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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM         TO        

Commission File Number: 001-39189

 

GORES HOLDINGS IV, INC.

(Exact name of registrant as specified in its Charter)

 

 

Delaware

 

84-2124167

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

9800 Wilshire Blvd.

 

 

Beverly Hills, CA

 

90212

(Address of principal executive offices)

 

(Zip Code)

 

(310) 209-3010

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbols

 

Name of each exchange on which registered

Class A Common Stock

 

GHIV

 

Nasdaq Capital Market

Warrants

 

GHIVW

 

Nasdaq Capital Market

Units

 

GHIVU

 

Nasdaq Capital Market

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  NO 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  NO 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definition of “large accelerated filer”, “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

 

Large accelerated filer

 

Accelerated filer

Non-accelerated filer

 

Smaller reporting company

Emerging growth company

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). YES  NO 

As of November 5, 2020, there were 42,500,000 shares of the Company’s Class A common stock, par value $0.0001 per share, and 10,625,000 shares of the Company’s Class F common stock, par value $0.0001 per share, issued and outstanding.

 

 


 

TABLE OF CONTENTS

 

 

Page

PART I—FINANCIAL INFORMATION

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

Balance Sheets (Unaudited)

3

 

 

Statements of Operations (Unaudited)

4

 

 

Statements of Changes in Stockholders’ Equity (Unaudited)

5

 

 

Statements of Cash Flows (Unaudited)

6

 

 

Notes to Interim Financial Statements (Unaudited)

7

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

23

 

 

 

Item 4.

Controls and Procedures

24

 

 

PART II—OTHER INFORMATION

25

 

 

 

Item 1.

Legal Proceedings

25

 

 

 

Item 1A.

Risk Factors

25

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

25

 

 

 

Item 3.

Defaults Upon Senior Securities

26

 

 

 

Item 4.

Mine Safety Disclosures

26

 

 

 

Item 5.

Other Information

26

 

 

 

Item 6.

Exhibits

27

 

 

2


GORES HOLDINGS IV, INC.

BALANCE SHEETS

 

 

 

September 30, 2020

 

 

December 31, 2019

 

 

 

(unaudited)

 

 

(audited)

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

 

222,372

 

 

$

 

1,120

 

Deferred offering costs

 

 

 

 

 

 

 

411,374

 

Prepaid assets

 

 

 

250,861

 

 

 

 

 

Total current assets

 

 

 

473,233

 

 

 

 

412,494

 

Investments and cash held in Trust Account

 

 

 

425,323,144

 

 

 

 

 

Total assets

 

$

 

425,796,377

 

 

$

 

412,494

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

Accrued expenses, formation and offering costs

 

$

 

3,237,605

 

 

$

 

274,666

 

State franchise tax accrual

 

 

 

150,000

 

 

 

 

1,830

 

Income tax payable

 

 

 

114,395

 

 

 

 

 

Notes payable – related party

 

 

 

1,000,000

 

 

 

 

150,000

 

Total current liabilities

 

 

 

4,502,000

 

 

 

 

426,496

 

Deferred underwriting compensation

 

 

 

14,875,000

 

 

 

 

 

Total liabilities

 

$

 

19,377,000

 

 

$

 

426,496

 

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies:

 

 

 

 

 

 

 

 

 

 

Class A subject to possible redemption, 40,141,937 and -0- shares at September 30, 2020 and December 31, 2019, respectively (at redemption value of $10 per share)

 

 

 

401,419,370

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 1,000,000 shares authorized, none issued or outstanding

 

 

 

 

 

 

 

 

Common stock

 

 

 

 

 

 

 

 

 

 

Class A common stock, $0.0001 par value; 200,000,000 shares authorized, 2,358,063 and -0- shares issued and outstanding (excluding 40,141,937 and -0- shares subject to possible redemption) at September 30, 2020 and December 31, 2019, respectively

 

 

 

236

 

 

 

 

 

Class F common stock, $0.0001 par value; 20,000,000 shares authorized, 10,625,000 and 11,500,000 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

 

 

 

1,063

 

 

 

 

1,150

 

Additional paid-in-capital

 

 

 

9,918,588

 

 

 

 

23,850

 

Accumulated deficit

 

 

 

(4,919,880

)

 

 

 

(39,002

)

 

 

 

 

 

 

 

 

 

 

 

Total stockholders’ equity

 

 

 

5,000,007

 

 

 

 

(14,002

)

 

 

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

 

425,796,377

 

 

$

 

412,494

 

 

See accompanying notes to the unaudited, interim financial statements.

