☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Cayman Islands | 98-1560356 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Class A ordinary shares, $0.0001 par value | DGNU | The Nasdaq |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||
Emerging growth company | ☒ |
DRAGONEER GROWTH OPPORTUNITIES CORP. III
FORM
TABLE OF CONTENTS
1 | |||||
2 | |||||
3 | |||||
4 | |||||
5 | |||||
17 | |||||
21 | |||||
21 | |||||
22 | |||||
22 | |||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |||||
23 | |||||
23 | |||||
23 | |||||
23 | |||||
24 | |||||
25 |
September 30, 2021 | December 31, 2020 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 3,269,951 | $ | — | ||||
Prepaid expenses | 925,313 | — | ||||||
Total Current Assets | 4,195,264 | — | ||||||
Deferred offering costs | — | 66,224 | ||||||
Cash held in Trust Account | 430,676,061 | — | ||||||
TOTAL ASSETS | $ | 434,871,325 | $ | 66,224 | ||||
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY | ||||||||
Current l iabilities | ||||||||
Accrued offering costs | $ | 653,379 | $ | 18,774 | ||||
Accounts payable and other accrued expenses | 173,144 | — | ||||||
Promissory note – related party | — | 27,450 | ||||||
Convertible note – related party, net of debt discount | 635,700 | — | ||||||
Total current liabilities | 1,462,223 | 46,224 | ||||||
Warrant liability | 10,594,288 | — | ||||||
Deferred underwriting fee payable | 15,073,661 | — | ||||||
Total Liabilities | 27,130,172 | 46,224 | ||||||
Commitments and Contingencies | 0 | 0 | ||||||
Class A ordinary shares subject to possible redemption, 43,067,606 and 0 shares at $10.00 per share redemption value as of September 30, 2021 and December 31, 2020, respectively | 430,676,061 | — | ||||||
Shareholders’ (Deficit) Equity | ||||||||
Preference shares, $0.0001 par value; 1,000,000 shares authorized; 0 shares issued and outstanding | 0— | 0— | ||||||
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 0 shares issued and outstanding (excluding 43,067,606 and 0 shares subject to possible redemption) at September 30, 2021 and December 31, 2020, respectively | 0— | 0— | ||||||
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 10,766,902 and 11,500,000 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (1) | 1,077 | 1,150 | ||||||
Additional paid-in capital | — | 23,850 | ||||||
Accumulated deficit | (22,935,985 | ) | (5,000 | ) | ||||
Total Shareholders’ (Deficit) Equity | (22,934,908 | ) | 20,000 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY | $ | 434,871,325 | $ | 66,224 | ||||
September 30, 2022 | December 31, 2021 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash | $ | 1,771,591 | $ | 3,185,171 | ||||
Prepaid expenses | 292,659 | 765,502 | ||||||
Total Current Assets | 2,064,250 | 3,950,673 | ||||||
Cash held in Trust Account | 430,676,061 | 430,676,061 | ||||||
Total Assets | $ | 432,740,311 | $ | 434,626,734 | ||||
LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable and other accrued expenses | $ | 38,573 | $ | 291,654 | ||||
Accrued offering cost | 8,000 | 648,379 | ||||||
Convertible note | 2,228,350 | 1,031,415 | ||||||
Total Current Liabilities | 2,274,923 | 1,971,448 | ||||||
Warrant liability | 1,184,876 | 7,642,968 | ||||||
Deferred underwriting fee payable | 15,073,661 | 15,073,661 | ||||||
Total Liabilities | 18,533,460 | 24,688,077 | ||||||
Commitments and Contingencies (Note 6) | ||||||||
Class A ordinary shares subject to possible redemption, 43,067,606 at $10.00 per share redemption value as of September 30, 2022 and December 31, 2021, respectively | 430,676,061 | 430,676,061 | ||||||
Shareholders’ Deficit | ||||||||
Preferred shares, $0.0001 par value; 1,000,000 shares authorized; no shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | — | — | ||||||
