income tax rate | % | |||
State taxes, net of federal tax benefit | % | |||
Change in fair value of warrant liabilities | ( | )% | ||
Valuation allowance | ( | )% | ||
Income tax provision | % |
The Company’s effective tax rates for the periods presented differ from the expected (statutory) rates due to changes in fair value in warrants and the recording of full valuation allowances on deferred tax assets.
The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination by the various taxing authorities. The Company’s tax returns for the year ended September 30, 2021 remain open and subject to examination. The Company considers Delaware to be a significant state tax jurisdiction.
NOTE 11. SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements, other than those identified below.
As described above, on November 30, 2021, the Codere Business Combination was completed pursuant to the terms of the Business Combination Agreement, which among other things provided for the Merger. In connection with the consummation of the Codere Business Combination , “DD3 Acquisition Corp. II” was renamed “Codere Online U.S. Corp.” Also in connection with the consummation of the Codere Business Combination, the Company became a direct, wholly-owned subsidiary of Holdco.
On November 30, 2021, the Nasdaq Stock Market LLC filed a Form 25 (Notification of Removal from Listing) with the SEC relating to the delisting of our units, warrants and Class A common stock. As a result, the Company’s units, warrants and Class A common stock were delisted on the Nasdaq. On December 14, 2021, the Company filed a Form 15 certifying the deregistration of its units, warrants and Class A common stock under Section 12(g) of the Exchange Act and suspension of its duty to file reports under Sections 13 and 15(d) of the Exchange Act. The Company’s reporting obligations under Section 15(d) of the Exchange Act have been suspended.
On January 27, 2022, the Company filed amended 10-Q/A Quarterly Reports for the periods ending December 31, 2020, March 31, 2021 and June 30, 2021 to restate the financial statements to correct accounting errors related to the classification Private Placement Warrants and shares subject to possible redemption.
F-21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Codere Online U.S. Corp. (f/k/a DD3 Acquisition Corp. II) | ||
Date: February 16, 2022 | By: | /s/ Gonzalo de Osma Bucero |
Name: | Gonzalo de Osma Bucero | |
Title: |
Director, President and Treasurer (Principal Executive Officer and Principal Financial and Accounting Officer) | |
Date: February 16, 2022 | By: | /s/ Moshe Edree |
Name: | Moshe Edree | |
Title: | Director | |
Date: February 16, 2022 | By: | /s/ Oscar Iglesias |
Name: | Oscar Iglesias | |
Title: | Director |
29
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Gonzalo de Osma Bucero, Moshe Edree and Oscar Iglesias jointly and severally, his attorney-in-fact, each with the full power of substitution, for such person, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might do or could do in person hereby ratifying and confirming all that each of said attorneys-in-fact and agents, or his substitute, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
Signature | Title | Date | ||
/s/ Gonzalo de Osma Bucero |
Director, President and Treasurer (Principal Executive Officer and Principal Financial and Accounting Officer) |
February 16, 2022 | ||
Gonzalo de Osma Bucero | ||||
/s/ Moshe Edree | Director | February 16, 2022 | ||
Moshe Edree | ||||
/s/ Oscar Iglesias | Director | February 16, 2022 | ||
Oscar Iglesias | ||||
30
Exhibit 3.4
BYLAWS
OF
CODERE ONLINE U.S. CORP.
* * * * *
Article
1
Offices
Section 1.01. Registered Office. The registered office of the Corporation shall be in the City of Wilmington, County of New Castle, State of Delaware.
Section 1.02. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.
Section 1.03. Books. The books of the Corporation may be kept within or without the State of Delaware as the Board of Directors may from time to time determine or the business of the Corporation may require.
Article
2
Meetings of Stockholders
Section 2.01. Time and Place of Meetings. All meetings of stockholders shall be held at such place, either within or without the State of Delaware, on such date and at such time as may be determined from time to time by the Board of Directors (or the Chairman in the absence of a designation by the Board of Directors).
Section 2.02. Annual Meetings. Unless directors are elected by written consent in lieu of an annual meeting as permitted by the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended (“Delaware Law”), an annual meeting of stockholders, commencing with the year 2022, shall be held for the election of directors and to transact such other business as may properly be brought before the meeting. Stockholders may, unless the certificate of incorporation otherwise provides, act by written consent to elect directors; provided, however, that if such consent is less than unanimous, such action by written consent may be in lieu of holding an annual meeting only if all of the directorships to which directors could be elected at an annual meeting held at the effective time of such action are vacant and are filled by such action.
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Section 2.03. Special Meetings. Special meetings of stockholders may be called by the Board of Directors or the Chairman of the Board and shall be called by the Secretary at the request in writing of holders of record of a majority of the outstanding capital stock of the Corporation entitled to vote. Such request shall state the purpose or purposes of the proposed meeting.
Section 2.04. Notice of Meetings and Adjourned Meetings; Waivers of Notice. (a) Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting shall be given which shall state the place, if any, date and hour of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. Unless otherwise provided by Delaware Law, such notice shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder of record entitled to vote at such meeting. Unless these bylaws otherwise require, when a meeting is adjourned to another time or place (whether or not a quorum is present), notice need not be given of the adjourned meeting if the time, place, if any, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days, or after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
(b) A written waiver of any such notice signed by the person entitled thereto, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
Section 2.05. Quorum. Unless otherwise provided under the certificate of incorporation or these bylaws and subject to Delaware Law, the presence, in person or by proxy, of the holders of a majority of the outstanding capital stock of the Corporation entitled to vote at a meeting of stockholders shall constitute a quorum for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, a majority in voting interest of the stockholders present in person or represented by proxy may adjourn the meeting, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified.
2
Section 2.06. Voting. (a) Unless otherwise provided in the certificate of incorporation and subject to Delaware Law, each stockholder shall be entitled to one vote for each outstanding share of capital stock of the Corporation held by such stockholder. Any share of capital stock of the Corporation held by the Corporation shall have no voting rights. Except as otherwise provided by law, the certificate of incorporation or these bylaws, in all matters other than the election of directors, the affirmative vote of the majority of the shares of capital stock of the Corporation present in person or represented by proxy at the meeting and entitled to vote on the subject matter shall be the act of the stockholders.
(b) Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to a corporate action in writing without a meeting may authorize another person or persons to act for such stockholder by proxy, appointed by an instrument in writing, subscribed by such stockholder or by his attorney thereunto authorized, or by proxy sent by cable, telegram or by any means of electronic communication permitted by law, which results in a writing from such stockholder or by his attorney, and delivered to the secretary of the meeting. No proxy shall be voted after three (3) years from its date, unless said proxy provides for a longer period.
(c) In determining the number of votes cast for or against a proposal or nominee, shares abstaining from voting on a matter will not be treated as a vote cast.
Section 2.07. Action by Consent. (a) Unless otherwise provided in the certificate of incorporation and subject to the proviso in Section 2.02, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding capital stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take the action were delivered to the Corporation as provided in Section 2.07(b).
3
(b) Every written consent shall bear the date of signature of each stockholder who signs the consent, and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated consent delivered in the manner required by this section and Delaware Law to the Corporation, written consents signed by a sufficient number of holders to take action are delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.
Section 2.08. Organization. At each meeting of stockholders, the Chairman of the Board, if one shall have been elected, or in the Chairman’s absence or if one shall not have been elected, the director designated by the vote of the majority of the directors present at such meeting, shall act as chairman of the meeting. The Secretary (or in the Secretary’s absence or inability to act, the person whom the chairman of the meeting shall appoint secretary of the meeting) shall act as secretary of the meeting and keep the minutes thereof.
Section 2.09. Order of Business. The order of business at all meetings of stockholders shall be as determined by the chairman of the meeting.
Article
3
Directors
Section 3.01. General Powers. Except as otherwise provided in Delaware Law or the certificate of incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors.
Section 3.02. Number, Election and Term Of Office. (a) The number of directors which shall constitute the whole Board shall be fixed from time to time by resolution of the Board of Directors but shall not be less than three or more than nine. The directors shall be elected at the annual meeting of the stockholders by written ballot, except as provided in Section 2.02 and Section 3.12 herein, and each director so elected shall hold office until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. Directors need not be stockholders.
(b) Subject to the rights of the holders of any series of preferred stock to elect additional directors under specific circumstances, directors shall be elected by a plurality of the votes of the shares of capital stock of the Corporation present in person or represented by proxy at the meeting and entitled to vote on the election of directors.
