The following discussion and analysis of the Company's financial condition and
results of operations of Landcadia Holdings IV, Inc. (the "Company") should be
read in conjunction with the financial statements and the notes thereto
contained elsewhere in this report (the "Quarterly Report"). Certain information
contained in the discussion and analysis set forth below includes
forward-looking statements that involve risks and uncertainties.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report includes forward-looking statements. These forward-looking
statements are based on our current expectations and beliefs concerning future
developments and their potential effects on us. There can be no assurance that
future developments affecting us will be those that we have anticipated. These
forward-looking statements involve a number of risks, uncertainties (some of
which are beyond our control) or other assumptions that may cause actual results
or performance to be materially different from those expressed or implied by
these forward-looking statements. Our forward-looking statements include, but
are not limited to, statements regarding our or our management team's
expectations, hopes, beliefs, intentions or strategies regarding the future. In
addition, any statements that refer to projections, forecasts or other
characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. For example, statements made
relating to future business combinations, use of proceeds of past securities
offerings, future loans and conversions of warrants are forward-looking
statements. The words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intends," "may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking. Factors that might cause or contribute to such
forward-looking statements include, but are not limited to, those set forth in
the Risk Factors section of the Company's final prospectus for its initial
public offering of units (the "Public Offering") filed with the U.S. Securities
and Exchange Commission. The following discussion should be read in conjunction
with our financial statements and related notes thereto included elsewhere in
this Quarterly Report.
Overview
We are a blank check company incorporated as a Delaware corporation 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 ("Business Combination"). Business Combination. We
consummated the Public Offering on March 29, 2021. We intend to use the cash
proceeds from our public offering and the private placement of warrants
described below as well as additional issuances, if any, of our capital stock,
debt or a combination of cash, stock and debt to complete the Business
Combination.
We expect to incur significant costs in the pursuit of our acquisition plans.
There can be no assurance that our plans to raise capital or to complete our
initial Business Combination will be successful.
The Company's management team is led by Tilman Fertitta, our Co-Chairman and
Chief Executive Officer, and Richard Handler, our Co-Chairman and President. Mr.
Fertitta is the sole shareholder of TJF, LLC ("TJF") and Mr. Handler is the
Chief Executive Officer of Jefferies Financial Group Inc. ("JFG"), and its
largest operating subsidiary, Jefferies Group LLC, a global investment banking
firm. The Company's sponsors are TJF and JFG (collectively, the "Sponsors").
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Liquidity and Capital Resources
On March 29, 2021 we consummated a $500,000,000 public offering consisting of
50,000,000 units at a price of $10.00 per unit ("Units"). Each Unit consists of
one share of the Company's Class A common stock, $0.0001 par value (the "Class A
common stock") and one-fourth of one redeemable warrant (each, a "Public
Warrant"). Simultaneously, with the closing of the Public Offering, we
consummated the $12,500,000 private placement ("Private Placement") of an
aggregate of 8,333,333 private placement warrants ("Sponsor Warrants") at a
price of $1.50 per warrant. Upon closing of the Public Offering and Private
Placement on March 29, 2021, $500,000,000 in proceeds (including $17,500,000 of
deferred underwriting commissions) from the public offering and private
placement was placed in a U.S.-based trust account maintained by Continental
Stock Transfer & Trust Company, acting as trustee. The remaining $12,500,000
held outside of trust was used to pay underwriting commissions of $10,000,000,
loans to our Sponsors, and deferred offering and formation costs, and for
working capital.
As of June 30, 2021, we had an unrestricted balance of $223,129 as well as cash
and marketable securities held in the Trust Account of $500,015,499. Our working
capital needs will be satisfied through the funds, held outside of the Trust
Account, from the public offering. Interest on funds held in the Trust Account
may be used to pay income taxes and franchise taxes, if any. Further, our
Sponsors have agreed to loan us up to $1,500,000, as may be required for ongoing
business expenses and the Business Combination. The Sponsors will each have the
option to convert any amounts outstanding under their respective convertible
notes into warrants at a price of $1.50 per warrant and would be identical to
the Sponsor Warrants.
Results of Operations
We have neither engaged in any significant business operations nor generated any
revenues to date. All activities to date relate to the Company's formation and
its Public Offering and search for a suitable Business Combination. We generate
non-operating income in the form of interest income on cash, cash equivalents,
and marketable securities held in the Trust Account. 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 for due diligence
expenses as we locate a suitable Business Combination.