Class A ordinary shares, $0.0001 par value; 200,000,000 shares authorized; no shares issued and outstanding (excluding 43,067,606 shares subject to possible redemption) at September 30, 2022 and December 31, 2021, respectively | — | — | ||||||
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 10,766,902 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively | 1,077 | 1,077 | ||||||
Additional paid in capital | — | — | ||||||
Accumulated deficit | (16,470,287 | ) | (20,738,481 | ) | ||||
Total Shareholders’ Deficit | (16,469,210 | ) | (20,737,404 | ) | ||||
TOTAL LIABILITIES, CLASS A ORDINARY SHARES SUBJECT TO POSSIBLE REDEMPTION AND SHAREHOLDERS’ DEFICIT. | $ | 432,740,311 | $ | 434,626,734 | ||||
Three Months Ended September 30, 2021 | Nine Months Ended September 30, 2021 | September 25, 2020 (Inception) Through September 30, 2020 | For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||||||||||
Formation costs and other operating expenses | $ | 236,475 | $ | 672,364 | $ | 5,000 | ||||||||||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||||||||||||||
Operating expenses | $ | 259,796 | $ | 236,475 | $ | 992,964 | $ | 672,364 | ||||||||||||||||||||
Loss from operations | (236,475 | ) | (672,364 | ) | (5,000 | ) | (259,796 | ) | (236,475 | ) | (992,964 | ) | (672,364 | ) | ||||||||||||||
Other income (expense): | ||||||||||||||||||||||||||||
Interest expense – amortization of debt discount | (411,009 | ) | (463,622 | ) | — | |||||||||||||||||||||||
Change in fair value of warrant liability | 9,995,945 | 7,786,801 | — | 579,841 | 9,995,945 | 6,458,092 | 7,786,801 | |||||||||||||||||||||
Change in fair value of conversion option liability | 2,827,922 | 2,827,922 | — | — | 2,827,922 | — | 2,827,922 | |||||||||||||||||||||
Loss from issuance of Private Placement Warrants | — | (7,767,566 | ) | — | — | — | — | (7,767,566 | ) | |||||||||||||||||||
Interest expense - amortization of debt discount | (403,363 | ) | (411,009 | ) | (1,196,934 | ) | (463,622 | ) | ||||||||||||||||||||
Transaction costs allocable to warrant liability | — | (41,191 | ) | — | — | — | — | (41,191 | ) | |||||||||||||||||||
Other income, net | 12,412,858 | 2,342,344 | — | 176,478 | 12,412,858 | 5,261,158 | 2,342,344 | |||||||||||||||||||||
Net income | $ | 12,176,383 | $ | 1,669,980 | $ | (5,000 | ) | |||||||||||||||||||||
Net income (loss) | $ | (83,318 | ) | $ | 12,176,383 | $ | 4,268,194 | $ | 1,669,980 | |||||||||||||||||||
Weighted average shares outstanding of Class A ordinary shares | 43,067,606 | 29,304,919 | 10,000,000 | 43,067,606 | 43,067,606 | 43,067,606 | 29,254,135 | |||||||||||||||||||||
Basic and diluted income per share, Class A ordinary shares | $ | 0.23 | $ | 0.04 | $ | 0.00 | ||||||||||||||||||||||
Basic and diluted net income (loss) per ordinary share, Class A ordinary shares | $ | (0.00 | ) | $ | 0.23 | $ | 0.0 8 | $ | 0.04 | |||||||||||||||||||
Weighted average shares outstanding, Class B ordinary shares | 10,766,902 | 10,412,947 | — | |||||||||||||||||||||||||
Weighted average shares outstanding of Class B ordinary shares | 10,766,902 | 10,766,902 | 10,766,902 | 10,413,165 | ||||||||||||||||||||||||
Basic and diluted net income per share, Class B ordinary shares | $ | 0.23 | $ | 0.04 | $ | 0.00 | ||||||||||||||||||||||
Basic and diluted net income (loss) per ordinary share, Class B ordinary shares | $ | (0.00 | ) | $ | 0.23 | $ | 0.08 | $ | 0.04 | |||||||||||||||||||
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ (Deficit) Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance—January 1, 2021 | — | $ | — | 11,500,000 | $ | 1,150 | $ | 23,850 | $ | (5,000 | ) | $ | 20,000 | |||||||||||||||
Sale of 40,000,000 Units, net of underwriting discounts and offering expenses | 40,000,000 | 4,000 | — | — | 377,058,295 | — | 377,062,295 | |||||||||||||||||||||
Accretion of Class A ordinary shares subject to possible redemption | (40,000,000 | ) | (4,000 | ) | — | — | (377,082,145 | ) | (22,913,855 | ) | (400,000,000 | ) | ||||||||||||||||
