BTRS Holdings Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1

Attached files

file	filename
EX-16.1 - EXHIBIT 16.1 - BTRS Holdings Inc.	nc10018795x1_ex16-1.htm
EX-10.10 - EXHIBIT 10.10 - BTRS Holdings Inc.	nc10018795x1_ex10-10.htm
EX-10.9 - EXHIBIT 10.9 - BTRS Holdings Inc.	nc10018795x1_ex10-9.htm
EX-10.8 - EXHIBIT 10.8 - BTRS Holdings Inc.	nc10018795x1_ex10-8.htm
EX-10.7 - EXHIBIT 10.7 - BTRS Holdings Inc.	nc10018795x1_ex10-7.htm
EX-10.6 - EXHIBIT 10.6 - BTRS Holdings Inc.	nc10018795x1_ex10-6.htm
EX-10.5 - EXHIBIT 10.5 - BTRS Holdings Inc.	nc10018795x1_ex10-5.htm
EX-10.4 - EXHIBIT 10.4 - BTRS Holdings Inc.	nc10018795x1_ex10-4.htm
EX-10.3 - EXHIBIT 10.3 - BTRS Holdings Inc.	nc10018795x1_ex10-3.htm
EX-10.2 - EXHIBIT 10.2 - BTRS Holdings Inc.	nc10018795x1_ex10-2.htm
EX-10.1 - EXHIBIT 10.1 - BTRS Holdings Inc.	nc10018795x1_ex10-1.htm
EX-4.5 - EXHIBIT 4.5 - BTRS Holdings Inc.	nc10018795x1_ex4-5.htm
EX-4.4 - EXHIBIT 4.4 - BTRS Holdings Inc.	nc10018795x1_ex4-4.htm
EX-4.2 - EXHIBIT 4.2 - BTRS Holdings Inc.	nc10018795x1_ex4-2.htm
EX-4.1 - EXHIBIT 4.1 - BTRS Holdings Inc.	nc10018795x1_ex4-1.htm
EX-3.2 - EXHIBIT 3.2 - BTRS Holdings Inc.	nc10018795x1_ex3-2.htm
EX-3.1 - EXHIBIT 3.1 - BTRS Holdings Inc.	nc10018795x1_ex3-1.htm
EX-2.2 - EXHIBIT 2.2 - BTRS Holdings Inc.	nc10018795x1_ex2-2.htm
EX-2.1 - EXHIBIT 2.1 - BTRS Holdings Inc.	nc10018795x1_ex2-1.htm
8-K - FORM 8-K - BTRS Holdings Inc.	nc10018795x1_8k.htm

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Capitalized terms used but not defined in this Exhibit 99.1 shall have the meanings ascribed to the in the Current Report on Form 8-K to which the Exhibit 99.1 is attached.

The following unaudited pro forma condensed combined balance sheet of the Combined Company (as defined below) as of September 30, 2020 and the unaudited pro forma condensed combined statements of operations of the Combined Company for the year ended December 31, 2019 and for the nine months ended September 30, 2020 present the combination of the financial information of South Mountain and Billtrust, after giving effect to the Business Combination, accounted for as a reverse recapitalization, and related adjustments described in the accompanying notes. In connection with the closing of the Business Combination, accounted for as a reverse recapitalization, the registrant changed its name from South Mountain Merger Corp. to BTRS Holdings Inc. (the “Combined Company”).

The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019 and for the nine months ended September 30, 2020 give pro forma effect to the Business Combination, accounted for as a reverse recapitalization, as if it had occurred on January 1, 2019. The unaudited pro forma condensed combined balance sheet as of September 30, 2020 gives pro forma effect to the Business Combination, accounted for as a reverse recapitalization, as if it was completed on September 30, 2020.

