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 quarter ended December 31, 20212022
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission file number:001-40135
NORTHERN STAR INVESTMENT CORP. IV
(Exact Name of Registrant as Specified in Its Charter)
Delaware | 85-4156787 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
The Chrysler Building
405 Lexington AvenueAvenue,11th Floor
New York, New York 10174
(Address of principal executive offices)
(212)818-8800
(Issuer’s telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Units, each consisting of one share of Class A Common Stock and one-sixth of one redeemable warrant | NSTD.U | The New York Stock Exchange | ||
Class A Common Stock, par value $0.0001 per share | NSTD | The New York Stock Exchange | ||
Redeemable warrants, exercisable for shares of Class A Common Stock at an exercise price of $11.50 per share | NSTD WS | The New York Stock Exchange |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in
| 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
As of February
NORTHERN STAR INVESTMENT CORP. IV
FORM 10-QFOR
TABLE OF CONTENTS
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i
PART I—FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
CONDENSED BALANCE SHEETS
December 31, 2021 | September 30, 2021 | |||||||
(Audited) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | 854,397 | $ | 1,029,943 | ||||
Prepaid expenses and other current assets | 29,842 | 29,842 | ||||||
Total Current Assets | 884,239 | 1,059,785 | ||||||
Marketable securities held in Trust Account | 400,035,143 | 400,021,169 | ||||||
TOTAL ASSETS | $ | 400,919,382 | $ | 401,080,954 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable and accrued expenses | $ | 440,799 | $ | 378,535 | ||||
Accrued offering costs | 19,550 | 24,550 | ||||||
Total Current Liabilities | 460,349 | 403,085 | ||||||
Warrant Liabilities | 14,118,334 | 14,610,834 | ||||||
Deferred underwriting payable | 14,000,000 | 14,000,000 | ||||||
TOTAL LIABILITIES | 28,578,683 | 29,013,919 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Class A common stock subject to possible redemption 40,000,000 shares at redemption value, as of December 31, 2021, and September 30, 2021 | 400,000,000 | 400,000,000 | ||||||
Stockholders’ Deficit | ||||||||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0 shares issued and outstanding | 0— | 0— | ||||||
Class A common stock, $0.0001 par value; 125,000,000 shares authorized; 0 shares issued and outstanding (excluding 40,000,000 shares subject to possible redemption) as of December 31, 2021, and September 30, 2021 | 0 | 0 | ||||||
Class B common stock, $0.0001 par value; 25,000,000 shares authorized; 10,000,000 shares issued and outstanding as of December 31, 2021 and September 30, 2021 | 1,000 | 1,000 | ||||||
Additional paid-in capital | 0 | 0 | ||||||
Accumulated deficit | (27,660,301 | ) | (27,933,965 | ) | ||||
Total Stockholders’ Deficit | (27,660,301 | ) | (27,932,965 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 400,919,382 | $ | 401,080,954 | ||||
| December 31, 2022 | September 30, 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash | $ | 196,718 | $ | 210,070 | ||||
| Prepaid expenses and other current assets | 41,508 | 23,175 | ||||||
| Total Current Assets | 238,226 | 233,245 | ||||||
| Marketable securities held in Trust Account | 404,609,067 | 402,426,671 | ||||||
| TOTAL ASSETS | $ | 404,847,293 | $ | 402,659,916 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accrued expenses | $ | 475,623 | $ | 476,574 | ||||
| Income taxes payable | 161,755 | 332,551 | ||||||
| Total Current Liabilities | 637,378 | 809,125 | ||||||
| Warrant Liabilities | 328,333 | 985,000 | ||||||
| Deferred underwriting payable | 14,000,000 | 14,000,000 | ||||||
| TOTAL LIABILITIES | 14,965,711 | 15,794,125 | ||||||
| Commitments and Contingencies (Note 6) | ||||||||
| Class A common stock subject to possible redemption 40,000,000 shares at redemption value, as of December 31, 2022, and September 30, 2022 | 404,217,637 | 401,644,120 | ||||||
| Stockholders’ Deficit | ||||||||
| Preferred stock, $0.0001 par value; 1,000,000 shares authorized; 0 shares issued and outstanding | — | — | ||||||
| Class A common stock, $0.0001 par value; 125,000,000 shares authorized; 0 shares issued and outstanding (excluding 40,000,000 shares subject to possible redemption) as of December 31, 2022, and September 30, 2022 | — | — | ||||||
| Class B common stock, $0.0001 par value; 25,000,000 shares authorized; 10,000,000 shares issued and outstanding as of December 31, 2022 and September 30, 2022 | 1,000 | 1,000 | ||||||
| Additional paid-in capital | — | — | ||||||
| Accumulated deficit | (14,337,055 | ) | (14,779,329 | ) | ||||
| Total Stockholders’ Deficit | (14,336,055 | ) | (14,778,329 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ | 404,847,293 | $ | 402,659,916 | ||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
NORTHERN STAR INVESTMENT CORP. IV
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended December 31, | For the Period from November 30, 2020 (inception) through December 31, | |||||||
2021 | 2020 | |||||||
Formation and operational costs | $ | 232,810 | $ | 875 | ||||
Loss from operations | (232,810 | ) | (875 | ) | ||||
Other income: | ||||||||
Change in fair value of warrant liabilities | 492,500 | 0 | ||||||
Interest earned on marketable securities held in Trust Account | 13,974 | 0 | ||||||
Other income , net | 506,474 | 0 | ||||||
Income (loss) before income taxes | 273,664 | (875 | ) | |||||
Net income (loss) | $ | 273,664 | $ | (875 | ) | |||