Net loss | — | — | — | — | — | (6,551,028 | ) | (6,551,028 | ) | |||||||||||||||||||
Balance—March 31, 2021 (unaudited) | — | $ | — | 11,500,000 | $ | 1,150 | $ | — | $ | (29,469,883 | ) | $ | (29,468,733 | ) | ||||||||||||||
Sale of 3,067,606 Class A shares, net of underwriting discounts and offering expenses | 3,067,606 | 307 | — | — | 28,988,571 | — | 28,988,878 | |||||||||||||||||||||
Forfeiture of 733,098 Founder Shares | — | — | (733,098 | ) | (73 | ) | — | 73 | — | |||||||||||||||||||
Accretion of Class A ordinary shares subject to possible redemption | (3,067,606 | ) | (307 | ) | — | — | (28,988,571 | ) | (1,687,183 | ) | (30,676,061 | ) | ||||||||||||||||
Net loss | — | — | — | — | — | (3,955,375 | ) | (3,955,375 | ) | |||||||||||||||||||
Balance—June 30, 2021 (unaudited) | — | $ | — | 10,766,902 | $ | 1,077 | $ | — | $ | (35,112,368 | ) | $ | (35,111,291 | ) | ||||||||||||||
Net income | — | — | — | — | — | 12,176,383 | 12,176,383 | |||||||||||||||||||||
Balance—September 30, 2021 (unaudited) | — | $ | — | 10,766,902 | $ | 1,077 | $ | — | $ | (22,935,985 | ) | $ | (22,934,908 | ) | ||||||||||||||
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | in Capital | Deficit | (Deficit) | ||||||||||||||||||||||
Balance – January 1, 2022 | — | $ | — | 10,766,902 | $ | 1,077 | $ | — | $ | (20,738,481 | ) | $ | (20,737,404 | ) | ||||||||||||||
Net loss | — | — | — | — | — | (236,117 | ) | (236,117 | ) | |||||||||||||||||||
Balance – March 31, 2022 | — | $ | — | 10,766,902 | $ | 1,077 | $ | — | $ | (20,974,598 | ) | $ | (20,973,521 | ) | ||||||||||||||
Net income | — | — | — | — | — | 4,587,629 | 4,587,629 | |||||||||||||||||||||
Balance – June 30, 2022 | — | $ | — | 10,766,902 | $ | 1,077 | $ | — | $ | (16,386,969 | ) | $ | (16,385,892 | ) | ||||||||||||||
Net income (loss) | — | — | — | — | — | (83,318 | ) | (83,318 | ) | |||||||||||||||||||
Balance – September 30, 2022 | — | $ | — | 10,766,902 | $ | 1,077 | $ | — | $ | (16,470,287 | ) | $ | (16,469,210 | ) | ||||||||||||||
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid | Accumulated | Total Shareholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | in Capital | Deficit | Equity (Deficit) | ||||||||||||||||||||||
Balance – January 1, 2021 | — | $ | — | 11,500,000 | $ | 1,150 | $ | 23,850 | $ | (5,000 | ) | $ | 20,000 | |||||||||||||||
Accretion of Class A ordinary shares subject to possible redemption | — | — | — | — | (23,850 | ) | (22,913,855 | ) | (22,937,705 | ) | ||||||||||||||||||
Net loss | — | — | — | — | — | (6,551,028 | ) | (6,551,028 | ) | |||||||||||||||||||
Balance – March 31, 2021 | — | $ | — | 11,500,000 | $ | 1,150 | $ | — | $ | (29,469,883 | ) | $ | (29,468,733 | ) | ||||||||||||||
Forfeiture of 733,098 Founder Shares | — | — | (733,098 | ) | (73 | ) | — | 73 | — | |||||||||||||||||||
Accretion of Class A ordinary shares subject to possible redemption | — | — | — | — | — | (1,687,183 | ) | (1,687,183 | ) | |||||||||||||||||||
Net loss | — | — | — | — | — | (3,955,375 | ) | (3,955,375 | ) | |||||||||||||||||||
Balance – June 30, 2021 | — | $ | — | 10,766,902 | $ | 1,077 | $ | — | $ | (35,112,368 | ) | $ | (35,111,291 | ) | ||||||||||||||
Net income | — | — | — | — | — | 12,176,383 | 12,176,383 | |||||||||||||||||||||
Balance – September 30, 2021 | — | $ | — | 10,766,902 | $ | 1,077 | $ | — | $ | (22,935,985 | ) | $ | (22,934,908 | ) | ||||||||||||||
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | |||||||||||||||||||||||||
Balance – September 25, 2020 | 0— | $ | 0— | 0— | $ | 0 — | $ | 0 — | $ | 0 — | $ | 0 — | ||||||||||||||||
Issuance of Class B Ordinary shares to Sponsor (1) | — | — | 11,500,000 | 1,150 | 23,850 | — | 25,000 | |||||||||||||||||||||
Net loss | — | — | — | — | — | (5,000 | ) | (5,000 | ) | |||||||||||||||||||
Balance – September 30, 2020 (unaudited) | — | $ | — | 11,500,000 | $ | 1,150 | $ | 23,850 | $ | (5,000 | ) | $ | 20,000 | |||||||||||||||