4
Section 3.03. Quorum and Manner of Acting. Unless the certificate of incorporation or these bylaws require a greater number, a majority of the total number of directors shall constitute a quorum for the transaction of business, and the affirmative vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. When a meeting is adjourned to another time or place (whether or not a quorum is present), notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Board of Directors may transact any business which might have been transacted at the original meeting. If a quorum shall not be present at any meeting of the Board of Directors the directors present thereat shall adjourn the meeting, from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
Section 3.04. Time and Place of Meetings. The Board of Directors shall hold its meetings at such place, either within or without the State of Delaware, and at such time as may be determined from time to time by the Board of Directors (or the Chairman in the absence of a determination by the Board of Directors).
Section 3.05. Annual Meeting. The Board of Directors shall meet for the purpose of organization, the election of officers and the transaction of other business, as soon as practicable after each annual meeting of stockholders, on the same day and at the same place where such annual meeting shall be held. Notice of such meeting need not be given. In the event such annual meeting is not so held, the annual meeting of the Board of Directors may be held at such place either within or without the State of Delaware, on such date and at such time as shall be specified in a notice thereof given as hereinafter provided in Section 3.07 herein or in a waiver of notice thereof signed by any director who chooses to waive the requirement of notice.
Section 3.06. Regular Meetings. After the place and time of regular meetings of the Board of Directors shall have been determined and notice thereof shall have been once given to each member of the Board of Directors, regular meetings may be held without further notice being given.
Section 3.07. Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board or the President and shall be called by the Chairman of the Board, President or Secretary on the written request of three directors. Notice of special meetings of the Board of Directors shall be given to each director at least three days before the date of the meeting in such manner as is determined by the Board of Directors.
Section 3.08. Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to any of the following matters: (a) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by Delaware Law to be submitted to the stockholders for approval or (b) adopting, amending or repealing any bylaw of the Corporation. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.
5
Section 3.09. Action by Consent. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions, are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.
Section 3.10. Telephonic Meetings. Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or such committee, as the case may be, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.
Section 3.11. Resignation. Any director may resign at any time by giving notice in writing or by electronic transmission to the Board of Directors or to the Secretary of the Corporation. The resignation of any director shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 3.12. Vacancies. Unless otherwise provided in the certificate of incorporation, vacancies and newly created directorships resulting from any increase in the authorized number of directors elected by all the stockholders having the right to vote as a single class may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the certificate of incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. Each director so chosen shall hold office until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal. If there are no directors in office, then an election of directors may be held in accordance with Delaware Law. Unless otherwise provided in the certificate of incorporation, when one or more directors shall resign from the Board, effective at a future date, a majority of the directors then in office shall have the power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office as provided in the filling of other vacancies.
6
Section 3.13. Removal. Any director or the entire Board of Directors may be removed, with or without cause, at any time by the affirmative vote of the holders of a majority of the outstanding capital stock of the Corporation then entitled to vote at any election of directors and the vacancies thus created may be filled in accordance with Section 3.12 herein.
Section 3.14. Compensation. Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board of Directors shall have authority to fix the compensation of directors, including fees and reimbursement of expenses.
Article
4
Officers
Section 4.01. Principal Officers. The principal officers of the Corporation shall be a President, one or more Vice Presidents, a Treasurer and a Secretary who shall have the duty, among other things, to record the proceedings of the meetings of stockholders and directors in a book kept for that purpose. The Corporation may also have such other principal officers, including one or more Controllers, as the Board may in its discretion appoint. One person may hold the offices and perform the duties of any two or more of said offices, except that no one person shall hold the offices and perform the duties of President and Secretary.
Section 4.02. Election, Term of Office and Remuneration. The principal officers of the Corporation shall be elected annually by the Board of Directors at the annual meeting thereof. Each such officer shall hold office until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal. The remuneration of all officers of the Corporation shall be fixed by the Board of Directors. Any vacancy in any office shall be filled in such manner as the Board of Directors shall determine.
7
Section 4.03. Subordinate Officers. In addition to the principal officers enumerated in Section 4.01 herein, the Corporation may have one or more Assistant Treasurers, Assistant Secretaries and Assistant Controllers and such other subordinate officers, agents and employees as the Board of Directors may deem necessary, each of whom shall hold office for such period as the Board of Directors may from time to time determine. The Board of Directors may delegate to any principal officer the power to appoint and to remove any such subordinate officers, agents or employees.
Section 4.04. Removal. Except as otherwise permitted with respect to subordinate officers, any officer may be removed, with or without cause, at any time, by resolution adopted by the Board of Directors.
Section 4.05. Resignations. Any officer may resign at any time by giving written notice to the Board of Directors (or to a principal officer if the Board of Directors has delegated to such principal officer the power to appoint and to remove such officer). The resignation of any officer shall take effect upon receipt of notice thereof or at such later time as shall be specified in such notice; and unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
Section 4.06. Powers and Duties. The officers of the Corporation shall have such powers and perform such duties incident to each of their respective offices and such other duties as may from time to time be conferred upon or assigned to them by the Board of Directors.
Article
5
Capital Stock
Section 5.01. Uncertificated Shares; Certificates For Stock. The shares of the Corporation shall be uncertificated shares, provided that the Board of Directors of the Corporation may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be represented by certificates. Except as otherwise provided by law, the rights and obligations of the holders of uncertificated shares and the rights and obligations of the holders of shares represented by certificates of the same class and series shall be identical. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of, the Corporation by any two authorized officers of the Corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. A Corporation shall not have power to issue a certificate in bearer form.
8
Section 5.02. Transfer Of Shares. Shares of the stock of the Corporation may be transferred on the record of stockholders of the Corporation by the holder thereof or by such holder’s duly authorized attorney upon surrender of a certificate therefor properly endorsed or upon receipt of proper transfer instructions from the registered holder of uncertificated shares or by such holder’s duly authorized attorney and upon compliance with appropriate procedures for transferring shares in uncertificated form, unless waived by the Corporation.
Section 5.03. Authority for Additional Rules Regarding Transfer. The Board of Directors shall have the power and authority to make all such rules and regulations as they may deem expedient concerning the issue, transfer and registration of certificated or uncertificated shares of the stock of the Corporation, as well as for the issuance of new certificates in lieu of those which may be lost or destroyed, and may require of any stockholder requesting replacement of lost or destroyed certificates, bond in such amount and in such form as they may deem expedient to indemnify the Corporation, and/or the transfer agents, and/or the registrars of its stock against any claims arising in connection therewith.
Article
6
General Provisions
Section 6.01. Fixing the Record Date. (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than 60 nor less than 10 days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided that the Board of Directors may fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by Delaware Law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by Delaware Law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.
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(c) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
Section 6.02. Dividends. Subject to limitations contained in Delaware Law and the certificate of incorporation, the Board of Directors may declare and pay dividends upon the shares of capital stock of the Corporation, which dividends may be paid either in cash, in property or in shares of the capital stock of the Corporation.
Section 6.03. Year. The fiscal year of the Corporation shall commence on January 1 and end on December 31 of each year.
Section 6.04. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed, affixed or otherwise reproduced.
Section 6.05. Voting of Stock Owned by the Corporation. The Board of Directors may authorize any person, on behalf of the Corporation, to attend, vote at and grant proxies to be used at any meeting of stockholders of any corporation (except this Corporation) in which the Corporation may hold stock.
Section 6.06. Amendments. These bylaws or any of them, may be altered, amended or repealed, or new bylaws may be made, by the stockholders entitled to vote thereon at any annual or special meeting thereof or by the Board of Directors.
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Exhibit 4.6
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
The following summary of the material terms of certain securities of Codere Online U.S. Corp. (f/k/a DD3 Acquisition Corp. II), a Delaware corporation (“we,” “us,” “our,” “the company” or “our company”) as of September 30, 2021, is not intended to be a complete summary of the rights and preferences of such securities as of such date and is subject to and qualified by reference to our amended and restated certificate of incorporation, our bylaws and the warrant agreement, dated October 20, 2020, between the company and Continental Stock Transfer & Trust Company (the “Warrant Agreement”), in each case as in effect on September 30, 2021 and incorporated by reference as exhibits to the company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2021 (the “Report”) of which this exhibit is a part, and applicable Delaware law, including the Delaware General Corporation Law (the “DGCL”).
As of the end of the period covered by the Report, we had the following three classes of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): (i) units, each consisting of one share of Class A common stock and one-half of one warrant, (ii) Class A common stock, par value $0.0001 per share, and (iii) warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50. This exhibit also references the company’s Class B common stock, par value $0.0001 per share (“Class B common stock” or “founder shares”), which was not registered pursuant to Section 12 of the Exchange Act but was convertible into Class A common stock. The description of the Class B common stock is included to assist in the description of the Class A common stock. Unless the context otherwise requires, references to our “sponsor” are to DD3 Sponsor Group, LLC, a Delaware limited liability company, and references to our “initial stockholders” are to holders of our founder shares. Terms used but not defined herein shall have the meaning ascribed to such terms in the Report. All information set forth herein is presented as of the end of the period covered by the Report.
