THUNDER BRIDGE CAPITAL PARTNERS IV INC. Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical fact included in this Report including, without limitation, statements in this section regarding our 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 our management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our 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 our behalf are qualified in their entirety by this paragraph. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Report. Overview We are a blank check company incorporated as aDelaware corporation and formed for the purpose of effecting a business combination. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the private placement of the placement units, the proceeds of the sale of our securities in connection with our initial business combination (pursuant to backstop agreements we may enter into), our shares, debt or a combination of cash, stock and debt.
The issuance of additional shares in connection with an initial business combination to the owners of the target or other investors:
? may significantly dilute the equity interest of our common stockholders, which
dilution would increase if the anti-dilution provisions in the Class B common
stock resulted in the issuance of shares of our Class A common stock on a
greater than one-to-one basis upon conversion of the Class B common stock;
? may subordinate the rights of holders of our common stock if preferred stock is
issued with rights senior to those afforded our common stock;
? could cause a change in control if a substantial number of shares of our common
stock is 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 stock ownership or voting rights of a person seeking to obtain
control of us; and
? may adversely affect prevailing market prices for our units, Class A common
stock and/or warrants.
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Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, 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;
? our immediate payment of all principal and accrued interest, if any, if
the debt security is payable on demand;
? our 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;
? our inability to pay dividends on our common stock;
? using a substantial portion of our cash flow to pay principal and
interest on our debt, which will reduce the funds available for
dividends on our common stock if declared, our ability to payexpenses,
make capital expenditures and acquisitions, and fund other general
corporate purposes;
? limitations on our flexibility in planning for and reacting to changes
in our business and in the industry in which we operate;
? increased vulnerability to adverse changes in general economic,
industry and competitive conditions and adverse changes in
government
regulation;
? limitations on our ability to borrow additional amounts for expenses,
capital expenditures, acquisitions, debt service requirements, and
execution of our strategy; and
? other purposes and other disadvantages compared to our competitors who
have less debt.
As indicated in the financial statements and the notes thereto contained
elsewhere in this Report, we had $32,022 held outside the trust account that is
available to us to fund our working capital requirements and $239,770,045 held
inside the trust account as of December 31, 2022 .
On March 22, 2022 , we entered into the Coincheck Business Combination Agreement.
If the Coincheck Business Combination Agreement is approved by our stockholders,
and the Coincheck Business Combination is consummated, (1) Coincheck
equityholders will conduct a share exchange pursuant to which they will receive
shares of PubCo and Coincheck will become a wholly owned subsidiary of PubCo and
(2) we will merge with and into a wholly owned subsidiary of PubCo , with our
Company continuing as the surviving corporation and a wholly owned subsidiary of
PubCo , with our stockholders and warrantholders receiving identical numbers of
securities of PubCo .
For a full description of the Coincheck Merger Agreement and the proposed Coincheck Business Combination, please see "Item 1. Business."
Results of Operations For the years endedDecember 31, 2022 and 2021, we had net income of$3,758,497 and a loss from operations of$2,545,069 , and had a net loss of$165,906 and a loss from operations of$905,815 , respectively. For the year endedDecember 31, 2022 , we had a provision for income tax of$308,439 . Our entire activity from inception toJuly 2, 2021 was in preparation for our initial public offering. Since the consummation of our initial public offering throughDecember 31, 2022 , our activity has been limited to the evaluation of potential initial business combination candidates, and we will not be generating any operating revenues until the closing and completion of our initial business combination. We are incurring 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. 24
Liquidity, Capital Resources and Going Concern
Prior to the consummation of our initial public offering, our only sources of liquidity were an initial purchase of founder shares for$25,000 by the sponsor, and a total of$105,000 of loans and advances by the sponsor. OnJuly 2, 2021 , we consummated our initial public offering in which we sold 22,500,000 units at a price of$10.00 per unit generating gross proceeds of$225,000,000 before underwriting fees and expenses. Simultaneously with the consummation of our initial public offering, we consummated the private placement of 625,000 placement units, generating gross proceeds, before expenses, of$6,250,000 . Each placement unit consists of one share of Class A common stock and one fifth of one redeemable warrant. Each whole warrant entitles the holder to purchase one share of Class A common stock at an exercise price of$11.50 per whole share. OnAugust 9, 2021 , the underwriters exercised the over-allotment option in part and purchased an additional 1,152,784 units, generating gross proceeds of$11,527,840 and consummated a sale of an additional 23,055 placement units to the sponsor at a price of$10.00 per unit, generating gross proceeds of$230,550 . Following the closing, an additional$11,527,840 of proceeds was placed in the trust account. In connection with the partial exercise of the over-allotment option and the expiration of the over-allotment option, 555,554 shares of Class B common stock were forfeited for no consideration. In connection with our initial public offering and the exercise of the over-allotment option, we incurred offering costs of$12,793,700 (including an underwriting fee of$4,730,557 and deferred underwriting commissions of$8,278,474 ). Other incurred offering costs consisted principally of formation and preparation fees related to our initial public offering. A total of$236,527,840 , comprised of$231,797,283 of the proceeds from the initial public offering and the underwriters exercise of the over-allotment option and$4,730,557 of the proceeds of the private placement, was placed in the trust account, established for the benefit of our public stockholders. Prior to the closing of our initial public offering, the sponsor had made$100,000 in loans and advances to us. The loans and advances were non-interest bearing and payable on the earlier ofDecember 31, 2021 or the completion of our initial public offering. The loans of$105,000 were fully repaid upon the consummation of our initial public offering onJuly 2, 2021 . OnMarch 25, 2022 , the sponsor executed the Promissory Note, representing a Working Capital Loan from the sponsor to us of up to$1,500,000 . AtDecember 31, 2022 there was$206,000 outstanding under the Promissory Note.$1,294,000 remains available under the Note to finance transaction costs in connection with the initial business combination.
As of
Our liquidity needs to date have been satisfied through a contribution of$25,000 from the sponsor to cover certain expenses in exchange for the issuance of the founder shares, an advance from an affiliate of the sponsor of the payment of certain formation and operating costs on behalf of the Company and the proceeds from the consummation of the private placement not held in the trust account. In addition, as ofDecember 31, 2022 and 2021, there were$206,000 and$0 amounts outstanding under the Working Capital Loan. In connection with our assessment of going concern considerations in accordance with FASB ASC Topic 205-40, "Presentation of Financial Statements - Going Concern" ("ASC 205-40"), we have evaluated our liquidity and financial condition and determined that it is probable we will not be able to meet our obligations over the period of one year from the issuance date of the financial statements contained elsewhere in this Report. In addition, while our plans to seek additional funding or to consummate an initial business combination, there is no guarantee we will be able to borrow such funds from our sponsor, an affiliate of the sponsor, or certain of our officers and directors in order to meet our obligations through the earlier of the consummation of an initial business combination or one year from this filing. We have determined that the uncertainty surrounding our liquidity condition raises substantial doubt about our ability to continue as a going concern. The financial statements contained elsewhere in this Report do not include any adjustments that might result from the outcome of this uncertainty. 25 Contractual Obligations
At
The underwriters were paid a cash underwriting fee of 2% of gross proceeds of the initial public offering and the over-allotment option, or$4,730,557 . In addition, the underwriters are 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 underwriters from the amounts held in the trust account solely in the event that we complete an initial business combination, subject to the terms of the underwriting agreement by and among us andMorgan Stanley & Co. LLC .