For the Nine Months Ended September 30, | ||||||||||||||||
September 30, 2021 | September 25, 2020 (Inception) Through September 30, 2020 | 2022 | 2021 | |||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||
Net income (loss) | $ | 1,669,980 | $ | (5,000 | ) | |||||||||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||||||||||
Payment of formation costs through issuance of Class B ordinary shares | — | 5,000 | ||||||||||||||
Net income | $ | 4,268,194 | $ | 1,669,980 | ||||||||||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||||||
Change in fair value of warrant liability | (7,786,801 | ) | — | (6,458,092 | ) | (7,786,801 | ) | |||||||||
Change in fair value of conversion option liability | (2,827,922 | ) | — | — | (2,827,922 | ) | ||||||||||
Loss from issuance of Private Placement Warrants | 7,767,566 | — | — | 7,767,566 | ||||||||||||
Transaction costs allocated to warrant liability | 41,191 | — | — | 41,191 | ||||||||||||
Amortization of debt discount | 463,622 | — | 1,196,934 | 463,622 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Prepaid expenses | (905,712 | ) | — | 472,844 | (905,712 | ) | ||||||||||
Accounts payable and accrued expenses | 173,144 | — | (253,081 | ) | 173,144 | |||||||||||
Net cash used in operating activities | (1,404,932 | ) | 0 | (773,201 | ) | (1,404,932 | ) | |||||||||
Cash Flows from Investing Activities: | ||||||||||||||||
Investment of cash in Trust Account | (430,676,061 | ) | — | — | (430,676,061 | ) | ||||||||||
Net cash used in investing activities | (430,676,061 | ) | 0 | — | (430,676,061 | ) | ||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||
Proceeds from sale of Units, net of underwriting discounts paid | 422,062,539 | — | ||||||||||||||
Proceeds from sale of Shares, net of underwriting discounts paid | — | 422,062,539 | ||||||||||||||
Proceeds from sale of Private Placement Warrants | 10,613,522 | — | — | 10,613,522 | ||||||||||||
Repayment of promissory note - related party | — | (228,836 | ) | |||||||||||||
Proceeds from convertible note - related party | — | 3,000,000 | ||||||||||||||
Payment of offering costs | (96,281 | ) | — | (640,379 | ) | (96,281 | ) | |||||||||
Repayment of promissory note – related party | (228,836 | ) | — | |||||||||||||
Proceeds from convertible note – related party | 3,000,000 | — | ||||||||||||||
Net cash provided by financing activities | 435,350,944 | 0 | ||||||||||||||
Net cash (used in) provided by financing activities | (640,379 | ) | 435,350,944 | |||||||||||||
Net Change in Cash | 3,269,951 | — | (1,413,580 | ) | 3,269,951 | |||||||||||
Cash – Beginning of period | 0 | 0 | ||||||||||||||
Cash - Beginning of period | 3,185,171 | — | ||||||||||||||
Cash – End of period | $ | 3,269,951 | $ | 0 | ||||||||||||
Cash - End of period | $ | 1,771,591 | $ | 3,269,951 | ||||||||||||
Non-Cash investing and financing activities: | ||||||||||||||||
Offering costs included in accrued offering costs | $ | 587,155 | $ | 28,000 | $ | — | $ | 587,155 | ||||||||
Offering costs paid through promissory note | $ | 181,786 | $ | — | $ | — | $ | 181,786 | ||||||||
Payment of prepaid expenses through promissory note | $ | 19,600 | $ | — | $ | — | $ | 19,600 | ||||||||
Initial classification of Class A ordinary shares subject to possible redemption | $ | 430,676,061 | $ | — | ||||||||||||
Deferred underwriting fee payable | $ | 15,073,661 | $ | — | $ | — | $ | 15,073,661 | ||||||||
Initial Classification of conversion option | $ | 2,827,922 | $ | — | ||||||||||||
Initial classification of conversion option | $ | — | $ | 2,827,922 | ||||||||||||
Deferred offering costs paid by Sponsor in exchange for the issuance of Class B ordinary shares | $ | — | $ | 20,000 | ||||||||||||
Gross Proceeds | $ | 430,676,061 | ||
Less: | ||||
Class A ordinary shares issuance costs | (24,624,888 | ) | ||
Plus: | ||||
Accretion of carrying value to redemption value | 24,624,888 | |||
