THUNDER BRIDGE CAPITAL PARTNERS IV INC. References to the "Company," "us," "our" or "we" referThunder Bridge Capital Partners IV Inc. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited Condensed Consolidated financial statements and related notes included herein.
Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report including, without limitation, statements under this "Item 2. 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. When used in this Report, words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to us or the Company's management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of management, as well as assumptions made by, and information currently available to, the Company's management. Actual results could differ materially from those contemplated by the forward- looking statements as a result of certain factors detailed in our filings with theSEC . All subsequent written or oral forward-looking statements attributable to us or persons acting on the Company's behalf are qualified in their entirety by this paragraph. Overview
The Company is a blank check company incorporated as aDelaware corporation for the purpose of effecting a Business Combination with one or more businesses. The Company intends to effectuate its initial Business Combination using cash from the proceeds of the Initial Public Offering and the Private Placement, the proceeds of the sale of our securities in connection with our initial Business Combination, our shares, debt or a combination of cash, stock and debt.
The issuance of additional shares of Class A common stock in a Business Combination:
? may significantly dilute the equity interest of investors, which dilution would
increase if the anti-dilution provisions in the shares of Class B common stock
resulted in the issuance of shares of Class A common stock on a greater than
one-to-one basis upon conversion of the shares of Class B common stock;
? may subordinate the rights of holders of shares of common stock if preference
shares are issued with rights senior to those afforded our shares of common
stock;
? could cause a change of control if a substantial number of our shares of common
stock are issued, which may affect, among other things, our ability to use our
net operating loss carry forwards, if any, and could result in the resignation
or removal of our present officers and directors;
? may have the effect of delaying or preventing a change of control of us by
diluting the share ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our shares of Class A common
stock and/or warrants.
Similarly, if the Company issues debt securities, it could result in:
? default and foreclosure on our assets if our operating revenues after an
initial business combination are insufficient to repay our debt obligations;
? acceleration of our obligations to repay the indebtedness even if we make all
principal and interest payments when due if we breach certain covenants that
require the maintenance of certain financial ratios or reserves without a
waiver or renegotiation of that covenant;
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? the Company's immediate payment of all principal and accrued interest, if any,
if the debt security is payable on demand;
? the Company's inability to obtain necessary additional financing if the debt
security contains covenants restricting our ability to obtain such financing
while the debt security is outstanding;
? the Company's inability to pay dividends on our shares of common stock;
? using a substantial portion of the Company's cash flow to pay principal and
interest on the Company's debt, which will reduce the funds available for
dividends on the Company's shares of common stock if declared, expenses,
capital expenditures, acquisitions and other general corporate purposes;
? limitations on the Company's flexibility in planning for and reacting to
changes in the Company's business and in the industry in which the Company
operates;
? increased vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation; and
? limitations on the Company's ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements, execution of the
Company's strategy and other purposes and other disadvantages compared to the
Company's competitors who have less debt. Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception toMarch 31, 2022 were organizational activities, those necessary to prepare for the Initial Public Offering, and 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. We expect to generate non-operating income in the form of interest income on cash and marketable securities held after the Initial Public Offering. We expect that we will incur increased 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 completing a Business Combination. For the three months endedMarch 31, 2022 we had net income of$843,612 . The net income consisted of formation and operating costs of$250,162 , interest income of$23,830 and income from the change in fair value of our warrant liability of$1,069,944 . For the period fromJanuary 7, 2021 (inception) throughMarch 31, 2021 , we had a net loss of$29,750 which consists of formation costs and operating costs.