The unaudited pro forma condensed combined financial information is based on and should be read in conjunction with:

•

the accompanying notes to the unaudited pro forma condensed combined financial statements;

•

the historical unaudited interim financial statements of South Mountain as of September 30, 2020, and for the nine months ended September 30, 2020, and the historical audited financial statements of South Mountain as of December 31, 2019, and for the period from February 28, 2019 (inception) through December 31, 2019, and the related notes, in each case, included elsewhere in this Current Report on Form 8-K or in the Proxy Statement;

•

the historical unaudited condensed financial statements of Billtrust as of September 30, 2020, and for the nine months ended September 30, 2020, and the historical consolidated financial statements of Billtrust as of and for the year ended December 31, 2019, and the related notes, in each case, included elsewhere in this Current Report on Form 8-K or in the Proxy Statement; and

•

other information relating to South Mountain and Billtrust contained in this Current Report on Form 8-K or in the Proxy Statement, including the BCA and the description of certain terms thereof set forth under “The Business Combination Agreement,” as well as the disclosures contained in the sections titled “South Mountain Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Billtrust’s Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what the Combined Company’s financial condition or results of operations would have been had the Business Combination, which is accounted for as a reverse recapitalization, occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the Combined Company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.

On January 12, 2021, Billtrust consummated the previously announced Business Combination pursuant to the Agreement dated October 18, 2020 and amended as of December 13, 2020, between South Mountain, First Merger Sub, BT Merger Sub II, LLC and Billtrust, under the terms of which: (i) First Merger Sub, a wholly owned subsidiary of South Mountain merged with and into Billtrust (the “First Merger”), with Billtrust being the surviving company of the First Merger as a wholly owned subsidiary of South Mountain (Billtrust, in its capacity as the surviving corporation of the First Merger, is sometimes referred to as the “Surviving Corporation”) and (ii) following the First Merger Billtrust merged with and into Second Merger Sub, a wholly owned subsidiary of South Mountain (the “Second Merger,” and together with the First Merger, the “Mergers”), with Second Merger Sub being the surviving entity of the Second Merger. After giving effect to the Mergers, the Combined Company owns, directly, all of the issued and outstanding equity interests of Billtrust, and the pre-Business Combination stockholders of Billtrust hold a portion of the South Mountain Class A Common Stock and all of the South Mountain Class C Common Stock.

As part of the Business Combination, accounted for as a reverse recapitalization, each existing share of Billtrust Common Stock, including shares of Billtrust Preferred Stock that were converted into Billtrust Common Stock as part of the Business Combination, accounted for as a reverse recapitalization, was converted into 7.228 shares of South Mountain Class A Common Stock or South Mountain Class C Common Stock, as applicable.

The following pro forma condensed combined financial statements presented herein reflect the actual redemption of 2,015 shares of Class A Common Stock of South Mountain’s stockholders in conjunction with the shareholder vote on the Business Combination contemplated by the Agreement at a meeting held on January 12, 2021.

BTRS Holdings Inc.

UNAUDITED PRO FORMA CONDENSED

COMBINED BALANCE SHEET

SEPTEMBER 30, 2020

(in thousands)

	South Mountain								Billtrust										Business
																			Combination*
			Transaction Accounting									Transaction Accounting							Transaction Accounting				Combined
	Historical		Adjustments			Note 3	As Adjusted		Historical			Adjustments			Note 3	As Adjusted			Adjustments			Note 3	Pro Forma
Assets
Current assets
Cash and cash equivalents	$	1,438	$	452,267		(a)	$	453,705	$	10,219		$	(1,779	)	(a)	$	8,440		$	(168,493	)	(a)	$	293,652
Restricted cash		-		-				-		3,276			-				3,276			-				3,276
Customer funds		-		-				-		22,654			-				22,654			-				22,654
Accounts receivable, net		-		-				-		20,075			-				20,075			-				20,075
Prepaid expenses		121		-				121		3,785			-				3,785			-				3,906
Prepaid income taxes		144		-				144		-			-				-			-				144
Deferred implementation, commission and other costs, current		-		-				-		4,687			-				4,687			-				4,687
Other current assets		-		-				-		762			-				762			-				762
Total current assets		1,703		452,267				453,970		65,458			(1,779	)			63,679			(168,493	)			349,156
Property and equipment, net		-		-				-		17,241			-				17,241			-				17,241
Goodwill		-		-				-		36,956			-				36,956			-				36,956
Intangible assets, net		-		-				-		10,091			-				10,091			-				10,091
Deferred implementation and commission costs, non-current		-		-				-		8,165			-				8,165			-				8,165
Marketable securities held in Trust Account		252,287		(252,287	)	(b)		-		-			-				-			-				-
Other assets		-		-				-		1,645			1,032		(g)		2,677			(1,779	)	(j)		898
Total assets	$	253,990	$	199,980			$	453,970	$	139,556		$	(747	)		$	138,809		$	(170,272	)		$	422,507

