Sonder(US:SOND)2021-11-15 22:03PART I—FINANCIAL INFORMATION Financial Statements The company presents its unaudited interim financial statements as a special purpose acquisition company (SPAC) focused on a business combination Balance Sheets The company's balance sheet shows total assets of $451.3 million, primarily cash in trust, against a total stockholders' deficit of $44.8 million Balance Sheet Comparison (Unaudited) | Balance Sheet Items | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $39,734 | $160,314 | | Cash, cash equivalents and other investments held in Trust Account | $450,029,593 | $0 | | Total Assets | $451,346,153 | $446,255 | | Liabilities | | | | Public warrants derivative liability | $15,300,000 | $0 | | Private warrants derivative liability | $9,350,000 | $0 | | Deferred underwriting compensation | $15,750,000 | $0 | | Total Liabilities | $46,173,283 | $461,173 | | Equity | | | | Class A subject to possible redemption | $450,000,000 | $0 | | Total stockholders' equity (deficit) | ($44,827,130) | ($14,918) | Statements of Operations The company reported no revenue and a net loss of $5.1 million for the nine months ended September 30, 2021, driven by non-cash warrant liability changes Statement of Operations Highlights (Unaudited) | Item | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Revenues | $0 | $0 | | Gain/(loss) from change in fair value of warrant liabilities | ($4,350,000) | $1,595,000 | | Net Loss | ($5,883,663) | ($5,122,333) | | Net loss per share (Class A & F) | ($0.10) | ($0.87) | Statements of Cash Flows Cash flow activities were dominated by financing from the IPO and investing activities related to funding the Trust Account Cash Flow Summary for Nine Months Ended Sep 30, 2021 (Unaudited) | Cash Flow Activity | Amount | | :--- | :--- | | Net cash used by operating activities | ($2,677,967) | | Net cash used in investing activities | ($450,029,593) | | Net cash provided by financing activities | $452,586,980 | Notes to Interim Financial Statements Notes detail the proposed merger with Sonder Holdings Inc, IPO proceeds, warrant liability accounting, and related party loans - On April 29, 2021, the Company entered into a Merger Agreement with Sonder Holdings Inc, with an amendment on October 27, 2021, reducing the aggregate stock consideration from approximately $2.18 billion to $1.90 billion and extending the transaction termination date to January 31, 2022232729 - The company completed its IPO on January 22, 2021, selling 45,000,000 units at $10.00 per unit, generating gross proceeds of $450,000,000, with an aggregate of $450,000,000 placed in a Trust Account4377 - Public and private warrants are accounted for as derivative liabilities, with fair values as of September 30, 2021, of $15.3 million for public warrants and $9.35 million for private warrants70105106 - The Sponsor has provided loans for operational expenses, with $1,500,000 outstanding as of September 30, 2021, and an additional loan of up to $1,000,000 made available in November 202190111 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the proposed merger with Sonder, operational results, liquidity sources, and the timeline for completing a business combination - The company is a blank check company that completed its IPO on January 22, 2021, and is seeking to complete a business combination115 - The proposed business combination with Sonder Holdings Inc was amended on October 27, 2021, reducing the aggregate stock consideration to ~$1.9B and extending the merger agreement termination date to January 31, 2022116122 - As of September 30, 2021, the company had $39,734 in cash outside the Trust Account for working capital and has received a $1.5 million loan from its Sponsor to fund ongoing operational expenses139144145 - Contractual obligations include a $20,000 monthly administrative services fee and a deferred underwriting discount of $15,750,000, payable only upon completion of a Business Combination148149 Results of Operations | Period | Net Loss | Key Driver | | :--- | :--- | :--- | | Three months ended Sep 30, 2021 | ($5,883,663) | Includes ($4,350,000) non-cash loss from change in warrant liability fair value | | Nine months ended Sep 30, 2021 | ($5,122,333) | Includes $1,595,000 non-cash gain from change in warrant liability fair value | Quantitative and Qualitative Disclosures About Market Risk The company's market risk is primarily limited to interest rate fluctuations on the $450 million held in its Trust Account - The company's primary market risk exposure is related to changes in interest rates on the investments held in the Trust Account151 - As of September 30, 2021, the Trust Account held $450,029,593 invested in money market funds, with an effective annualized rate of return of approximately 0.0008%152 Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls during the quarter - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2021155 - No material changes were made to the company's internal control over financial reporting during the most recent fiscal quarter156 PART II—OTHER INFORMATION Legal Proceedings The company reports no legal proceedings, though a related stockholder action is disclosed elsewhere - The company reports no legal proceedings under this item158 Risk Factors No material changes have been made to the risk factors previously disclosed in the company's prospectus - There have been no material changes to the risk factors disclosed in the company's prospectus filed on January 21, 2021160 Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered sales to the Sponsor and the use of IPO proceeds, with $450 million placed in the Trust Account - The Sponsor purchased 11,500,000 Founder Shares for $25,000 and 5,500,000 Private Placement Warrants for $11,000,000 in unregistered, private transactions161162 - The company's IPO of 45,000,000 units generated gross proceeds of $450,000,000, and after expenses and private warrant sales, $450,000,000 was placed in the Trust Account164165 - The company has 24 months from the IPO closing date (until January 2023) to complete a business combination or it will be required to liquidate and redeem public shares168 Defaults Upon Senior Securities The company reports no defaults upon its senior securities - None170 Mine Safety Disclosures This section is not applicable to the company's operations - Not Applicable170 Other Information The company reports no other material information in this section - None171 Exhibits This section lists key legal and financial documents filed with the report, including the merger agreement and officer certifications - Key exhibits filed include the Merger Agreement (2.1), Amended and Restated Certificate of Incorporation (3.1), Warrant Agreement (4.4), and CEO/CFO certifications (31.1, 31.2, 32.1, 32.2)174