3


GORES HOLDINGS IV, INC.

STATEMENTS OF OPERATIONS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Period from

 

 

 

Three

 

 

Three

 

 

Nine

 

 

June 12, 2019

 

 

 

Months Ended

 

 

Months Ended

 

 

Months Ended

 

 

(inception) through

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

September 30, 2020

 

 

September 30, 2019

 

Professional fees and other expenses

 

 

 

(5,338,410

)

 

 

 

(20,514

)

 

 

 

(5,709,435

)

 

 

 

(20,514

)

State franchise taxes, other than income tax

 

 

 

(50,000

)

 

 

 

(717

)

 

 

 

(150,000

)

 

 

 

(717

)

     Net loss from operations

 

 

 

(5,388,410

)

 

 

 

(21,231

)

 

 

 

(5,859,435

)

 

 

 

(21,231

)

Other income - interest and dividend income

 

 

 

39,551

 

 

 

 

 

 

 

 

1,092,952

 

 

 

 

 

     Loss before income taxes

 

$

 

(5,348,859

)

 

$

 

(21,231

)

 

$

 

(4,766,483

)

 

$

 

(21,231

)

Income tax expense

 

 

 

(287

)

 

 

 

 

 

 

 

(114,395

)

 

 

 

 

     Net loss attributable to common shares

 

$

 

(5,349,146

)

 

$

 

(21,231

)

 

$

 

(4,880,878

)

 

$

 

(21,231

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per ordinary share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Class A ordinary shares - basic and diluted

 

$

 

(0.10

)

 

$

 

-

 

 

$

 

(0.09

)

 

$

 

-

 

   Class F ordinary shares - basic and diluted

 

$

 

(0.10

)

 

$

 

(0.00

)

 

$

 

(0.12

)

 

$

 

(0.00

)

 

See accompanying notes to the unaudited, interim financial statements.

 

 

4


GORES HOLDINGS IV, INC.

STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

 

 

 

Three Months Ended September 30, 2019

 

 

 

Class A Common Stock

 

 

Class F Common Stock

 

 

Additional

 

 

(Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Deficit)

 

 

Equity

 

Beginning Balance at July 1, 2019

 

 

-

 

 

$

 

-

 

 

 

 

-

 

 

$

 

-

 

 

$

 

-

 

 

$

 

-

 

 

$

 

-

 

Sale of Class F common stock to Sponsor in July 2019 at $.0001 par value

 

 

-

 

 

 

 

-

 

 

 

 

11,500,000

 

 

 

 

1,150

 

 

 

 

23,850

 

 

 

 

-

 

 

 

 

25,000

 

Net loss

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(21,231

)

 

 

 

(21,231

)

Balance at September 30, 2019

 

 

-

 

 

$

 

-

 

 

 

 

11,500,000

 

 

$

 

1,150

 

 

$

 

23,850

 

 

$

 

(21,231

)

 

$

 

3,769

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Period from June 12, 2019 (inception) through September 30, 2019

 

 

 

Class A Common Stock

 

 

Class F Common Stock

 

 

Additional

 

 

(Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Deficit)

 

 

Equity

 

Balance at June 12, 2019 (inception)

 

 

-

 

 

$

 

-

 

 

 

 

-

 

 

$

 

-

 

 

$

 

-

 

 

$

 

-

 

 

$

 

-

 

Sale of Class F common stock to Sponsor in July 2019 at $.0001 par value

 

 

-

 

 

 

 

-

 

 

 

 

11,500,000

 

 

 

 

1,150

 

 

 

 

23,850

 

 

 

 

-

 

 

 

 

25,000

 

Net loss

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(21,231

)

 

 

 

(21,231

)

Balance at September 30, 2019

 

 

-

 

 

$

 

-

 

 

 

 

11,500,000

 

 

$

 

1,150

 

 

$

 

23,850

 

 

$

 

(21,231

)

 

$

 

3,769

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings/

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

Class F Common Stock

 

 

Additional

 

 

(Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Deficit)

 

 

Equity

 

Beginning Balance at July 1, 2020

 

 

1,823,148

 

 

$

 

182

 

 

 

 

10,625,000

 

 

$

 

1,063

 