Liabilities, redeemable convertible preferred stock and commitments and stockholders’ equity (deficit)
Current liabilities
Accounts payable		-		-				-		2,192			-				2,192			-				2,192
Customer funds payable		-		-				-		22,654			-				22,654			-				22,654
Accrued expenses and other		577		-				577		20,051			(747	)	(f)		19,304			-				19,881
Current portion of debt and capital lease obligations, net of deferred financing costs		-		-				-		425			-				425			(195	)	(k)		230
Deferred revenue		-		-				-		10,199			-				10,199			-				10,199
Other current liabilities		-		-				-		915			-				915			-				915
Total current liabilities		577		-				577		56,436			(747	)			55,689			(195	)			56,071
Long-term debt and capital lease obligations, net of current portion and deferred financing costs		-		-				-		43,344			-				43,344			(43,286	)	(k)		58
Customer postage deposits		-		-				-		10,420			-				10,420			-				10,420
Deferred revenue, net of current portion		-		-				-		13,800			-				13,800			-				13,800
Deferred taxes		-		-				-		714			-				714			-				714
Accrual for cash consideration to Billtrust stockholders at the Business Combination		-		-				-		-			90,061		(h)		90,061			(90,061	)	(a)		-
Deferred underwriting fee payable		7,970		-				7,970		-			-				-			(7,970	)	(j)		-
Other long-term liabilities		-		-				-		8,803			-				8,803			-				8,803
Total liabilities		8,547		-				8,547		133,517			89,314				222,831			(141,512	)			89,866
													-
Common stock subject to possible redemption		240,443		(240,443	)	(c)		-		-			-				-			-				-
Redeemable convertible preferred stock		-		-				-		156,862			(156,862	)	(i)		-			-				-
Stockholders’ equity (deficit)
Common stock		-		-				-		5			10		(d)(i)		15			(15	)	(d)		-
South Mountain Class A Common Stock		-		5		(d)(e)		5		-			-				-			8		(d)		13
South Mountain Class B Common Stock		1		(1	)	(d)		-		-			-				-			-				-
South Mountain Class C Common Stock		-		-				-		-			-				-			1		(d)		1
Additional paid-in capital		3,432		440,419		(d)(e)		443,851		14,220			66,791		(d)(i)		81,011			(25,441	)	(d)		499,421
Retained earnings (Accumulated deficit)		1,567		-				1,567		(165,048	)		-				(165,048	)		(3,313	)	(d)		(166,794	)
Total stockholders’ equity (deficit)		5,000		440,423				445,423		(150,823	)		66,801				(84,022	)		(28,760	)			332,641
Total liabilities, redeemable convertible preferred stock and commitments and stockholders’ equity (deficit)	$	253,990	$	199,980			$	453,970	$	139,556		$	(747	)		$	138,809		$	(170,272	)		$	422,507

*	Business Combination is accounted for as a reverse recapitalization for purposes of unaudited pro forma condensed combined financial information.

BTRS Holdings Inc.

UNAUDITED PRO FORMA CONDENSED

COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED

SEPTEMBER 30, 2020

(in thousands, except share and per share amounts)

	South Mountain (Historical)			Billtrust (Historical)			Transaction Accounting Adjustments			Note 3	Pro Forma
Revenues:
Subscription, transaction and services	$	-		$	78,978		$	-			$	78,978
Reimbursable costs		-			28,052			-				28,052
Total revenues		-			107,030			-				107,030
Cost of revenues:
Cost of subscription, transaction and services		-			24,100			-				24,100
Cost of reimbursable costs		-			28,052			-				28,052
Total cost of revenues, excluding depreciation and amortization		-			52,152			-				52,152
Operating expenses:
Research and development		-			27,260			-				27,260
Sales and marketing		-			17,295			-				17,295
General and administrative		-			15,226			-				15,226
Depreciation and amortization		-			4,223			-				4,223
Operation and formation costs		698			-			-				698
Total operating expenses		698			64,004			-				64,702
Loss from operations		(698	)		(9,126	)		-				(9,824	)
Other income (expense):
Interest income		-			18			-				18
Interest expense		-			(3,405	)		3,314		(l)		(91	)
Other income (expense), net		-			(51	)		-				(51	)
Interest income on marketable securities held in Trust Account		904			-			(904	)	(m)		-
Total other income (expense)		904			(3,438	)		2,410				(124	)
Income (loss) before income taxes		206			(12,564	)		2,410				(9,948	)
Provision for income taxes		(43	)		(150	)		43		(m)		(150	)
Net income (loss) and comprehensive income (loss)	$	163		$	(12,714	)	$	2,453			$	(10,098	)

