References in this quarterly report on Form 10-Q (the "Quarterly Report") to
"we," "us" or the "Company" refer to InterPrivate IV InfraTech Partners Inc.
References to our "management" or our "management team" refer to our officers
and directors, and references to the "Sponsor" refer to InterPrivate Acquisition
Management IV, LLC. The following discussion and analysis of the Company's
financial condition and results of operations should be read in conjunction with
the financial statements and the notes thereto contained elsewhere in this
Quarterly Report and the Annual 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 of 1933 and Section 21E of the Securities
Exchange Act of 1934, as amended (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 "expect,"
"believe," "anticipate," "intend," "estimate," "seek" 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
Annual Report. 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 formed under the laws of the State of Delaware on
September 10, 2020 for the purpose of effectuating a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or other similar
business combination with one or more businesses. We intend to effectuate our
Business Combination using cash from the proceeds of the Initial Public Offering
and the sale of the Private Placement Warrants, our capital stock, debt or a
combination of cash, stock 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 revenues to date.
Our only activities through September 30, 2022 were organizational activities,
those necessary to prepare for the Initial Public Offering, described below, 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 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.
The three months ended September 30, 2022 compared to the three months ended
September 30, 2021
For the three months ended September 30, 2022 and 2021, we had net income of
$372,142 versus a net income of $2,955,875, respectively, a change of
$2,583,733. This change was primarily driven by a slight increase in operating
costs of $20,971, offset by decrease in the fair market value of the warrant
liability of $3,757,298 due to fluctuations in the market, and an increase of in
the provision for income taxes of $302,636.
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Period-to-period changes in our results also include interest income on
marketable securities held in the Trust Account for the three months ended
September 30, 2022 of $1,439,899 compared to $33,546 for the three months ended
September 30, 2021. For the three months ended September 30, 2022 and 2021, we
had an unrealized gain (loss) on marketable securities held in the Trust Account
of $75,471 and $15,348, respectively.
The nine months ended September 30, 2022 compared to the nine months ended
September 30, 2021
For the nine months ended September 30, 2022 and 2021, we had net income of
$6,127,832 versus a net loss of $1,471,985, respectively, a change of
$7,599,817. This change was primarily driven by increases in operating costs of
$261,373 offset by the change in fair value of warrant liability of $5,998,726,
an increase in interest income and fair market value gains on marketable
securities of $1,967,554, and an increase of in the provision for income taxes
of $366,245.
Period-to-period changes in our results also include interest income on
marketable securities held in the Trust Account for the three months ended
September 30, 2022 of $1,981,199 of compared to $60,192 for the nine months
ended September 30, 2021. For the nine months ended September 30, 2022 and 2021,
we had an unrealized gain (loss) on marketable securities held in the Trust
Account of $27,419 and $19,128, respectively. In addition, during the nine
months ended September 30, 2021, the Company incurred offering costs of $261,155
related to the warrants issued.
Liquidity and Capital Resources
On March 9, 2021, we consummated the Initial Public Offering of 28,750,000
Units, which includes the full exercise by the underwriters of their
over-allotment option in the amount of 3,750,000 Units, at $10.00 per Unit,
generating gross proceeds of $287,500,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 5,000,000 Private
Placement Warrants at a price of $1.50 per Private Placement Warrant in a
private placement to the Sponsor, generating gross proceeds of $7,500,000.
Following the Initial Public Offering, the full exercise of the over-allotment
option, and the sale of the Private Placement Warrants, a total of $287,500,000
was placed in the Trust Account.
For the nine months ended September 30, 2022, cash used in operating activities
was $816,061. Net income of $6,127,832 was affected by a non-cash income related
to the change in warrant liability of $7,231,226, interest earned on marketable
securities held in the Trust Account of $1,981,199 and an unrealized gain on
marketable securities held in in the Trust Account of $27,419. Changes in
operating assets and liabilities provided $2,295,951 of cash for operating
activities.
As of September 30, 2022, we had marketable securities held in the Trust Account
of $289,148,349 (including $1,981,199 of interest income and $27,419 unrealized
gain on U.S. Treasury Bills with a maturity of 185 days or less). Interest
income on the balance in the Trust Account may be used by us to pay taxes.
Through September 30, 2022, we have withdrawn $439,427 from the Trust Account
related to payments for Delaware franchise and income taxes.
We intend to use substantially all of the funds held in the Trust Account,
including any amounts representing interest earned on the Trust Account (less
income taxes payable), to complete our Business Combination. To the extent that
our capital stock 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, we had cash of $79,522 held outside 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,
and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in
connection with a Business Combination, the Sponsor, or certain of our officers
and directors or their affiliates may, but are not obligated to, loan us funds
as may be required. If we complete a Business Combination, we would repay such
loaned amounts. In the event that a Business Combination does not close, we may
use a portion of the working capital held outside the Trust Account to repay
such loaned amounts but no proceeds from our Trust Account would be used for
such repayment. Up to $1,500,000 of such loans may be convertible into warrants
at a price of $1.50 per warrant, at the option of the lender. The warrants would
be identical to the Private Placement Warrants.