General
Pursuant to our amended and restated certificate of incorporation in effect as of September 30, 2021, our authorized capital stock consists of 100,000,000 shares of Class A common stock, par value $0.0001 per share, 10,000,000 shares of Class B common stock, par value $0.0001 per share, and 1,000,000 shares of undesignated preferred stock, par value $0.0001 per share.
As of September 30, 2021, our units, Class A common stock and warrants were listed on the Nasdaq Capital Market (“Nasdaq”) under the symbols “DDMXU,” “DDMX” and “DDMXW,” respectively.
Units
Each unit consists of one share of Class A common stock and one-half of one warrant. Each whole warrant entitles the holder to purchase one share of Class A common stock. Pursuant to the Warrant Agreement, a warrant holder may exercise its warrants only for a whole number of shares of Class A common stock. This means that only a whole warrant may be exercised at any given time by a warrant holder. No fractional warrants will be issued upon separation of the units and only whole warrants will trade.
The Class A common stock and warrants comprising the units commenced separate trading on January 27, 2021. Holders have the option to continue to hold units or separate their units into the component securities. Holders will need to have their brokers contact our transfer agent in order to separate the units into shares of Class A common stock and warrants.
Common Stock
Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Other than with regard to our directors prior to our initial business combination as described below under the heading “Founder Shares,” holders of the Class A common stock and holders of the Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders, except as required by law. Unless specified in our amended and restated certificate of incorporation or bylaws, or as required by applicable provisions of the DGCL or applicable stock exchange rules, the affirmative vote of a majority of our shares of common stock that are voted is required to approve any such matter voted on by our stockholders. Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voted for the election of directors can elect all of the directors. Our stockholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor. Prior to our initial business combination, only holders of our founder shares will have the right to vote on the election of directors. Holders of our public shares will not be entitled to vote on the election of directors during such time.
Because our amended and restated certificate of incorporation authorizes the issuance of up to 100,000,000 shares of Class A common stock, if we were to enter into an initial business combination, we may (depending on the terms of such an initial business combination) be required to increase the number of shares of Class A common stock which we are authorized to issue at the same time as our stockholders vote on the initial business combination to the extent we seek stockholder approval in connection with our initial business combination.
In accordance with Nasdaq corporate governance requirements, we are required to hold an annual meeting no later than one full year after our first fiscal year end following our listing on Nasdaq. Under Section 211(b) of the DGCL, we are, however, required to hold an annual meeting of stockholders for the purposes of electing directors in accordance with our bylaws, unless such election is made by written consent in lieu of such a meeting. We may not hold an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, and thus we may not be in compliance with Section 211(b) of the DGCL, which requires an annual meeting. Therefore, if our stockholders want us to hold an annual meeting prior to the consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We will provide our stockholders with the opportunity to convert all or a portion of their public shares upon the completion of our initial business combination at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account as of two business days prior to the consummation of our initial business combination including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, subject to the limitations described herein. Our sponsor, initial stockholders, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed to waive their conversion rights with respect to any founder shares, private shares and any public shares held by them in connection with the completion of our initial business combination. Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and provide for related redemptions of public shares for cash upon completion of such initial business combinations even when a vote is not required by law, if a stockholder vote is not required by law and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of incorporation, conduct the redemptions pursuant to the tender offer rules of the SEC, and file tender offer documents with the SEC prior to completing our initial business combination. Our amended and restated certificate of incorporation will require these tender offer documents to contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under the SEC’s proxy rules. If, however, a stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other reasons, we will, like many blank check companies, offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we seek stockholder approval, we will complete our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the initial business combination. A quorum for such meeting will consist of the holders present in person or by proxy of shares of outstanding capital stock of the company representing a majority of the voting power of all outstanding shares of capital stock of the company entitled to vote at such meeting.
However, the participation of our sponsor, initial stockholders, officers, directors, advisors or their affiliates in privately-negotiated transactions, if any, could result in the approval of our initial business combination even if a majority of our public stockholders vote, or indicate their intention to vote, against such business combination. For purposes of seeking approval of the majority of our outstanding shares of common stock voted, non-votes will have no effect on the approval of our initial business combination once a quorum is obtained. We intend to give approximately 30 days (but not less than 10 days nor more than 60 days) prior written notice of any such meeting, if required, at which a vote shall be taken to approve our initial business combination. These quorum and voting thresholds, and the voting agreements of our sponsor, initial stockholders, officers and directors, may make it more likely that we will consummate our initial business combination.
If we seek stockholder approval of our initial business combination and we do not conduct conversions in connection with our initial business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from converting its shares with respect to more than an aggregate of 15% of the shares of Class A common stock sold in our initial public offering, which we refer to as the “Excess Shares”. However, we would not be restricting our stockholders’ ability to vote all of their shares (including Excess Shares) for or against our initial business combination. Our stockholders’ inability to convert the Excess Shares will reduce their influence over our ability to complete our initial business combination, and such stockholders could suffer a material loss in their investment if they sell such Excess Shares on the open market. Additionally, such stockholders will not receive conversion distributions with respect to the Excess Shares if we complete the initial business combination. As a result, such stockholders will continue to hold that number of shares exceeding 15% and, in order to dispose such shares, would be required to sell their shares in open market transactions, potentially at a loss.
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If we seek stockholder approval in connection with our initial business combination, pursuant to the letter agreement our sponsor, initial stockholders, officers and directors have agreed to vote their founder shares, private shares and any public shares held by them in favor of our initial business combination. Additionally, each public stockholder may elect to convert its public shares irrespective of whether they vote for or against the proposed transaction (subject to the limitation described in the preceding paragraph).
Pursuant to our amended and restated certificate of incorporation, if we do not complete our initial business combination by December 10, 2022, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter subject to lawfully available funds therefor, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating 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. Our sponsor, initial stockholders, officers and directors have agreed to waive their rights to liquidating distributions from the trust account with respect to any founder shares and private shares held by them if we fail to complete our initial business combination by December 10, 2022. However, if our sponsor, initial stockholders, officers or directors acquire public shares, they will be entitled to liquidating distributions from the trust account with respect to such public shares if we fail to complete our initial business combination within the prescribed time period.
In the event of a liquidation, dissolution or winding up of the company after an initial business combination, our stockholders are entitled to share ratably in all assets remaining available for distribution to them after payment of liabilities and after provision is made for each class of stock, if any, having preference over the common stock. Our stockholders have no preemptive or other subscription rights. There are no sinking fund provisions applicable to the common stock, except that we will provide our public stockholders with the opportunity to convert their public shares for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account, upon the completion of our initial business combination, subject to the limitations described herein.
Founder Shares
The founder shares are identical to the shares of Class A common stock included in the units sold in our initial public offering, and holders of founder shares have the same stockholder rights as public stockholders, except that (i) the founder shares are subject to certain transfer restrictions, as described in more detail below, (ii) our sponsor, initial stockholders, officers and directors have entered into a letter agreement with us, pursuant to which they have agreed (A) to waive their conversion rights with respect to any founder shares, private shares and any public shares held by them in connection with the completion of our initial business combination, (B) to waive their conversion rights with respect to their founder shares, private shares and public shares in connection with a stockholder vote to approve an amendment to our amended and restated certificate of incorporation (x) to modify the substance or timing of our obligations with respect to conversion rights as described in the final prospectus for our initial public offering filed with the SEC on December 10, 2020 or (y) with respect to any other provision relating to stockholders’ rights or pre-initial business combination activity and (C) to waive their rights to liquidating distributions from the trust account with respect to any founder shares and private shares held by them if we fail to complete our initial business combination by December 10, 2022, although they will be entitled to liquidating distributions from the trust account with respect to any public shares they hold if we fail to complete our initial business combination within such time period, (iii) the founder shares are shares of our Class B common stock that will automatically convert into shares of our Class A common stock at the time of our initial business combination, or at any time prior thereto at the option of the holder, on a one-for-one basis, subject to adjustment as described herein and in our amended and restated certificate of incorporation, and (iv) are entitled to registration rights. If we submit our initial business combination to our public stockholders for a vote, our sponsor, initial stockholders, officers and directors have agreed pursuant to the letter agreement to vote their founder shares, private shares and any public shares held by them in favor of our initial business combination. Permitted transferees of the founder shares and private shares held by our sponsor, initial stockholders, officers and directors would be subject to the same restrictions.
