Filing identity and reporting period
Important entity mismatch: The supplied filing is Supernova Partners Acquisition Company II, Ltd.’s unaudited Form 10-Q for the quarter ended March 31, 2021—not a Rigetti Computing, Inc. filing. It describes a blank-check company (SPAC) formed to pursue a business combination; it had not commenced operating activities by quarter-end.
Financial results and position
- Revenue and margins: No operating revenue; the company stated it would not generate operating revenue before completing a business combination. Operating margins are not meaningful.
- Net loss: $1.16 million for the three months ended March 31, 2021, comprising $135,253 in general and administrative expense, a $523,000 non-cash warrant fair-value loss, and $502,450 of offering costs associated with warrant liabilities, partly offset by approximately $1,586 of trust investment income. Loss per non-redeemable share was $0.13.
- Cash flow: Operating activities used $476,570; investing activities used $345.0 million, primarily the trust deposit; financing activities provided $346.9 million. Period-end cash was $1.39 million.
- Liquidity and assets: Cash and working capital were approximately $1.4 million and $1.3 million, respectively. Trust investments totaled $345.0 million. Total assets were $346.8 million.
- Liabilities and equity: Total liabilities were $26.3 million, including $13.7 million of derivative warrant liabilities and $12.1 million of deferred underwriting commissions. No working capital loans were outstanding. Shareholders’ equity was $5.0 million; 31.6 million Class A shares were classified as temporary equity due to possible redemption.
Material changes and unusual items
- The company completed its March 4, 2021 IPO of 34.5 million units at $10 each, raising $345.0 million gross, and issued private placement warrants for $8.9 million. IPO and related offering costs were approximately $19.5 million, including deferred underwriting commissions of approximately $12.1 million.
- Following the SEC staff’s April 12, 2021 statement on SPAC warrant accounting, management revised the warrant classification from equity to liabilities, measured at fair value. The company described the correction to its previously issued March 4 balance sheet as immaterial; recurring fair-value changes may cause material non-cash earnings volatility.
- Management concluded disclosure controls were ineffective at March 31 because of a material weakness in accounting for warrants. It reported expanded review procedures and further planned remediation; the filing says the financial statements were prepared with additional analysis.
- There is no prior-year comparable operating period presented; the company was incorporated in December 2020, and its activity through March 31 primarily related to formation and the IPO.
Outlook, risks, and contingencies
- Management expected available working capital and potential sponsor borrowing capacity to fund needs through the earlier of a business combination or one year from the filing. Sponsor loans were possible but not committed.
- The SPAC had until March 4, 2023 to complete a business combination; otherwise it generally must redeem public shares from the trust and liquidate. Warrants would expire worthless if no transaction is completed.
- The company noted uncertainty about the COVID-19 pandemic’s possible effect on its financial position and target search; the specific impact was not determinable.
- Key risks include failure to complete a business combination, warrant fair-value volatility, the material control weakness and possible related disputes, and the possibility that negative interest rates could reduce trust value and redemption proceeds. No legal proceedings were reported.
Investor facts to verify
- Confirm the intended issuer: this filing is for Supernova Partners Acquisition Company II, Ltd., not Rigetti Computing, Inc.
- Review the warrant liability valuation and the company’s progress remediating the material weakness.
- Verify trust assets, redemption terms, deferred underwriting fees, and any subsequent business-combination developments.
- Distinguish SPAC trust funds from operating cash available to meet expenses; the filing reports approximately $1.4 million of operating cash at quarter-end.