Net loss per share
Weighted average shares outstanding, basic and diluted		7,403,146			4,357,002					(n)		142,887,379
Basic and diluted net loss per share		(0.07	)		(4.41	)				(n)		(0.07	)

BTRS Holdings Inc.

UNAUDITED PRO FORMA CONDENSED

COMBINED STATEMENT OF OPERATIONS FOR THE YEAR ENDED

DECEMBER 31, 2019

(in thousands, except share and per share amounts)

	South Mountain (Historical)			Billtrust (Historical)			Transaction Accounting Adjustments			Note 3	Pro Forma
Revenues:
Subscription, transaction and services	$	-		$	96,460		$	-			$	96,460
Reimbursable costs		-			40,008			-				40,008
Total revenues		-			136,468			-				136,468
Cost of revenues:
Cost of subscription, transaction and services		-			32,015			-				32,015
Cost of reimbursable costs		-			40,008			-				40,008
Total cost of revenues, excluding depreciation and amortization		-			72,023			-				72,023
Operating expenses:
Research and development		-			34,285			-				34,285
Sales and marketing		-			22,098			-				22,098
General and administrative		-			23,297			-				23,297
Depreciation and amortization		-			5,881			-				5,881
Operation and formation costs		562			-			-				562
Total operating expenses		562			85,561			-				86,123
Loss from operations		(562	)		(21,116	)		-				(21,678	)
Other income (expense):
Interest income		-			1			-				1
Interest expense		-			(1,507	)		1,476		(l)		(31	)
Other income (expense), net		-			(21	)		-				(21	)
Interest income on marketable securities held in Trust Account		2,338			-			(2,338	)	(m)		-
Total other income (expense)		2,338			(1,527	)		(862	)			(51	)
Income (loss) before income taxes		1,776			(22,643	)		(862	)			(21,729	)
Provision for income taxes		(373	)		(160	)		373		(m)		(160	)
Net income (loss) and comprehensive income (loss)	$	1,403		$	(22,803	)	$	(489	)		$	(21,889	)

Net loss per share
Weighted average shares outstanding, basic and diluted		6,908,855			4,257,300					(n)		142,887,379
Basic and diluted net loss per share		(0.05	)		(7.40	)				(n)		(0.15	)

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

Note 1—Description of the Business Combination

On January 12, 2021, Billtrust consummated the previously announced Business Combination pursuant to the Agreement dated October 18, 2020 and amended as of December 13, 2020, between South Mountain, First Merger Sub, BT Merger Sub II, LLC and Billtrust, under the terms of which: (i) First Merger Sub merged with and into Billtrust (the “First Merger”), with Billtrust being the surviving company of the First Merger and (ii) immediately following the First Merger Billtrust merged with and into Second Merger Sub, with Second Merger Sub being the surviving entity of the Second Merger. After giving effect to the Mergers, the Combined Company owns, directly, all of the issued and outstanding equity interests of Billtrust, and the pre-Business Combination stockholders of Billtrust hold a portion of the Combined Company Class A Common Stock and all of the Combined Company Class C Common Stock.

As a result of the Agreement, Billtrust stockholders received aggregate consideration with a value equal to $1,189,502,229, which consists of (i) $90,061,329 in cash at Closing of the Business Combination, accounted for as a reverse recapitalization, and (ii) $1,099,440,900 in South Mountain Class A Common Stock and South Mountain Class C Common Stock at Closing of the Business Combination, accounted for as a reverse recapitalization, or 109,944,090 shares based on an assumed share price of $10 per share.