Basic and diluted weighted average shares outstanding, Class A common stock | 40,000,000 | 0 | ||||||
Basic and diluted net income per share, Class A common stock | $ | 0.01 | $ | 0 | ||||
Basic and diluted weighted average shares outstanding, Class B common stock | 10,000,000 | 8,750,000 | ||||||
Basic and diluted net income per share, Class B common stock | $ | 0.01 | $ | 0 | ||||
(UNAUDITED)
For the Three Months Ended | ||||||||
| 2022 | 2021 | |||||||
| Formation and operational costs | $ | 295,534 | $ | 232,810 | ||||
| Loss from operations | (295,534 | ) | (232,810 | ) | ||||
| Other income: | ||||||||
| Interest earned on marketable securities held in Trust Account | 3,347,022 | 13,974 | ||||||
| Change in fair value of warrant liabilities | 656,667 | 492,500 | ||||||
| Total other income | 4,003,689 | 506,474 | ||||||
| Income before provision for income taxes | 3,708,155 | 273,664 | ||||||
| Provision for income taxes | (692,364 | ) | — | |||||
| Net income | $ | 3,015,791 | $ | 273,664 | ||||
| Basic and diluted weighted average shares outstanding, Class A common stock | 40,000,000 | 40,000,000 | ||||||
| Basic and diluted net income per share, Class A common stock | $ | 0.06 | $ | 0.01 | ||||
| Basic and diluted weighted average shares outstanding, Class B common stock | 10,000,000 | 10,000,000 | ||||||
| Basic and diluted net income per share, Class B common stock | $ | 0.06 | $ | 0.01 | ||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
NORTHERN STAR INVESTMENT CORP. IV
CONDENSED STATEMENTS OF CHANGES INSTOCKHOLDERS’ EQUITY (DEFICIT)IN STOCKHOLDERS’ DEFICIT
(UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 2022
| Class A Common Stock | Class B Common Stock | Additional Paid | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | in Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – September 30, 2022 | — | $ | — | 10,000,000 | $ | 1,000 | $ | — | $ | (14,779,329 | ) | $ | (14,778,329 | ) | ||||||||||||||
| Accretion to share subject to redemption | — | — | — | — | — | (2,573,517 | ) | (2,573,517 | ) | |||||||||||||||||||
| Net income | — | — | — | — | — | 3,015,791 | 3,015,791 | |||||||||||||||||||||
| Balance – December 31, 2022 | — | $ | — | 10,000,000 | $ | 1,000 | $ | — | $ | (14,337,055 | ) | $ | (14,336,055 | ) | ||||||||||||||
FOR THE THREE MONTHS ENDED DECEMBER 31, 2021
Class A Common Stock | Class B Common Stock | Additional Paid in Capital | Accumulated Deficit | Total Stockholders’ Equity (Deficit) | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance – September 30, 2021 | 0 | $ | 0 | 10,000,000 | $ | 1,000 | $ | 0 | $ | (27,933,965 | ) | $ | (27,932,965 | ) | ||||||||||||||
Net income | — | — | — | — | — | 273,664 | 273,664 | |||||||||||||||||||||
Balance – December 31, 2021 | 0 | $ | 0 | 10,000,000 | $ | 1,000 | $ | 0 | $ | (27,660,301 | ) | $ | (27,659,301 | ) | ||||||||||||||
Class A Common Stock | Class B Common Stock | Additional Paid in Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance –November 30, 2020 (inception) | 0 | $ | 0 | 0 | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||
Issuance of Class B common stock to Sponsor | — | — | 10,062,500 | 1,006 | $ | 23,994 | 0 | 25,000 | ||||||||||||||||||||
Net loss | — | — | — | — | — | (875 | ) | (875 | ) | |||||||||||||||||||
Balance – December 31, 2020 | 0 | $ | 0 | 10,062,500 | $ | 1,006 | $ | 23,994 | $ | (875 | ) | $ | 24,125 | |||||||||||||||
| Class A Common Stock | Class B Common Stock | Additional Paid | Accumulated | Total Stockholders’ | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | in Capital | Deficit | Deficit | ||||||||||||||||||||||
| Balance – September 30, 2021 | — | $ | — | 10,000,000 | $ | 1,000 | $ | — | $ | (27,933,965 | ) | $ | (27,932,965 | ) | ||||||||||||||
| Net income | — | — | — | — | — | 273,664 | 273,664 | |||||||||||||||||||||
| Balance – December 31, 2021 | — | $ | — | 10,000,000 | $ | 1,000 | $ | — | $ | (27,660,301 | ) | $ | (27,659,301 | ) | ||||||||||||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
NORTHERN STAR INVESTMENT CORP. IV
CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended December 31, | For the Period from November 30, 2020 (inception) through December 31, | |||||||
2021 | 2020 | |||||||
Cash Flows from Operating Activities: | ||||||||
Net income (loss) | $ | 273,664 | $ | (875 | ) | |||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
Change in fair value of warrant liabilities | (492,500 | ) | 0 | |||||
Interest earned on marketable securities held in Trust Account | (13,974 | ) | 0 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts payable and accrued expenses | 62,264 | 875 | ||||||
Net cash used in operating activities | $ | (170,546 | ) | $ | 0 | |||
Cash Flows from Financing Activities: | ||||||||
Proceeds from issuance of Class B common stock to Sponsor | $ | 0 | $ | 25,000 | ||||
Proceeds from promissory note—related party | 0 | 150,000 | ||||||
Payment of offering costs | (5,000 | ) | (25,000 | ) | ||||
Net cash provided by financing activities | $ | (5,000 | ) | $ | 150,000 | |||
Net Change in Cash | $ | (175,546 | ) | $ | 150,000 | |||
Cash – Beginning of period | 1,029,943 | 0 | ||||||
Cash – End of period | $ | 854,397 | $ | 150,000 | ||||
Non-Cash investing and financing activities: | ||||||||
Offering costs included in accrued offering costs | 0 | $ | 2,500 | |||||
(UNAUDITED)
| For the Three Months Ended December 31, | ||||||||
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income | $ | 3,015,791 | $ | 273,664 | ||||
| Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
| Change in fair value of warrant liability | (656,667 | ) | (492,500 | ) | ||||