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Convertible Promissory Note - Related Party
On March 31, 2022, the Company entered into a convertible promissory note with
the Sponsor, pursuant to which the Company may borrow up to an aggregate
principal amount of $1,500,000 (the "Convertible Promissory Note"). The
Convertible Promissory Note is non-interest bearing and due on the earlier of
March 9, 2023 and the date on which the Company consummates its initial business
combination. If we complete a business combination, we would repay such
additional loaned amounts, without interest, upon consummation of the business
combination. In the event that a business combination does not close, we may use
a portion of the working capital held outside the Trust Account to repay such
additional loaned amounts but no proceeds from our Trust Account would be used
for such repayment. Up to $1,500,000 of such additional loans (if any) may be
convertible into warrants, at a price of $1.50 per warrant at the option of the
Sponsor. The warrants would be identical to the private placement warrants,
including as to exercise price, exercisability and exercise period. Except for
the foregoing, the terms of such additional loans (if any) have not been
determined and no written agreements exist with respect to such loans. If we
fully draw down on the Convertible Promissory Note and require additional funds
for working capital purposes, the Sponsor, an affiliate of the Sponsor, or our
officers and directors may, but are not obligated to, loan us such additional
funds as may be required. The issuance of the Convertible Promissory Note was
approved by our board of directors and our audit committee on March 31, 2022. As
of September 30, 2022 and December 31, 2021, $515,818 and $0, respectively, was
outstanding under the Convertible Promissory Note, which is included in related
party payable on the accompanying condensed balance sheets.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination,
the Sponsor or an affiliate of the Sponsor or certain of the Company's directors
and officers may, but are not obligated to, loan the Company funds as may be
required ("Working Capital Loans"). If the Company completes a Business
Combination, the Company would repay the Working Capital Loans out of the
proceeds of the Trust Account released to the Company. Otherwise, the Working
Capital Loans would be repaid only out of funds held outside the Trust Account.
In the event that a Business Combination does not close, the Company may use a
portion of proceeds held outside the Trust Account to repay the Working Capital
Loans, but no proceeds held in the Trust Account would be used to repay the
Working Capital Loans.
The Working Capital Loans would either be repaid upon consummation of a Business
Combination, without interest, or, at the lender's discretion, up to $1,500,000
of such Working Capital Loans may be convertible into warrants of the
post-Business Combination entity at a price of $1.50 per warrant. The warrants
would be identical to the Private Placement Warrants.
In addition, as the Company incurs operating expenses, these fees are paid by
InterPrivate LLC, and InterPrivate LLC is subsequently reimbursed by the Company
for the full amount paid. As of September 30, 2022 and December 31, 2021, the
Company had outstanding advances due to the Sponsor of $0 and $59,697,
respectively.
We will need to raise additional capital through loans or additional investments
from our initial stockholders, officers or directors. If we are unable to raise
additional capital, we 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. We cannot provide any assurance that new financing will be
available to us on commercially acceptable terms, if at all. These conditions
raise substantial doubt about our ability to continue as a going concern through
one year and one day from the issuance of this report.
Off-Balance Sheet Arrangements
We have no obligations, assets or liabilities that 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 the Sponsor
a monthly fee of $10,000 for office space, administrative and support services.
We began incurring these fees on March 4, 2021 and will continue to incur these
fees monthly until the earlier of the completion of the Business Combination and
our liquidation.
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We have entered into an agreement, pursuant to which we will pay the Vice
President a total of $10,000 per month for assisting us in negotiating and
consummating an initial Business Combination. Upon completion of the Business
Combination or the Company's liquidation, the agreement will terminate, and the
Company will cease paying these monthly fees.
The underwriters are entitled to a deferred fee of $0.35 per unit, or
$10,062,500 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 GAAP 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 income and
expenses during the periods reported. Actual results could materially differ
from those estimates. We have identified the following critical accounting
policies:
Warrant Classification
We account for warrants as either equity-classified or liability-classified
instruments based on an assessment of the warrant's specific terms and
applicable authoritative guidance in Financial Accounting Standards Board
("FASB") Accounting Standards Codification ("ASC") Topic 480, "Distinguishing
Liabilities from Equity" ("ASC 480") and ASC Topic 815, "Derivatives and
Hedging" ("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 the Company's own shares of common stock and whether the
warrant holders could potentially require "net cash settlement" in a
circumstance outside of the Company's 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
quarterly period end date while the warrants are outstanding. As of September
30, 2022 and December 31, 2021, both the Public Warrants and the Private
Placement Warrants were accounted for as liabilities.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in ASC 480. Common stock subject to mandatory redemption is
classified as a liability instrument and measured at fair value. Conditionally
redeemable common stock (including common stock that features 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, common stock is classified as
stockholders' equity. Our common stock features certain redemption rights that
are considered to be outside of our control and subject to the occurrence of
uncertain future events. Accordingly, common stock subject to possible
redemption is presented as temporary equity, outside of the stockholders' equity
section of our condensed balance sheets.
Net Income (Loss) Per Share of Common Stock
Net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of shares of common stock outstanding during the
period. Accretion associated with the redeemable shares of Class A common stock
is excluded from earnings per share as the redemption value approximates fair
value.
The Company's statement of operations includes a presentation of income (loss)
per share of common stock in a manner similar to the two-class method of income
(loss) per share.
Non-redeemable Class A common stock includes the Founder Shares and other shares
of Class A common stock that do not have redemption features.
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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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