References in this report (this "Quarterly Report") to "we," "us" or the
"Company" refer to Social Capital Suvretta Holdings Corp. IV. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to SCS Sponsor IV LLC. The following
discussion and analysis of the Company's financial condition and results of
operations should be read in conjunction with the condensed financial statements
and the notes thereto contained elsewhere in this Quarterly Report. Certain
information contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act and Section 21E of the Exchange Act that
are not historical facts and involve risks and uncertainties that could cause
actual results to differ materially from those expected and projected. All
statements, other than statements of historical fact included in this Quarterly
Report including, without limitation, statements in this "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding the Company's financial position, business strategy and the plans and
objectives of management for future operations, are forward-looking statements.
Words such as "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intends," "may," "might," "plan," "possible," "potential," "predict,"
"project," "seek," "should," "will," "would" and variations and similar words
and expressions are intended to identify such forward-looking statements. Such
forward-looking statements relate to future events or future performance, but
reflect management's current beliefs, based on information currently available.
A number of factors could cause actual events, performance or results to differ
materially from the events, performance and results discussed in the
forward-looking statements. For information identifying important factors that
could cause actual results to differ materially from those anticipated in the
forward-looking statements, please refer to the Risk Factors section of the
Company's Annual Report on Form 10-Kfiled with the SEC. The Company's securities
filings can be accessed on the EDGAR section of the SEC's website at
www.sec.gov. Except as expressly required by applicable securities law, the
Company disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future events
or otherwise.
Overview
We are a blank check company incorporated in the Cayman Islands on February 25,
2021, formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar Business Combination. We
intend to effectuate our Business Combination using cash derived from the
proceeds of the Initial Public Offering and the sale of the Private Placement
Shares, our shares, debt or a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our
acquisition plans. We cannot assure you that our plans to complete a Business
Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. All activity for the period from February 25, 2021 (inception) through
September 30, 2022 related to our formation, the Initial Public Offering,
described below, and, subsequent to the Initial Public Offering, identifying a
target company for a Business Combination. We do not expect to generate any
operating revenues until after the completion of our Business Combination, at
the earliest. We generate non-operating income in the form of interest income on
marketable securities held in the Trust Account. We incur expenses as a result
of being a public company (for legal, financial reporting, accounting and
auditing compliance), as well as for due diligence expenses in connection with
searching for, and completing, a Business Combination.
For the three months ended September 30, 2022, we had a net income of $922,565,
which consisted of interest earned on marketable securities held in the Trust
Account of $1,128,435, offset by operating and formation costs of $205,870.
For the nine months ended September 30, 2022, we had a net income of $827,445,
which consisted of interest earned on marketable securities held in the Trust
Account of $1,491,206, offset by operating and formation costs of $663,761.
For the three months ended September 30, 2021, we had a net loss of $250,898,
which consisted of formation and operating costs of $253,940, offset by interest
earned on marketable securities held in trust account of $3,042.
For the period from February 25, 2021 (inception) through September 30, 2021, we
had net loss of $256,223, which consisted of formation and operating costs of
$259,265, offset by interest earned on marketable securities held in trust
account of $3,042.
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 pandemic could have a
negative effect on the Company's business, financial position, results of
operations and/or the search for a target company, the specific impact is not
readily determinable as of the date of these condensed financial statements. The
condensed financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Liquidity, Capital Resources and Going Concern
On July 2, 2021, we consummated the Initial Public Offering of 25,000,000 Public
Shares, which includes the partial exercise by the underwriters of their
over-allotment option in the amount of 3,000,000 Public Shares, at $10.00 per
Public Share, generating gross proceeds of $250,000,000. Substantially
concurrently with the closing of the Initial Public Offering, we consummated the
sale of 640,000 Private Placement Shares at a price of $10.00 per Private
Placement Share in a private placement to the Sponsor, generating gross proceeds
of $6,400,000.
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Following the Initial Public Offering, the partial exercise of the
over-allotment option and the sale of the Private Placement Shares, a total of
$250,000,000 was placed in the Trust Account. We incurred $12,480,267 in Initial
Public Offering related costs, including $4,400,000 of underwriting fees,
$7,700,000 of deferred underwriting fees and $380,267 of other costs.
For the nine months ended September 30, 2022, cash used in operating activities
was $294,326. Net income of $827,445 was affected by interest earned on
marketable securities held in the Trust Account of $1,491,206. Changes in
operating assets and liabilities provided $369,435 of cash for operating
activities.
For the period from February 25, 2021 (inception) through September 30, 2021,
cash used in operating activities was $1,135,260. Net loss of $256,223 was
affected by interest earned on marketable securities held in trust account of
$3,042, offset by formation costs paid through issuance of Class B ordinary
shares to the Sponsor of $5,000. Changes in operating assets and liabilities
used $880,995 of cash for operating activities.
As of September 30, 2022 and December 31, 2021, we had marketable securities
held in the Trust Account of $251,499,530 and $250,008,324, respectively. We
intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account,
excluding deferred underwriting commissions, to complete our Business
Combination. We may withdraw interest from the Trust Account to pay taxes, if
any. To the extent that our share capital or debt is used, in whole or in part,
as consideration to complete our Business Combination, the remaining proceeds
held in the Trust Account will be used as working capital to finance the
operations of the target business or businesses, make other acquisitions and
pursue our growth strategies.
As of September 30, 2022 and December 31, 2021, we had cash of $170,085 and
$464,411, respectively, held outside of the Trust Account. We intend to use the
funds held outside the Trust Account primarily to identify and evaluate target
businesses, perform business due diligence on prospective target businesses,
travel to and from the offices, plants or similar locations of prospective
target businesses or their representatives or owners, review corporate documents
and material agreements of prospective target businesses, structure, negotiate
and complete a Business Combination.
The Company may need to raise additional capital through loans or additional
investments from its Sponsor, shareholders, officers, directors, or third
parties. The Company's officers, directors and Sponsor may, but are not
obligated to, loan the Company funds, from time to time or at any time, in
whatever amount they deem reasonable in their sole discretion, to meet the
Company's working capital needs. Accordingly, the Company may not be able to
obtain additional financing. If the Company is unable to raise additional
capital, it may be required to take additional measures to conserve liquidity,
which could include, but not necessarily be limited to, curtailing operations,
suspending the pursuit of a potential transaction, and reducing overhead
expenses. The Company cannot provide any assurance that new financing will be
available to it on commercially acceptable terms, if at all.
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's Accounting Standards
Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," the Company has until July 2, 2023 to
consummate a Business Combination, which date may be extended pursuant to its
Amended and Restated Memorandum and Articles of Association. It is uncertain
that the Company will be able to consummate a Business Combination by July 2,
2023. If a Business Combination is not consummated by this date and such date is
not extended pursuant to the Company's Amended and Restated Memorandum and
Articles of Association, there will be a mandatory liquidation and subsequent
dissolution of the Company. Management has determined that the liquidity
condition and the mandatory liquidation, should a Business Combination not occur
within the required time period, and potential subsequent dissolution raises
substantial doubt about the Company's ability to continue as a going concern,
which is considered to be one year from the issuance date of the condensed
financial statements. No adjustments have been made to the carrying amounts of
assets or liabilities should the Company be required to liquidate after July 2,
2023.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities which would be considered
off-balance sheet arrangements as of September 30, 2022. We do not participate
in transactions that create relationships with unconsolidated entities or
financial partnerships, often referred to as variable interest entities, which
would have been established for the purpose of facilitating off-balance sheet
arrangements. We have not entered into any- off-balance sheet financing
arrangements, established any special purpose entities, guaranteed any debt or
commitments of other entities, or purchased any non-financial assets.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities, other than an agreement to pay an
affiliate of the Sponsor $10,000 per month for office space, administrative and
support services. We began incurring these fees on June 30, 2021 and will
continue to incur these fees monthly until the earlier of the completion of a
Business Combination and our liquidation.
The underwriters are entitled to a deferred underwriting commission of
$7,700,000 in the aggregate. 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.
Critical Accounting Policies
The preparation of condensed 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 condensed financial statements, and revenue and
expenses during the periods reported. Actual results could materially differ
from those estimates. We have identified the following critical accounting
policies:
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Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible conversion in
accordance with the guidance in ASC Topic 480, "Distinguishing Liabilities from
Equity." Ordinary shares subject to mandatory redemption are classified as a
liability instrument and 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 our control) are classified as
temporary equity. At all other times, ordinary shares are classified as
shareholders' equity. Our Class A ordinary shares feature certain redemption
rights that are considered to be outside of our control and subject to
occurrence of uncertain future events. Accordingly, Class A ordinary shares
subject to possible redemption are presented at redemption value as temporary
equity, outside of the shareholders' deficit section of our condensed balance
sheets.
Net Income (Loss) per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net income (loss)
by the weighted average number of ordinary shares outstanding during the period.
We have two classes of shares, which are referred to as Class A ordinary shares
and Class B ordinary shares. Losses are shared pro rata between the two classes
of shares. Remeasurement associated with the redeemable Class A ordinary shares
is excluded from earnings per share as the redemption value approximates fair
value.
Recent Accounting Standards
Management does not believe that any 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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