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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

For the quarterly period ended September 30, 2021

OR

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

For the transition period from ________ to ________

SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

(Exact name of registrant as specified in its charter)

 

Cayman Islands

001-40273

98-1574762

(State or other jurisdiction of incorporation or organization)

(Commission File Number)

(IRS Employer Identification No.)

 

4301 50th Street NW,

Suite 300 PMB 1044,

Washington, D.C.

 

20016

(Address Of Principal Executive Offices)

 

(Zip Code)

(202) 918-7050

Registrant’s telephone number, including area code

Not Applicable

(Former name or former address, if changed since last report)

 

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 Class A ordinary share, $0.0001 par value, and one-fifth of one redeemable warrant

  

STRE.U

  

The New York Stock Exchange

Class A ordinary shares, par value $0.0001 per share

  

STRE

  

The New York Stock Exchange

Redeemable warrants, each whole warrant exercisable for one Class A ordinary share at an exercise price of $11.50

  

STRE WS

  

The New York Stock Exchange

 

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

 

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

 

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

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

Emerging growth company

 

 

 

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

 

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

 

As of November 15, 2021, 28,103,449 shares of Class A ordinary shares, par value $0.0001 per share, and 7,025,862 shares of Class B ordinary shares, par value $0.0001 per share, were issued and outstanding, respectively.

 


 

 

SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

Form 10-Q

For the Quarter Ended September 30, 2021

Table of Contents

 

 

 

Page

PART I. FINANCIAL INFORMATION

 

 

 

 

Item 1.

Condensed Financial Statements

1

 

 

 

 

Condensed Balance Sheets as of September 30, 2021 (unaudited) and December 31, 2020

1

 

 

 

 

Unaudited Condensed Statements of Operations for The Three and Nine Months Ended September 30, 2021

2

 

 

 

 

Unaudited Condensed Statements of Changes in Shareholders’ Equity (Deficit) for the Three and Nine Months Ended September 30, 2021

3

 

 

 

 

Unaudited Condensed Statement of Cash Flows for the Nine Months Ended September 30, 2021

4

 

 

 

 

Notes to Unaudited Condensed Financial Statements

5

 

 

 

Item 2.

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

23

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

29

 

 

 

Item 4.

Controls and Procedures

29

 

 

PART II. OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

30

 

 

 

Item 1A.

Risk Factors

30

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities

30

 

 

 

Item 3.

Defaults Upon Senior Securities

31

 

 

 

Item 4.

Mine Safety Disclosures

31

 

 

 

Item 5.

Other Information

31

 

 

 

Item 6.

Exhibits

32

 

 

 


 

 

PART I. FINANCIAL INFORMATION

Item 1.Condensed Financial Statements

 

SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

CONDENSED BALANCE SHEETS

 

 

 

September 30, 2021

 

 

December 31, 2020

 

 

 

(unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash

 

$

708,783

 

 

$

-

 

Prepaid expenses

 

 

313,038

 

 

 

-

 

Total current assets

 

 

1,021,821

 

 

 

-

 

Investments held in Trust Account

 

 

281,043,219

 

 

 

-

 

Deferred offering costs

 

 

-

 

 

 

35,000

 

Total Assets

 

$

282,065,040

 

 

$

35,000

 

 

 

 

 

 

 

 

 

 

Liabilities, Class A Ordinary Shares Subject to Possible

   Redemption and Shareholders' Equity (Deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

125,000

 

 

$

-

 

Accrued expenses

 

 

1,181,888

 

 

 

19,414

 

Total current liabilities

 

 

1,306,888

 

 

 

19,414

 

Deferred underwriting commissions

 

 

9,836,207

 

 

 

-

 

Derivative warrant liabilities

 

 

9,489,140

 

 

 

-

 

Total liabilities

 

 

20,632,235

 

 

 

19,414

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A ordinary shares subject to possible redemption, $0.0001 par

   value; 28,103,449 and -0- shares at $10.00 per share as of

   September 30, 2021 and December 31, 2020

 

 

281,034,490

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity (Deficit)