In connection with the Business Combination, accounted for as a reverse recapitalization, Billtrust stockholders will receive contingent consideration of up to 12,000,000 shares of South Mountain Class A Common Stock or South Mountain Class C Common Stock, as applicable (“Earnout Securities”), contingent upon achieving certain market share price milestones within a period of five years post Business Combination.

In connection with the Business Combination, accounted for as a reverse recapitalization, 1,875,000 shares of South Mountain Class A Common Stock previously issued to the Sponsor and its affiliates in exchange of the founder shares (“Sponsor Vesting Shares”) were placed in a lock-up and will be released from a lock-up upon achieving certain market share price milestones within a period of five years post-Closing. These shares will be forfeited if the set milestones are not reached (see Note 3(d) Impact on equity).

At the Closing, Sponsor forfeited 1,250,000 shares of its South Mountain Class B Common Stock that it owned as of the Closing.

The following table summarizes the pro forma share of the Combined Company Class A Common Stock outstanding after giving effect to the Business Combination, excluding the potential dilutive effect of the Earnout Securities, Sponsor Vesting Shares, and exercise of warrants:

	Including dilutive effect of Billtrust options outstanding					Excluding dilutive effect of Billtrust options outstanding
	Shares		%			Shares¹		%
Billtrust’s existing stockholders		109,944,090		69.56	%		94,764,394		66.32	%
South Mountain’s existing public stockholders		24,997,985		15.81	%		24,997,985		17.49	%
PIPE Investors		20,000,000		12.65	%		20,000,000		14.00	%
South Mountain’s Sponsor shares		3,125,000		1.98	%		3,125,000		2.19	%
Total		158,067,075		100	%		142,887,379		100	%

¹ Excludes 15,179,696 Billtrust options outstanding.

Note 2—Basis of presentation

The historical financial information of Billtrust and South Mountain has been adjusted in the unaudited pro forma condensed combined financial information to reflect transaction accounting adjustments related to the Business Combination, accounted for as a reverse capitalization, in accordance with U.S. GAAP. The pro forma adjustments are prepared to illustrate the estimated effect of the Business Combination, accounted for as a reverse recapitalization, and certain other adjustments.

The Business Combination will be accounted for as a reverse recapitalization because Billtrust has been determined to be the accounting acquirer under Financial Accounting Standards Board’s Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”). The determination is primarily based on the evaluation of the following facts and circumstances taken into consideration:

•	Pre-Business Combination stockholders of Billtrust will own a relatively larger portion in the Combined Company compared to the ownership to be held by the pre-Business Combination shareholders of South Mountain;

•	Billtrust has the right to appoint a majority of BTRS Holdings Inc. Board members;

•	Senior management of Billtrust will comprise the senior management of the Combined Company; and

•	The operations of Billtrust prior to the transaction will comprise the only ongoing operations of the Combined Company.

Under the reverse recapitalization model, the Business Combination will be treated as Billtrust issuing equity for the net assets of South Mountain, with no goodwill or intangible assets recorded.

Note 3—Pro Forma Adjustments

Adjustments to the Unaudited Pro Forma Condensed Combined Balance Sheet as of September 30, 2020

The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of September 30, 2020 are as follows:

Cash. Represents the impact of the Business Combination, accounted for as a reverse recapitalization, on the cash balance of the Combined Company.

The table below represents the sources and uses of funds as it relates to the Business Combination, accounted for as a reverse recapitalization:

(in thousands)	Note
Cash balance of Billtrust prior to Business Combination*		$	10,219
Cash balance of South Mountain prior to Business Combination*			1,438
Total cash balance prior to Business Combination*			11,657

South Mountain pro forma cash adjustments:
South Mountain cash held in Trust Account	(1)		252,287
PIPE Financing	(2)		200,000
Payment to redeeming South Mountain public stockholders	(3)		(20	)
Total South Mountain pro forma cash adjustments			452,267

Billtrust pro forma cash adjustment:
Payment of the accrued transaction cost prior to the Close of the Business Combination*	(4)		(747	)
Payment of the incremental transaction cost prior to the Close of the Business Combination*	(4)		(1,032	)
Total Billtrust pro forma cash adjustment			(1,779	)