Class A ordinary shares subject to possible redemption | $ | 430,676,061 | ||
For the Three Months Ended September 30. | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Class A Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | |||||||||||||
Basic and diluted net income (loss) per ordinary share | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income (loss) | $ | (66,654 | ) | $ | (16,664 | ) | $ | 9,741,106 | $ | 2,435,277 | ||||||
Denominator | ||||||||||||||||
Basic and diluted weighted average shares outstanding | 43,067,606 | 10,766,902 | 43,067,606 | 10,766,902 | ||||||||||||
Basic and diluted net income (loss) per ordinary share | $ | (0.00 | ) | $ | (0.00 | ) | $ | 0.23 | $ | 0.23 | ||||||
Three Months Ended September 31, 2021 | Nine Months Ended September 31, 2021 | September 25, 2020 (inception) Through September 30, 2020 | ||||||||||||||||||||||
Class A Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | |||||||||||||||||||
Basic and diluted net income per ordinary share | ||||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||
Allocation of net income | $ | 9,741,106 | $ | 2,435,277 | $ | 1,232,157 | $ | 437,823 | $ | — | $ | (5,000 | ) | |||||||||||
Denominator | ||||||||||||||||||||||||
Basic and diluted weighted average shares outstanding | 43,067,606 | 10,766,902 | 29,304,919 | 10,412,947 | — | 10,000,000 | ||||||||||||||||||
Basic and diluted net income per ordinary shares | $ | 0.23 | $ | 0.23 | $ | 0.04 | $ | 0.04 | $ | 0.00 | $ | 0.00 | ||||||||||||
For the Nine Months Ended September 30. | ||||||||||||||||
2022 | 2021 | |||||||||||||||
Class A Ordinary Shares | Class B Ordinary Shares | Class A Ordinary Shares | Class B Ordinary Shares | |||||||||||||
Basic and diluted net income per ordinary share | ||||||||||||||||
Numerator: | ||||||||||||||||
Allocation of net income | $ | 3,414,555 | $ | 853,639 | $ | 1,231,589 | $ | 438,391 | ||||||||
Denominator | ||||||||||||||||
Basic and diluted weighted average shares outstanding | 43,067,606 | 10,766,902 | 29,254,135 | 10,413,165 | ||||||||||||
Basic and diluted net income per ordinary share | $ | 0.08 | $ | 0.08 | $ | 0.04 | $ | 0.04 | ||||||||
Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |
Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
Level | September 30, 2021 | |||||||
Liabilities: | ||||||||
Warrant Liability – Private Placement Warrants | 3 | $ | 10,594,288 | |||||
Warrant Liability – Conversion Option | 3 | 0 |
Level | September 30, 2022 | December 31, 2021 | ||||||||||
Liabilities: | ||||||||||||
Warrant Liability—Private Placement Warrants | 3 | $ | 1,184,876 | $ | 7,642,968 |
As of September 30, 2021 | As of September 30, 2022 | As of December 31, 2021 | ||||||||||
Stock price | $ | 9.80 | $ | 9.79 | $ | 9.77 | ||||||
Strike price | $ | 11.50 | $ | 11.50 | $ | 11.50 | ||||||
Volatility | 16.0 | % | 2.5 | % | 12.0 | % | ||||||
Risk-free rate | 1.15 | % | 3.61 | % | 1.54 | % | ||||||
Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % |
Warrant Liabilities | ||||
Fair value as of January 1, 2021 | $ | 0— | ||
Initial measurement on March 25, 2021 | 17,252,208 | |||
Change in fair value | (7,786,801 | ) | ||
Measurement of the additional Private Placement warrants issued on May 6, 2021 | 1,128,881 | |||
Fair value as of September 30, 2021 | $ | 10,594,288 | ||
Private Placement Warrants Liabilities | ||||
Fair value as of January 1, 2021 | $ | — | ||
Initial measurement on March 25, 2021 | 17,252,208 | |||
Changes in fair value(1) | (7,786,801 | ) | ||
Measurement of the additional Private Placement warrants issued on May 6, 2021 | 1,128,881 | |||
Fair value as of September 30, 2021 | $ | 10,594,288 | ||
Fair value as of January 1, 2022 | $ | 7,642,968 | ||
Changes in fair value(1) | (6,458,092 | ) | ||
Fair value as of September 30, 2022 | $ | 1,184,876 | ||
