The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
The accompanying notes are an integral part
of the unaudited condensed financial statements.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Churchill Capital
Corp IV (formerly known as Annetta Acquisition Corp) (the “Company”) was incorporated in Delaware on April 30,
2020. 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 is an
early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and
emerging growth companies.
As of September 30,
2020, the Company had not commenced any operations. All activity for the period from April 30, 2020 (inception) through September 30,
2020 relates to the Company’s formation and the initial public offering (“Initial Public Offering”), which is
described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination,
at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from
the Initial Public Offering.
The registration
statements for the Company’s Initial Public Offering were declared effective on July 29, 2020. On August 3, 2020,
the Company consummated the Initial Public Offering of 207,000,000 units (the “Units” and, with respect to the shares
of Class A common stock included in the Units sold, the “Public Shares”), which includes the full exercise by
the underwriters of the over-allotment option to purchase an additional 27,000,000 Units, at $10.00 per Unit, generating gross
proceeds of $2,070,000,000, which is described in Note 3.
Simultaneously with
the closing of the Initial Public Offering, the Company consummated the sale of 42,850,000 warrants (the “Private Placement
Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Churchill Sponsor IV LLC, (the “Sponsor”),
generating gross proceeds of $42,850,000 which is described in Note 4.
Transaction costs amounted to $109,714,885, consisting of $36,403,600
of underwriting fees, $72,450,000 of deferred underwriting fees and $861,285 of other offering costs. In addition, at September 30,
2020, cash of $4,218,387 was held outside of the Trust Account (as defined below) and is available for working capital purposes.
Following the closing
of the Initial Public Offering on August 3, 2020, an amount of $2,070,000,000 ($10.00 per Unit) from the net proceeds of
the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account
(the “Trust Account”) located in the United States and invested only in U.S. government securities, within the meaning
set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”),
with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund
selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company,
until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account, as
described below, except that interest earned on the Trust Account can be released to the Company to fund working capital requirements,
subject to an annual limit of $1,000,000 and/or to pay its tax obligations.
The Company’s
management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and
the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally
toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination
successfully. The Company’s initial Business Combination must be with one or more target businesses that together have a
fair market value equal to at least 80% of the balance in the Trust Account (excluding taxes payable on interest income earned
from the Trust Account and the deferred underwriting commissions) at the time of the agreement to enter into the initial Business
Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more
of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it
not to be required to register as an investment company under the Investment Company Act.
The Company will
provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all
or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder
meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company
will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its
discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then
in the Trust Account (initially $10.00 per Public Share, plus any pro rata interest, net of amounts withdrawn for working
capital requirements, subject to an annual limit of $1,000,000 and/or to pay its taxes (“permitted withdrawals”)).
The per-share amount to be distributed to public stockholders who redeem their Public Shares will not be reduced by the deferred
underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). There will be no redemption rights
upon the completion of a Business Combination with respect to the Company’s warrants.
CHURCHILL CAPITAL CORP IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
The Company will
proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a
Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the
Business Combination. If a stockholder vote is not required by law or stock exchange requirements and the Company does not decide
to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate
of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the
tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with
the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or
the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction
with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder
approval in connection with a Business Combination, the Company’s Sponsor and its permitted transferees will agree to vote
their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor
of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective
of whether they vote for or against the proposed transaction.
If the Company seeks
stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended
and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder
or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares
with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.
The Sponsor has agreed
(a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the
completion of a Business Combination, (b) to waive its rights to liquidating distributions from the Trust Account with respect
to its Founder Shares if the Company fails to consummate a Business Combination within the Combination Window (as defined below)
and (c) not to propose an amendment to the Company’s Amended and Restated Certificate of Incorporation that would affect
the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete
a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their shares in conjunction
with any such amendment.
If the Company is
unable to complete a Business Combination by August 3, 2022 (or November 3, 2022 if the Company has an executed letter
of intent, agreement in principle or definitive agreement for a Business Combination by August 3, 2022) (the “Combination
Window”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as
reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the Trust Account including interest (net of permitted withdrawals and
up to $100,000 to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely
extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions,
if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the
approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject
in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of
other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants,
which will expire worthless if the Company fails to complete a Business Combination within the Combination Window.
The Sponsor has agreed
to waive its right to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails
to complete a Business Combination within the Combination Window. However, if the Sponsor acquires Public Shares in or after the
Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company
fails to complete a Business Combination within the Combination Window. The underwriters have agreed to waive their rights to
their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business
Combination within the Combination Window and, in such event, such amounts will be included with the other funds held in the Trust
Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible
that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price
per Unit ($10.00).
