Sonder(SOND) - 2021 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION Financial Statements The unaudited interim financial statements show a net income of $761,330, driven by a non-cash gain on warrant liabilities Balance Sheets Balance Sheet Summary (Unaudited) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total Assets | $451,613,900 | $446,255 | | Investments and cash held in Trust Account | $450,018,248 | $— | | Total Liabilities | $40,557,367 | $461,173 | | Public warrants derivative liability | $12,600,000 | $— | | Private warrants derivative liability | $7,700,000 | $— | | Deferred underwriting compensation | $15,750,000 | $— | | Class A subject to possible redemption | $450,000,000 | $— | | Total stockholders' equity (deficit) | ($38,943,467) | ($14,918) | Statements of Operations Statements of Operations Summary (Unaudited) | Item | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Revenues | $— | $— | | Professional fees and other expenses | ($2,320,234) | ($4,183,777) | | Gain from change in fair value of warrant liability | $145,000 | $5,945,000 | | Net income/(loss) from operations | ($2,225,234) | $743,082 | | Other income - interest income | $11,220 | $18,248 | | Net income/(loss) attributable to common shares | ($2,214,014) | $761,330 | | Net loss per share (Class A & F) | ($0.04) | ($0.78) | Statements of Changes in Stockholders' Equity (Deficit) - The total stockholders' deficit increased from ($14,918) to ($38,943,467) as of June 30, 2021, driven by a subsequent measurement adjustment of ($39,666,004) against accumulated deficit, offset by net income of $761,330[16] Statement of Cash Flows Cash Flow Summary for the Six Months Ended June 30, 2021 (Unaudited) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash used by operating activities | ($2,175,966) | | Net cash used in investing activities | ($450,018,248) | | Net cash provided by financing activities | $452,086,980 | | Decrease in cash | ($107,234) | | Cash at beginning of period | $160,314 | | Cash at end of period | $53,080 | - Financing activities were the primary source of cash, with $450 million from the IPO and $11 million from the sale of Private Placement Warrants, while the majority of cash was used to deposit $450 million into the Trust Account[18] Notes to Interim Financial Statements - The Company entered into a definitive merger agreement with Sonder Holdings Inc with an aggregate merger consideration valued at approximately $2.177 billion[23][27] - The Company sold 45,000,000 units in its Public Offering on January 22, 2021, at $10.00 per unit, generating gross proceeds of $450 million[70] - Public and private warrants are accounted for as derivative liabilities, with fair values of $12.6 million and $7.7 million respectively as of June 30, 2021[63][97] - The Sponsor has provided loans for operational expenses, with $1,000,000 outstanding as of June 30, 2021, from a $1,500,000 facility[83] Management's Discussion and Analysis of Financial Condition and Results of Operations The company, a blank check entity, discusses its merger agreement with Sonder Holdings Inc and its financial results Proposed Business Combination - The Company entered into a definitive merger agreement with Sonder Holdings Inc on April 29, 2021, which will constitute its Business Combination[108] - The aggregate merger consideration is valued at $2,176,603,000, payable in Company Common Stock at a deemed value of $10.00 per share[112] - A private placement of 20,000,000 shares at $10.00 per share will raise $200 million in connection with the merger[34][120] Results of Operations - For the six months ended June 30, 2021, the company reported a net income of $761,330, primarily from a non-cash gain of $5,945,000 on the change in fair value of warrant liability[123] - Business activities have focused on identifying and evaluating prospective acquisition candidates, incurring significant related costs[123][125] Liquidity and Capital Resources - The company raised net proceeds of $452 million from its Public Offering and private warrant sale, with $450 million placed in the Trust Account[127] - As of June 30, 2021, cash held outside the Trust Account was $53,080, supplemented by a $1.5 million loan facility from its Sponsor, of which $1.0 million was drawn[129][130] - The company had a working capital deficit of ($23,211,715) as of June 30, 2021, primarily due to the non-cash warrant liability which does not impact current liquidity[131] Quantitative and Qualitative Disclosures About Market Risk The company's market risk is primarily limited to interest rate fluctuations on funds held in its Trust Account - The primary market risk is interest rate risk on the $450,018,248 held in the Trust Account, which is invested in money market funds[137] - The company has not engaged in any hedging activities and does not expect to do so[139] Controls and Procedures Management concluded disclosure controls were effective after remediating a material weakness related to warrant accounting - A material weakness related to accounting for warrants and equity classification of Class A Common Stock, identified as of March 31, 2021, was remediated as of June 30, 2021[142][143][145] - Remediation efforts included implementing additional documentation procedures and consulting with third-party accounting and valuation experts[144] - The CEO and CFO concluded that disclosure controls and procedures were effective as of June 30, 2021[141] PART II—OTHER INFORMATION Legal Proceedings The company reports no legal proceedings under this item, though a separate disclosure mentions a stockholder action - The company states there are no legal proceedings to report[147] Risk Factors The company states there have been no material changes to the risk factors previously disclosed in its prospectus - There have been no material changes to the risk factors disclosed in the company's prospectus from January 21, 2021[149] Unregistered Sales of Equity Securities and Use of Proceeds This section details the unregistered sales of Founder Shares and Private Warrants and confirms the use of IPO proceeds - The Sponsor purchased 11,500,000 Founder Shares for $25,000 and 5,500,000 Private Placement Warrants for $11,000,000 in unregistered sales[150][151] - The Public Offering generated gross proceeds of $450,000,000, of which $450,000,000 was placed in the Trust Account after accounting for fees and private warrant proceeds[153][154] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[159] Mine Safety Disclosures This item is not applicable to the company - Not Applicable[159] Other Information The company reports no other information - None[160] Exhibits This section lists the exhibits filed, including the Merger Agreement with Sonder Holdings Inc and officer certifications - Key exhibits include the Agreement and Plan of Merger with Sonder Holdings Inc, the Amended and Restated Certificate of Incorporation, and various officer certifications[163]