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The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of our initial business combination on a one-for-one basis (subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like), and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in our initial public offering and related to the closing of the initial business combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon completion of our initial public offering (not including the shares of Class A common stock underlying the private units) plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with the initial business combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in the initial business combination and any additional units issued to our sponsor, officers, directors, initial stockholders or their affiliates in payment of working capital loans made to us). We cannot determine at this time whether a majority of the holders of our Class B common stock at the time of any future issuance would agree to waive such adjustment to the conversion ratio. They may waive such adjustment due to (but not limited to) the following: (i) closing conditions which are part of the agreement for our initial business combination; (ii) negotiation with Class A stockholders on structuring an initial business combination; or (iii) negotiation with parties providing financing which would trigger the anti-dilution provisions of the Class B common stock. If such adjustment is not waived, the issuance would not reduce the percentage ownership of holders of our Class B common stock, but would reduce the percentage ownership of holders of our Class A common stock. If such adjustment is waived, the issuance would reduce the percentage ownership of holders of both classes of our common stock. Holders of founder shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any time. The term “equity-linked securities” refers to any debt or equity securities that are convertible, exercisable or exchangeable for shares of Class A common stock issues in a financing transaction in connection with our initial business combination, including but not limited to a private placement of equity or debt. Securities could be “deemed issued” for purposes of the conversion rate adjustment if such shares are issuable upon the conversion or exercise of convertible securities, warrants or similar securities.
On December 10, 2020, all of the issued and outstanding founder shares were placed in escrow with Continental Stock Transfer & Trust Company, as escrow agent, until the earlier of one year after the date of the consummation of our initial business combination and the date on which the closing price of our Class A common stock equals or exceeds $12.50 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within a 30-trading day period commencing 150 days after the consummation of our initial business combination, or earlier if, subsequent to our initial business combination, we consummate a liquidation, merger, stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property.
During the escrow period, the holders of these shares will not be able to sell or transfer their securities except for transfers, assignments or sales (i) among our initial stockholders or to our or our initial stockholders’ members, officers, directors, consultants or their affiliates, (ii) to a holder’s stockholders or members upon its liquidation, in each case if the holder is an entity, (iii) by bona fide gift to a member of the holder’s immediate family or to a trust, the beneficiary of which is the holder or a member of the holder’s immediate family, in each case for estate planning purposes, (iv) by virtue of the laws of descent and distribution upon death, (v) pursuant to a qualified domestic relations order, (vi) to us for no value for cancellation in connection with the consummation of our initial business combination, (vii) in connection with the consummation of a business combination at prices no greater than the price at which the shares were originally purchased, (viii) in the event of our liquidation prior to our consummation of an initial business combination or (ix) in the event that, subsequent to the consummation of an initial business combination, we complete a liquidation, merger, capital stock exchange or other similar transaction which results in all of our stockholders having the right to exchange their common stock for cash, securities or other property, in each case (except for clauses (vi), (viii) or (ix) or with our prior consent) where the transferee agrees to the terms of the escrow agreement and to be bound by these transfer restrictions, but will retain all other rights as our stockholders, including, without limitation, the right to vote their shares of common stock and the right to receive cash dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends will also be placed in escrow. If we are unable to effect a business combination and liquidate, there will be no liquidation distribution with respect to the founder shares.
Prior to our initial business combination, only holders of our founder shares will have the right to vote on the election of directors. Holders of our public shares will not be entitled to vote on the election of directors during such time. These provisions of our amended and restated certificate of incorporation may only be amended by a resolution passed by a majority of our Class B common stock. With respect to any other matter submitted to a vote of our stockholders, including any vote in connection with our initial business combination, except as required by law, holders of our founder shares and holders of our public shares will vote together as a single class, with each share entitling the holder to one vote.
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Forward Purchase Shares
Our forward purchase investors have entered into contingent forward purchase agreements with us that provide for the purchase of an aggregate of up to 5,000,000 forward purchase shares, at a price of $10.00 per forward purchase share, in a private placement to close immediately prior to the closing of our initial business combination. Each forward purchase investor will have the right to be excused from its purchase obligation in connection with any specific business combination if, within five days following written notice delivered by us of our intention to enter into a specific business combination, the forward purchase investor notifies us that it has decided not to proceed with the purchase for any reason. If either forward purchase investor exercises such right, or otherwise fails to purchase the forward purchase shares allocated to it, such forward purchase investor will forfeit a pro rata portion of its interest in our sponsor or its right to purchase founder shares from our sponsor, as applicable. Any funds from the sale of the forward purchase shares may be used as part of the consideration to the sellers in the initial business combination, for expenses in connection with the initial business combination or for the combined company’s working capital needs. This obligation is independent of the percentage of stockholders electing to redeem their public shares and could provide us with a minimum funding level for the initial business combination. The contingent forward purchase agreements also provide a right of first refusal for our forward purchase investors to participate in any sale of equity securities by us in connection with our initial business combination so long as such forward purchase investor elects to purchase its forward purchase shares.
Preferred Stock
Our amended and restated certificate of incorporation authorizes the issuance of shares of preferred stock with such designation, rights and preferences as may be determined from time to time by our board of directors. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power or other rights of the holders of common stock. However, the underwriting agreement that we entered into in connection with our initial public offering prohibits us, prior to a business combination, from issuing preferred stock which participates in any manner in the proceeds of the trust account, or which votes as a class with the common stock on a business combination. We may issue some or all of the preferred stock to effect a business combination. In addition, the preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of us.
Warrants
Each whole warrant entitles the registered holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on the later of 30 days after the completion of an initial business combination or December 10, 2021. However, no warrants will be exercisable for cash unless we have an effective and current registration statement covering the shares of Class A common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of Class A common stock. Notwithstanding the foregoing, if a registration statement covering the shares of Class A common stock issuable upon exercise of the public warrants is not effective by the 60th business day following the consummation of our initial business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. In the event of such cashless exercise, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose will mean the average reported last sale price of the shares of Class A common stock for the 5 trading days ending on the trading day prior to the date of exercise. The warrants will expire on the fifth anniversary of our completion of an initial business combination, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation.
The private warrants, as well as any warrants underlying additional units we issue to our sponsor, officers, directors, initial stockholders or their affiliates in payment of working capital loans made to us, will be identical to the public warrants underlying the units issued in our initial public offering except that such warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and will not be redeemable by us, in each case so long as they are still held by our sponsor or its permitted transferees.
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We may call the warrants for redemption (excluding the private warrants and any warrants underlying additional units issued to our sponsor, initial stockholders, officers, directors or their affiliates in payment of working capital loans made to us), in whole and not in part, at a price of $0.01 per warrant,
● | at any time after the warrants become exercisable, |
● | upon not less than 30 days’ prior written notice of redemption to each warrant holder, |
● | if, and only if, the reported last sale price of the shares of Class A common stock equals or exceeds $18.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations), for any 20 trading days within a 30 trading day period commencing at any time after the warrants become exercisable and ending on the third business day prior to the notice of redemption to warrant holders; and |
● | if, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants. |
The right to exercise will be forfeited unless the warrants are exercised prior to the date specified in the notice of redemption. On and after the redemption date, a record holder of a warrant will have no further rights except to receive the redemption price for such holder’s warrant upon surrender of such warrant.
The redemption criteria for our warrants have been established at a price which is intended to provide warrant holders a reasonable premium to the initial exercise price and provide a sufficient differential between the then-prevailing share price and the warrant exercise price so that if the share price declines as a result of our redemption call, the redemption will not cause the share price to drop below the exercise price of the warrants.
If we call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so on a “cashless basis.” In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of Class A common stock equal to the quotient obtained by dividing (x) the product of the number of shares of Class A common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose shall mean the average reported last sale price of the shares of Class A common stock for the 5 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.
The warrants were issued in registered form under the Warrant Agreement, which provides that the terms of the warrants may be amended without the consent of any holder (i) to cure any ambiguity or correct any mistake, including to conform the provisions of the Warrant Agreement to the description of the terms of the warrants and the Warrant Agreement set forth in the final prospectus for our initial public offering, or to cure, correct or supplement any defective provision, or (ii) to add or change any other provisions with respect to matters or questions arising under the Warrant Agreement as the parties to the Warrant Agreement may deem necessary or desirable and that the parties deem to not adversely affect the interests of the registered holders of the warrants, but requires the approval, by written consent or vote, of the holders of at least 50% of the then outstanding public warrants in order to make any change that adversely affects the interests of the registered holders.
The exercise price and number of shares of Class A common stock issuable on exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, except as described below, the warrants will not be adjusted for issuances of shares of Class A common stock at a price below their respective exercise prices.