 

$

 

4,569,492

 

 

$

 

429,266

 

 

$

 

5,000,003

 

Class A common stock subject to possible redemption; 40,141,937 shares at a redemption price of $10.00

 

 

534,915

 

 

 

 

54

 

 

 

 

-

 

 

 

 

-

 

 

 

 

5,349,096

 

 

 

 

-

 

 

 

 

5,349,150

 

Net loss

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(5,349,146

)

 

 

 

(5,349,146

)

Balance at September 30, 2020

 

 

2,358,063

 

 

$

 

236

 

 

 

 

10,625,000

 

 

$

 

1,063

 

 

$

 

9,918,588

 

 

$

 

(4,919,880

)

 

$

 

5,000,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retained

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

Class F Common Stock

 

 

Additional

 

 

(Accumulated

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Paid-In Capital

 

 

Deficit)

 

 

Equity

 

Beginning Balance at January 1, 2020

 

 

-

 

 

$

 

-

 

 

 

 

11,500,000

 

 

$

 

1,150

 

 

$

 

23,850

 

 

$

 

(39,002

)

 

$

 

(14,002

)

Proceeds from initial public offering of Units on January 28, 2020 at $10.00 per Unit

 

 

42,500,000

 

 

 

 

4,250

 

 

 

 

-

 

 

 

 

-

 

 

 

 

424,995,750

 

 

 

 

-

 

 

 

 

425,000,000

 

Sale of 5,250,000 Private Placement Warrants to Sponsor on January 27, 2020 at $2.00 per Private Placement Warrant

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

10,500,000

 

 

 

 

-

 

 

 

 

10,500,000

 

Underwriters discounts

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(8,500,000

)

 

 

 

-

 

 

 

 

(8,500,000

)

Offering costs charged to additional paid-in capital

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(810,743

)

 

 

 

-

 

 

 

 

(810,743

)

Deferred underwriting compensation

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(14,875,000

)

 

 

 

-

 

 

 

 

(14,875,000

)

Forfeited Class F Common stock by Sponsor

 

 

-

 

 

 

 

-

 

 

 

 

(875,000

)

 

 

 

(87

)

 

 

 

87

 

 

 

 

-

 

 

 

 

-

 

Class A common stock subject to possible redemption; 40,141,937 shares at a redemption price of $10.00

 

 

(40,141,937

)

 

 

 

(4,014

)

 

 

 

-

 

 

 

 

-

 

 

 

 

(401,415,356

)

 

 

 

-

 

 

 

 

(401,419,370

)

Net loss

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

-

 

 

 

 

(4,880,878

)

 

 

 

(4,880,878

)

Balance at September 30, 2020

 

 

2,358,063

 

 

$

 

236

 

 

 

 

10,625,000

 

 

$

 

1,063

 

 

$

 

9,918,588

 

 

$

 

(4,919,880

)

 

$

 

5,000,007

 

 

See accompanying notes to the unaudited, interim financial statements

 

5


GORES HOLDINGS IV, INC.

STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

For the Period from

 

 

 

 

 

 

 

 

June 12, 2019

 

 

 

Nine Months Ended

 

 

(inception) through

 

Cash flows from operating activities:

 

September 30, 2020

 

 

September 30, 2019

 

Net loss

 

$

 

(4,880,878

)

 

$

 

(21,231

)

Changes in state franchise tax accrual

 

 

 

148,170

 

 

 

 

717

 

Changes in prepaid assets

 

 

 

(250,861

)

 

 

 

 

Changes in accrued expenses, formation and offering costs

 

 

 

3,374,313

 

 

 

 

(65,500

)

Changes in income tax payable

 

 

 

114,395

 

 

 

 

 

Net cash used in operating activities

 

 

 

(1,494,861

)

 

 

 

(86,014

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

 

Cash deposited in Trust Account

 

 

 

(425,000,000

)

 

 

 

 

Interest and dividends reinvested in the Trust Account

 

 

 

(323,144

)

 

 

 

 

Net cash used in investing activities

 

 

 

(425,323,144

)

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

 

Proceeds from sale of Units in initial public offering

 

 

 

425,000,000

 

 

 

 

 

Proceeds from sale of Private Placement Warrants to Sponsor

 

 

 

10,500,000

 

 

 

 

 

Proceeds from notes payable – related party

 

 

 

1,000,000

 

 

 