 

 

 

 

 

 

 

 

Preference shares, $0.0001 par value; 5,000,000 shares

   authorized; none issued and outstanding

 

 

-

 

 

 

-

 

Class A ordinary shares, $0.0001 par value; 500,000,000

   shares authorized; none issued and outstanding

 

 

-

 

 

 

-

 

Class B ordinary shares, $0.0001 par value; 50,000,000 shares

   authorized; 7,025,862 and 7,187,500 shares issued and

   outstanding as of September 30, 2021 and December 31,

   2020, respectively

 

 

703

 

 

 

719

 

Additional paid-in capital

 

 

-

 

 

 

24,281

 

Accumulated deficit

 

 

(19,602,388

)

 

 

(9,414

)

Total shareholders' equity (deficit)

 

 

(19,601,685

)

 

 

15,586

 

Total Liabilities, Class A Ordinary Shares Subject to Possible

   Redemption and Shareholders' Equity (Deficit)

 

$

282,065,040

 

 

$

35,000

 

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

1


 

SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

UNAUDITED CONDENSED STATEMENTS OF OPERATIONS

 

 

 

Three Months

Ended

September 30,

2021

 

 

Nine Months

Ended

September 30,

2021

 

General and administrative expenses

 

$

712,169

 

 

$

1,705,435

 

Loss from operations

 

 

(712,169

)

 

 

(1,705,435

)

Other income (expense)

 

 

 

 

 

 

 

 

Change in fair value of derivative warrant liabilities

 

 

1,828,100

 

 

 

116,030

 

Financing costs - derivative warrant liabilities

 

 

-

 

 

 

(321,903

)

Gain on investments held in Trust Account

 

 

4,244

 

 

 

8,729

 

Net income (loss)

 

$

1,120,175

 

 

$

(1,902,579

)

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding of Class A ordinary shares, basic and diluted

 

 

28,103,449

 

 

 

19,479,601

 

Basic and diluted net income (loss) per share, Class A ordinary

 

$

0.03

 

 

$

(0.07)

 

Weighted average shares outstanding of Class B ordinary shares, basic and diluted

 

 

7,025,862

 

 

 

6,662,088

 

Basic and diluted net income (loss) per share, Class B ordinary shares

 

$

0.03

 

 

$

(0.07

)

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

 

2


 

 

SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2021

 

 

 

Ordinary Shares

 

 

Additional

 

 

 

 

 

 

Total

 

 

 

Class A

 

 

Class B

 

 

Paid-in

 

 

Accumulated

 

 

Shareholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity (Deficit)

 

Balance - December 31, 2020

 

 

-

 

 

$

-

 

 

 

7,187,500

 

 

$

719

 

 

$

24,281

 

 

$

(9,414

)

 

$

15,586

 

Excess of cash received over fair value of private placement warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,360,000

 

 

 

-

 

 

 

3,360,000

 

Accretion of Class A ordinary shares to redemption amount

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(3,384,281

)

 

 

(15,673,854

)

 

 

(19,058,135

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(593,464

)

 

 

(593,464

)

Balance - March 31, 2021 (restated, see Note 2)

 

 

-

 

 

$

-

 

 

 

7,187,500

 

 

$

719

 

 

$

-

 

 

$

(16,276,732

)

 

$

(16,276,013

)

Excess of cash received over fair value of private placement warrants

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

288,620

 

 

 

-

 

 

 

288,620

 

Forfeiture of Class B ordinary shares

 

 

-

 

 

 

-

 

 

 

(161,638

)

 

 

(16

)

 

 

16

 

 

 

-

 

 

 

-

 

Accretion of Class A ordinary shares to redemption amount (restated, see Note 2)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(288,636

)

 

 

(2,016,541

)

 

 

(2,305,177

)

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(2,429,290

)

 

 

(2,429,290

)

Balance - June 30, 2021 (restated, see Note 2)

 

 

-

 

 

$

-

 

 

 

7,025,862

 

 

$

703

 

 

$

-

 

 

$

(20,722,563

)