In addition, if (x) we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by our board of directors, and in the case of any such issuance to our sponsor, initial stockholders or their affiliates, without taking into account any founder shares held by them prior to such issuance) (the “Newly Issued Price”), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and (z) the volume weighted average trading price of our Class A common stock during the 20 trading day period starting on the trading day prior to the day on which we consummate our initial business combination (such price, the “Market Value”) is below $9.20 per share, then the exercise price of the warrants will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the Market Value or (ii) the Newly Issued Price, and the $18.00 per share redemption trigger price of the warrants will be adjusted (to the nearest cent) to be equal to 180% of the greater of (i) the Market Value or (ii) the Newly Issued Price.
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The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied by full payment of the exercise price, by certified or official bank check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of shares of Class A common stock and any voting rights until they exercise their warrants and receive shares of Class A common stock. After the issuance of shares of Class A common stock upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by stockholders.
Warrant holders may elect to be subject to a restriction on the exercise of their warrants such that an electing warrant holder would not be able to exercise their warrants to the extent that, after giving effect to such exercise, such holder would beneficially own in excess of 9.8% of the shares of Class A common stock outstanding.
No fractional shares will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up to the nearest whole number the number of shares of Class A common stock to be issued to the warrant holder.
Dividends
We have not paid any cash dividends on our common stock and do not intend to pay cash dividends prior to the completion of our initial business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of our initial business combination. The payment of any dividends subsequent to our initial business combination will be within the discretion of the board of directors at such time. It is the intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board of directors does not anticipate declaring any dividends in the foreseeable future. Further, if we incur any indebtedness, our ability to declare dividends may be limited by restrictive covenants we may agree to in connection therewith. In addition, our board of directors is not contemplating and does not anticipate declaring any stock dividends in the foreseeable future.
Our Transfer Agent and Warrant Agent
The transfer agent for our securities and warrant agent for our warrants is Continental Stock Transfer & Trust Company, 1 State Street, New York, New York 10004.
Listing of our Securities
As of September 30, 2021, our units, Class A common stock and warrants were listed on Nasdaq under the symbols “DDMXU,” “DDMX” and “DDMXW,” respectively.
Certain Anti-Takeover Provisions of Delaware Law and our Amended and Restated Certificate of Incorporation and By-Laws
We have opted out of Section 203 of the DGCL. However, our amended and restated certificate of incorporation contains similar provisions providing that we may not engage in certain “business combinations” with any “interested stockholder” for a three-year period following the time that the stockholder became an interested stockholder, unless:
● | prior to such time, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder; |
● | upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding certain shares; or |
● | at or subsequent to that time, the business combination is approved by our board of directors and by the affirmative vote of holders of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder. |
Generally, a “business combination” includes a merger, asset or stock sale or certain other transactions resulting in a financial benefit to the interested stockholder. Subject to certain exceptions, an “interested stockholder” is a person who, together with that person’s affiliates and associates, owns, or within the previous three years owned, 15% or more of our voting stock.
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Under certain circumstances, this provision will make it more difficult for a person who would be an “interested stockholder” to effect various business combinations with a corporation for a three-year period. This provision may encourage companies interested in acquiring our company to negotiate in advance with our board of directors because the stockholder approval requirement would be avoided if our board of directors approves either the business combination or the transaction which results in the stockholder becoming an interested stockholder. These provisions also may have the effect of preventing changes in our board of directors and may make it more difficult to accomplish transactions which stockholders may otherwise deem to be in their best interests.
Our amended and restated certificate of incorporation provides that our sponsor and its affiliates, any of its direct or indirect transferees of at least 15% of our outstanding common stock and any group as to which such persons are party to, do not constitute “interested stockholders” for purposes of this provision.
Staggered board of directors
Our amended and restated certificate of incorporation provides that our board of directors is classified into three classes of directors of approximately equal size. As a result, in most circumstances, a person can gain control of our board only by successfully engaging in a proxy contest at two or more annual meetings.
Special meeting of stockholders
Our bylaws provide that special meetings of our stockholders may be called only by a majority vote of our board of directors, by our Chief Executive Officer or by our Chairman.
Advance notice requirements for stockholder proposals and director nominations
Our bylaws provide that stockholders seeking to bring business before our annual meeting of stockholders, or to nominate candidates for election as directors at our annual meeting of stockholders must provide timely notice of their intent in writing. To be timely, a stockholder’s notice will need to be delivered to our principal executive offices not later than the close of business on the 60th day nor earlier than the close of business on the 90th day prior to the scheduled date of the annual meeting of stockholders. In the event that less than 70 days’ notice or prior public disclosure of the date of the annual meeting of stockholders is given, a stockholder’s notice shall be timely if delivered to our principal executive offices not later than the 10th day following the day on which public announcement of the date of our annual meeting of stockholders is first made or sent by us. Our bylaws also specify certain requirements as to the form and content of a stockholders’ meeting. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders.
Action by written consent
Subsequent to the consummation of our initial public offering, any action required or permitted to be taken by our common stockholders must be effected by a duly called annual or special meeting of such stockholders and may not be effected by written consent of the stockholders other than with respect to our Class B common stock.
Class B common stock consent right
For so long as any shares of Class B common stock remain outstanding, we may not, without the prior vote or written consent of the holders of a majority of the shares of Class B common stock then outstanding, voting separately as a single class, amend, alter or repeal any provision of our amended and restated certificate of incorporation, whether by merger, consolidation or otherwise, if such amendment, alteration or repeal would alter or change the powers, preferences or relative, participating, optional or other or special rights of the Class B common stock. Any action required or permitted to be taken at any meeting of the holders of Class B common stock may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of the outstanding Class B common stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Class B common stock were present and voted.
Authorized but unissued shares
Our authorized but unissued common stock and preferred stock are available for future issuances without stockholder approval and could be utilized for a variety of corporate purposes, including future offerings to raise additional capital, acquisitions and employee benefit plans. The existence of authorized but unissued and unreserved common stock and preferred stock could render more difficult or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
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Exclusive forum selection
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions against directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware, except any action (A) as to which the Court of Chancery in the State of Delaware determines that there is an indispensable party not subject to the jurisdiction of the Court of Chancery (and the indispensable party does not consent to the personal jurisdiction of the Court of Chancery within ten days following such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, (C) for which the Court of Chancery does not have subject matter jurisdiction, or (D) any action arising under the Securities Act. If an action is brought outside of Delaware, the stockholder bringing the suit will be deemed to have consented to service of process on such stockholder’s counsel. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, a court may determine that this provision is unenforceable, and to the extent it is enforceable, the provision may have the effect of discouraging lawsuits against our directors and officers, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder.
Our amended and restated certificate of incorporation provides that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law but will not apply to suits brought to enforce any duty or liability created by the Exchange Act, the Securities Act or any other claim for which the federal courts have exclusive jurisdiction. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder and Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act, the Securities Act or any other claim for which the federal courts have exclusive jurisdiction.
Limitation on Liability and Indemnification of Directors and Officers
Our amended and restated certificate of incorporation provides that our directors and officers will be indemnified by us to the fullest extent authorized by Delaware law as it now exists or may in the future be amended. In addition, our amended and restated certificate of incorporation provides that our directors will not be personally liable for monetary damages to us for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or unlawful redemptions, or derived an improper personal benefit from their actions as directors.
We have entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation. Our bylaws also permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Delaware law would permit indemnification. We have purchased a policy of directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify the directors and officers.
These provisions may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. Furthermore, a stockholder’s investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
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Exhibit 14.2
Code of Ethics
and Integrity
Table of Contents
INTRODUCTION | 3 |
Who does this Code apply to? | 4 |
How to use this Code | 5 |
Compliance with the Code | 6 |
Non-Retaliation Principle | 7 |
Where can I find answers to my questions? | 7 |
I. OUR INTEGRITY | 8 |
1.1 Our Vision | 8 |
1.2 Our Values | 9 |
1.3 Our Principles | 9 |
II. OUR PEOPLE | 11 |
2.1 The Most Important Value of Codere Online Group | 11 |
2.1.1 Principle of Non-Discrimination and Equal Opportunities | 11 |
2.1.2 Work-Life Balance | 12 |
2.1.3 Personal Data and the Right to Privacy | 12 |
2.1.4 Occupational Safety and Health | 12 |
2.1.5 Selection and Evaluation | 13 |
2.1.6 Training Policites | 13 |
2.1.7. Gifts and Presents | 13 |
2.1.8. Conflicts of Interest | 14 |
2.1.9. Resources and Means for Carrying Out the Professional Activity | 14 |
2.1.10 Proprietary and Confidential Information | 15 |
2.1.11 Inside Information | 15 |
2.1.12 External Activities | 16 |
III. OUR BUSINESS PRACTICES | 17 |
3. Relationships with Third Parties | 17 |
3.1 Customers | 17 |
3.1.1 Quality of Services and Products | 17 |
3.1.2 Data Protection | 17 |
3.2 Suppliers and Providers | 17 |
3.2.1 Selection Policy | 17 |
3.2.2 Confidentiality of Information | 17 |
3.3 Customer Relations | 18 |
3.4 Partner Relations | 18 |
3.5 Society | 18 |
3.5.1 Authorities, Regulatory Bodies and Administrations | 18 |
3.5.2 Truthful, Adequate and Useful Information | 18 |
3.5.3 Money Laundering | 19 |
3.5.4 Crime Prevention | 20 |
3.5.5 Antitrust and Securities Market Regulation | 20 |
3.6 Shareholders | 20 |
IV. WHISTLEBLOWING PLATFORM | 21 |
4.1 Guarantees of the Code of Ethics and Integrity and the Whistleblowing Platform | 21 |
V. MONITORING AND UPDATING THE CODE | 23 |
Introduction
At the Codere Online Group we know that, in order to fulfil our mission by providing an excellent service and in accordance with the principles of good governance and corporate social responsibility, we must put into practice, in each of the situations we face, the values and principles of our company, reinforcing business ethics, honesty and transparency in all areas of action. The Codere Online Group comprises Codere Online Luxembourg, S.A. (“Codere Online”) and all subsidiaries over which it has or may have direct or indirect control. Codere Online reaffirms its commitment to carrying out its business in accordance with the legislation in force and with the ethical standards and values on which our company’s business is based, in each of the countries in which it operates. The Code of Ethics and Integrity (the “Code”) guides our daily business and is the foundation of our policies and procedures. It has the approval of the Board of Directors of Codere Online and must be accepted and respected by all the professionals of the Codere Online Group, as well as third parties who wish to do business with us. The principles and provisions contained in this Code should not be taken as an exhaustive list of expected behavioural patterns, but should be understood as general guidance on ethics and compliance. Therefore, you are encouraged to use the channels of consultation provided in this document for any questions or concerns you may have. |
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Who does this Code apply to?
Our Code is applicable and mandatory for all professionals of the Codere Online Group (directors, officers (including Codere Online’s chief executive officer or managing director, chief financial officer, chief accounting officer or controller, or persons performing similar functions), managers and collaborators in general), regardless of their hierarchical level and their geographical or functional location, as well as for all those who wish to start a working or business relationship with the company.
Professionals who join or become part of the Codere Online Group in the future will accept the full content of the Code and any associated policies and procedures, which will be attached to the employment contracts and published on the company’s intranet and website (www.codereonline.com) for consultation.
The Code -and any potential amendments- will be communicated and disseminated among the professionals of the Codere Online Group and will be disclosed externally to business partners, suppliers and other third parties related to the Group, as deemed appropriate.
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How to use this Code
This Code aims to (i) define the responsibilities in the performance of our roles, as well as the ethical guidelines in our relationships with third parties; (ii) establish rules that constitute ethical guidelines for our actions, (iii) provide the mechanisms for promptly notifying any non-compliance with its provisions, and (iv) promote accountability for adherence to the Code.
In certain cases, there may be varied and unknown circumstances, where we are not clear about the conduct or behaviour expected by the company. In those cases, our Code is the main reference for the applicable values, ethical and compliance standards when we act on behalf of the Codere Online Group.
Even though it is very difficult to anticipate all the situations we may face in the performance of our duties, in such cases and to facilitate decision-making, you can ask yourself the following questions:
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Is
it in line with the principles and standards set out in our Code? |
Is this behaviour/situation justified? |
Is this conduct/situation legal? | Will
I feel comfortable if this conduct/situation becomes public? |
How
can this conduct/situation affect the Codere Online Group/Codere Online? |
How
would this conduct/situation be perceived by my colleagues and/or family? |
If the answer to any of these questions is no, or you are still in doubt, please use the ethics and compliance communication channels set out in the Code.
If you have a concern about a questionable accounting or auditing matter and wish to submit the concern confidentially or anonymously, please promptly contact the Audit Committee.
If you have any questions or concerns about the scope of this Code, please contact: | ||
Your immediate | Your local Compliance | Codere Online’s |
superior | Department | Corporate Legal |
and Compliance | ||
Department |
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Compliance with the Code
Compliance with the Code does not preclude strict compliance with the corresponding internal rules and regulations of the various entities that make up the Codere Online Group, as well as any laws, rules and regulations that may be applicable in accordance with the corresponding local legislation and regulations.
• Anyone working on behalf of the Codere Online Group must:
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Do the right thing Always act appropriately to achieve the company’s business and profit targets, taking into consideration the consequences of your actions as an employee, officer, director or other professional of the company. |
Comply with the law We understand that the legislation in the countries where the company operates may vary, but it must always be complied with. |
Ensure that you understand and apply the Code, its related policies and procedures
If you suspect any non-compliance with the Code and its related policies and procedures report promptly.
Report promptly
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Non-Retaliation Principle
The Codere Online Group promotes a work environment where all its members feel protected and free to report any suspicions and/or certainties of breaches of laws, rules, regulations, the Code and/or its applicable policies or procedures.
Codere Online has implemented internal procedures to facilitate and guarantee the protection of whistleblowing in good faith by the employees, officers, directors and other professionals of the Codere Online Group.
What is meant by retaliation?
Retaliation refers to any act or conduct that may have a negative impact on a person, in response to good-faith whistleblowing regarding the violation of applicable laws, rules and regulations, the Code, and related policies and procedures.
Some examples, which are not • Workplace harassment |
Any professional who retaliates against |
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I. OUR INTEGRITY
1.1. Our Vision
The Codere Online Group’s vision refers to the pillars of being:
Leading the industry | Being a reference and creating a trend |
Throwing light on our sector, dignifying it |
Generating growth opportunities | Exceeding the expectations of our shareholders and investors | |
Developing our people and local communities where the Codere Online Group operates |
Maintaining appropriate and transparent relations with public authorities | |
Promoting sustainability |
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1.2. Our Values
The Codere Online Group is grounded on the following values, which
represent firm
commitments of the company:
1.3. Our Principles
Members of our organisation must apply the following principles to their
professional
conduct when acting on behalf of the company:
Compliance |
Commitment to |
Demonstrating |
Safe and Responsible Gambling
The Codere Online Group is committed to providing a fair and safe gaming experience, which protects players against the possible adverse effects of the activity, acting for the prevention, awareness, detection and management of risk behaviour, in a coordinated action with organisations and governments to promote legislation that ensures the greatest guarantees for the user.
Codere Online is committed to strict compliance with the applicable laws, rules and regulations in the countries where we operate, not only in terms of responsible gambling, but also in the fight against potential fraud, thus guaranteeing safe gambling and promoting at all times the transparency, objectivity and integrity of our activities.
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Additionally, as a fundamental aspect of safe and responsible gaming, and in compliance with current legislation, the Codere Online Group expresses its constant commitment to applying those controls that prevent access to gaming by vulnerable groups, especially minors.
Human Rights
The Codere Online Group expresses its commitment and involvement with the human and labour rights recognised in:
• National and international legislation
• The principles on which the United Nations Global Compact is based
• The United Nations Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with regard to Human Rights
• The OECD Guidelines for Multinational Enterprises
• The Tripartite Declaration of Principles concerning Multinational Enterprise
• The Social Policy of the International Labour Organisation (ILO), as well as documents or texts that may replace or complement the above
Codere Online is highly committed to the prohibition of child labour and modern slavery in any of its forms, as well as to strict compliance with Conventions issued by the International Labour Organization (ILO), and local labour laws, rules and regulations.
In accordance with the previous paragraph, the Codere Online Group expresses its total rejection of child labour and modern slavery in its supply chain and in all the countries where it operates.
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II. OUR PEOPLE
2.1. The Most Important Value of Codere Online Group
The Codere Online Group recognizes its professionals as its most valuable asset.
Therefore, we are focused on promoting and guaranteeing the following principles, related to a positive and respectful work environment for all members of our organization:
2.1.1 Principle of Non-discrimination and Equal Opportunities
The Codere Online Group promotes non-discrimination among its professionals, as well as equal opportunities among them.
In particular, the Codere Online Group will promote equal treatment of men and women as regards:
Access to employment |
Training | Promotion of professionals |
Working conditions |
Supply of goods and services |
We must not discriminate, harass or intimidate members of our group because of:
Sex Marital status |
Family situation Sexual orientation |
Age Political opinions |
Religious beliefs Ethnic, social or cultural origin |
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The Codere Online Group rejects any manifestation of violence, harassment, abuse of authority in the workplace and any other conduct that creates an intimidating or offensive environment for the personal rights of its professionals.
In this regard, the Codere Online Group will promote specific measures to prevent sexual harassment and harassment on the basis of sex.
2.1.2. Work-Life Balance
The Codere Online Group respects the personal and family life of its professionals and will promote work-life balance policies that facilitate the best balance between these and their work responsibilities.
2.1.3. Personal Data and the Right to Privacy
The Codere Online Group respects the right to privacy of its professionals, in all its manifestations, especially with regard to personal, medical and economic data.
Likewise, the company respects the personal communications of its professionals through technological tools and other means of communication. Therefore, the Codere Online Group will establish the appropriate internal controls to guarantee that no illicit activities are carried out or that could put the company’s security at risk, through the electronic means with which it provides its professionals for the exclusive development of their professional functions, in accordance with the framework in force set out by the data protection regulations and in accordance with the policies on the use of tools and/or any other that may be in force for this purpose.
The Codere Online Group undertakes not to disseminate personal data of its professionals except with the consent of the interested parties and except in cases of legal obligation or compliance with judicial or administrative decisions. Under no circumstances may the personal data of the professionals be processed for purposes other than those legally or contractually envisaged.
The professionals of the Codere Online Group who, due to their activity, have access to the personal data of other professionals of the Group, suppliers or clients, must comply with the same obligations of confidentiality, in relation to the referred data, and this obligation is applicable with the reception and acceptance of this Code.
2.1.4. Occupational Safety and Health
The Codere Online Group will promote a policy of safety and health at work and will take the corresponding preventive measures.
Codere Online Group’s professionals will observe with special attention the rules related to health and safety in the workplace, with the aim of preventing and minimising occupational risks.
The Codere Online Group will promote the application, by contractors and third parties with whom it operates, of its rules and policies on health and safety in the workplace.
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2.1.5. Selection and Evaluation
The Codere Online Group will maintain the most rigorous and objective selection policy, paying exclusive attention to the academic, personal and professional merits of the candidates and to the needs of the Group. Codere Online will evaluate its professionals rigorously and objectively, taking into account their professional performance.
The professionals of the Codere Online Group will participate in the definition of its objectives and will be informed of the evaluations that may take place.
If you have suspicion or knowledge of a breach of any of the principles
described
above, you can report it using the following options:
Contact your immediate superior |
Contact the Codere Online’s Corporate Legal and Compliance Department |
Report it using the company’s whistleblowing platform |
Contact your local Compliance Department |
2.1.6. Training Policies
The Codere Online Group will promote the training of its employees. Training programmes will foster equal opportunities and career development and will contribute to the achievement of the Group’s objectives.
The professionals of the Codere Online Group undertake to constantly update their technical and managerial knowledge, and to taking advantage of the Group’s training programmes.
2.1.7. Gifts and Presents
The professionals of the Codere Online Group may not give or accept gifts or presents in the course of their professional activity. Exceptionally, the delivery and acceptance of gifts and presents will be permitted if the following three requirements are met, without prejudice to any specifications that may be included in the corresponding policies:
(a) are of negligible economic value |
(b) respond to usual commercial considerations |
(c) are not prohibited by law, generally accepted commercial practices or the Anti- Corruption Policy |
All professionals of the Codere Online Group must comply with Codere Online’s Anti-Corruption Policy.
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2.1.8. Conflicts of Interest
The Codere Online Group recognises and respects the intervention of its professionals in activities other than those they carry out for the company, as long as they are legal and do not conflict with their responsibilities.
The professionals of the Codere Online Group must avoid situations:
• That could lead to a conflict between personal interests and those of Codere Online.
• If they represent Codere Online and intervene or influence decision-making in any situation in which they have a (current or future) personal interest.
• That are for the benefit of companies in the sector or those carrying out activities likely to compete with those of Codere Online.
Therefore, they must always act, in the fulfilment of their responsibilities, with loyalty and in defence of the interests of the Codere Online Group and no-one should take advantage of their position, information, relationship or activity in the Codere Online Group to attempt or manage to gain financial or intangible benefits of any kind, either directly or through an intermediary, based on their knowledge or functions and disloyal or dishonest conduct towards the Group.
The professionals of the Codere Online Group who may be affected by a conflict of interest must inform Codere Online’s Compliance Committee, or the person assigned with such responsibility by the Compliance Committee, before making any decision.
2.1.9. Resources and Means for Carrying out the Professional Activity
The Codere Online Group undertakes to make available to its professionals the resources and means necessary and appropriate so they can carry out their professional activity.
The professionals of the Codere Online Group are committed to making responsible use of the resources and means placed at their disposal, carrying out with them only professional activities in the interest of the Codere Online Group. Likewise, they must avoid any practices that diminish the creation of value for the shareholders.
The Codere Online Group is the owner of the property and the rights of use and exploitation of the programs, computer systems, equipment, works and rights created, developed, perfected or used by its professionals, within the framework of their work activity for the Codere Online Group.
The professionals will respect the principle of confidentiality regarding the characteristics of the rights, licenses, programs, systems and technological knowledge, in general, whose ownership or rights of exploitation or use correspond to the Codere Online Group, which may not be disclosed to third parties except in cases where expressly authorised.
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2.1.10. Proprietary and Confidential Information
Non-public information which is the property of or entrusted to the Codere Online Group will, in general, be considered as reserved and confidential information, and the content of this information may not be provided to third parties, unless expressly authorised by the Codere Online Group.
It is the responsibility of the Codere Online Group and all its professionals to provide sufficient security means and to apply the established procedures to protect reserved and confidential information registered on a physical or electronic support.
The professionals of the Codere Online Group will keep the content of their work confidential in their relations with third parties.
Disclosing proprietary and confidential information and using proprietary and confidential information for private purposes is against this Code.
Any reasonable indication of leakage of confidential and proprietary information, and of particular use thereof, shall be reported by those who are aware of it to their immediate superior.
In the event of the termination of the labour relationship, the proprietary and confidential information will be returned by the professional to the Codere Online Group and the professional’s duty of confidentiality shall remain in any case.
2.1.11. Inside information
Inside information is any specific information about the Codere Online Group that is not public and that, if it were to be or has been made public, could influence the price of the shares or other marketable securities of the Codere Online Group or any Codere Group company under the terms established by the Insider Trading and Fair Disclosure Policy approved by the Board of Directors of Codere Online.
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Conduct prohibited when accessing inside information
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× Prepare or carry out any |
× Communicate such |
× Recommending to a |
The prohibitions set out in the previous section apply to:
(a) Any professional who has inside information when that professional knows or should have known that it is inside information | (b) Any information about other listed companies that could be considered as insider information | (c) Any information to which the professional has had access in the course of their work or position in the Codere Online Group |
All professionals of the Codere Online Group must comply with Codere Online’s Insider Trading and Fair Disclosure Policy.
2.1.12. External activities
The professionals will dedicate to the Codere Online Group all the professional capacity and personal effort necessary for the exercise of their functions.
The provision of labour or professional services, either self-employed or employed, for other companies or entities other than the Codere Online Group, as well as the carrying out of non-occasional academic activities, must be previously communicated in writing to the Codere Online’s Corporate Personnel Department.
The Codere Online Group respects the performance of social and public activities by its professionals.
The involvement, membership or collaboration of professionals with political parties or other types of entities, institutions or associations with public purposes will be carried out in such a way that their private nature is clear, thus avoiding any relationship with the Group.
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III. OUR BUSINESS PRACTICES
3. Relationships with Third Parties
The Codere Online Group promotes the best business practices in all the relationships it has with third parties, whether they are customers, suppliers, providers, partners, competitors, authorities, shareholders and/or local communities.
3.1. Customers
3.1.1. Quality of Services and Products
The Codere Online Group is committed to offering quality services and products in accordance with the requirements and quality standards established by law.
The Codere Online Group will also compete in the market and develop marketing and sales activities based on the superior quality of the products and services that the Codere Online Group has to offer
3.1.2. Data Protection
The Codere Online Group believes that one of the main elements on which the trust of its clients is based is the appropriate handling of their information and the effective limitation of its use in accordance with the applicable legal provisions.
3.2. Suppliers and Providers
3.2.1 Selection Policy
The Codere Online Group will adapt the selection processes for suppliers and providers to objectivity and impartiality criteria, and will avoid any conflict of interest in the selection of the same. To this end, the policies applicable in each of the business units will be established for the selection or approval process for suppliers and providers.
3.2.2 Confidentiality of Information
The referred policies and procedures must guarantee that the prices and information presented by the suppliers and providers will be confidentially treated and will not be disclosed to third parties except with the consent of the interested parties and except in cases of legal obligation or compliance with judicial or administrative resolutions.
The information provided by the professionals of the Codere Online Group to the suppliers and providers will be true and not projected with the intention of misleading.
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3.3 Customer Relations
Professionals will avoid any kind of interference or influence from third parties that could alter their professional impartiality and objectivity regarding the economic conditions of transactions with clients.
Professionals may not receive any kind of remuneration from clients or, in general, accept any kind of external remuneration for services derived from the professional’s own activity within the Codere Online Group, nor may they share information inherent to the competitive procedures in progress or any offers that may have been made.
3.4 Partner Relations
The Codere Online Group will establish with its partners in common business, a collaborative relationship based on trust, transparency in information and the sharing of knowledge, experience and skills; to achieve objectives and mutual benefit. Its professionals must be committed to this, and will apply the same ethical principles of respect, an enabling environment and teamwork as if they were internal professionals.
Codere Online will promote, among its partners, knowledge of this Code in order to better apply the principles contained herein.
3.5 Society
3.5.1. Authorities, Regulatory Bodies and Administrations
Relations with authorities, regulatory bodies and administrations will be approached on the basis of the principle of cooperation and transparency.
Except in cases expressly regulated or authorised, in accordance with Codere Online’s anti-corruption policies (including the Anti-Corruption Policy), professionals will refrain from making contributions to political parties, authorities, bodies, public administrations and institutions in general at the Codere Online Group’s expense.
3.5.2. Truthful, Adequate and Useful Information
The Codere Online Group’s policy is to provide truthful, appropriate, useful and consistent information on its policies and actions. Transparency in information is a basic principle that must govern the actions of Codere Online Group’s professionals. The Codere Online Group’s policy is to provide full, fair, accurate, timely, and understandable disclosure in the reports and documents that it files with, or submits to, the U.S. Securities and Exchange Commission and in other public communications.
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The Codere Online Group’s policy is to provide complete, precise and truthful economic and financial information of the Codere Online Group, which faithfully reflects its economic, financial and patrimonial reality, in accordance with generally accepted accounting principles and applicable international financial reporting standards.
The lack of honesty in the communication of information, both within the Codere Online Group and outside it, contravenes this Code, without prejudice to any additional provisions which may be imposed by law or by a specific procedure in the matter in question.
3.5.3 Money Laundering
The Codere Online Group has internal procedures and rules with the aim of preventing and impeding the use of its activity by criminal organisations for money laundering in accordance with the international standards of the countries in which the Codere Online Group operates.
The Codere Online Group fully cooperates with the authorities responsible for combating money laundering or the financing of any illegal activity, providing any information that may be requested in accordance with legal and regulatory provisions, as well as informing those authorities, on its own initiative and to the extent required by law, of any facts which might constitute an indication of such conduct.
All Codere Online Group employees must be aware of the internal rules applicable to the prevention of money laundering, which will be disseminated to them by the Codere Online’s Legal and Compliance Department.
Additionally, senior management professionals and those with direct contact with clients or third parties in areas where there may be a risk of money laundering will be given training.
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3.5.4 Crime Prevention
The Codere Online Group expresses its firm commitment to working intensely to prevent the commission of any irregular conduct, with strict compliance with the law on the part of its professionals. To this end, it seeks to implement and develop the corresponding policies and controls, in order to avoid any conduct of this nature.
In particular, and in view of the scourge and impact that the crime of corruption generates in societies, the relevant measures are provided for the non-implementation of practices that may be considered corrupt in the development of their relations with customers, suppliers, providers, competitors, authorities, etc.
No funds or assets of the Codere Online Group may be used to pay, lend or bribe, or make any other illegal payment in order to influence or compromise the recipient’s actions. The Codere Online Group opposes any act of corruption or bribery, whether by public officials or private individuals, and does not tolerate practices whose purpose is to do business through improper means. All professionals of the Codere Online Group must comply with Codere Online’s Anti-Corruption Policy.
3.5.5 Antitrust and Securities Market Regulation
The professionals of the Codere Online Group will have to respect particularly the applicable legal system in each case in terms of defence of competition and organisation of the securities markets.
In particular, they will refrain from entering into any agreements with competitors, suppliers or customers, who have the intention or the effect of restricting free competition in any of the markets in which the Codere Online Group is present.
They will also refrain from any action that could constitute an abuse of a dominant position in the market and from any unfair behaviour, by acting in the markets in good faith.
3.6 Shareholders
The Codere Online Group expresses its intention to continuously create value for its shareholders and will permanently make available to them those channels of communication and consultation that allow them to have adequate, useful and complete information on the evolution of the Group.
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IV. WHISTLEBLOWING PLATFORM
The Codere Online Group has a whistleblowing platform which allows and guarantees the confidentiality of communications, even anonymous ones, regarding the commission of irregularities or acts contrary to the law or the rules of action of this Code.
In the absence of any specific procedure or formation of an internal body that could be established by the Board of Directors of Codere Online Luxembourg, S.A., the Codere Online’s Corporate Legal and Compliance Department is the competent body to administer and regulate the procedures corresponding to this platform, both in the reception and in the processing of the corresponding whistleblowing.
The existence, guarantees and forms of contact of this platform in all the territorial areas in which the Codere Online Group operates, will be communicated to the professionals, partners, clients and suppliers.
The confidentiality of whistle-blowers shall not preclude strict respect for the rights of the defence in disciplinary or other proceedings which may be instituted, in accordance with the procedure to be defined for that purpose.
4.1. Guarantees of the Code of Ethics and Integrity and the Whistleblowing Platform
The Codere Online Group will develop the necessary measures for the effective implementation of the Code.
No person, regardless of his or her level or position, is authorised to request that a professional commit an illegal act or contravene the provisions of the Code. In turn, no professional may justify improper, illegal or contravening conduct with regard to the Code on the basis of an order from a superior.
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If there are reasonable indications that an irregularity has been committed or an act against the legality or the rules of action of the Code, Codere Online’s Corporate Legal and Compliance Department must be informed through the email address: ethicalchannel.online@codere.com.
E-mail ethicalchannel.online@codere.com
A person who reports a potential breach of a legal rule, or the provisions of the Code, may do so by identifying themselves or, if they deem it more convenient, anonymously. The Codere Online Group will not adopt any form of direct or indirect retaliation against professionals who have truthfully reported an anomalous action.
Without prejudice to the policy or procedure that may be established for this purpose, the Codere Online Group’s policy is that it will not tolerate any form of retaliation against any person who, in good faith, reports any potential non-compliance with the Code and/or the legal rules in force and/or the procedures or regulations issued in this regard.
The Code will be strictly enforced and violations will be dealt with immediately. When it is determined that a professional of the Codere Online Group has carried out activities which contravene the provisions of any law, rule or regulation or the Code, the disciplinary measures which are applicable will be applied in accordance with the provisions of the applicable labour legislation, without prejudice to any internal procedure or policy of sanctions which could be approved in the Codere Online Group. Violations of the Code that involve illegal behaviour will be reported to the appropriate authorities.
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V. MONITORING AND UPDATING THE CODE
The monitoring, updating or proposed improvement of this Code will be the responsibility of Codere Online’s Corporate Legal and Compliance Department, without prejudice to the participation of other interdisciplinary bodies within the structure of the Codere Online Group, as decided or approved.
This Code was approved at the Codere Online Board of Directors at a meeting held on November 26, 2021 and came into force immediately upon its approval.
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Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO RULES 13a-14(a) AND 15(d)-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Gonzalo de Osma Bucero, certify that:
1. | I have reviewed this Annual Report on Form 10-K of Codere Online U.S. Corp. (f/k/a DD3 Acquisition Corp.); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
b) | (Paragraph omitted pursuant to SEC Release Nos. 33-8238/34-47986 and 33-8392/34-49313); |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 16, 2022
/s/ Gonzalo de Osma Bucero | |
Gonzalo de Osma Bucero | |
Director, President and Treasurer | |
(Principal Executive Officer and Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Codere Online U.S. Corp. (f/k/a DD3 Acquisition Corp.) (the “Company”) on Form 10-K for the year ended September 30, 2021, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Gonzalo de Osma Bucero, Director, President and Treasurer (Principal Executive Officer and Principal Financial Officer) of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | To my knowledge, the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report. |
Date: February 16, 2022
/s/ Gonzalo de Osma Bucero | |
Gonzalo de Osma Bucero | |
Director, President and Treasurer | |
(Principal Executive Officer and Principal Financial Officer) |
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