 

25,000

 

Repayment of notes payable – related party

 

 

 

(150,000

)

 

 

 

150,000

 

Payment of underwriters’ discounts and commissions

 

 

 

(8,500,000

)

 

 

 

 

Payment of accrued offering costs

 

 

 

(810,743

)

 

 

 

 

Net cash provided by financing activities

 

 

 

427,039,257

 

 

 

 

175,000

 

Increase in cash

 

 

 

221,252

 

 

 

 

88,986

 

Cash at beginning of period

 

 

 

1,120

 

 

 

 

 

Cash at end of period

 

$

 

222,372

 

 

$

 

88,986

 

Supplemental disclosure of non-cash financing activities:

 

 

 

 

 

 

 

 

 

 

Deferred underwriting compensation

 

$

 

14,875,000

 

 

$

 

 

Cash paid for income and state franchise taxes

 

$

 

1,830

 

 

$

 

 

Deferred offering costs charged to paid-in capital

 

$

 

411,374

 

 

$

 

209,687

 

 

See accompanying notes to the unaudited, interim financial statements.

6


GORES HOLDINGS IV, INC.

NOTES TO THE UNAUDITED, INTERIM FINANCIAL STATEMENTS

1.       Organization and Business Operations

Organization and General

Gores Holdings IV, Inc. (the “Company”) was incorporated in Delaware on June 12, 2019. The Company was 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 (the “Business Combination”). The Company has neither engaged in any operations nor generated any operating revenue to date. The Company’s Sponsor is Gores Holdings IV Sponsor, LLC, a Delaware limited liability company (the “Sponsor”). The Company has selected December 31st as its fiscal year-end.

At September 30, 2020, the Company had not commenced any operations. All activity for the period from June 12, 2019 (inception) through September 30, 2020 relates to the Company’s formation and initial public offering (“Public Offering”) described below, the identification and evaluation of prospective acquisition targets for a Business Combination and the entry into the Business Combination Agreement (as defined below) in connection with the Proposed Business Combination (as defined below) and transactions contemplated thereby. The Company completed the Public Offering on January 28, 2020 (the “IPO Closing Date”).

The Company will not generate any operating revenues until after the completion of the Business Combination, at the earliest. Subsequent to the Public Offering, the Company generates non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the Public Offering and the sale of the Private Placement Warrants (as defined below) held in the Trust Account (as defined below).

Proposed United Wholesale Mortgage Business Combination

On September 22, 2020, Gores Holdings IV, Inc. (the “Company”) entered into a Business Combination Agreement (the “Business Combination Agreement”), by and among the Company, SFS Holding Corp., a Michigan corporation (“SFS Corp.”), United Shore Financial Services, LLC (d/b/a United Wholesale Mortgage), a Michigan limited liability company and a wholly-owned subsidiary of SFS Corp. (“UWM”), and UWM Holdings, LLC, a newly formed Delaware limited liability company and a wholly-owned subsidiary of SFS Corp. (“UWM LLC” and, together with SFS Corp. and UWM, the “UWM Entities.”). The transactions contemplated by the Business Combination Agreement will constitute a “Business Combination” within the meaning of the Company’s Amended and Restated Certificate of Incorporation. Such transactions are hereinafter referred to as the “Proposed Business Combination.”

Pursuant to the Business Combination Agreement, as described in more detail below, (a) SFS Corp. will contribute UWM into UWM LLC, (b) the Company will acquire Class A Common Units in UWM LLC (the “UWM Class A Common Units”) and SFS Corp. will acquire Class B Common Units in UWM LLC (the “UWM Class B Common Units”), and (c) the Company will issue to SFS Corp. shares of a new non-economic Class D common stock of the Company (the “Class D Common Stock”), which will entitle the holder to 10 votes per share. Following the consummation of the transactions contemplated by the Business Combination Agreement (the “Closing”), the Company will be organized in an “Up-C” structure in which all of the business of UWM will be held directly by UWM LLC and the Company’s only direct assets will consist of the UWM Class A Common Units. The Company is expected to own approximately 6% of the combined Common Units in UWM LLC and will control UWM LLC as the sole manager of UWM LLC in accordance with the terms of the amended and restated limited liability agreement of UWM LLC to be entered into in connection with the Closing. SFS Corp. is expected to retain approximately 94% of the combined Common Units in UWM LLC. Each UWM Class B Common Unit to be held by SFS Corp. may be exchanged, along with the stapled Class D Common Stock, for either, at the option of the Company, (a) cash or (b) one share of the Company’s Class B common stock, par value $0.0001 per share (the “Class B Common Stock”), which will be identical to the Company’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”) except that it will entitle the holder to 10 votes per share. Each share of Class

7


B Common Stock is convertible into one share of Class A Common Stock upon the transfer or assignment of such share from SFS Corp. to a non-affiliated third-party.