(1) | Changes in valuation inputs or other assumptions are recognized in change in fair value of warrant liabilities in the unaudited condensed statements of operations. |
Option Liability | ||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Dragoneer Growth Opportunities Corp. III. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Dragoneer Growth Opportunities Holdings III.directors. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act that are not historical facts and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Form
Overview
We are a blank check company incorporated in theas a Cayman Islands exempted company on September 25, 2020 formed for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). While we may pursue an initial Business Combination target in any industry or entities. Wegeographic location, we intend to effectuatefocus our Business Combination using cash derived fromsearch for a target business operating in the proceedsmedia, entertainment and technology industries. Our sponsor is Dragoneer Growth Opportunities Holdings III (an affiliate of the Initial Public Offering and the sale of the Private Placement Warrants, our shares, debt orDragoneer Investment Group, LLC (the “Sponsor”)), a combination of cash, shares and debt.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination will be successful.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities through September 30, 20212022 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We may generate
For the three months ended September 30, 2022, we had a net loss of $83,318, which consists of operating costs of $259,796, interest expense related to the amortization of the debt discount of $403,363, and a gain on the change in the fair value of the warrant liability of $579,841.
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For the three months ended September 30, 2021, we had a net income of $12,176,383, which relates to formation and operating costs of $236,475, a decrease in the fair value of the warrant liability of $9,995,945, a decrease in the fair value of the conversion option liability of $2,827,922, and interest expense related to the amortization of the debt discount of $411,009.
For the nine months ended September 30, 2021, we had a net income of $1,669,980, which consisted primarily of formation and operating costs of $672,364, a decrease in the fair value of the warrant liability of $7,786,801, a decrease in the fair value of the conversion option liability of $2,827,922, a loss on the issuance of the private Placement Warrants of $7,767,566, interest expense related to the amortization of the debt discount of $463,622, and transaction costs allocable to the warrant liability of $41,191.
Liquidity, and Capital Resources
On March 25, 2021, we consummated the Initial Public Offering of 40,000,000 Class A Public Shares at $10.00 per Public Share, generating gross proceeds of $400,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 10,000,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $10,000,000.
On May 6, 2021, the underwriters partially exercised their over-allotment option, resulting in an additional 3,067,606 Public Shares issued for an aggregate amount of $30,676,060. In connection with the underwriters’ partial exercise of their over-allotment option, the Company also consummated the sale of an additional 613,522 Private Placement Warrants at $1.00 per Private Placement Warrant, generating total gross proceeds of $613,522. A total of $30,676,060 was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $430,676,060.
For the nine months ended September 30, 2022, cash used in operating activities was $773,201. Net income of $4,268,194 was affected by a gain on the change in the fair value of the warrant liability of $6,458,092, and amortization of the debt discount of $1,196,934. Changes in operating assets and liabilities provided $219,763 of cash for operating activities.