| Interest earned on marketable securities held in Trust Account | (3,347,022 | ) | (13,974 | ) | ||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other currents assets | (18,333 | ) | — | |||||
| Accrued expenses | (951 | ) | 62,264 | |||||
| Income taxes payable | (170,796 | ) | — | |||||
| Net cash used in operating activities | (1,177,978 | ) | (170,546 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Cash withdrawn from Trust Account to pay franchise and income taxes | 1,164,626 | — | ||||||
| Net cash provided by investing activities | 1,164,626 | — | ||||||
| Cash Flows from Financing Activities: | ||||||||
| Payment of offering costs | — | (5,000 | ) | |||||
| Net cash used in by financing activities | — | (5,000 | ) | |||||
| Net Change in Cash | (13,352 | ) | (175,546 | ) | ||||
| Cash – Beginning of period | 210,070 | 1,029,943 | ||||||
| Cash – End of period | $ | 196,718 | $ | 854,397 | ||||
| Supplementary cash flow information: | ||||||||
| Cash paid for income taxes | $ | 863,160 | $ | — | ||||
| Non-Cash investing and financing activities: | ||||||||
| Remeasurement adjustment of Class A common stock to redemption value | $ | 2,573,517 | $ | — | ||||
The accompanying notes are an integral part of the unaudited condensed financial statements.
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 20212022
(Unaudited)
NOTE 1.1 — DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Northern Star Investment Corp. IV (the “Company”) is a blank check company incorporated in Delaware on November 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 not limited to a particular industry or sector for purposes of consummating a Business Combination although it is currently focusing on target businesses in the
As of December 31, 2021,2022, the Company had not commenced any operations. All activity for the period from November 30, 2020 (inception) through December 31, 20212022 relates to the Company’s formation and theits initial public offering (“Initial Public Offering”), which is described below.below, and subsequent to the Initial Public Offering, seeking to identify a target company for Business Combination. The Company believes it will not generate any operating revenues until after the completion of aits initial Business Combination, at the earliest. The Company will generate
The registration statements for the Company’s Initial Public Offering became effective on March 1, 2021. On March 4, 2021, the Company consummated the Initial Public Offering of 40,000,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), which included the partial exercise by the underwriter of its over-allotment option in the amount of 5,000,000 Units, at $10.00 per Unit, generating gross proceeds of $400,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 9,750,000 warrants (each, a “Private Warrant” and, collectively, the “Private Warrants”) at a price of $1.00 per Private Warrant in a private placement to Northern Star IV Sponsor LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $9,750,000, which is described in Note 4.
Transaction costs amounted to $22,531,113, consisting of $8,000,000 of underwriting fees, $14,000,000 of deferred underwriting fees and $531,113 of other offering costs.
Following the closing of the Initial Public Offering on March 4, 2021, an amount of $400,000,000 ($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 Warrants was placed in a trust account (the “Trust Account”), located in the United States and held as cash items or 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 paragraph (d) of Rule
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 must complete a Business Combination having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on income earned on the Trust Account) at the time of the agreement to enter into an initial Business Combination. The Company intends to 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 anticipated to be $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 20212022
(Unaudited)
The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 either immediately prior to or upon the 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 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 conversions 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 holders of the Founder Shares (as defined below in Note 5) have agreed to vote their Founder Shares 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 or do not vote at all.
If the Company seeks stockholder approval of a Business Combination and it does not conduct conversions 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 20% or more of the Public Shares, without the prior consent of the Company.
The holders of Founder Shares have agreed (a) to waive their conversion rights with respect to their Founder Shares and Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose an amendment to the Amended and Restated Certificate of Incorporation (i) 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 within the required time period or (ii) with respect to any other provision relating to stockholders’ rights or
If the Company is unable to complete a Business Combination by the Combination PeriodMarch 4, 2023 (the “Combination Period”) and such period is not extended by stockholders, 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 aper-sharea per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to the Company (less up to $100,000 of interest 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 the case of clauses (ii) and (iii) 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 Period.
The holders of the Founder Shares have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the holders of Founder Shares acquire 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 Period. The underwriters are expected agreed to waive their rights to the deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period 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 for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per share or (ii) the actual amount per public share held in the trust account as of the date of the liquidation of the trust account, if less than $10.00 per share due to reductions in the value of the trust assets. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriter 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.
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 20212022
(Unaudited)
Risks and Uncertainties
Management continues to evaluate the impact of the
Inflation Reduction Act of 2022 (the “IR Act”)
On August 16, 2022, the Inflation Reduction Act of 2022 (the “IR Act”) was signed into federal law. The IR Act provides for, among other things, a new U.S. federal 1% excise tax on certain repurchases of stock by publicly traded U.S. domestic corporations and certain U.S. domestic subsidiaries of publicly traded foreign corporations occurring on or after January 1, 2023. The excise tax is imposed on the repurchasing corporation itself, not its shareholders from which shares are repurchased. The amount of the excise tax is generally 1% of the fair market value of the shares repurchased at the time of the repurchase. However, for purposes of calculating the excise tax, repurchasing corporations are permitted to net the fair market value of certain new stock issuances against the fair market value of stock repurchases during the same taxable year. In addition, certain exceptions apply to the excise tax. The U.S. Department of the Treasury (the “Treasury”) has been given authority to provide regulations and other guidance to carry out and prevent the abuse or avoidance of the excise tax. The Treasury recently issued interim guidance that redemptions in connection with a SPAC liquidation would not be subject to the excise tax under certain circumstances. In addition, redemptions that occur in the same taxable year as a liquidation is completed will also be exempt from such tax.
Any redemption or other repurchase that occurs after December 31, 2022, in connection with a Business Combination, extension vote or otherwise, may be subject to the excise tax. Whether and to what extent the Company would be subject to the excise tax in connection with a Business Combination, extension vote or otherwise would depend on a number of factors, including (i) the fair market value of the redemptions and repurchases in connection with the Business Combination, extension or otherwise, (ii) the structure of a Business Combination, (iii) the nature and amount of any “PIPE” or other equity issuances in connection with a Business Combination (or otherwise issued not in connection with a Business Combination but issued within the same taxable year of a Business Combination) and (iv) the content of regulations and other guidance from the Treasury. In addition, because the excise tax would be payable by the Company and not by the redeeming holder, the mechanics of any required payment of the excise tax have not been determined. The foregoing could cause a reduction in the cash available on hand to complete a Business Combination and in the Company’s ability to complete a Business Combination.
Liquidity and Going Concern
As of December 31, 2021,2022, the Company had $854,397$196,718 in its operating bank accounts, $400,035,143$404,609,067 in securities held in the Trust Account to be used for a Business Combination or to repurchase or redeem its common stock in connection therewith and working capital deficit of $478,161.$197,347. As of December 31, 2021, approximately $35,0002022, $4,609,067 of the amount on deposit in the Trust Account represented interest income, which is available to pay the Company’s tax obligations.
Until the consummation of a Business Combination, the Company will be using the funds not held in the Trust Account for identifying and evaluating prospective acquisition candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to acquire, and structuring, negotiating and consummating the Business Combination.
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 2022
(Unaudited)
The Company may need to raise additional capital through loans or additional investments from its Sponsor, shareholders,stockholders, 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. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time, which is considered to be one year from the issuance date of the condensed financial statements. These condensed financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
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 March 4, 2023 to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date and stockholders do not approve an extension of such date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the mandatory liquidation, should a Business Combination not occur and an extension is not requested by the Sponsor, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after March 4, 2023.
NOTE 2.2 — 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
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 2022
(Unaudited)
The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended September 30, 2021 10-K,2022, as filed with the SEC on December 23, 2021.22, 2022. The interim results for the three months ended December 31, 2021 and for the period from November 30, 2020 (inception) through December 31, 20202022 are not necessarily indicative of the results to be expected for period ended December 31, 2021September 30, 2023, 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, 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
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 condensed financial statements and the reported amounts of revenues and expenses during the reporting period.
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. The Company did 0tnot have any cash equivalents as of December 31, 2021.
Marketable Securities Held in Trust Account
At December 31, 2021,2022 and September 30, 2022, substantially all of the assets held in the Trust Account were held in money market funds which primarily invest in U.S. Treasury securities.
Class A Common Stock Subject to Possible Redemption
The Company accounts for its Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A 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
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 2022
(Unaudited)
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.
Warrant Liabilities
The Company assessed its warrants under ASC 480-25, “Distinguishing liabilities from equity” and ASC 815-40 “Derivatives and Hedging—Contracts in Entity’s Own Equity”. The Company accounts for warrantsthe Public Warrants (as defined below) and Private Placement Warrants (collectively, the “Warrants”) as either equity-classifiedderivative liabilities. A provision in the Warrant Agreement related to certain tender or liability-classified instruments based on an assessmentexchange offers precludes the Warrants from being accounted for as components of equity. As the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480,Warrants meet the definition of a liability pursuant toderivative as contemplated in ASC 480, and whether815, the warrants meet allCompany accounts for Warrants for shares of the requirements for equity classification under ASC 815, including whether the warrantsCompany’s common stock that are not indexed to the Company’sits own ordinary shares, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conductedstock as derivative liabilities at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
Income Taxes
The Company follows the asset and liability method of accountingaccounts for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized forASC 740, Income Taxes, requires the estimated future tax consequences attributable to differences between the financial statements carrying amountsrecognition 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 for both the expected impact of differences between the unaudited condensed financial statements and tax basis of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally requires a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances arevaluation allowance to be established when necessary, to reduceit is more likely than not that all or a portion of deferred tax assets to the amount expected towill not be realized. As of December 31, 2022 and September 30, 2022, the Company’s deferred tax asset had a full valuation allowance recorded against it.