The Business Combination Agreement and the Proposed Business Combination were unanimously approved by the Board of Directors of the Company (the “Board”) on September 22, 2020.

At the Closing, a series of transactions will occur, including the following: (a) UWM LLC will issue to SFS Corp. a number of UWM Class B Common Units equal to the quotient of the Company Equity Value (as defined in the Business Combination Agreement) divided by $10.00, minus the number of outstanding Founder Shares (as defined below) as of immediately prior to Closing; (b) the Company will contribute to UWM LLC an amount in cash equal to the Closing Cash Consideration (as defined in the Business Combination Agreement), which is expected to be approximately $896,000,000 assuming no redemptions by the Company’s stockholders; (c) UWM LLC will issue to the Company the number of UWM Class A Common Units equal to the number of issued and outstanding shares of the Class A Common Stock as of immediately prior to the Closing; and (d) the Company will issue to SFS Corp. a number of shares of the Class D Common Stock equal to the number of UWM Class B Common Units issued by UWM LLC to SFS Corp. pursuant to clause (a) above.

In addition to the consideration to be paid at the Closing, SFS Corp. will be entitled to receive an additional number of earn-out shares from the Company, issuable in shares of Class D Common Stock and UWM Class B Common Units as provided in the Business Combination Agreement, if the price of the Company’s Class A Common Stock exceeds certain thresholds during the five-year period following the Closing. The maximum number of shares to be issued in connection with the earn-out will not exceed 6% of the Company Equity Value, divided by $10.00, assuming each of the price thresholds is achieved during the earn-out period.

For further discussion of the Proposed Business Combination and the Business Combination Agreement, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Proposed United Wholesale Mortgage Business Combination.”  

Financing

Upon the closing of the Public Offering and the sale of the Private Placement Warrants, an aggregate of $425,000,000 was placed in a Trust Account with Continental Stock Transfer & Trust Company acting as trustee (the “Trust Account”).

The Company intends to finance a Business Combination with the net proceeds from its $425,000,000 Public Offering and its sale of $10,500,000 of Private Placement Warrants (See Note 3). The proposed financing for the Proposed Business Combination is discussed below under “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Proposed United Wholesale Mortgage Business Combination.”    

Trust Account

Funds held in the Trust Account can be invested only in U.S. government treasury bills with a maturity of one hundred and eighty-five (185) days or less or in money market funds meeting certain conditions under Rule 2a‑7 under the Investment Company Act of 1940, as amended, that invest only in direct U.S. government obligations. As of September 30, 2020, the Trust Account consisted of money market funds.

The Company’s amended and restated certificate of incorporation provides that, other than the withdrawal of interest to fund regulatory compliance requirements and other costs related thereto (a “Regulatory Withdrawal”), subject to an annual limit of $1,100,000, for a maximum 24 months and/or additional amounts necessary to pay franchise and income taxes, if any, none of the funds held in trust will be released until the earliest of: (i) the completion of the Business Combination; or (ii) the redemption of any public shares of common stock properly tendered in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of such public shares of common stock if the Company does not complete the Business Combination within 24 months from the closing of the Public Offering; or (iii) the redemption of 100% of the public shares of common stock if the Company is

8


unable to complete a Business Combination within 24 months from the closing of the Public Offering, subject to the requirements of law and stock exchange rules.

Business Combination

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering, although substantially all of the net proceeds of the Public Offering are intended to be generally applied toward consummating a Business Combination. The Business Combination must be with one or more target businesses that together have an aggregate fair market value of at least 80% of the assets held in the Trust Account (less any deferred underwriting commissions and taxes payable on interest income earned) at the time of the Company signing a definitive agreement in connection with the Business Combination. Furthermore, there is no assurance that the Company will be able to successfully effect a Business Combination.