For the nine months ended September 30, 2021, cash used in operating activities was $1,404,932. Net income of $1,669,980 was affected by a decrease in the fair value of the warrant liability of $7,786,801, a decrease in the fair value of the conversion option of $2,827,922, a loss on the issuance of the private Placement Warrants of $7,767,566, amortization of the debt discount of $463,622 and transaction costs allocable to the warrant liability of $41,191. Changes in operating assets and liabilities used $732,568 of cash for operating activities.
As of September 30, 2021,2022, we had cash held in the Trust Account of $430,676,061. Interest income on the balance in the Trust Account may be used by us to pay taxes. Through September 30, 2021,2022, we have not earned any interest earned from the Trust Account.
We intend to use substantially all of the funds held in the Trust Account including any amounts representing interest earned onand the Trust Account (less income taxes payable),proceeds from the sale of the forward purchase shares to complete our Business Combination. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
As of September 30, 2022, we had cash of $1,771,591 held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plantsproperties, or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, or certain of our officers and directors or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $3,000,000 of such loans may be convertible into warrants at a price of $1.00 per warrant, at the option of the lender. The warrants would be identical to the Private Placement Warrants.
On June 18, 2021, we entered into a Working Capital Loan with the Sponsor pursuant to which the Sponsor agreed to loan us up to an aggregate principal amount of $3,000,000 (the “Working Capital Loan”), which we drew in full on the same day. The Working Capital Loan is
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Off-Balance
We have no obligations, assets or liabilities, which would be considered
Contractual Obligations
Registration and Shareholder Rights Agreement
Pursuant to a registration and shareholder rights agreement entered into on March 22, 2021, the holders of the Founder Shares and Private Placement Warrants, and any warrants that may be issued upon conversion of the Working Capital Loans (and any Class A ordinary shares issuable upon the exercise of the Private Placement Warrants and any warrants that may be issued upon conversion of Working Capital Loans and conversion of Founder Shares) are entitled to registration rights. The holders of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination. However, the registration and shareholder rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The registration rights agreement does not contain liquidating damages or other cash settlement provisions resulting from delays in registering the Company’s securities. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
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Underwriting Agreement
The Company granted the underwriters a 45-day option to purchase up to 6,000,000 additional Public Shares to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. The underwriters partially exercised their over-allotment option on May 6, 2021 resulting in the sale of an additional 3,067,606 Public Shares at a price of $10.00 per Public Share. The underwriters’ remaining over-allotment option expired unexercised on May 6, 2021.
The underwriters are entitled to a deferred fee of $0.35 per Public Share, or $15,073,661 in the aggregate. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Forward Purchase Agreement
The Company entered into a forward purchase agreement pursuant to which an affiliate of the Sponsor agreed to purchase an aggregate of up to 5,000,000 forward purchase shares for $10.00 per share, or up to $50,000,000 in the aggregate, in a private placement to close substantially concurrently with the initial Business Combination. The Company will determine in its sole discretion the specific number of forward purchase shares that it sells to the purchaser, if any. The funds from the sale of forward purchase shares may be used as part of the consideration to the sellers in the initial Business Combination, expenses in connection with the initial Business Combination or for working capital in the post transaction company. The obligations under the forward purchase agreement do not depend on whether any public shareholdersPublic Shareholders elect to redeem their shares and provide the Company with a minimum funding level for the initial Business Combination.
Since the forward purchase shares are not freestanding financial instruments, they are not deemed to be within the scope of ASC 815-40. Accordingly, the forward purchase shares themselves are not derivative instruments and will not be recognized within equity of the Company until issued for consideration.
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liability
We account for the warrants issued in connection with our Initial Public Offering in accordance with the guidance contained in ASC 815 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to
Derivative Financial Instruments
We evaluate our financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the issuance date and is then revalued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or
Class A Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480, “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption are presented at redemption value as temporary equity, outside of the shareholders’ (deficit) equity section of our unaudited condensed balance sheets.
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Net Loss Per Ordinary Share
The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” The Company has two classes of shares, which are referred to as Class A ordinary shares and Class B ordinary shares. Income and losses are shared pro rata between the two classes of shares. Net income (loss) per ordinary share is calculatedcomputed by dividing the net income (loss) by the weighted average number of ordinary shares outstanding for the respective period.