Our effective tax rate was 18.67% and 0.00% for the three months ended December 31, 2022 and 2021, respectively. The effective tax rate differs from the statutory tax rate of 21% for the three months ended December 31, 2022 and 2021, due to changes in fair value in warrant liability and the valuation allowance on the deferred tax assets.
ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and a measurement attributeprocess for the financial statement recognition and measurement of a tax positionsposition taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than notmore-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were 0no unrecognized tax benefits and 0no amounts accrued for interest and penalties as of December 31, 2021.2022 and September 30, 2022. 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 has identified the United States as its only “major” tax jurisdiction. The Company is subject to income tax examinationstaxation by major taxing authorities since inception. On March 27, 2020,These examinations may include questioning the CARES Act was enacted in response toCOVID-19pandemic. Under ASC 740,timing and amount of deductions, the effectsnexus of changes in tax rates and laws are recognized in the period which the new legislation is enacted. The CARES Act madeincome among various tax law changes including among other things (i) increasingjurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the limitation under Section 163(j)total amount of unrecognized tax benefits will materially change over the Internal Revenue
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 20212022
(Unaudited)
Net Income (Loss) Per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The Company has two classes of shares, which are referred to as Class A common stock and classClass B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per share of common stock is calculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the respective period. Remeasurement adjustment associated with the redeemable shares of Class A common stock is excluded from income (loss) per common share as the redemption value approximates fair value.
The calculation of diluted income (loss) per common share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. The warrants are exercisable to purchase 16,416,667 shares of Class A common stock in the aggregate. As of December 31, 2022 and 2021, 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. As a result, diluted net income (loss) per common share is the same as basic net income (loss) per common share for the periods presented.
The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts):
| For the Three Months Ended December 31, | ||||||||||||||||||||||||||||||||
For Three Months Ended December 31, | For the Period from November 30, 2020 (inception) Through December 31, | 2022 | 2021 | |||||||||||||||||||||||||||||
2021 | 2020 | Class A | Class B | Class A | Class B | |||||||||||||||||||||||||||
Class A | Class B | Class A | Class B | |||||||||||||||||||||||||||||
Basic and diluted net income (loss) per common stock | ||||||||||||||||||||||||||||||||
| Basic and diluted net income per common stock | ||||||||||||||||||||||||||||||||
| Numerator: | ||||||||||||||||||||||||||||||||
| Allocation of net income (loss), as adjusted | $ | 218,931 | $ | 54,733 | $ | — | $ | (875 | ) | |||||||||||||||||||||||
| Allocation of net income, as adjusted | $ | 2,412,633 | $ | 603,158 | $ | 218,931 | $ | 54,733 | ||||||||||||||||||||||||
| Denominator: | ||||||||||||||||||||||||||||||||
| Basic and diluted weighted average shares outstanding | 40,000,000 | 10,000,000 | — | 8,750,000 | 40,000,000 | 10,000,000 | 40,000,000 | 10,000,000 | ||||||||||||||||||||||||
| Basic and diluted net income (loss) per common stock | $ | 0.01 | $ | 0.01 | $ | — | $ | (0.00 | ) | |||||||||||||||||||||||
| Basic and diluted net income per common stock | $ | 0.06 | $ | 0.06 | $ | 0.01 | $ | 0.01 | ||||||||||||||||||||||||
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 and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed balance sheets, primarily due to their short-term nature.nature except for warrant liabilities (See Note 8).
Fair Value Measurements
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
| ● | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 20212022
(Unaudited)
| ● | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
| ● | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
Derivative Financial Instruments
The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then
Recent Accounting Standards
In August 2020, the FASB issued ASU
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 3.3 — INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 40,000,000 Units, which includes a partial exercise by the underwriters of their over-allotment option in the amount of 5,000,000 Units, at a price of $10.00 per Unit. Each Unit consists of one share of Class A common stock and
NOTE 4.4 — PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 9,750,000 Private Warrants at a price of $1.00 per Private Warrant, for an aggregate purchase price of $9,750,000, in a private placement. Each Private Warrant is exercisable to purchase one share of Class A common stock at an exercise price of $11.50. The proceeds from the sale of Private 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 Period, the proceeds of the sale of the Private Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Warrants will expire worthless.
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 20212022
(Unaudited)
NOTE 5.5 — RELATED PARTY TRANSACTIONS
Founder Shares
On December 18, 2020, the Company’s sponsor purchased an aggregate of 8,625,000 shares of the Company’s Class B common stock (the “Founder Shares”) for an aggregate price of $25,000. On March 1, 2021, the Company effected a dividend of approximately 0.167 shares for each outstanding share, resulting in there being an aggregate of 10,062,500 Founder Shares outstanding.
The Founder Shares included an aggregate of up to 62,500 shares of Class B common stock that remained subject to forfeiture by the Sponsor following the underwriters’ election to partially exercise their over-allotment option so that the number of Founder Shares would collectively represent 20% of the Company’s issued and outstanding shares upon the completion of the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering). The underwriters’ over-allotment option expired unexercised on April 18, 2021, and, accordingly, 62,500 Founder Shares were forfeited, resulting in an aggregate of 10,000,000 Founder Shares outstanding.
The holders of Founder Shares have agreed, subject to certain limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last sale 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
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the initial stockholders or an affiliate of the initial stockholders or certain of the Company’s directors and officers 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 wouldwill repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. 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 of the post-Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.
NOTE 6.6 — COMMITMENTS AND CONTINGENCIES
Registration Rights
Pursuant to a registration rights agreement entered into on March 1, 2021, the holders of the Founder Shares, Private Placement Warrants and any warrants that may be issued upon conversion of the Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of Working Capital Loans) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of the Initial Public Offering, requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to shares of common stock). The holders of the majority of these securities are 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 statementsstatement filed subsequent to 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 registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 20212022
(Unaudited)
Underwriting Agreement
The Company granted the underwriter a
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $14,000,000 in the aggregate. The deferred fee will be forfeited by the underwriters solely in the event that the Company fails to complete a Business Combination, subject to the terms of the underwriting agreement.
Consulting Agreement
On February 1, 2022, the Company entered into an agreement with a consultant for advisory services. The agreement specifies that the Company pays $8,333.33 a month plus any out-of-pocket expenses to the consultant. The agreement is terminable within 30 days written notice.
NOTE 7.7 — STOCKHOLDER’S EQUITY
Preferred Stock
Class
Class
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
NORTHERN STAR INVESTMENT CORP. IV
NOTES TO CONDENSED FINANCIAL STATEMENTS
DECEMBER 31, 20212022
(Unaudited)
NOTE 8.8 — FAIR VALUE MEASUREMENTS
The Company classifies its U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC Topic 320 “Investments—Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying condensed balance sheets and adjusted for the amortization or accretion of premiums or discounts.
At December 31, 2021,2022 and September 30, 2022, assets held in the Trust Account were comprised of $400,035,143$404,609,067 and $402,426,671 in a money market fund that invests in U.S. Treasury securities.securities, respectively. During the three months ended December 31, 2021,2022, the Company did 0t withdraw anyhad withdrawn $1,164,626 interest income from the Trust Account.
The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 20212022 and September 30, 2022 and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value.
Description | Level | December 31, 2021 | ||||||
Assets: | ||||||||
Investments held in Trust Account - US. Treasury Money | 1 | $ | 400,035,143 | |||||
Liabilities: | ||||||||
Warrant Liability – Public | 1 | 5,733,334 | ||||||
Warrant Liability – Private Placement | 2 | 8,385,000 | ||||||
| Description | Level | December 31, 2022 | Level | September 30, 2022 | ||||||||
| Assets: | ||||||||||||
| Investments held in Trust Account – U.S Treasury Securities Money Market Fund | 1 | $ | 404,609,067 | 1 | $ | 402,426,671 | ||||||
| Liabilities: | ||||||||||||
| Warrant Liability – Public | 1 | $ | 133,333 | 1 | $ | 400,000 | ||||||
| Warrant Liability – Private Placement | 2 | 195,000 | 2 | 585,000 | ||||||||
The Warrants were accounted for as liabilities in accordance with
The subsequent measurements of the Public Warrants after the detachment of the Public Warrants from the Units isare classified as Level 1 due to the use of an observable market quote in an active market under the ticker NSTD.WS. For periods subsequent to the detachment of the Public Warrants from the Units, the close price of the Public Warrant price was used as the fair value of the Warrants as of each relevant date.
Transfers to/from Levels 1, 2 and 3 are recognized at the end of the reporting period in which a change in valuation technique or methodology occurs. There have been no transfers in or out of Level 3 measurements from the period between September 30, 2021,2022, and December 31, 2021.
The following table presents the changes in the fair value of warrant liabilities:
| Private Placement | Public | Warrant Liabilities | ||||||||||
| Fair value as of September 30, 2022 | $ | 585,000 | $ | 400,000 | $ | 985,000 | ||||||
| Change in fair value | (390,000 | ) | (266,667 | ) | (656,667 | ) | ||||||
| Fair value as of December 31, 2022 | $ | 195,000 | $ | 133,333 | $ | 328,333 | ||||||
Private Placement | Public | Warrant Liabilities | ||||||||||
Fair value as of September 30, 2021 | $ | 8,677,500 | $ | 5,933,334 | $ | 14,610,834 | ||||||
Change in fair value | (292,500 | ) | (200,000 | ) | (492,500 | ) | ||||||
Fair value as of December 31, 2021 | $ | 8,385,000 | $ | 5,733,334 | $ | 14,118,334 | ||||||
NOTE 9.9 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheets date up to the date that the condensed financial statements were issued. Other than as described in these financial statements,Based upon this review, the Company did not identify any subsequent events, other than those listed below, that would have required adjustment or disclosure in the condensed financial statements.
Effective February 1, 2023, the Company terminated its agreement with a consultant for monthly advisory services.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Northern Star Investment Corp. IV References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Northern Star IV Sponsor LLC. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form
Overview
We are a blank check company formed under the laws of the State of Delaware on November 30, 2020, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Private Warrants, our capital stock, debt or a combination of cash, stock and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial Business Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities through December 31, 20212022, were organizational activities, those necessary to prepare for the Initial Public Offering and, after our Initial Public Offering, identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We generate
For the three months ended December 31, 2022, we had net income of $3,015,791, which consisted of change in fair value of warrant liability of $656,667 and interest earned on marketable securities held in Trust Account of $3,347,022, offset by formation and operational costs of $295,534 and provision for income tax of $692,364.
For the three months ended December 31, 2021, we had net income of $273,664, which consisted of formation and operational costs of $232,810, change in fair value of warrant liability of $492,500 and interest earned on marketable securities held in Trust Account of $13,974.
Liquidity and Capital Resources
On March 4, 2021, we consummated the Initial Public Offering of 40,000,000 Units, which included the partial exercise by the underwriter of the over-allotment option in the amount of 5,000,000 Units, at $10.00 per Unit, generating gross proceeds of $400,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 9,750,000 Private Warrants to the Sponsor at a price of $1.00 per warrant, generating gross proceeds of $9,750,000.
Following the Initial Public Offering, the partial exercise of the over-allotment option, and the sale of the Private Warrants, a total of $400,000,000 was placed in the Trust Account. We incurred $22,531,113 in transaction costs, including $8,000,000 of underwriting fees, $14,000,000 of deferred underwriting fees and $531,113 of other costs.
For the three months ended December 31, 2022, net cash used in operating activities was $1,177,978. Net income of $3,015,791 was affected by the change in fair value of warrant liability of $656,667 and interest earned on marketable securities held in Trust Account of $3,347,022. Changes in operating assets and liabilities used $190,080 of cash for operating activities.
For the three months ended December 31, 2021, net cash used in operating activities was $170,546. Net income of $273,664 was affected by the change in fair value of warrant liability of $492,500 and interest earned on marketable securities held in Trust Account of $13,974. Changes in operating assets and liabilities provided $62,264 of cash for operating activities.
As of December 31, 2021,2022, we had marketable securities held in the Trust Account of $400,035,143$404,609,067 (including $35,143$4,609,067 of interest income) consisting of U.S. Treasury Bills with a maturity of 185 days or less. Interest income on the balance in the Trust Account may be used by us to pay taxes Through December 31, 2021,2022, we have not withdrawn any interest earned from the Trust Account.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less deferred underwriting commissions and income taxes payable), to complete our Business Combination. To the extent that our capital stock or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of December 31, 2021,2022, we had cash of $854,397.$196,718. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor or our officers, directors or their respective affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we wouldwill repay such loaned amounts. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants identical to the Private Warrants, at a price of $1.00 per warrant at the option of the lender.
The Company may need to raise additional capital through loans or additional investments from its Sponsor, shareholders,stockholders, 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. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time, which is considered to be one year from the issuance date of the financial statements. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
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 March 4, 2023 to consummate a Business Combination. It is uncertain that the Company will be able to consummate a Business Combination by this time. If a Business Combination is not consummated by this date and stockholders do not approve an extension of such date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the mandatory liquidation, should a Business Combination not occur and an extension is not requested by the Sponsor, and potential subsequent dissolution raises substantial doubt about the Company’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after March 4, 2023.
Off-Balance
We have no obligations, assets or liabilities, which would be considered
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
The underwriters are entitled to a deferred fee of $0.35 per Unit, or $14,000,000 in the aggregate.aggregate (or $10,062,500 if the underwriters’ over-allotment is exercised in full). The deferred fee will be forfeited by the underwriters solely in the event that we fail to complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liabilities
The Company assessed its warrants under ASC 480-25, “Distinguishing liabilities from equity” and ASC 815-40 “Derivatives and Hedging—Contracts in Entity’s Own Equity”. The Company accounts for the Public Warrants (as defined below) and Private Placement Warrants (collectively, the “Warrants”) as derivative liabilities. A provision in the Warrant Agreement related to certain tender or exchange offers precludes the Warrants from being accounted for as components of equity. As the Warrants meet the definition of a derivative as contemplated in ASC 815, the Company accounts for Warrants for shares of the Company’s common stock that are not indexed to its own stock as derivative liabilities at fair value on the balance sheets and measured at fair value at inception (on the date of the Initial Public Offering) and at each reporting date in accordance with the guidance contained in
Class A Common Stock Subject to Possible Redemption
We account for our shares of Class A common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A 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 are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, common stock is classified as stockholders’ equity.deficit. Our common stock features certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, shares ofthe Class A common stock subject to possible redemption is presented at redemption value as temporary equity, outside of the stockholders’ equitydeficit section of our condensed balance sheets.
The Company recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Immediately upon the closing of the Initial Public Offering, the Company recognized the remeasurement from initial book value to redemption amount value. Increases or decreases in the carrying amount of redeemable common stock are affected by charges against additional paid in capital and accumulated deficit.
Net Income (Loss) Per Common Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. The Company has two classes of shares, which are referred to as Class A common stock and class B common stock. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per share of common stock is computedcalculated by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the respective period. The Company appliesWe did not consider the
Recent Accounting Standards
In August 2020, the Financial Accounting Standards Board (“FASB”)FASB issued Accounting Standards Update (“ASU”)
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our financial statements.
