References to "DCRD," "our," "us" or "we" refer to Decarbonization Plus
Acquisition Corporation IV. The following discussion and analysis of DCRD's
financial condition and results of operations should be read in conjunction with
the unaudited financial statements and the notes thereto contained in Item 1. of
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.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). We have based these forward-looking statements on
our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties
and assumptions about us that may cause our actual results, levels of activity,
performance or achievements to be materially different from any future results,
levels of activity, performance or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "continue," or the negative of such
terms or other similar expressions. Such statements include, but are not limited
to, possible business combinations and the financing thereof, and related
matters, as well as all other statements other than statements of historical
fact included in this Form 10-Q. Factors that might cause or contribute to such
a discrepancy include, but are not limited to, those described in our other
Securities and Exchange Commission ("SEC") filings.
Overview
We are a blank check company incorporated as a Cayman Islands exempted company
and formed for the purpose of effecting a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination with
one or more businesses (the "initial business combination"). Our Sponsor is
Decarbonization Plus Acquisition Sponsor IV LLC, a Cayman Islands limited
liability company ("Sponsor") and an affiliate of Riverstone Investment Group
LLC, a Delaware limited liability company, and its affiliates ("Riverstone").
Although we may pursue an acquisition opportunity in any business or industry,
we intend to capitalize on the Riverstone platform to identify, acquire and
operate a business in industries that may provide opportunities for attractive
risk-adjusted returns in one of the multiple sectors that may advance the
objectives of global decarbonization. This includes the energy and agriculture,
industrials, transportation and commercial and residential sectors.
The Registration Statement for our initial public offering was declared
effective on August 10, 2021 (the "Public Offering"). On August 13, 2021, we
consummated the Public Offering of 31,625,000 units (the "Units") at $10.00 per
Unit, generating gross proceeds of $316,250,000, and incurring transaction costs
of approximately $19.4 million, consisting of $6,325,000 of underwriting fees,
$11,068,750 of deferred underwriting fees and approximately $2,000,000 of other
offering costs.
Simultaneously with the consummation of the Public Offering, we consummated the
sale of 12,737,500 Private Placement Warrants at a price of $1.00 per Private
Placement Warrant in a private placement to our Sponsor and independent
directors, generating gross proceeds of $12,737,500 (the "Private Placement").
Approximately $319,412,500 ($10.10 per Unit) of the net proceeds of the Public
Offering and certain of the proceeds of the Private Placement was placed in a
trust account (the "Trust Account") located in the United States with the
Continental Stock Transfer & Trust Company, and invested only in U.S.
"government securities," within the meaning set forth in Section 2(a)(16) of the
Investment Company Act, with a maturity of one hundred eighty-five (185) days or
less, or in money market funds meeting the conditions of paragraphs (d)(1),
(d)(2), (d)(3) and (d)(4) of Rule 2a-7 under the Investment Company Act, which
invest only in direct U.S. government treasury obligations, as determined by the
Company, until the earlier of: (i) the completion of our initial business
combination and (ii) the distribution of the Trust Account as otherwise
permitted under our amended and restated certificate of incorporation.
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If we are unable to complete an initial business combination within eighteen
(18) months from the closing of the Public Offering, or February 13, 2023, we
will (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible but not more than ten (10) business days
thereafter, 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 (less up to $100,000 of interest to pay
dissolution expenses and net of taxes payable), 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 Cayman Islands law to
provide for claims of creditors and the requirements of other applicable law.
Results of Operations
Our only activities from February 22, 2021 (inception) to June 30, 2021 related
to our formation and the Public Offering, as well as due diligence costs
incurred to identify a target company for a potential business combination. We
expect to incur increased expenses as a result of being a public company (for
legal, financial reporting, accounting and auditing compliance), as well as
costs in the pursuit of our acquisition plans.
For the three (3) months ended June 30, 2021, we had a net loss of $507,522.
For the period from February 22, 2021 (inception) through June 30, 2021, we had
a net loss of $527,515.
Liquidity and Capital Resources
Our liquidity needs up to the Public Offering were satisfied through receipt of
a $25,000 capital contribution from our Sponsor in exchange for the issuance of
the Founder Shares to our Sponsor and a loan from our Sponsor for an aggregate
amount of $300,000 to cover organizational expenses and expenses related to the
Public Offering pursuant to a promissory note (the "Note"). As of June 30, 2021,
there was $300,000 outstanding under the Note, and the Sponsor had covered
expenses of $73,535 in excess of the Note, which is presented on the balance
sheet as Due to related party. The Note was paid off in full on August 19, 2021.
In addition to the Note, as of August 13, 2021, an additional $110,684 was owed
to a related party for payment of expenses on the Company's behalf. Subsequent
to the consummation of the Public Offering, our liquidity needs have been
satisfied through the net proceeds of approximately $12.38 million from the
Private Placement held outside of the Trust Account.
In addition, in the short term and long term, in connection with a business
combination, our Sponsor or an affiliate of our Sponsor, or certain of our
officers and directors may, but are not obligated to, loan us funds as may be
required. As of June 30, 2021, there were no amounts outstanding under any
working capital loans.
Contractual Obligations
Registration Rights
The holders of the Founder Shares, Private Placement Warrants and warrants that
may be issued upon conversion of working capital loans, if any, and any Class A
ordinary shares issuable upon the exercise of the Private Placement Warrants and
warrants that may be issued upon conversion of working capital loans and upon
conversion of the Founder Shares will be entitled to registration rights
pursuant to a registration rights agreement. These holders will be entitled to
certain demand and "piggyback" registration rights. We will bear the expenses
incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20 per unit, or
$6,325,000 in the aggregate, paid upon closing of the Public Offering.
In addition, $0.35 per unit, or approximately $11,068,750 in the aggregate, will
be payable to the underwriters for deferred underwriting commissions. The
deferred fee will become payable to the underwriters from the amounts held in
the Trust Account solely in the event that we complete a business combination,
subject to the terms of the underwriting agreement.
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Administrative Services Agreement
Commencing on the date that our securities were first listed on the NASDAQ
Capital Market and continuing until the earlier of our consummation of an
initial business combination or our liquidation, we have agreed to pay an
affiliate of our Sponsor a total of $10,000 per month for office space,
utilities, secretarial support and administrative support made available to the
Company. Upon completion of the Initial Business Combination or the Company's
liquidation, the Company will cease paying these monthly fees.
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity
with accounting principles generally accepted in the United States of America
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 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 warrants issued in connection with our initial public
offering in accordance with Accounting Standards Codification ("ASC") 815-40,
Derivatives and Hedging-Contracts in Entity's Own Equity ("ASC 815"), under
which the warrants do not meet the criteria for equity classification and must
be recorded as liabilities. As the warrants meet the definition of a derivative
as contemplated in ASC 815, the warrants are measured at fair value at inception
and at each reporting date in accordance with ASC 820, Fair Value Measurement,
with changes in fair value recognized in the Statements of Operations in the
period of change.
Ordinary shares subject to possible redemption
We account for the Class A Ordinary Shares subject to possible redemption in
accordance with the guidance in ASC 480, Distinguishing Liabilities from Equity.
Class A Ordinary Shares subject to mandatory redemption are classified as a
liability instrument and are measured at fair value. Conditionally redeemable
Ordinary Shares (including Ordinary Shares that feature redemption rights that
are either within the control of the holder or subject to redemption upon the
occurrence of uncertain events not solely within DCRD's control) are classified
as temporary equity. At all other times, Ordinary Shares are classified as
shareholders' equity. The Company's Ordinary Shares feature certain redemption
rights that are considered to be outside of DCRD's control and subject to
occurrence of uncertain future events.
Impact of COVID-19
Our Sponsor 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 our financial position, results of operations and/or search
for a target company, the specific impact is not readily determinable as of the
balance sheet date.
Recent Accounting Pronouncements
We do not believe that any recently issued, but not yet effective, accounting
pronouncements, if currently adopted, would have a material impact on our
financial statements.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, we did not have any off-balance sheet
arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K.
JOBS Act
On April 5, 2012, the Jumpstart Our Business Startups Act of 2012 (the "JOBS
Act") was signed into law. The JOBS Act contains provisions that, among other
things, relax certain reporting requirements for qualifying public companies. We
qualify as an "emerging growth company" under the JOBS Act and are allowed to
comply with new or revised accounting pronouncements based on the effective date
for private (not publicly traded) companies. We
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elected to delay the adoption of new or revised accounting standards, and as a
result, we may not comply with new or revised accounting standards on the
relevant dates on which adoption of such standards is required for non-emerging
growth companies. As a result, our financial statements may not be comparable to
companies that comply with new or revised accounting pronouncements as of public
company effective dates.
As an "emerging growth company," we are not required to, among other things, (i)
provide an auditor's attestation report on our system of internal controls over
financial reporting, (ii) provide all of the compensation disclosure that may be
required of non-emerging growth public companies, (iii) comply with any
requirement that may be adopted by the Public Company Accounting Oversight Board
regarding mandatory audit firm rotation or a supplement to the auditor's report
providing additional information about the audit and the financial statements
(auditor discussion and analysis), and (iv) disclose comparisons of the CEO's
compensation to median employee compensation. These exemptions will apply for a
period of five (5) years following the completion of our Public Offering or
until we otherwise no longer qualify as an "emerging growth company."
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