References to the "Company," "us," "our" or "we" refer to Social Capital
Suvretta Holdings Corp. IV. The following discussion and analysis of our
financial condition and results of operations should be read in conjunction with
our audited financial statements and related notes included herein.
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with our audited financial
statements and the notes related thereto which are included in "Item 8.
Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.
Certain information contained in the discussion and analysis set forth below
includes forward-looking statements. Our actual results may differ materially
from those anticipated in these forward-looking statements as a result of many
factors, including those set forth under "Special Note Regarding Forward-Looking
Statements," "Item 1A. Risk Factors" and elsewhere in this Annual Report on Form
10-K.
Overview
We are a blank check company incorporated in the Cayman Islands on February 25,
2021, formed for the purpose of effecting a merger, share exchange, asset
acquisition, share purchase, reorganization or similar Business Combination. We
intend to effectuate our Business Combination using cash derived from the
proceeds of the Initial Public Offering and the sale of the private placement
shares, our shares, debt or a combination of cash, shares 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.
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Results of Operations
We have neither engaged in any operations nor generated any operating revenues
to date. All activity for the period from February 25, 2021 (inception) through
December 31, 2022 related to our formation, the Initial Public Offering,
described below, and subsequent to the 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, at
the earliest. 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 in connection with
searching for, and completing, a Business Combination.
For the year ended December 31, 2022, we had a net income of $2,737,404, which
consisted of interest earned on marketable securities held in the Trust Account
of $3,606,076, offset by operating and formation costs of $868,672.
For the period from February 25, 2021 (inception) through December 31, 2021, we
had a net loss of $536,606, which consisted of formation and operating costs of
$544,930, offset by interest earned on marketable securities held in the Trust
Account of $8,324.
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic and has
concluded that while it is reasonably possible that the pandemic could have a
negative effect on the Company's business, financial position, results of
operations and/or the search for a target company, the specific impact is not
readily determinable as of the date of these financial statements. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Liquidity, Capital Resources and Going Concern
On July 2, 2021, we consummated the Initial Public Offering of 25,000,000 public
shares, which includes the partial exercise by the underwriters of their
over-allotment option in the amount of 3,000,000 public shares, at $10.00 per
public share, generating gross proceeds of $250,000,000. Substantially
concurrent with the closing of the Initial Public Offering, we consummated the
sale of 640,000 private placement shares at a price of $10.00 per private
placement share in a private placement to the Sponsor generating gross proceeds
of $6,400,000.
Following the Initial Public Offering, the partial exercise of the
over-allotment option, and the sale of the private placement shares, a total of
$250,000,000 was placed in the Trust Account. We incurred $12,480,267 in Initial
Public Offering related costs, including $4,400,000 of underwriting fees,
$7,700,000 of deferred underwriting fees and $380,267 of other costs.
For the year ended December 31, 2022, cash used in operating activities was
$333,189. Net income of $2,737,404 was affected by interest earned on marketable
securities held in the Trust Account of $3,606,076. Changes in operating assets
and liabilities provided $535,483 of cash for operating activities.
For the period from February 25, 2021(inception) through December 31, 2021, cash
used in operating activities was $1,185,322. Net loss of $536,606 was affected
by interest earned on marketable securities held in the Trust Account of $8,324
and formation costs of $25,000 paid by the Sponsor in exchange for the issuance
of Founder Shares. Changes in operating assets and liabilities used $645,392 of
cash from operating activities.
As of December 31, 2022 and 2021, we had marketable securities held in the Trust
Account of $253,614,400 and $250,008,324, respectively. We intend to use
substantially all of the funds held in the Trust Account, including any amounts
representing interest earned on the Trust Account, excluding deferred
underwriting commissions, to complete our Business Combination. We may withdraw
interest from the Trust Account to pay taxes, if any. To the extent that our
share capital 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 December 31, 2022 and 2021, we had cash of $131,222 and $464,411,
respectively, held outside of 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, structure, negotiate and complete a
Business Combination.
The Company may need to raise additional capital through loans or additional
investments from its Sponsor, shareholders, officers, directors, or third
parties. The Company's officers, directors and Sponsor may, but are not
obligated to, loan the Company funds, from time to time or at any time, in
whatever amount they deem reasonable in their sole discretion, to meet the
Company's working capital needs. Accordingly, the Company may not be able to
obtain additional financing. If the Company is unable to raise additional
capital, it 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. The Company cannot provide any assurance that new financing will be
available to it on commercially acceptable terms, if at all.
In connection with the Company's assessment of going concern considerations in
accordance with Financial Accounting Standard Board's Accounting Standards
Update ("ASU") 2014-15, "Disclosures of Uncertainties about an Entity's Ability
to Continue as a Going Concern," the Company has until July 2, 2023 to
consummate a Business Combination, which date may be extended pursuant to its
Amended and Restated Memorandum and Articles of Association. It is uncertain
that the Company will be able to consummate a Business Combination by July 2,
2023. If a Business Combination is not consummated by this date and such date is
not extended pursuant to the Company's Amended and Restated Memorandum and
Articles of Association, there will be a mandatory liquidation and subsequent
dissolution of the Company. Management has determined that the liquidity
condition and the mandatory liquidation, should a Business Combination not occur
within the required time period, and potential subsequent dissolution raises
substantial doubt about the Company's ability to continue as a going concern,
which is considered to be one year from the issuance date of the financial
statements. No adjustments have been made to the carrying amounts of assets or
liabilities should the Company be required to liquidate after July 2, 2023.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered
off-balance sheet arrangements as of December 31, 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 an
affiliate of the Sponsor $10,000 per month for office space, administrative and
support services. We began incurring these fees on June 30, 2021 and will
continue to incur these fees monthly until the earlier of the completion of a
Business Combination and our liquidation.
The underwriters are entitled to a deferred underwriting commission of
$7,700,000 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 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 revenue and expenses
during the periods reported. Actual results could materially differ from those
estimates. We have identified the following critical accounting policies:
Class A Ordinary Shares Subject to Possible Redemption
We account for our Class A ordinary shares subject to possible conversion in
accordance with the guidance in ASC Topic 480 "Distinguishing Liabilities from
Equity." Ordinary shares subject to mandatory redemption are classified as a
liability instrument and measured at fair value. Conditionally redeemable
ordinary shares (including ordinary shares 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) are classified as
temporary equity. At all other times, ordinary shares are classified as
permanent deficit. Our Class A ordinary shares feature certain redemption rights
that are considered to be outside of our control and subject to occurrence of
uncertain future events. Accordingly, Class A ordinary shares subject to
possible redemption are presented at redemption value as temporary equity,
outside of the permanent deficit section of our balance sheets.
Net Income (Loss) per Ordinary Share
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.
We have two classes of shares, which are referred to as Class A ordinary shares
and Class B ordinary shares. Income and losses are shared pro rata between the
two classes of shares. Remeasurement associated with the redeemable Class A
ordinary shares is excluded from earnings per share as the redemption value
approximates fair value.
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
financial statements.
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SOCIAL CAPITAL SUVRETTA HOLDINGS CORP. IV 