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 as of the date of the condensed financial statements and the reported amounts of revenues and expenses during the 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
As required by Rules 13a-15 and 15d-15 under the supervisionExchange Act, our Chief Executive Officer and with the participation of our management, including our principal executive officer and principal financial and accounting officer, we conductedChief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the fiscal quarter ended December 31, 2021, as such term is defined in Rules
Management intends to continueimplement remediation steps to devote, significant effortimprove our disclosure controls and resources to the remediationprocedures and improvement of itsour internal control over financial reporting. Specifically, we intend to expand and improve our review process for complex securities and related accounting standards. We are monitoring our processes to ensure proper identification and appropriate application of applicable accounting requirements. These processes include timely evaluation of relevant accounting guidance to better understand the nuances of the complex accounting standards that apply to our financial statements. We are also ensuring enhancedhave improved this process by enhancing access to accounting literature, research materials and documents and are monitoring our processes to ensure increased communication among our personnel andidentification of third-party professionals with whom weto consult regarding complex accounting applications.applications and consideration of additional staff with the requisite experience and training to supplement existing accounting professionals.
Changes in Internal Control over Financial Reporting
During the quarter ended December 31, 2021,2022, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, as the circumstances that led to the material weakness described above had not yet been identified. We are in the process of implementing changes to our internal control over financial reporting to remediate such material weaknesses, as more fully described above. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects.
PART II—OTHER INFORMATION
Item 1A. Risk Factors
As of the date of this Quarterly Report, there have been no material changes with respect to those risk factors previously disclosed in our Annual Report on Form10-K for the year ended September 30, 2022, except as set forth below. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations.
We identified an additional material weakness in our internal control over financial reporting relating to our complex financial instruments. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of condensed financial statements for external purposes in accordance with GAAP. Our management also evaluates the effectiveness of our internal controls, and we will disclose any changes and material weaknesses identified through such evaluation in those internal controls. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
As described elsewhere in this report, in connection with the preparation of our condensed financial statements as of December 31, 2022, management identified errors made in our historical financial statements where we improperly classified some of our Class A common stock subject to possible redemption. We previously determined the Class A common stock subject to possible redemption to be equal to the redemption value of $10.00 per share of Class A common stock while also taking into consideration that a redemption cannot result in net tangible assets being less than $5,000,001 pursuant to our amended and restated certificate of incorporation. Management determined that the Class A common stock issued during our initial public offering can be redeemed or become redeemable subject to the occurrence of future events considered outside our control. Therefore, management concluded that temporary equity should include all shares of Class A common stock subject to possible redemption. As a result, management has noted a classification error related to temporary equity and permanent equity. This resulted in a restatement to the initial carrying value of the Class A common stock subject to possible redemption with the offset recorded to additional paid-in capital (to the extent available), accumulated deficit and Class A common stock. Management concluded that the foregoing constituted a material weakness as of December 31, 2022.
As a result, we performed additional analysis as deemed necessary to ensure that our condensed financial statements were prepared in accordance with U.S. generally accepted accounting principles. Accordingly, management believes that the condensed financial statements included in this Form10-Qpresent fairly in all material respects our financial position, results of operations and cash flows for the period presented. However, we cannot assure you that the foregoing will not result in any future material weaknesses or deficiencies in internal control over financial reporting. Even though we have strengthened our controls and procedures, in the future those controls, and procedures may not be adequate to prevent or identify irregularities or errors or to facilitate the fair presentation of our condensed financial statements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On March 4, 2021, we consummated the Initial Public Offering of 40,000,000 Units, inclusive of 5,000,000 Units sold to the underwriters upon the underwriters’ election to partially exercise their over-allotment option, at a price of $10.00 per Unit, generating total gross proceeds of $400,000,000. Citigroup Global Markets Inc. acted as the book-running manager of the Initial Public Offering. The securities in the offering were registered under the Securities Act on registration statements on
Simultaneous with the consummation of the Initial Public Offering, and the partial exercise of the over-allotment option, we consummated the private placement of an aggregate of 9,750,000 Private Warrants to the Sponsor at a price of $1.00 per Private Warrant, generating total proceeds of $9,750,000. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants are not transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions.
Of the gross proceeds received from the Initial Public Offering including the over-allotment option, and the Private Warrants, $400,000,000 was placed in the Trust Account.
We paid a total of $8,000,000 in underwriting discounts and commission and $531,113 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer up to $14,000,000 in underwriting discounts and commissions.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this
Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on
No. | Description of Exhibit | |
| Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||
| | ||
| 31.2* | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| | ||
| 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| | ||
| 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Online XBRL Document | ||
| Inline XBRL Taxonomy Extension Schema Document | ||
| Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||
| Inline XBRL Taxonomy Extension Definition Linkbase Document | ||
| Inline XBRL Taxonomy Extension Labels Linkbase Document | ||
| Inline XBRL Taxonomy Extension Presentation Linkbase Document | ||
| 104 | The cover page from the Company’s Quarterly report on | |
| * | Filed herewith. |
| ** | Furnished. |
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
NORTHERN STAR INVESTMENT CORP. IV | |||||||
| Date: February 15, 2023 | By: | /s/ Joanna Coles | |||||
| Name: | Joanna Coles | ||||||
| Title: | Chief Executive Officer | ||||||
| (Principal Executive Officer) | |||||||
| Date: February 15, 2023 | By: | /s/ James Brady | ||||
| Name: | James Brady | |||||
| Title: | Chief Financial Officer | |||||
| (Principal Financial and Accounting Officer) |
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