In order to protect
the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a
third party (other than the Company’s independent registered public accounting firm) for services rendered or products sold
to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality
or similar agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) the
amount per Public Share held in the Trust Account as of the liquidation of the Trust Account, if less than $10.00 per Public Share
due to reductions in the value of the trust assets, in each case net of permitted withdrawals. This liability will not apply with
respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account or to any
claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed
waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability
for such third-party claims.
The Company will
seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring
to have all vendors, service providers, prospective target businesses or other entities with which the Company does business,
execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust
Account.
CHURCHILL CAPITAL CORP IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying
unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q
and Article 10 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements
prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim
financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation
of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed
financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation
of the financial position, operating results and cash flows for the periods presented.
The accompanying
unaudited condensed financial statements should be read in conjunction with the Company’s prospectus for its Initial Public
Offering as filed with the SEC on July 31, 2020, as well as the Company’s Current Reports on Form 8-K, as filed
with the SEC on August 7, 2020. The interim results for the three months ended September 30,
2020 and for the period from April 30, 2020 (inception) through September 30, 2020 are not necessarily indicative of
the results to be expected for period ended December 31, 2020 or for any future periods.
Emerging Growth Company
The Company is an
“emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities
Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging
growth companies including, but not limited to, not being required to comply with the independent registered public accounting
firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory
vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, 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 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. This may make comparison of the Company’s financial statement
with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of
using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Use of Estimates
The preparation of
the condensed financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates
requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a
condition, situation or set of circumstances that existed at the date of the financial statements, which management considered
in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual
results could differ significantly from those estimates.
Cash and Cash Equivalents
The Company considers
all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. Cash equivalents
consist of mutual funds. The Company did not have any cash equivalents as of September 30, 2020.
CHURCHILL CAPITAL CORP IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Marketable Securities Held in Trust
Account
At September 30,
2020, substantially all of the assets held in the Trust Account were held in U.S. Treasury Bills.
Common Stock Subject to Possible
Redemption
The Company accounts
for its common stock subject to possible redemption 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 is measured at fair value. Conditionally redeemable common stock (including common stock that features
redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events
not solely within the Company’s control) is classified as temporary equity. At all other times, common stock is classified
as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside
of the Company’s 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 the Company’s
condensed balance sheet.
Income Taxes
The Company follows
the asset and liability method of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and
liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income
in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets
to the amount expected to be realized. The effective tax rate differs from the statutory tax rate of 21% for the three months
ended September 30, 2020 and for the period from April 30, 2020 (inception) through September 30, 2020, due to
the valuation allowance recorded on the Company’s net operating losses.
ASC 740 prescribes
a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken
or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be
sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized
tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties
as of September 30, 2020. The Company is currently not aware of any issues under review that could result in significant
payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing
authorities since inception.
On March 27,
2020, President Trump signed the Coronavirus Aid, Relief, and Economic Security “CARES” Act into law. The CARES Act
includes several significant business tax provisions that, among other things, would eliminate the taxable income limit for certain
net operating losses (“NOL) and allow businesses to carry back NOLs arising in 2018, 2019 and 2020 to the five prior years,
suspend the excess business loss rules, accelerate refunds of previously generated corporate alternative minimum tax credits,
generally loosen the business interest limitation under IRC section 163(j) from 30 percent to 50 percent among other technical
corrections included in the Tax Cuts and Jobs Act tax provisions. The Company does not believe that the CARES Act will have a
significant impact on Company's financial position or statement of operations.
Net Loss per Common Share
Net loss per
common share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. The
Company applies the two-class method in calculating earnings per share. Shares of common stock subject to possible redemption
at September 30, 2020, which are not currently redeemable and are not redeemable at fair value, have been excluded from
the calculation of basic net loss per common share since such shares, if redeemed, only participate in their pro rata share
of the Trust Account earnings. The Company has not considered the effect of warrants sold in the Initial Public Offering and
the private placement to purchase 84,250,000 shares of common stock in the calculation of diluted loss per share, since the
exercise of the warrants into shares of common stock is contingent upon the occurrence of future events. As a result, diluted
net loss per common share is the same as basic net loss per common share for the period presented.
Reconciliation of Net Loss per Common
Share
The Company’s
net loss is adjusted for the portion of income that is attributable to common stock subject to possible redemption, as these shares
only participate in the earnings of the Trust Account and not the income or losses of the Company. Accordingly, basic and diluted
loss per common share is calculated as follows:
CHURCHILL CAPITAL CORP IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
|
|
Three Months
Ended
September 30,
|
|
|
For the Period
from April 30,
2020 (Inception)
Through
September 30,
|
|
|
|
2020
|
|
|
2020
|
|
Net loss
|
|
$
|
(155,614
|
)
|
|
$
|
(156,614
|
)
|
Less: Income attributable to shares subject to possible redemption
|
|
|
—
|
|
|
|
—
|
|
Adjusted net loss
|
|
$
|
(155,614
|
)
|
|
$
|
(156,614
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding, basic and diluted
|
|
|
53,784,534
|
|
|
|
51,122,554
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
$
|
(0.00
|
)
|
|
$
|
(0.00
|
)
|
Concentration of Credit Risk
Financial instruments
that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which,
at times, may exceed the Federal Depository Insurance Coverage of $250,000. The Company has not experienced losses on this
account.