For the three months ended June 30, 2021, we had a net income of $10,900,924
related to $282,542 of general and administrative costs related to the formation
of the Company and on-going expenses as we search for a Business Combination and
$60,000 in management fees, offset by a gain of $10,916,667 in the change in the
fair value of the warrant derivative liability, a reduction of $311,300 in
offering costs expensed and $15,499 in earnings on the Trust Account assets.
For the six months ended June 30, 2021, we had a net income of $9,947,357
related to $295,752 of general and administrative costs related to the formation
of the Company and on-going expenses as we search for a Business Combination and
$80,000 in management fees, and $942,390 in offering costs expensed, offset by a
gain of $11,250,000 in the change in the fair value of the warrant derivative
liability and $15,499 in earnings on the Trust Account assets.
Critical Accounting Policies
The preparation of financial statements in accordance with GAAP requires
management to make estimates and assumptions that affect the amounts reported in
the unaudited financial statements and accompanying notes. Actual results could
differ from those estimates. The Company has identified the following as its
critical accounting policies:
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Warrant Derivative Liability
In accordance with FASB ASC 815-40, Derivatives and Hedging: Contracts in an
Entities Own Equity, entities must consider whether to classify contracts that
may be settled in its own stock, such as warrants, as equity of the entity or as
an asset or liability. If an event that is not within the entity's control could
require net cash settlement, then the contract should be classified as an asset
or a liability rather than as equity. We have determined because the terms of
Public Warrants include a provision that entitles all warrantholders to cash for
their warrants in the event of a qualifying cash tender offer, while only
certain of the holders of the underlying shares of common stock would be
entitled to cash, our warrants should be classified as derivative liability
measured at fair value, with changes in fair value each period reported in
earnings. Further if our Sponsor Warrants are held by someone other than initial
purchasers of the Sponsor Warrants or their permitted transferees, the Sponsor
Warrants will be redeemable by the Company and exercisable by such holders on
the same basis as the Public Warrants. Because the terms of the Sponsor Warrants
and Public Warrants are so similar, we classified both types of warrants as a
derivative liability measured at fair value. Volatility in our Class A common
stock and Public Warrants may result in significant changes in the value of the
derivatives and resulting gains and losses on our statement of operations.
Redeemable Shares
All of the 50,000,000 Public Shares sold as part of the Public Offering contain
a redemption feature as described in the final prospectus filed by the Company
with the SEC on March 26, 2021 (the "Prospectus"). In accordance with FASB ASC
480, "Distinguishing Liabilities from Equity", redemption provisions not solely
within the control of the Company require the security to be classified outside
of permanent equity. The Company's amended and restated certificate of
incorporation provides a minimum net tangible asset threshold of $5,000,001. The
Company recognizes changes in redemption value immediately as they occur and
will adjust the carrying value of the security to equal the redemption value at
the end of each reporting period. Increases or decreases in the carrying amount
of redeemable shares will be affected by charges against additional paid-in
capital. At June 30, 2021, there were 50,000,000 Public Shares, of which
45,676,740 were recorded as redeemable shares, classified outside of permanent
equity, and 4,323,260 were classified as Class A common stock.
Income per Common Share
Basic income per common share is computed by dividing net income applicable to
common stockholders by the weighted average number of common shares outstanding
during the period. All shares of Class B common stock are assumed to convert to
shares of Class A common stock on a one-for-one basis. Consistent with FASB ASC
480, shares of Class A common stock subject to possible redemption, as well as
their pro rata share of undistributed trust earnings consistent with the
two-class method, have been excluded from the calculation of income per common
share for the three and six months ended June 30, 2021. Such shares, if
redeemed, only participate in their pro rata share of trust earnings. Diluted
income per share includes the incremental number of shares of common stock to be
issued in connection with the conversion of Class B common stock or to settle
warrants, as calculated using the treasury stock method. For the three and six
months ending June 30, 2021, the Company did not have any dilutive warrants,
securities or other contracts that could, potentially, be exercised or converted
into common stock. As a result, diluted income per common share is the same as
basic income per common share for all periods presented. For the three and six
months ended June 30, 2021, the Company reported income available to common
shareholders of $0.62 and $0.62, respectively.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective,
accounting standards, if currently adopted, would have a material effect on the
accompanying financial statements.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2021.
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Contractual Obligations
As of June 30, 2021, we did not have any long-term debt, capital or operating
lease obligations.
The Company entered into an administrative services agreement in which we will
pay Fertitta Entertainment, Inc., (an affiliate of TJF) for office space,
secretarial and administrative services provided to members of our management
team, in an amount not to exceed $20,000 per month commencing on the date of
effectiveness of the Public Offering and ending on the earlier of the completion
of a Business Combination or liquidation.
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