 

$

(20,721,860

)

Net income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,120,175

 

 

 

1,120,175

 

Balance - September 30, 2021

 

 

-

 

 

$

-

 

 

 

7,025,862

 

 

$

703

 

 

$

-

 

 

$

(19,602,388

)

 

$

(19,601,685

)

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

3


 

 

SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

UNAUDITED CONDENSED STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021

 

Cash Flows from Operating Activities:

 

 

 

 

Net loss

 

$

(1,902,579

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Change in fair value of derivative warrant liabilities

 

 

(116,030

)

Financing costs - derivative warrant liabilities

 

 

321,903

 

Gain on investments held in Trust Account

 

 

(8,729

)

Changes in operating assets and liabilities:

 

 

 

 

Prepaid expenses

 

 

(313,038

)

Accounts payable

 

 

125,000

 

Accrued expenses

 

 

1,077,474

 

Net cash used in operating activities

 

 

(815,999

)

 

 

 

 

 

Cash Flows from Investing Activities:

 

 

 

 

Cash deposited in Trust Account

 

 

(281,034,490

)

Net cash used in investing activities

 

 

(281,034,490

)

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

Proceeds from note payable to related party

 

 

300,000

 

Repayment of note payable to related party

 

 

(300,000

)

Proceeds received from initial public offering, gross

 

 

281,034,490

 

Proceeds received from private placement

 

 

7,620,690

 

Offering costs paid

 

 

(6,095,908

)

Net cash provided by financing activities

 

 

282,559,272

 

 

 

 

 

 

Net change in cash

 

 

708,783

 

 

 

 

 

 

Cash - beginning of the period

 

 

-

 

Cash - end of the period

 

$

708,783

 

 

 

 

 

 

Supplemental disclosure of noncash financing activities:

 

 

 

 

Offering costs included in accrued expenses

 

$

85,000

 

Deferred underwriting commissions

 

$

9,836,207

 

 

The accompanying notes are an integral part of these unaudited condensed financial statements.

 

4


 

SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

Note 1-Description of Organization, Business Operations and Liquidity

 

Supernova Partners Acquisition Company III, Ltd. (the “Company”) was incorporated as a Cayman Islands exempted company on December 24, 2020. The Company was formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is an emerging growth company and, as such, the Company is subject to all the risks associated with emerging growth companies.

 

As of September 30, 2021, the Company had not commenced any operations. All activity for the period from December 24, 2020 (inception) through September 30, 2021, relates to the Company’s formation and the initial public offering (the “Initial Public Offering”) described below, and since the Initial Public Offering, the search or an initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company generates non-operating income in the form of interest income on from the proceeds from the Initial Public Offering held in the trust account. The Company has selected December 31 as its fiscal year end.

 

The Company’s sponsor is Supernova Partners III LLC, a Cayman Islands exempted company (the “Sponsor”). The registration statement for the Company’s Initial Public Offering was declared effective on March 22, 2021. On March 25, 2021, the Company consummated its Initial Public Offering of 25,000,000 units (the “Units” and, with respect to the Class A ordinary shares included in the Units being offered, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $250.0 million, and incurring offering costs of approximately $14.3 million, of which approximately $8.8 million was for deferred underwriting commissions (see Note 5).

 

The Company granted the underwriters in the IPO (the “Underwriters”) a 45-day option to purchase up to 3,750,000 additional Units to cover over-allotments, if any. The Underwriters exercised the over-allotment option in full and on April 1, 2021 purchased an additional 3,103,449 Units (the “Over-Allotment Units”), generating gross proceeds of approximately $31.0 million (the “Over-Allotment”), and incurring additional offering costs of approximately $1.7 million in offering costs, of which approximately $1.1 million was for deferred underwriting fees.

 

Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 3,500,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”), at a price of $2.00 per Private Placement Warrant with the Sponsor, generating gross proceeds of $7.0 million (see Note 4).

 

Simultaneously with the closing of the Over-allotment on April 1, 2021, the Company consummated the second closing of the Private Placement, resulting in the purchase of an aggregate of an additional 310,345 Private Placement Warrants by the Sponsor, generating gross proceeds to the Company of approximately $621,000.

 

In addition, the Sponsor agreed to forfeit up to 937,500 Class B ordinary shares, par value $0.0001 (the “Founder Shares”) to the extent that the over-allotment option was not exercised in full by the underwriters. The underwriters partially exercised their over-allotment option on April 1, 2021, and subsequently on May 9, 2021, the Sponsor forfeited 161,638 Class B ordinary shares.

 

Upon the closing of the Initial Public Offering, the Over-Allotment, and the Private Placement, $281.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (“Trust Account”), located in the United States at J.P. Morgan Chase Bank, N.A., with American Stock Transfer & Trust Company acting as trustee, 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 paragraphs (d)(2), (d)(3) and (d)(4) 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 and (ii) the distribution of the Trust Account as described below.

 

5


SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

 

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 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 one or more initial Business Combinations having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the amount of any deferred underwriting discount held in trust) at the time of the signing of the agreement to enter into the initial Business Combination. However, 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 its Public Shares (the “Public Shareholders”) 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 general meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Shareholders will be entitled to redeem their Public Shares

for a pro rata portion of the amount then in the Trust Account (at $10.00 per Public Share). The per-share amount to be distributed to Public Shareholders 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 5). These Public Shares were classified as temporary equity in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, 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 a majority of the shares voted are voted in favor of the Business Combination. If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its amended and restated memorandum and articles of association (the “Amended and Restated Memorandum and Articles of Association”), 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, shareholder approval of the transactions is required by law, or the Company decides to obtain shareholder 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. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction. If the Company seeks shareholder approval in connection with a Business Combination, the initial shareholders (as defined below) agreed to vote their Founder Shares (as defined below in Note 4) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination. Subsequent to the consummation of the Initial Public Offering, the Company has adopted an insider trading policy which will require insiders to: (i) refrain from purchasing shares during certain blackout periods and when they are in possession of any material non-public information and (ii) to clear all trades with the Company’s legal counsel prior to execution. In addition, the initial shareholders agreed to waive their redemption rights with respect to their Founder Shares and Public Shares in connection with the completion of a Business Combination.

 

Notwithstanding the foregoing, the Amended and Restated Memorandum and Articles of Association will provide that a Public Shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder 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 Class A ordinary shares sold in the Initial Public Offering, without the prior consent of the Company.

 

The Company’s Sponsor, officers and directors (the “initial shareholders”) agreed not to propose an amendment to the Amended and Restated Memorandum and Articles of Association that would modify 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 Shareholders with the opportunity to redeem their Class A ordinary shares in conjunction with any such amendment.

 

If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or March 25, 2023 (the “Combination Period”), 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

6


SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

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 earned on the funds held in the Trust Account (less taxes payable and 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 Shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any) and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the board of directors, liquidate and dissolve, subject, in the case of clauses (ii) and (iii), to the Company’s obligations under Cayman Islands law to provide for claims of creditors and in all cases subject to the other requirements of applicable law. There will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless if the Company fails to complete its initial Business Combination within the Combination Period.

 

The Sponsor 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 Sponsor or members of the Company’s management team acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters agreed to waive their rights to their deferred underwriting commission (see Note 5) 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 residual assets remaining available for distribution (including Trust Account assets) will be only $10.00 per share initially held in the Trust Account. In order to protect the amounts held in the Trust Account, the Sponsor agreed to be liable to the Company if and to the extent any claims by a vendor 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. 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 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, except the independent registered public accounting firm, 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.

 

Going Concern

 

As of September 30, 2021, the Company had approximately $0.7 million in its operating bank account and a working capital deficit of approximately $0.3 million.

 

The Company has incurred and expects to incur significant costs in pursuit of its financing and acquisition plans. Management has determined that the Company has access to funds from the Sponsor that are sufficient to fund the working capital needs of the Company until the consummation of an initial Business Combination or for a minimum of one year from the date of issuance of these unaudited condensed financial statements. However, in connection with the Company’s assessment of going concern considerations in accordance with Financial Accounting Standards Board Accounting Standards Update 2014-15, “Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Company's cash flow deficit raise substantial doubt about the Company's ability to continue as a going concern within one year after the date that the financial statements are issued. There is no assurance that the Company’s plans to consummate a Business Combination or raise additional funds will be successful within the Combination Period. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Risks and Uncertainties

 

Management continues to evaluate the impact of the COVID-19 global pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position,

7


SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

results of its operations, and/or search for a target company, the specific impact is not readily determinable as of the date of these unaudited condensed financial statements. The unaudited condensed financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

Note 2-Basis of Presentation and Summary of Significant Accounting Policies

 

Basis of Presentation

 

The accompanying unaudited condensed financial statements are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected through December 31, 2021.

 

The accompanying unaudited condensed financial statements should be read in conjunction with the audited balance sheet and notes thereto included in the Form 8-K and the final prospectus filed by the Company with the SEC on March 31, 2021 and March 24, 2021, respectively. During the course of preparing the quarterly report on Form 10-Q for the three-month period ended March 31, 2021, the Company identified a misstatement in its accounting treatment for warrants issued in connection with the Initial Public Offering (the “Public Warrants”) and the Private Placement Warrants (collectively, the “Warrants”) as presented in its audited balance sheet as of March 25, 2021 included in its Current Report on Form 8-K, filed September 30, 2021. The Warrants were reflected as a component of equity as opposed to liabilities on the balance sheet. Pursuant to FASB ASC Topic 250, Accounting Changes and Error Corrections, and Staff Accounting Bulletin 99, "Materiality") ("SAB 99") issued by the SEC, the Company determined the impact of the error was immaterial. The following balance sheet items were impacted from the error correction as of March 25, 2021: an increase of approximately $8.6 million in warrant liabilities; a decrease of approximately $8.6 million in the amount of Class A ordinary shares subject to redemption; an increase of approximately $205,000 in additional paid-in capital; and an increase of approximately $205,000 in accumulated deficit.

 

Restatement to Previously Reported Financial Statements

 

In preparation of the Company’s unaudited condensed financial statements as of and for quarterly period ended September 30, 2021, the Company concluded it should restate its previously issued financial statements to classify all Class A ordinary shares subject to possible redemption in temporary equity. The Company’s previously filed financial statements that contained the error were reported in the Company’s Form 8-K filed with the SEC on March 31, 2021 (the “Post-IPO Balance Sheet”) and the Company’s Form 10-Qs for the quarterly periods ended March 31, 2021, and June 30, 2021 (the “Affected Quarterly Periods”).In accordance with the SEC and its staff’s guidance on redeemable equity instruments, ASC 480-10-S99, redemption provisions not solely within the control of the Company require ordinary shares subject to redemption to be classified outside of permanent equity. The Company had previously classified a portion of its Class A ordinary shares in permanent equity, or total shareholders’ equity. Although the Company did not specify a maximum redemption threshold, its charter currently provides that, the Company will not redeem its public shares in an amount that would cause its net tangible assets to be less than $5,000,001. Previously, the Company did not consider redeemable shares classified as temporary equity as part of net tangible assets. Effective with these financial statements, the Company revised this interpretation to include temporary equity in net tangible assets. As a result, the Company restated its previously filed financial statements to present all Class A ordinary shares subject to possible redemption as temporary equity and recognized accretion from the initial book value to redemption value at the time of its Initial Public Offering (including exercise of the over-allotment option).

 

The impact of the revision to the Post-IPO Balance Sheet is an increase to Class A ordinary shares subject to possible redemption of approximately $21.0 million, a decrease to additional paid-in capital of $5.3 million, an increase to the

8


SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

accumulated deficit of $15.7 million, and the reclassification of par value of 2,101,545 Class A ordinary shares from permanent equity to Class A ordinary shares subject to possible redemption, as presented below.

 

As of March 25, 2021

 

As Reported

 

 

Adjustment

 

 

As Restated

 

Total assets

 

$

251,877,540

 

 

 

-

 

 

$

251,877,540

 

Total liabilities

 

$

17,892,984

 

 

 

-

 

 

$

17,892,984

 

Class A ordinary shares subject to redemption

 

$

228,984,550

 

 

$

21,015,450

 

 

$

250,000,000

 

Preferred shares

 

$

-

 

 

 

-

 

 

 

-

 

Class A ordinary shares

 

$

210

 

 

 

(210

)

 

 

-

 

Class B ordinary shares

 

$

719

 

 

 

-

 

 

 

719

 

Additional paid-in capital

 

$

5,341,387

 

 

 

(5,341,387

)

 

 

-

 

Accumulated deficit

 

$

(342,310

)

 

 

(15,673,853

)

 

 

(16,016,163

)

Total shareholders’ equity (deficit)

 

$

5,000,006

 

 

$

(21,015,450

)

 

$

(16,015,444

)

Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders' Equity (Deficit)

 

$

251,877,540

 

 

$

-

 

 

$

251,877,540

 

 

The impact of the restatement on the condensed balance sheets and unaudited condensed statements of operations for the Affected Quarterly Periods is presented below.

 

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited condensed balance sheet as of March 31, 2021:

 

As of March 31, 2021

 

As Reported

 

 

Adjustment

 

 

As Restated

 

Total assets

 

$

252,251,811

 

 

 

-

 

 

$

252,251,811

 

Total liabilities

 

$

18,527,824

 

 

 

-

 

 

$

18,527,824

 

Class A ordinary shares subject to redemption

 

 

228,723,980

 

 

 

21,276,020

 

 

$

250,000,000

 

Preferred shares

 

 

-

 

 

 

-

 

 

 

-

 

Class A ordinary shares

 

 

213

 

 

 

(213

)

 

 

-

 

Class B ordinary shares

 

 

719

 

 

 

-

 

 

 

719

 

Additional paid-in capital

 

 

5,601,953

 

 

 

(5,601,953

)

 

 

-

 

Accumulated deficit

 

 

(602,878

)

 

 

(15,673,854

)

 

 

(16,276,732

)

Total shareholders’ equity (deficit)

 

$

5,000,007

 

 

$

(21,276,020

)

 

$

(16,276,013

)

Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders' Equity (Deficit)

 

$

252,251,811

 

 

$

-

 

 

$

252,251,811

 

 

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited condensed statement of cash flows for the three months ended March 31, 2021:

 

Form 10-Q: Three Months Ended March 31, 2021

 

 

 

As Reported

 

 

Adjustment

 

 

As Restated

 

Cash Flow from Operating Activities

 

$

(43,356

)

 

$

-

 

 

$

(43,356

)

Cash Flows from Investing Activities

 

$

(250,000,000

)

 

$

-

 

 

$

(250,000,000

)

Cash Flows from Financing Activities

 

$

251,875,592

 

 

$

-

 

 

$

251,875,592

 

Supplemental Disclosure of Noncash Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Offering costs included in accounts payable

 

$

85,810

 

 

$

-

 

 

$

85,810

 

Offering costs included in accrued expenses

 

$

350,000

 

 

$

-

 

 

$

350,000

 

Deferred underwriting commissions in connection with the initial public offering

 

$

8,750,000

 

 

$

-

 

 

$

8,750,000

 

Initial value of Class A ordinary shares subject to possible redemption

 

$

228,984,550

 

 

$

(228,984,550

)

 

$

-

 

Change in value of Class A ordinary shares subject to possible redemption

 

$

(260,570

)

 

$

260,570

 

 

$

-

 

 

9


SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

 

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited condensed balance sheet as of June 30, 2021:

 

As of June 30, 2021

 

As Reported

 

 

Adjustment

 

 

As Restated

 

Total assets

 

$

282,676,405

 

 

 

-

 

 

$

282,676,405

 

Total liabilities

 

$

22,363,775

 

 

 

-

 

 

$

22,363,775

 

Class A ordinary shares subject to redemption

 

 

255,312,620

 

 

 

25,721,870

 

 

$

281,034,490

 

Preferred shares

 

 

-

 

 

 

-

 

 

 

-

 

Class A ordinary shares

 

 

257

 

 

 

(257

)

 

 

-

 

Class B ordinary shares

 

 

703

 

 

 

-

 

 

 

703

 

Additional paid-in capital

 

 

8,031,218

 

 

 

(8,031,218

)

 

 

-

 

Accumulated deficit

 

 

(3,032,168

)

 

 

(17,690,395

)

 

 

(20,722,563

)

Total shareholders’ equity (deficit)

 

$

5,000,010

 

 

$

(25,721,870

)

 

$

(20,721,860

)

Total Liabilities, Class A Ordinary Shares Subject to Possible Redemption and Shareholders' Equity (Deficit)

 

$

282,676,405

 

 

$

-

 

 

$

282,676,405

 

 

The table below presents the effect of the financial statement adjustments related to the restatement discussed above of the Company’s previously reported unaudited condensed statement of cash flows for the six months ended June 30, 2021:

 

Form 10-Q: Six Months Ended June 30, 2021

 

 

 

As Reported

 

 

Adjustment

 

 

As Restated

 

Cash Flow from Operating Activities

 

$

(528,826

)

 

$

-

 

 

$

(528,826

)

Cash Flows from Investing Activities

 

$

(281,034,490

)

 

$

-

 

 

$

(281,034,490

)

Cash Flows from Financing Activities

 

$

282,824,272

 

 

$

-

 

 

$

282,824,272

 

Supplemental Disclosure of Noncash Financing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

Offering costs included in accrued expenses

 

$

350,000

 

 

$

-

 

 

$

350,000

 

Deferred underwriting commissions in connection with the initial public offering

 

$

9,836,207

 

 

$

-

 

 

$

9,836,207

 

Initial value of Class A ordinary shares subject to possible redemption

 

$

257,967,660

 

 

$

(257,967,660

)

 

$

-

 

Change in value of Class A ordinary shares subject to possible redemption

 

$

(2,655,040

)

 

$

2,655,040

 

 

$

-

 

 

In connection with the change in presentation for the Class A ordinary shares subject to possible redemption, the Company has revised its earnings per share calculation to allocate income and losses shared pro rata between the two classes of shares. This presentation contemplates a Business Combination as the most likely outcome, in which case, both classes of shares participate pro rata in the income and losses of the Company. The impact to the reported amounts of weighted average shares outstanding and basic and diluted earnings per ordinary share is presented below for the Affected Quarterly Periods:

10


SUPERNOVA PARTNERS ACQUISITION COMPANY III, LTD.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

 

 

 

 

EPS for Class A ordinary shares

(redeemable)

 

 

 

As Reported

 

 

Adjustment

 

 

As Adjusted

 

Form 10-Q (March 31, 2021) - three months ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(593,464

)

 

$

-

 

 

$

(593,464

)

Weighted average shares outstanding

 

 

22,894,733

 

 

 

(20,950,289

)

 

 

1,944,444

 

Basic and diluted earnings per share

 

$

0.00

 

 

$

(0.07

)

 

$

(0.07

)

Form 10-Q (June 30, 2021) - three months ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(2,429,290

)

 

$

-

 

 

$

(2,429,290

)

Weighted average shares outstanding

 

 

25,768,078

 

 

 

2,335,371

 

 

 

28,103,449

 

Basic and diluted earnings per share

 

$

0.00

 

 

$

(0.07

)

 

$

(0.07

)

Form 10-Q (June 30, 2021) - six months ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(3,022,754

)

 

$

-

 

 

$

(3,022,754

)

Weighted average shares outstanding

 

 

25,562,839

 

 

 

(10,466,630

)

 

 

15,096,209

 

Basic and diluted earnings per share

 

$

0.00

 

 

$

(0.14

)

 

$

(0.14

)

 

 

 

EPS for Class B ordinary shares

(non-redeemable)

 

 

 

As Reported

 

 

Adjustment