References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Northern Star Investment Corp. IV References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Northern Star IV Sponsor 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. 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, as amended (the "Securities Act")
and Section 21E of 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 Form
10-Q
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 Company's final prospectus for its Initial Public
Offering filed with the U.S. Securities and Exchange Commission (the "SEC"). 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
November 30, 2020, for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses (the "Business Combination"). We intend
to effectuate our Business Combination using cash from the proceeds of the
Initial Public Offering and the sale of the Private 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 raise capital or to
complete our initial 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 June 30, 2021 were organizational activities, those
necessary to prepare for the Initial Public Offering and, after our Initial
Public Offering, 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.
For the three months ended June 30, 2021, we had a net loss of $8,006,100, which
consisted of formation and operational costs of $165,823, change in fair value
of warrant liability of $7,847,167, and unrealized loss on marketable securities
held in Trust Account of $244, offset by interest earned on marketable
securities held in Trust Account of $7,134.
For the period from November 30, 2020 (inception) through June 30, 2021, we had
a net loss of $8,491,382, which consisted of formation and operational costs of
$278,217 and change in fair value of warrant liability of $7,847,167,
transaction costs allocated to warrant liabilities of $377,083, offset by
interest earned on marketable securities held in Trust Account of $11,085.
Liquidity and Capital Resources
On March 4, 2021, we consummated the Initial Public Offering of 40,000,000
Units, which included the partial exercise by the underwriter of the
over-allotment option in the amount of 5,000,000 Units, at $10.00 per Unit,
generating gross proceeds of $400,000,000. Simultaneously with the closing of
the Initial Public Offering, we consummated the sale of 9,750,000 Private
Warrants to the Sponsor at a price of $1.00 per warrant, generating gross
proceeds of $9,750,000.
Following the Initial Public Offering, the partial exercise of the
over-allotment option, and the sale of the Private Warrants, a total of
$400,000,000 was placed in the Trust Account. We incurred $22,531,113 in
transaction costs, including $8,000,000 of underwriting fees, $14,000,000 of
deferred underwriting fees and $531,113 of other costs.
For the period from November 30, 2020 (inception) through June 30, 2021, cash
used in operating activities was $145,260. Net loss of $8,491,382 was affected
by the change in fair value of warrant liability of $7,847,167, transaction
costs allocated to warrant liabilities of $377,083, and interest earned on
marketable securities held in Trust Account of $11,085. Changes in operating
assets and liabilities provided $132,957 of cash for operating activities.
As of June 30, 2021, we had marketable securities held in the Trust Account of
$400,011,085 (including $11,085 of interest income) consisting of 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 June 30, 2021, we have not
withdrawn any interest earned from the Trust Account.
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
deferred underwriting commissions and 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.

                                       15
--------------------------------------------------------------------------------
  Table of Contents
As of June 30, 2021, we had cash of $1,131,177. 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 our officers, directors
or their respective 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
identical to the Private Warrants, at a price of $1.00 per warrant at the option
of the lender.
We do not believe we will need to raise additional funds in order to meet the
expenditures required for operating our business. However, if our estimate of
the costs of identifying a target business, undertaking
in-depth
due diligence and negotiating a Business Combination are less than the actual
amount necessary to do so, we may have insufficient funds available to operate
our business prior to our Business Combination. Moreover, we may need to obtain
additional financing either to complete our Business Combination or because we
become obligated to redeem a significant number of our public shares upon
consummation of our Business Combination, in which case we may issue additional
securities or incur debt in connection with such Business Combination. Subject
to compliance with applicable securities laws, we would only complete such
financing simultaneously with the completion of our Business Combination. If we
are unable to complete our Business Combination because we do not have
sufficient funds available to us, we will be forced to cease operations and
liquidate the Trust Account. In addition, following our Business Combination, if
cash on hand is insufficient, we may need to obtain additional financing in
order to meet our obligations.
Off-Balance
Sheet Arrangements
We did not have any
off-balance
sheet arrangements as of June 30, 2021.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease
obligations or long-term liabilities.
The underwriter is entitled to a deferred fee of $0.35 per Unit, or $14,000,000
in the aggregate. The deferred fee will be forfeited by the underwriters solely
in the event that we fail to 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 accounting principles generally accepted in the United States of
America 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 Liabilities
We account for the Warrants in accordance with the guidance contained in ASC
815-40-15-7D
and 7F under which the Warrants do not meet the criteria for equity treatment
and must be recorded as liabilities. Accordingly, we classify the Warrants as
liabilities at their fair value and adjust the Warrants to fair value at each
reporting period. This liability is subject to
re-measurement
at each balance sheet date until exercised, and any change in fair value is
recognized in our statements of operations. The Private Placement Warrants and
the Public Warrants for periods where no observable traded price was available
are valued using a Monte Carlo simulation. For periods subsequent to the
detachment of the Public Warrants from the Units, the Public Warrant quoted
market price was used as the fair value as of each relevant date.
Common Stock Subject to Possible Redemption
We account for our common stock subject to possible conversion in accordance
with the guidance in Accounting Standards Codification ("ASC") Topic 480
"Distinguishing Liabilities from Equity." 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
occurrence of uncertain future events. Accordingly, common stock subject to
possible redemption is presented at redemption value as temporary equity,
outside of the stockholders' equity section of our condensed balance sheets.
Net Income (Loss) Per Common Share
We apply the
two-class
method in calculating earnings per share. Net income (loss) per common share,
basic and diluted for Class A common stock subject to possible redemption is
calculated by dividing the interest income earned on the Trust Account, net of
applicable taxes, if any, by the weighted average number of shares of Class A
common stock subject to possible redemption outstanding for the period. Net
income (loss) per common share, basic and diluted for and
non-redeemable
common stock is calculated by dividing net loss less income attributable to
Class A common stock subject to possible redemption, by the weighted average
number of shares of
non-redeemable
common stock outstanding for the period presented.

                                       16
--------------------------------------------------------------------------------
  Table of Contents
Recent Accounting Standards
In August 2020, the FASB issued ASU No.
2020-06, "Debt-Debt
with Conversion and Other Options (Subtopic
470-20)
and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic
815-40):
Accounting for Convertible Instruments and Contracts in an Entity's Own Equity"
("ASU
2020-06"),
which simplifies accounting for convertible instruments by removing major
separation models required under current GAAP. ASU
2020-06
removes certain settlement conditions that are required for equity contracts to
qualify for the derivative scope exception and it also simplifies the diluted
earnings per share calculation in certain areas. ASU
2020-06
is effective for fiscal years beginning after December 15, 2023, including
interim periods within those fiscal years, with early adoption permitted. 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 other recently issued, but not yet
effective, accounting standards, if currently adopted, would have a material
effect on our condensed financial statements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information
required to be disclosed by us in our Exchange Act reports is recorded,
processed, summarized, and reported within the time periods specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our principal executive officer and principal
financial officer or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
On April 12, 2021, the Acting Director of the Division of Corporation Finance
and Acting Chief Accountant of the SEC together issued a statement regarding the
accounting and reporting considerations for warrants issued by special purpose
acquisition companies entitled "Staff Statement on Accounting and Reporting
Considerations for Warrants Issued by Special Purpose Acquisition Companies
("SPACs")" (the "SEC Statement"). Specifically, the SEC Statement focused on
certain settlement terms and provisions related to certain tender offers
following a business combination, which terms are similar to those contained in
the warrant agreement governing our warrants. As a result of the SEC Statement,
we reevaluated the accounting treatment of our Public Warrants and our Private
Placement Warrants and determined to classify the warrants as derivative
liabilities measured at fair value, with changes in fair value each period
reported in earnings. Further, on June 4, 2021, the Company corrected certain
line items related to the previously audited balance sheet as of March 4, 2021
in the Form
8-K
filed with the SEC on March 10, 2021 related to misstatements identified in
improperly applying accounting guidance on certain warrants, recognizing them as
components of equity instead of a derivative liability.
Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of
the fiscal quarter ended June 30, 2021, as such term is defined in
Rules 13a-15(e) and
15d-15(e) under
the Exchange Act. Based on this evaluation, our Chief Executive Officer and
Chief Financial Officer have concluded that during the period covered by this
report, our disclosure controls and procedures were not effective, due solely to
the material weakness in our internal control over financial reporting described
above. In light of this material weakness, we performed additional analysis as
deemed necessary to ensure that our financial statements were prepared in
accordance with U.S. generally accepted accounting principles.
Notwithstanding the material weakness, management has concluded that the
financial statements included elsewhere in this Quarterly Report present fairly,
in all material respects, our financial position, results of operations and cash
flows in conformity with GAAP.
Changes in Internal Control over Financial Reporting
Other than as described below, there was no change in our internal control over
financial reporting that occurred during the fiscal quarter of 2021 covered by
this Quarterly Report on
Form 10-Q
that has materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting. In light of the material weakness, we
plan to enhance our processes to identify and appropriately apply applicable
accounting requirements to better evaluate and understand the nuances of the
complex accounting standards that apply to our financial statements. Our plans
at this time include providing enhanced access to accounting literature,
research materials and documents and increased communication among our personnel
and third-party professionals with whom we consult regarding complex accounting
applications. The elements of our remediation plan can only be accomplished over
time, and we can offer no assurance that these initiatives will ultimately have
the intended effects.

© Edgar Online, source Glimpses