Offerpad Solutions Inc. quarterly report, Q2 FY2021

Business context and reporting period

This is Supernova Partners Acquisition Company, Inc.’s unaudited Form 10-Q for the quarter ended June 30, 2021, signed August 16, 2021. Although the requested company is Offerpad Solutions, Inc., the filing is by Supernova, a blank-check company that had not completed its merger with Offerpad. It contains no Offerpad operating results. Supernova reported no operating revenue or business operations; its activities involved formation, its IPO, and pursuing a business combination.

On March 17, 2021, Supernova agreed to merge with Offerpad at an aggregate equity value of $2.25 billion. The transaction also included a committed $200 million PIPE investment and a $50 million forward purchase agreement. Closing remained subject to stockholder approvals and customary conditions.

Financial results and position

Net income primarily reflects noncash gains from revaluing warrant and forward-purchase derivative liabilities, rather than operating performance. No operating margins are meaningful because the company had no revenue. Six-month operating cash use was $796,566; cash at June 30 was $283,067, down from $1.08 million at December 31, 2020.

At June 30, total assets were $403.26 million, including $402.69 million in the trust account. Current liabilities were $5.11 million, including $4.82 million of accrued expenses; working capital deficit was approximately $4.5 million. Total liabilities were $52.56 million, including $33.26 million of derivative liabilities and $14.09 million of deferred underwriting commissions. No working-capital loans or other borrowings were outstanding. The trust account was held for the business combination or redemption process and was not ordinary operating liquidity.

Changes, outlook, risks, and unusual items

• Compared with the December 31, 2020 balance sheet, cash declined by about $797,000, accrued expenses increased to $4.82 million, and derivative liabilities fell from $49.67 million to $33.26 million. The filing provides no prior-year comparable quarterly income statement results.
• Management stated that cash constraints and the working-capital deficit raise substantial doubt about the company’s ability to continue as a going concern within one year after issuance of the financial statements. Additional funding or successful completion of the merger was not assured.
• The SPAC’s deadline to complete a business combination was October 23, 2022, subject to possible extension. If it failed to complete one, public shares generally would be redeemed from the trust account; warrants could expire worthless.
• A stockholder lawsuit filed April 21, 2021 alleged disclosure deficiencies relating to the merger proxy, including its background, projections, and financial-advisor analyses. Management said any loss was not reasonably probable or estimable.
• Management identified a material weakness in internal control over financial reporting related to prior warrant classification. Remediation steps were underway, but the weakness was not fully remediated as of June 30, 2021.
• Management said the COVID-19 pandemic could negatively affect the company’s financial position, results, or target search, but its specific impact was not readily determinable. No quantitative guidance or operating forecast is provided.

Important facts for investors to verify

• Confirm the merger’s closing status and review the final transaction terms, redemption levels, and resulting capitalization; this filing predates closing.
• Review the proxy disclosure allegations, lawsuit status, and any subsequent developments or settlement.
• Assess the going-concern warning against available operating cash, accrued transaction costs, and any committed or obtained funding.
• Confirm whether the material weakness was subsequently remediated and whether later filings report control deficiencies.
• Do not interpret reported net income as operating earnings: it was substantially driven by noncash derivative remeasurement gains.