Critical Accounting Policies
The preparation of financial statements and related disclosures in conformity with GAAP requires our 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 as its critical accounting policies:
Liquidity and Going Concern Consideration
In connection with our assessment of going concern considerations in accordance with ASC 205-40, we have untilJuly 2, 2023 to consummate a business combination. It is uncertain that we will be able to consummate a business combination by this time. If we do not complete our business combination byJuly 2, 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 business days thereafter, redeem 100% of the common stock sold as part of the units in the IPO, 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 franchise and income taxes payable and less up to$100,000 of such net interest which may be distributed to us to pay dissolution expenses), 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 liquidation 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 the board of directors, dissolve and liquidate, subject in each case to our obligations under the DGCL to provide for claims of creditors and the requirements of other applicable law. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including trust account assets) will be less than the initial public offering price per unit in the IPO. In addition, if we fail to complete our business combination byJuly 2, 2023 , there will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless. Management has determined that the liquidity condition and mandatory liquidation, should a business combination not occur, and potential subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate afterJuly 2, 2023 . The amount of time remaining to finalize a business combination does raise substantial doubt in the Company as a going concern. In addition, atDecember 31, 2022 andDecember 31, 2021 , we had current liabilities of$2,110,888 and$212,900 , respectively, and working capital (deficit) of ($1,957,649 ) and$720,328 , respectively. These amounts include accrued expenses owed to professionals, consultants, advisors and others who are working on seeking a business combination. Such work is continuing afterDecember 31, 2022 and amounts are continuing to accrue. In order to finance ongoing operating costs, the sponsor or an affiliate of the sponsor may provide us with additional working capital via a Working Capital Loan. Emerging Growth Company We are an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and we 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 auditor attestation requirements of Section 404 of 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 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. We have 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, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
Net Income (Loss) Per Share of Common Stock
We comply with accounting and disclosure requirements of FASB ASC Topic 260,
"Earnings Per Share". 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 ordinary share is
computed by dividing net income (loss) by the weighted average number of
ordinary shares outstanding during the period.
The calculation of diluted income (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 placement warrants, because the exercise of the warrants is
contingent upon the occurrence of future events.
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The following table reflects the calculation of basic and diluted net income
(loss) per share:
For the Period from
January 7, 2021 (Date of
For the Year Ended Inception) through
December 31, December 31,
2022 2021
Class A Class B Class A Class B (1)
Basic and diluted net income (loss) per
share
Numerator:
Allocation of net income (loss), as
adjusted $ 3,022921 $ 735,576 $ (113,000 ) $ (52,906 )
Less: Accretion allocated based on
ownership percentage (2,309,134 ) (561,889 ) (5,349 ) (2,505 )
Plus: Accretion applicable to Class A
redeemable shares 2,871,023 - 7,854
Income (loss) by class $ 3,584,810 $ 173,687 $ (110,495 ) $ (55,411 )
Denominator:
Basic and diluted weighted average
common stock outstanding 24,300,840 5,913,196 12,262,874 5,741,402
Basic and diluted net income (loss) per
share $ 0.15 $ 0.03 $ (0.01 ) $ (0.01 ) Fair Value of Financial Instruments
The fair value of our assets and liabilities, which qualify as financial instruments under FASB ASC Topic 820, "Fair Value Measurements and Disclosures," approximates the carrying amounts represented in the balance sheet primarily due to their short term nature. Offering Cost Offering costs consist of legal, accounting, underwriting fees and other costs incurred through the balance sheet date that are directly related to our initial public offering. Offering costs amounting to$13,427,731 were charged to stockholders' equity upon the completion of our initial public offering. Income Taxes We account for income taxes under FASB ASC Topic 740, Income Taxes ("ASC 740"). ASC 740 requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statement and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position 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. We recognize accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits as ofDecember 31, 2022 and 2021. We are currently not aware of any issues under review that could result in significant payments, accruals or material deviation from our position.
The Company has identified
Shares Subject to Possible Redemption
We account for our shares subject to possible redemption in accordance with the guidance in FASB ASC Topic 480 "Distinguishing Liabilities from Equity." Shares 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 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) is classified as temporary equity. At all other times, shares are classified as stockholders' equity. Our shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, atDecember 31, 2022 and 2021, shares subject to possible redemption are presented as temporary equity, outside of the stockholders' equity section
of
our balance sheets.
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Derivative Financial Instruments
The Company accounts for derivative financial instruments in accordance with FASB ASC Topic 815, "Derivatives and Hedging." For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value upon issuance and remeasured at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative financial instruments is evaluated at the end of each reporting period. Warrants We account for the public warrants and placement warrants as liability-classified instruments based on an assessment of the warrant's specific terms and applicable authoritative guidance in ASC 480 and ASC 815. The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to our own common stock and whether the warrant holders could potentially require "net cash settlement" in a circumstance outside of our control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent reporting period while the warrants are outstanding. Because we do not control the occurrence of events, such as a tender offer or exchange, that may trigger cash settlement of the warrants where not all of the stockholders also receive cash, the warrants do not meet the criteria for equity treatment thereunder, as such, the warrants must be recorded as derivative liability. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations.
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 inUkraine . 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.
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