Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
In this section, unless the context otherwise requires, the “combined company” or “ProKidney” refer to ProKidney Corp. (formerly Social Capital Suvretta Holdings Corp. III) and its subsidiaries after the Closing, “SCS” refers to SCS prior to the Closing, and “Legacy ProKidney” refers to ProKidney LP and its subsidiaries prior to the Closing.
The following unaudited pro forma condensed combined financial information for the six months ended June 30, 2022 combines the historical statement of operations of SCS and the historical consolidated statement of operations of Legacy ProKidney, giving effect to the Business Combination as if it had occurred on January 1, 2021. The unaudited pro forma condensed combined balance sheet as of June 30, 2022 combines the historical balance sheet of SCS and Legacy ProKidney, giving effect to the Business Combination as if it had occurred on June 30, 2022.
The following unaudited pro forma condensed combined financial information presents the combination of the financial information of SCS and Legacy ProKidney, adjusted to give effect to the Business Combination and other events contemplated by the Business Combination Agreement. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.”
The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only. The unaudited pro forma condensed combined statement of operations is not necessarily indicative of what the actual results of operations would have been had the Business Combination taken place on the date indicated, nor is it indicative of the future consolidated results of operations of the combined company. The pro forma adjustments were based on the information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed. Actual results may differ materially from the assumptions within the accompanying unaudited pro forma condensed combined financial information.
On July 11, 2022, SCS and Legacy ProKidney consummated the Business Combination pursuant to the Business Combination Agreement. The historical financial information has been adjusted to give pro forma effect to the following events that are related and/or directly attributable to the Business Combination. The following pro forma condensed combined financial statements presented herein reflect the actual redemption of 22,829,769 Class A ordinary shares in conjunction with the shareholder vote on the Business Combination contemplated by the Business Combination Agreement at the extraordinary general meeting held on July 11, 2022.
The following summarizes the pro forma share ownership of the combined company’s Class A ordinary shares after giving effect to the Business Combination.
| New ProKidney Ordinary Shares |
| Ownership |
| ||
Public Shareholders |
| 2,170,231 |
|
| 0.9 | % |
Sponsor |
| 6,890,000 |
|
| 2.9 | % |
Third Party PIPE Investors |
| 36,840,000 |
|
| 15.2 | % |
Sponsor Related PIPE Investors |
| 15,640,000 |
|
| 6.5 | % |
ProKidney Unitholders (including the ProKidney Related PIPE Investors) |
| 180,000,000 |
|
| 74.5 | % |
Total Shares Outstanding |
| 241,540,231 |
|
| 100.0 | % |
The unaudited pro forma condensed combined financial information is based on and should be read in conjunction with:
1
2
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEETS JUNE 30, 2022
(in thousands, except share and per share amounts)
| SCS Historical |
|
| ProKidney Historical |
|
| Transaction Accounting Adjustments (Note 3) |
|
| Note |
| Proforma Combined |
| ||||||||
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents | $ |
| 108 |
|
| $ |
| 21,882 |
|
| $ |
| 516,204 |
|
| (a) |
| $ |
| 538,194 |
|
Prepaid assets |
|
| 525 |
|
|
|
| 682 |
|
|
|
| - |
|
|
|
|
|
| 1,207 |
|
Prepaid clinical |
|
| - |
|
|
|
| 11,350 |
|
|
|
| - |
|
|
|
|
|
| 11,350 |
|
Other current assets |
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
|
|
|
| - |
|
Total current assets |
|
| 633 |
|
|
|
| 33,914 |
|
|
|
| 516,204 |
|
|
|
|
|
| 550,751 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Investments held in Trust Account |
|
| 250,371 |
|
|
|
| - |
|
|
|
| (250,371 | ) |
| (b) |
|
|
| - |
|
Fixed assets, net |
|
| - |
|
|
|
| 10,857 |
|
|
|
| - |
|
|
|
|
|
| 10,857 |
|
Right of use assets, net |
|
| - |
|
|
|
| 1,962 |
|
|
|
| - |
|
|
|
|
|
| 1,962 |
|
Deferred offering costs |
|
| - |
|
|
|
| 6,905 |
|
|
|
| (6,905 | ) |
| (c) |
|
|
| - |
|
Intangible assets, net |
|
| - |
|
|
|
| 320 |
|
|
|
| - |
|
|
|
|
|
| 320 |
|
Other long term assets |
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
|
|
|
| - |
|
Total assets | $ |
| 251,004 |
|
| $ |
| 53,958 |
|
| $ |
| 258,928 |
|
|
|
| $ |
| 563,890 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Accounts payable | $ |
| - |
|
| $ |
| 2,513 |
|
| $ |
| - |
|
|
|
| $ |
| 2,513 |
|
Lease liabilities |
|
| - |
|
|
|
| 377 |
|
|
|
| - |
|
|
|
|
|
| 377 |
|
Accrued expenses and other |
|
| 7,603 |
|
|
|
| 6,184 |
|
|
|
| - |
|
|
|
|
|
| 13,787 |
|
Related party notes payable |
|
| 250 |
|
|
|
| 35,000 |
|
|
|
| (35,250 | ) |
| (d) |
|
|
| - |
|
Income taxes payable |
|
| - |
|
|
|
| 1,730 |
|
|
|
| - |
|
|
|
|
|
| 1,730 |
|
Advances from related party |
|
| 81 |
|
|
|
| - |
|
|
|
| (81 | ) |
| (e) |
|
|
| - |
|
Total current liabilities |
|
| 7,934 |
|
|
|
| 45,804 |
|
|
|
| (35,331 | ) |
|
|
|
|
| 18,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Long term liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Deferred underwriting fee payable |
|
| 7,700 |
|
|
|
| - |
|
|
|
| (7,700 | ) |
| (f) |
|
|
| - |
|
Lease liabilities, net of current portion |
|
| - |
|
|
|
| 1,617 |
|
|
|
| - |
|
|
|
|
|
| 1,617 |
|
Tax Receivable Agreement liability |
|
| - |
|
|
|
| - |
|
|
|
| - |
|
| (g) |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
Temporary equity: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Class A ordinary shares subject to possible redemption |
|
| 250,371 |
|
|
|
| - |
|
|
|
| (250,371 | ) |
| (h) |
|
|
| - |
|
Redeemable noncontrolling interest |
|
| - |
|
|
|
| - |
|
|
|
| 410,388 |
|
| (i) |
|
|
| 410,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
ProKidney Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
ProKidney Corp. Class A ordinary shares |
|
| - |
|
|
|
| - |
|
|
|
| 58 |
|
| (j),(h),(o) |
|
|
| 58 |
|
ProKidney Corp. Class B ordinary shares |
|
| - |
|
|
|
| - |
|
|
|
| 18 |
|
| (k) |
|
|
| 18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
SCS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
SCS Preference shares, $0.0001 par value |
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
|
|
|
| - |
|
SCS Class A ordinary shares, $0.0001 par value |
|
| - |
|
|
|
| - |
|
|
|
| - |
|
|
|
|
|
| - |
|
SCS Class B ordinary shares, $0.0001 par value |
|
| 1 |
|
|
|
| - |
|
|
|
| (1 | ) |
| (o) |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
|
|
|
|
| |||
ProKidney: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
ProKidney - Class A Units |
|
| - |
|
|
|
| 186,500 |
|
|
|
| (186,500 | ) |
| (k) |
|
|
| - |
|
ProKidney - Class B Units |