As discussed above, the Company, entered into a definitive agreement for the Proposed Business Combination and intends to seek stockholder approval of the Proposed Business Combination at a meeting called for such purpose in connection with which stockholders may seek to redeem their shares, regardless of whether they vote for or against the Proposed Business Combination, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest income but less taxes payable. The Company will complete the Proposed Business Combination only if a majority of the outstanding shares of common stock voted are voted in favor of the Proposed Business Combination. Currently, the Company will not redeem its public shares of common stock in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its public shares of common stock and the related Proposed Business Combination, and instead may search for an alternate Business Combination.

In connection with a Business Combination, the Company may alternatively provide stockholders with the opportunity to sell their shares to the Company by means of a tender offer (and thereby avoid the need for a stockholder vote) for an amount in cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Business Combination, including interest income but less taxes payable. The decision as to whether the Company will seek stockholder approval of the Business Combination or will allow stockholders to sell their shares in a tender offer will be made by the Company, solely in its discretion, and will be based on a variety of factors such as the timing of the transaction and whether the terms of the transaction would otherwise require the Company to seek stockholder approval, unless a vote is required by law or under the rules of the exchange where its securities are listed.

As a result of the foregoing redemption provisions, the public shares of common stock will be recorded at redemption amount and classified as temporary equity, in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic  480, “Distinguishing Liabilities from Equity” (“ASC 480”) in subsequent periods.

The Company will have 24 months from the IPO Closing Date to complete the Business Combination. If the Company does not complete a Business Combination within this period of time, it shall (i) cease all operations except for the purposes of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the public shares of common stock for a per share pro rata portion of the Trust Account, including interest income, but less taxes payable (less up to $100,000 of such net interest income to pay dissolution expenses) and (iii) as promptly as possible following such redemption, dissolve and liquidate the balance of the Company’s net assets to its remaining stockholders, as part of its plan of dissolution and liquidation. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be less than the initial public offering price per Unit in the Public Offering.

The Sponsor and the Company’s officers and directors have entered into a letter agreement with the Company, pursuant to which they waived their rights to participate in any redemption with respect to their Founder Shares (as defined below); however, if the Sponsor or any of the Company’s officers, directors or affiliates acquire public shares of common stock, they will be entitled to a pro rata share of the Trust Account in the event the Company does not complete a Business Combination within the required time period.

9


In connection with the Proposed Business Combination, the Sponsor and the Company’s officers and directors have also entered into a Waiver Agreement pursuant to which they have waived their rights to a conversion price adjustment with respect to any shares of common stock they may hold in connection with the consummation of the Proposed Business Combination. Currently, the Sponsor and the Company’s officers and directors own 20% of our issued and outstanding shares of common stock, including all the Founder Shares (as defined below).

Emerging Growth Company

Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

2.       Significant Accounting Policies

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting and disclosure rules and regulations of the Securities and Exchange Commission (“SEC”), and reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the financial position as of September 30, 2020 and the results of operations and cash flows for the periods presented. Operating results for the nine months ended September 30, 2020 are not necessarily indicative of results that may be expected for the full year or any other period. While the Company was formed on June 12, 2019, there were no transactions or operations between inception and June 30, 2019. Therefore, these financials statements do not include comparative statements to a full nine-month period. The accompanying unaudited financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2020.

10


Net Income/(Loss) Per Common Share

The Company has two classes of shares, which are referred to as Class A Common Stock and Class F common stock (the “Founders Shares”). Net income/(loss) per common share is computed utilizing the two-class method. The two-class method is an earnings allocation formula that determines earnings per share separately for each class of common stock based on an allocation of undistributed earnings per the rights of each class. At September 30, 2020, the Company did not have any dilutive securities or other contracts that could, potentially, be exercised or converted into common stock and then share in the earnings of the Company under the treasury stock method. As a result, diluted net income/(loss) per common share is the same as basic net income/(loss) per common share for the period. The table below presents a reconciliation of the numerator and denominator used to compute basic and diluted net income/(loss) per share for each class of common stock:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Period from June 12, 2019

 

 

 

For the Three Months Ended September 30, 2020

 

 

For the Three Months Ended September 30, 2019

 

 

For the Nine Months Ended September 30, 2020

 

 

(inception) through September 30, 2019

 

 

 

Class A

 

 

Class F

 

 

Class A

 

 

Class F

 

 

Class A

 

 

Class F

 

 

Class A

 

 

Class F

 

Basic and diluted net loss per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Numerator: