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").
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.
19
Table of Contents
As of September 30, 2021, we had an unrestricted balance of $113,902 as well as
cash and marketable securities held in the Trust Account of $500,023,181. 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 September 30, 2021, we had a net income of $321,123
related to $876,559 of general and administrative costs related to expenses as
we search for a Business Combination and $60,000 in management fees, offset by a
$1,250,000 gain related to the change in the fair value of the warrant
derivative liability, and $7,682 in earnings on the Trust Account assets.
For the nine months ended September 30, 2021, we had a net income of $10,268,480
related to $1,172,311 of general and administrative costs related to the
formation of the Company and on-going expenses as we search for a Business
Combination and $140,000 in management fees, and $942,390 in offering costs
expensed, offset by a $12,500,000 gain of related to the change in the fair
value of the warrant derivative liability and $23,181 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:
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. Although the Company's amended and restated certificate of
incorporation provides a minimum net tangible asset threshold of $5,000,001, the
Company has determined all of the 50,000,000 Public Shares should be included in
temporary equity, classified outside of permanent equity, regardless of the
minimum net tangible assets required by the Company's amended and restated
certificate of incorporation.
20
Table of Contents
Net Income per Common Share
Basic net 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. For the three
and nine months ending September 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 nine months ended September 30, 2021, the Company reported income available
to common shareholders of $0.01 and $0.16, respectively.
Recent Accounting Pronouncements
In August 2020, the Financial Accounting Standards Board ("FASB") issued
Accounting Standards Update ("ASU") 2020-06, Debt -Debt with Conversion and
Other Options (Subtopic 470-20) and Derivatives and Hedging -Contracts in
Entity' Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for
certain financial instruments. ASU 2020-06 eliminates the current models that
require separation of beneficial conversion and cash conversion features from
convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity's own equity. The
new standard also introduces additional disclosures for convertible debt and
freestanding instruments that are indexed to and settled in an entity's own
equity. ASU 2020-06 amends the diluted earnings per share guidance, including
the requirement to use the if-converted method for all convertible instruments.
ASU 2020-06 is effective January 1, 2022 and should be applied on a full or
modified retrospective basis, with early adoption permitted beginning on January
1, 2021. The Company is currently assessing the impact, if any, that ASU 2020-06
would have on its financial position, results of operations or cash flows.
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 September 30, 2021.
Contractual Obligations
As of September 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.
© Edgar Online, source Glimpses
LANDCADIA HOLDINGS IV, INC. 
