Business context and reporting period
This is Social Capital Suvretta Holdings Corp. III’s unaudited Form 10-Q for the quarter ended June 30, 2021, not a filing by ProKidney Corp. The registrant was a newly formed blank-check company (SPAC), focused on finding a business combination target in biotechnology, particularly neurology. It had not selected a target or begun substantive target discussions and had no operating activities or revenue through June 30.
The financial statements cover the three months ended June 30, 2021 and, for inception-to-date figures, February 25 through June 30, 2021. A year-over-year comparison is not provided because the company was incorporated in February 2021.
Financial results and condition
| Metric | Reported amount or detail |
|---|---|
| Revenue | None reported; the company said it does not expect operating revenue before a business combination. |
| Net loss | $143 for the quarter; $5,325 from inception through June 30. |
| Net loss per share | $0.00 basic and diluted as reported, rounded to two decimal places. |
| Cash and current assets | Cash of $223,538; current assets of $243,138 at June 30. |
| Total assets | $622,804, including $379,666 of deferred offering costs. |
| Current liabilities | $603,129, including a $300,000 related-party promissory note, a $25,643 related-party advance, and $277,398 of accrued offering costs. |
| Shareholders’ equity | $19,675 at June 30. |
| Cash flow | $19,837 used in operating activities and $243,375 provided by financing activities from inception through June 30; ending cash was $223,538. |
| Debt and liquidity | No long-term debt was reported. The $300,000 note and $25,643 advance were repaid after quarter-end. Management said the July IPO left sufficient capital to sustain operations for at least one year. |
Material changes and subsequent events
On July 2, 2021, after the reporting date, the company completed an IPO of 25 million public shares at $10 each, raising $250 million gross, and sold 640,000 private placement shares for $6.4 million. It placed $250 million in a trust account. Total IPO-related costs were $12,479,666, including $7.7 million of deferred underwriting commissions payable only if a business combination is completed. The IPO proceeds and trust balance are subsequent events and were not reflected in the June 30 balance sheet.
Outlook, risks, and contingencies
- The company had until July 2, 2023, subject to any permitted extension, to complete a business combination. It cautioned that completion was not assured.
- Management expected to use trust funds primarily to complete a business combination and outside-trust funds for target identification, diligence, and transaction costs. Additional financing could be needed if costs exceed estimates or substantial shareholder redemptions occur.
- The company reported a $10,000 monthly administrative-services fee to a Sponsor affiliate. It also disclosed possible Sponsor or affiliate working-capital loans, none outstanding at June 30; up to $1.5 million of such loans may be convertible into shares.
- Public shareholders may redeem shares in connection with a business combination or if no combination is completed by the deadline, subject to the company’s stated net tangible asset and other conditions. The Sponsor’s trust indemnity may be limited by its ability to pay.
- Management said COVID-19 could adversely affect the company or its target search, but the specific impact was not determinable. No adjustments for this uncertainty were recorded.
- The filing reported no legal proceedings and no material changes to the risk factors in the IPO prospectus. Disclosure controls were assessed as effective at a reasonable-assurance level; no material change in internal control was reported.
Important facts for investors to verify
- Confirm the issuer identity: this filing is for Social Capital Suvretta Holdings Corp. III, not ProKidney Corp.
- Review the IPO closing and trust-account terms, including the $250 million trust balance and redemption provisions.
- Check the business-combination deadline, any extension, and whether a target has since been identified.
- Review founder-share forfeiture and conversion terms, Sponsor interests, and deferred underwriting commissions.
- Assess cash available outside the trust, ongoing administrative costs, and any subsequent related-party or working-capital financing.