Fair Value of Financial Instruments
The fair value of
the Company’s assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,”
approximates the carrying amounts represented in the condensed balance sheet, primarily due to their short-term nature.
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 the Company’s condensed financial statements.
NOTE 3. PUBLIC OFFERING
Pursuant to the Initial
Public Offering, the Company sold 207,000,000 Units, which includes the full exercise by the underwriters of their option
to purchase an additional 27,000,000 Units, at $10.00 per Unit. Each Unit consists of one share of Class A common stock and
one-fifth of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase
one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7). The Units sold
in the Initial Public Offering comprise an aggregate of 207,000,000 shares of Class A common stock and 41,400,000 Public
Warrants.
NOTE 4. PRIVATE PLACEMENT
Simultaneously with
the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 42,850,000 Private Placement Warrants at a price
of $1.00 per Private Placement Warrant, for an aggregate purchase price of $42,850,000. Each Private Placement Warrant
is exercisable to purchase one share of Class A common stock at a price of $11.50 per share. The proceeds from the
Private Placement Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company
does not complete a Business Combination within the Combination Window, the proceeds of the sale of the Private Placement Warrants
will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement
Warrants will expire worthless. There will be no redemption rights or liquidating distributions from the Trust Account with respect
to the Private Placement Warrants.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
On May 22, 2020,
the Sponsor purchased 21,562,500 shares of the Company’s Class B common stock for an aggregate price of $25,000
(the “Founder Shares”). On July 14, 2020, the Company effected a stock dividend of one-third of a share of Class B
common stock for each outstanding share of Class B common stock, on July 27, 2020, the Company effected a stock dividend
of 0.50 to 1 share of Class B common stock for each outstanding share of Class B common stock and on July 30, 2020,
the Company effected a stock dividend of 0.20 to 1 share of Class B common stock for each outstanding share of Class B
common stock, resulting in 51,750,000 shares of Class B common stock being issued and outstanding. All share and per-share
amounts have been retroactively restated to reflect the stock dividends. The Founder Shares included an aggregate of up to 6,750,000
shares subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in
part, so that the Sponsor would own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after
the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering). As a result
of the underwriters’ election to fully exercise their over-allotment option, 6,750,000 Founder Shares are no longer subject
to forfeiture.
CHURCHILL CAPITAL CORP IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
The Sponsor has agreed,
subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one
year after the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger,
stock exchange, reorganization or similar transaction after a Business Combination that results in all of the Company’s
stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding
the foregoing, if the closing price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period
commencing at least 150 days after a Business Combination, the Founder Shares will be released from the lock-up.
Promissory Note — Related
Party
On May 13, 2020,
the Sponsor agreed to loan the Company an aggregate of up to $600,000 to cover expenses related to the Initial Public Offering
pursuant to a promissory note (the “Promissory Note”). The Promissory Note was non-interest bearing and payable on
the earlier of December 31, 2021 or the completion of the Initial Public Offering. The borrowings outstanding under the note
in the amount of $550,000 were repaid upon the consummation of the Initial Public Offering on August 3, 2020.
Administrative Support Agreement
The Company entered
into an agreement whereby, commencing on July 30, 2020 through the earlier of the Company’s consummation of a Business
Combination and its liquidation, the Company will pay an affiliate of the Sponsor a total of $50,000 per month for office
space, administrative and support services. For the three months ended September 30, 2020 and for the period from April 30,
2020 (inception) through September 30, 2020, the Company incurred and paid $100,000 in fees for these services.
Advisory Fee
The Company may engage
M. Klein and Company, LLC, an affiliate of the Sponsor, or another affiliate of the Sponsor, as its lead financial advisor in
connection with a Business Combination and may pay such affiliate a customary financial advisory fee in an amount that constitutes
a market standard financial advisory fee for comparable transactions.
Related Party Loans
In order to finance
transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s
officers and directors 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. 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. Except for the foregoing, the terms of such Working Capital Loans, if any, have not
been determined and no written agreements exist with respect to such 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 at a price of $1.00 per warrant. The warrants would be identical to the
Private Placement Warrants.