Business Combination* pro forma cash adjustments:
Cash consideration to existing Billtrust stockholders at the Business Combination*	(5)		(90,061	)
Repayment of principal of Billtrust’s historical debt	(6)		(44,663	)
Reypayment of accrued interest on Billtrust’s historical debt	(6)		(127	)
Fees related to payment of Billtrust’s historical debt	(7)		(1,569	)
Payment of deferred underwriting fees	(8)		(7,970	)
Payment of Billtrust transaction costs	(9)		(10,286	)
Payment of additional Billtrust costs	(9)		(437	)
Payment of SMMC transaction costs	(10)		(13,380	)
Total Business Combination* pro forma cash adjustments			(168,493	)

Pro forma cash balance		$	293,652

*	Business Combination is accounted for as a reverse recapitalization for purposes of unaudited pro forma condensed combined financial information.

(1)	Represents the amount of the restricted investments and cash held in the Trust Account upon consummation of the Business Combination, accounted for as a reverse recapitalization, at Closing (see Note 3(b) Trust Account).

(2)	Represents the issuance, in the PIPE Financing, to third-party investors of up to 20,000,000 shares of South Mountain Class A Common Stock assuming stock price of $10 per share (see Note 3(e) PIPE Financing).

(3)	Represents the amount paid to Public Stockholders who are assumed to exercise redemption rights under the maximum redemption scenario, including payment of accrued interest (see Note 3(d) Impact on equity).

(4)

Represents payment of Billtrust transaction costs accrued as of September 30, 2020 and payment of incremental Billtrust transaction costs prior to the Close of the Business Combination, accounted for as a reverse recapitalization (see Note 3(f) Payment of Billtrust accrued transaction costs prior to the Close and Note 3(g) Payment of Billtrust incremental transaction costs prior to the Close).

(5)

Represents the amount of cash consideration paid to existing Billtrust stockholders in the Business Combination, accounted for as a reverse recapitalization (see Note 3(d) Impact on equity and Note 3(h) Accrual for cash consideration to Billtrust stockholders at the Business Combination, accounted for as a reverse recapitalization).

(6)	Represents repayment of Billtrust’s term loan, including accrued interest, under the terms of the BCA in the amount of $44,789,044 (see Note 3(k) Long-term debt).

(7)	Represents payment of fees associated with repayment of Billtrust’s term loan (see Note 3(k) Long-term debt and Note 3(d) Impact to equity).

(8)	Represents the payment of deferred underwriting fees incurred as part of the IPO committed to be paid upon the consummation of a Business Combination, accounted for as a reverse recapitalization (see Note 3(j)(1) Transaction costs).

(9)	Represents payment of Billtrust incremental transaction costs and additional Billtrust costs at the close of the Business Combination, accounted for as a reverse recapitalization (see Note 3(j)(4) Transaction costs and Note 3(j)(5) Transaction costs).

(10)	Represents payment of South Mountain transaction costs (see Note 3(j)(2) Transaction costs).

Trust Account. Represents release of the restricted investments and cash held in the Trust Account upon consummation of the Business Combination, accounted for as a reverse recapitalization, to fund the Closing of the Business Combination (see Note 3(a)(1) Cash).

South Mountain’s Common Stock Subject to Possible Redemption. Represents reclassification of South Mountain’s redeemable shares into South Mountain Class A Common Stock in connection with the Business Combination, accounted for as a reverse recapitalization (see Note 3(d) Impact on equity).

Impact on equity. The following table represents the impact of the Business Combination, accounted for as a reverse recapitalization, on the number of shares of South Mountain Class A Common Stock and South Mountain Class C Common Stock and represents the total equity section (in thousands, except share amounts):

	Number of Shares																Par Value
	Class A Common Stock - Sponsor			Class A Common Stock - Others			Class B Common Stock			Class C Common Stock		Sponsor Vesting Shares		Common stock, subject to possible redemption			Class A Common Stock		Class B Common Stock			Class C Common Stock		South Mountain’s Common stock, subject to possible redemption			Billtrust’s Common Stock			Billtrust’s Redeemable Convertible Preferred stock			Additional paid in capital			Retained earnings (Accumulated deficit)
South Mountain equity as of September 30,2020 - prior to Business Combination*		-			1,179,479			6,250,000			-		-		23,820,521		$	-	$	1		$	-	$	240,443		$	-		$	-		$	3,432		$	1,567
Billtrust equity as of September 30,2020 - prior to Business Combination*		-			-			-			-		-		-			-		-			-					5			156,862			14,220			(165,048	)
Equity balance prior to Business Combination*		-			1,179,479			6,250,000			-		-		23,820,521			-		1			-		240,443			5			156,862			17,652			(163,481	)

South Mountain pro forma equity adjustments:
Reclassification of redeemable shares to Class A Stock		-			23,820,521			-			-		-		(23,820,521	)		2		-			-		(240,443	)		-			-			240,441			-
Less: Redemption of redeemable stock		-			(2,015	)		-			-		-					-		-			-		-			-			-			(20	)		-
Base Forfeited Shares		-			-			(1,250,000	)		-		-		-			-		-			-		-			-			-			-			-
Reclassification of Sponsor-held Class B stock		5,000,000			-			(5,000,000	)		-		-		-			1		(1	)		-		-			-			-			-			-
Sponsor Vesting Shares		(1,875,000	)		-			-			-		1,875,000		-			-		-			-		-			-			-			-			-
PIPE Financing		-			20,000,000			-			-		-		-			2		-			-		-			-			-			199,998			-
Total South Mountain pro forma equity adjustments		3,125,000			43,818,506			(6,250,000	)		-		1,875,000		(23,820,521	)		5		(1	)		-		(240,443	)		-			-			440,419			-

Billtrust pro forma equity adjustments:
Conversion of Billtrust’s redeemable convertible Preferred stock into common stock		-			-			-			-		-		-			-		-			-		-			10			(156,862	)		156,852			-
Cash to existing Billtrust stockholders at the Business Combination*		-			-			-			-		-		-			-		-			-		-			-			-			(90,061	)		-
Total Billtrust pro forma equity adjustments		-			-			-			-		-		-			-		-			-		-			10			(156,862	)		66,791			-

Business Combination pro forma equity adjustments:
Shares issued to Billtrust stockholders as consideration		-			85,733,177			-			9,031,217		-		-			8		-			1		-			-			-			(9	)
SMMC transaction costs		-			-			-			-		-		-			-		-			-		-			-			-			(13,380	)		-
Billtrust incremental transaction costs and additional Billtrust costs		-			-			-			-		-		-			-		-			-		-			-			-			(10,286	)		(437	)
Billtrust’s capitalized expenses related to Business Combination*		-			-			-			-		-		-			-		-			-		-			-			-			(1,779	)		-
Payment of fees related to repayment of historical debt of Billtrust and write-off of unamortized deferred financing costs		-			-			-			-		-		-			-		-			-		-			-			-			(1,569	)		(1,309	)
Elimination of historical retained earnings of South Mountain		-			-			-			-		-		-			-		-			-		-			-			-			1,567			(1,567	)
Elimination of historical shareholder shares of Billtrust		-			-			-			-		-		-			-		-			-					(15	)		-			15			-
Total Business Combination* pro forma equity adjustments		-			85,733,177			-			9,031,217		-		-			8		-			1		-			(15	)		-			(25,441	)		(3,313	)

Post-Business Combination*		3,125,000			130,731,162			-			9,031,217		1,875,000		-		$	13	$	-		$	1	$	-		$	-		$	-		$	499,421		$	(166,794	)

*	Business Combination is accounted for as a reverse recapitalization for purposes of unaudited pro forma condensed combined financial information.

PIPE Financing. Represents the issuance, in the PIPE Financing, to third-party investors of up to 20,000,000 shares of South Mountain Class A Common Stock at a price of $10 per share (see Note 3(a)(2) Cash and Note 3(d) Impact on equity).

Payment of Billtrust accrued transaction costs prior to the Close. Represents payment of Billtrust accrued transaction costs related to the Business Combination, accounted for as a reverse recapitalization, accrued as of September 30, 2020 in the amount of $746,946 (see Note 3(a)(4) Cash). These costs were paid from Billtrust funds prior to the Close of the Business Combination. The unaudited pro forma combined balance sheet reflects these costs as a decrease in cash with a corresponding decrease in accrued expenses and other.

Payment of Billtrust incremental transaction costs prior to the Close. Represents payment of Billtrust incremental transaction costs related to the Business Combination, accounted for as a reverse recapitalization, in the amount of $1,031,716 (see Note 3(a)(4) Cash). These costs were paid from Billtrust funds prior to the Close of the Business Combination. The unaudited pro forma combined balance sheet reflects these costs as a decrease in cash with a corresponding increase in other assets.

Accrual for cash consideration to Billtrust stockholders at the Business Combination, accounted for as a reverse recapitalization. Represents accrual of liability related to cash consideration payable to Billtrust stockholders in connection with the Business Combination, accounted for as a reverse recapitalization (see Note 3(a)(5) Cash and 3(d) Impact on equity).

Billtrust’s Redeemable Convertible Preferred Stock. Represents conversion of Billtrust Preferred Stock into 9,637,547 Billtrust Common Stock in connection with the Business Combination, accounted for as a reverse recapitalization, (see Note 3(d) Impact on equity).

Transaction costs.

(1)

Payment of deferred underwriting fees incurred by South Mountain in the amount of $7,970,375 (see Note 3(a)(8) Cash). The unaudited pro forma condensed combined balance sheet reflects payment of these costs as a reduction of cash with a corresponding decrease in deferred underwriting fee payable.

(2)

Payment of South Mountain incremental transaction costs related to the Business Combination, accounted for as a reverse recapitalization, incurred through the close of the Business Combination in the amount of $13,379,367 (see Note 3(a)(10) Cash). The unaudited pro forma condensed combined balance sheet reflects these costs as a reduction of cash with a corresponding decrease in additional paid-in capital (see Note 3(d) Impact on equity).

(3)

Recognition of Billtrust’s capitalized transaction costs related to the Business Combination, accounted for as a reverse recapitalization, in the amount of $1,778,994 as a reduction to equity proceeds. The unaudited pro forma combined balance sheet reflects these costs as a decrease in other assets with a corresponding decrease in additional paid-in capital (see Note 3(d) Impact on equity).

(4)

Payment of Billtrust incremental transaction costs related to the Business Combination, accounted for as a reverse recapitalization, incurred through the close of the Business Combination in the amount of $10,286,337 (see Note 3(a)(9) Cash). The unaudited pro forma condensed combined balance sheet reflects these costs as a reduction of cash with a corresponding decrease in additional paid-in capital (See Note 3(d) Impact on equity).

(5)

Payment of additional Billtrust costs at the close of the Business Combination, accounted for as a reverse recapitalization, in the amount of $436,631 determined to be not directly attributable and incremental to the Business Combination (see Note 3(a)(9) Cash). The unaudited pro forma condensed combined balance sheet reflects these costs as a reduction of cash with a corresponding decrease in retained earnings (accumulated deficit) (See Note 3(d) Impact on equity).

Long-term debt. Represents funds from the Business Combination, accounted for as a reverse recapitalization, used to repay Billtrust’s term loan, including accrued interest, under the terms of the BCA in the amount of $44,789,044 (see Note 3(a)(6) Cash) and write-off of unamortized deferred financing costs in the amount of $1,308,962 (see Note 3(d) Impact on equity).

Adjustments to the Unaudited Pro Forma Condensed Combined Statements of Operations for the nine months ended September 30, 2020 and the year ended December 31, 2019

The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2020 and for the year ended December 31, 2019 are as follows:

Interest expense. Represents elimination of historical interest expense and amortization of deferred financing costs in connection with repayment of Billtrust’s term loan under the terms of the BCA (see Note 3(k) Long-term debt).

Exclusion of interest income and related income tax expense. Represents elimination of interest earned on marketable securities held in the Trust Account and elimination of related income tax expense.

Net loss per share. Represents pro forma net loss per share based on pro forma net loss and 142,887,379 total shares outstanding upon consummation of the Business Combination, accounted for as a reverse recapitalization. For each period presented, there is no difference between basic and diluted pro forma net loss per share as the inclusion of all potential shares of South Mountain Class A Common Stock and South Mountain Class C Common Stock of the Combined Company, as well as the Billtrust stock options outstanding at closing, would have been anti-dilutive.

BTRS Holdings Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - January 14, 2021

Attached files

BTRS Holdings Inc. Reports