Liquidity and Capital Resources
OnJuly 2, 2021 , we consummated our Initial Public Offering in which we sold 22,500,000 Units, at$10.00 per Unit generating gross proceeds of$225,000,000 before underwriting fees and expenses. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 625,000 Private Placement Units at$10.00 per Private Placement Unit to our Sponsor, generating gross proceeds of$6,250,000 . OnAugust 9, 2021 , the underwriters partially exercised their over-allotment option, and the underwriters purchased 1,152,784 Over-Allotment Units at an offering price of$10.00 per unit, generating gross proceeds to the Company of$11,527,840 . Simultaneously with the sale of the Over-Allotment Units, the Company completed a private placement with the Sponsor for an additional 23,056 private placement units at a price of$10.00 per unit, generating gross proceeds of$230,560 . Transaction costs of the Initial Public Offering and the partial exercise of the overallotment option, amounted to$13,427,732 consisting of underwriting fees of$4,730,557 and deferred underwriting fees of$8,278,474 and$418,700 of other costs.$268,555 of the total underwriting costs were expensed in connection with the warrant liability and the balance was charged to equity. In connection with the underwriter's partial exercise of the over-allotment option and the expiration of the over-allotment option onAugust 9, 2021 , 555,554 shares of Class B common stock were forfeited for no consideration. As ofMarch 31, 2022 , we have available to us$402,094 of cash on our balance sheet and working capital of$470,177 . We will use these funds primarily to and evaluate target businesses, perform business, legal, and accounting 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 a Business Combination. The interest income earn on the investments in the Trust Account are unavailable to fund operating expenses. In order to finance transaction costs in connection with the Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company's officers and directors may, but are not obligated to, loan the Company funds as may be required under Working Capital Loans. If the Company completes the Business Combination, the Company would repay such loaned amounts. In the event that the Business Combination does not close, the Company may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from the trust account would be used for such repayment. Up to$1,500,000 of such loans may be convertible into Units at a price of$10.00 per Unit at the option of the lender. The units would be identical to the Private Placement Units issued to the Sponsor. The terms of such loans by the Company's officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. The Company does not expect to seek loans from parties other than the Sponsor or its directors or officers or their respective affiliates as it does not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in the Trust Account. OnMarch 25, 2022 , the Sponsor executed the Promissory Note, a Working Capital Loan in the form of a promissory note to loan funds to the Company up to$1,500,000 . No monies have been advanced under the Promissory Note. There were no borrowings under the Promissory Note atMarch 31, 2022 . 21
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements. 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 entered into any non-financial assets.
Contractual Obligations
At
The underwriter was paid a cash underwriting fee of 2% of gross proceeds of the Initial Public Offering, or$4,730,557 . In addition, the underwriter is entitled to aggregate deferred underwriting commissions of$8,278,474 consisting of 3.5% of the gross proceeds of the Initial Public Offering. The deferred underwriting commissions will become payable to the Underwriter from the amounts held in the Trust Account solely in the event that the Company completes an initial Business Combination, subject to the terms of the underwriting agreement by and between the Company andMorgan Stanley & Co. LLC .
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with GAAP requires the Company's 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. The Company has identified the following as its critical accounting policies:
Net Income (Loss) Per Share of Common Stock
The Company complies with accounting and disclosure requirements of ASC 260. We
have two classes of shares, which are referred to as "Class A common stock" and
"Class B common stock". Income and losses are shared pro rata between the two
classes of shares. Net income (loss) per share of common stock is computed by
dividing net income (loss) by the weighted average number of shares of common
stock outstanding during the period.
The calculation of diluted loss per share does not consider the effect of the
Public Warrants issued in connection with the Initial Public Offering and the
sale of the Private Placement Warrants, because the exercise of the warrants is
contingent upon the occurrence of future events.
The following table reflects the calculation of basic and diluted net loss per
share:
For the Period from
January 7, 2021
(Date of Inception)
For the Three Months Ended through
March 31, 2022 March 31, 2021
Class A Class B Class A Class B
Basic and diluted net loss per share
Numerator:
Allocation of net income (loss), as
adjusted $ 678,508 $ 165,104 $ - $ (29,750 )
Denominator:
Less: Income (loss) attributable to
Basic and diluted weighted average
shares of common stock outstanding (1) 24,300,840 5,913,196 - 5,625,000
Basic and diluted net income (loss) per
share $ 0.03 $ 0.03 $ - $ (0.01 ) (1) Excludes an aggregate of up to 843,750 shares that were subject to forfeiture
if the over-allotment is not exercised in full by the underwriter (see Note
8). On
for no consideration as a result of a partial exercise of the over-allotment
option (see Note 1).
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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.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date.
Shares of Common Stock Subject to Possible Redemption
The Company accounts for its shares of common stock subject to possible redemption in accordance with the guidance in ASC 480. Shares of common stock subject to mandatory redemption (if any) is classified as a liability instrument and is measured at fair value. Conditionally redeemable shares of common stock (including shares of common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of events not solely within the Company's control) is classified as temporary equity. At all other times, shares of common stock are classified as stockholders' equity. The Company's shares of common stock feature certain redemption rights that are considered to be outside of the Company's control and subject to occurrence of uncertain future events. Accordingly, atMarch 31, 2022 , shares of common stock subject to possible redemption is presented as temporary equity, outside of the stockholders' equity section of the Company's balance sheet.
Recent Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company's financial statements.
Factors That May Adversely Affect Our Results of Operations
Our results of operations and our ability to complete an initial business combination may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflict in theUkraine . We cannot at this time fully predict the likelihood of one or more of the above events, their duration or magnitude or the extent to which they may negatively impact our business and our ability to complete an initial Business Combination. 23
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