NOTE 6. COMMITMENTS
Registration Rights
Pursuant to a registration
rights agreement entered into on July 29, 2020, the holders of the Founder Shares, Private Placement Warrants and warrants
that may be issued upon conversion of Working Capital Loans (and any shares of Class A common stock issuable upon the exercise
of the Private Placement Warrants or warrants that may be issued upon conversion of Working Capital Loans and upon conversion
of the Founder Shares) will be entitled to registration rights requiring the Company to register such securities for resale (in
the case of the Founder Shares, only after conversion to Class A common stock). The holders of these securities will be entitled
to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders
have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion
of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under
the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
CHURCHILL CAPITAL CORP IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Underwriting Agreement
The underwriters
are entitled to a deferred fee of $0.35 per Unit, or $72,450,000 in the aggregate. The deferred fee will be waived by the
underwriters in the event that the Company does not complete a Business Combination, subject to the terms of the underwriting
agreement. The underwriters waived the upfront underwriting discount on 19,982,000 Units, resulting in a reduction of the upfront
underwriting discount of $3,996,400. In addition, the underwriters reimbursed the Company an aggregate of $1,000,000 for costs
incurred in connection with the Initial Public Offering.
NOTE 7. STOCKHOLDERS’ EQUITY
Preferred Stock — The
Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations,
voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30,
2020, there were no shares of preferred stock issued or outstanding.
Class A
Common Stock — On July 30, 2020, the Company amended its Amended and Restated Certificate of
Incorporation such that the Company is authorized to issue 400,000,000 shares of Class A common stock with a par value of $0.0001
per share. Holders of Class A common stock are entitled to one vote for each share. At September 30, 2020, there were
7,212,627 shares of Class A common stock issued or outstanding, excluding 199,787,373 shares of Class A common stock
subject to possible redemption
Class B
Common Stock — On July 30, 2020, the Company amended its Amended and Restated Certificate of
Incorporation such that the Company is authorized to issue 100,000,000 shares of Class B common stock with a par value of $0.0001
per share. Holders of Class B common stock are entitled to one vote for each share. At September 30, 2020, there were
51,750,000 shares of Class B common stock issued and outstanding
Holders of Class B
common stock will have the right to elect all of the Company’s directors prior to a Business Combination. Holders of Class A
common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders
except as required by law.
The shares of Class B
common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one
basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are
issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business
Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will
be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment
with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon
conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of
the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering plus all shares
of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding
any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination in consideration for such
seller’s interest in the Business Combination target, any private placement-equivalent warrants issued, or to be issued,
to any seller in a Business Combination.
Warrants — Public
Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units
and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after
the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public
Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will
not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation
to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of
Class A common issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares
of Class A common stock is available, subject to the Company satisfying its obligations with respect to registration. No
warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders
seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the
securities laws of the state of the exercising holder, or an exemption from registration is available.
The Company has agreed
that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company
will use its best efforts to file with the SEC, and within 60 business days following a Business Combination to have declared
effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of
the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire
or are redeemed. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed
on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of
the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on
a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company
so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its reasonable
best efforts to qualify the shares under applicable blue sky laws to the extent an exemption is not available.
CHURCHILL CAPITAL CORP IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Once the warrants become exercisable,
the Company may redeem the Public Warrants:
|
•
|
in whole and not in part;
|
|
•
|
at a price of $0.01 per warrant;
|
|
•
|
upon a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period, to each warrant holder; and
|
|
•
|
if, and only if, the closing price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders.
|
If and when the warrants
become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the
underlying securities for sale under all applicable state securities laws.
If the Company calls
the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants
to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A
common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock
dividend, or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuance
of Class A common stock at a price below its exercise price. Additionally, in no event will the Company be required to net
cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Window and the Company
liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants,
nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such
warrants. Accordingly, the warrants may expire worthless.
The Private Placement
Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private
Placement Warrants and the Class A common stock issuable upon the exercise of the Placement Warrants will not be transferable,
assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.
Additionally, the Private Placement Warrants will be exercisable on a cashless basis and be non-redeemable so long as they are
held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than
the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable
by such holders on the same basis as the Public Warrants.
NOTE 8. FAIR VALUE MEASUREMENTS
The Company follows
the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting
period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.
The fair value of
the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have
received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction
between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities,
the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the
use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following
fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in
order to value the assets and liabilities:
|
Level 1:
|
Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.
|
|
|
|
|
Level 2:
|
Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.
|
|
|
|
|
Level 3:
|
Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.
|
The following table
presents information about the Company’s assets that are measured at fair value on a recurring basis at September 30,
2020, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value:
CHURCHILL CAPITAL CORP IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2020
(Unaudited)
Description
|
|
Level
|
|
|
September 30,
2020
|
|
Assets:
|
|
|
|
|
|
|
|
|
Marketable securities held in Trust Account
|
|
|
1
|
|
|
$
|
2,070,167,783
|
|
NOTE 9. SUBSEQUENT EVENTS
The Company evaluated
subsequent events and transactions that occurred after the balance sheet date up to the date that the condensed financial statements
were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or
disclosure in the condensed financial statements.