Recent Accounting Standards
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our unaudited condensed financial statements.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have elected to irrevocably opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, we will adopt the new or revised standard at the time public companies adopt the new or revised standard. This may make comparison of our financial statements with another emerging growth company that has not opted out of using the extended transition period difficult or impossible because of the potential differences in accountant standards used.
Additionally, we are in the process of evaluating the benefits of relying on the other reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an “emerging growth company”, we choose to rely on such exemptions we may not be required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our Initial Public Offering or until we are no longer an “emerging growth company,” whichever is earlier.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are a smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
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As required by Rules
Changes in Internal Control over Financial Reporting
During the fiscal quarter ended September 30, 2021,2022, there has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. The material weakness previously reported was remediated during the quarter ended September 30, 2021.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Factors that could cause our actual results to differ materially from those in this report include the risk factors described in our final prospectusAnnual Report on Form 10-K for our Initial Public Offeringthe year ended December 31, 2021, as filed with the SEC.SEC on March 31, 2022 (our “2021 Annual Report on Form 10-K”). Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Report, except as described below, there have been no material changes to the risk factors disclosed in our final prospectus for our Initial Public Offering filed with the.2021 Annual Report on Form 10-K. We may disclose changes to such factors or disclose additional factors from time to time in our future filings with the SEC.
The risk factor disclosure in our 2021 Annual Report on Form 10-K filed with the SEC on March 31, 2022, set forth under the heading “Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial Business Combination, and results of operations.” is replaced in its entirety with the following risk factor:
Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, including our ability to negotiate and complete our initial Business Combination, and results of operations.
We are subject to laws and regulations enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements. Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business, including our ability to negotiate and complete our initial Business Combination, and results of operations.
On March 30, 2022, the SEC issued proposed rules relating to, among other items, enhancing disclosures in business combination transactions involving SPACs and private operating companies; amending the financial statement requirements applicable to transactions involving shell companies; effectively eliminating the safe harbor relating to the use of projections in SEC filings in connection with proposed business combination transactions; increasing the potential liability of certain participants in proposed business combination transactions; and the extent to which SPACs could become subject to regulation under the Investment Company Act of 1940. These rules, if adopted, whether in the form proposed or in revised form, may materially adversely affect our ability to negotiate and complete our initial business combination and may increase the costs and time related thereto.
Moreover, because these laws, regulations and standards are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available. This evolution may result in continuing uncertainty regarding compliance matters and additional costs necessitated by ongoing revisions to our disclosure and governance practices. If we fail to address and comply with these regulations and any subsequent changes, we may be subject to penalty and our business may be harmed.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On March 25, 2021, we consummated the Initial Public Offering of 40,000,000 Class A ordinary shares. The Class A ordinary shares were sold at an offering price of $10.00 per unit, generating total gross proceeds of $400,000,000. The securities in the offering were registered under the Securities Act on registration statement on Form
On May 6, 2021, the underwriters partially exercised their over-allotment option, resulting in an additional 3,067,606 Class A ordinary shares issued for an aggregate amount of $30,676,060.
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 10,000,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $10,000,000. As a result of the underwriters’ partial exercise of their overallotment option on May 6, 2021, the Sponsor purchased an additional 613,522 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $613,522. A portion of the proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering to be held in the Trust Account. A portion of the proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering to be held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period or any Extension Period, the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will be worthless. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
We paid a total of $24,666,079, consisting of $8,613,522 of underwriting fees, $15,073,661 of deferred underwriting fees and $978,896 of other offering costs and expenses related to the Initial Public Offering.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
None.
Item 5. Other Information
None.
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form
* | Filed herewith. |
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PART III—SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DRAGONEER GROWTH OPPORTUNITIES CORP. III | ||||||
Date: November | By: | /s/ Christian Jensen | ||||
Name: | Christian Jensen | |||||
Title: | Chief Executive Officer | |||||
(Principal Executive Officer) | ||||||
Date: November | By: | /s/ Pat Robertson | ||||
Name: | Pat Robertson | |||||
Title: | President | |||||
(Principal Financial Officer and Principal Accounting Officer), Chief Operating Officer and Director |
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