|
| - |
|
|
|
| 71,164 |
|
|
|
| (71,164 | ) |
| (k) |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Additional paid-in capital |
|
|
|
|
|
|
|
|
|
| 141,867 |
|
| (k),(l) |
|
|
| 141,867 |
| ||
Accumulated deficit |
|
| (15,002 | ) |
|
|
| (251,127 | ) |
|
|
| 257,664 |
|
| (k) |
|
|
| (8,465 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Total equity |
|
| (15,001 | ) |
|
|
| 6,537 |
|
|
|
| 141,942 |
|
|
|
|
|
| 133,478 |
|
Total liabilities, redeemable noncontrolling | $ |
| 251,004 |
|
| $ |
| 53,958 |
|
| $ |
| 258,928 |
|
|
|
| $ |
| 563,890 |
|
4
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2022
(in thousands, except share and per share amounts)
| SCS Historical |
|
| ProKidney Historical |
|
| Transaction Accounting Adjustments (Note 3) |
|
| Note |
| Proforma Combined |
|
| ||||||||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Research and development | $ |
| - |
|
| $ |
| 40,048 |
|
| $ |
| - |
|
|
|
| $ |
| 40,048 |
|
|
Operation and formation costs |
|
| 6,614 |
|
|
|
| - |
|
|
|
| - |
|
|
|
|
|
| 6,614 |
|
|
General and administrative |
|
| - |
|
|
|
| 47,152 |
|
|
|
| - |
|
|
|
|
|
| 47,152 |
|
|
Total operating expenses |
|
| 6,614 |
|
|
|
| 87,200 |
|
|
|
| - |
|
|
|
|
|
| 93,814 |
|
|
Operating loss |
|
| (6,614 | ) |
|
|
| (87,200 | ) |
|
|
| - |
|
|
|
|
|
| (93,814 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
| - |
|
|
|
| (184 | ) |
|
|
| - |
|
|
|
|
|
| (184 | ) |
|
Interest income |
|
| 363 |
|
|
|
| - |
|
|
|
| (363 | ) |
| (aa) |
|
|
| - |
|
|
Total other income |
|
| 363 |
|
|
|
| (184 | ) |
|
|
| (363 | ) |
|
|
|
|
| (184 | ) |
|
Net loss before income taxes |
|
| (6,251 | ) |
|
|
| (87,384 | ) |
|
|
| (363 | ) |
|
|
|
|
| (93,998 | ) |
|
Income tax expense |
|
| - |
|
|
|
| 2,233 |
|
|
|
| - |
|
| (bb) |
|
|
| 2,233 |
|
|
Net loss |
|
| (6,251 | ) |
|
|
| (89,617 | ) |
|
|
| (363 | ) |
|
|
|
|
| (96,231 | ) |
|
Net loss attributable to noncontrolling interest |
|
| - |
|
|
|
| - |
|
|
|
| (71,713 | ) |
| (cc) |
|
|
| (71,713 | ) |
|
Net loss available to Class A ordinary shares | $ |
| (6,251 | ) |
| $ |
| (89,617 | ) |
| $ |
| 71,350 |
|
|
|
| $ |
| (24,518 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Weighted average Class A ordinary shares, basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 61,540,231 |
|
| |||
Net loss per share attributable to Class A ordinary shares, basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ |
| (0.40 | ) | (dd) |
5
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
1. Description of Transaction
On July 11, 2022, SCS and Legacy ProKidney consummated the Business Combination contemplated by the Business Combination Agreement.
Following the Closing, the combined company was organized in an umbrella partnership-C corporation (or “Up-C”) structure, and the combined company’s direct assets consisted of Post-Combination ProKidney Common Units and all of the issued and outstanding equity interests of GP, which replaced Legacy GP as the general partner of Legacy ProKidney upon the Closing, and substantially all of the operating assets and business of the combined company is held indirectly through Legacy ProKidney, as described further below. ProKidney is domiciled in the Cayman Islands.
Pursuant to the Business Combination Agreement, the following transactions occurred:
6
Pursuant to the Exchange Agreement as described elsewhere in this prospectus, each Post-Combination ProKidney Common Unit, together with one Class B ordinary share, is generally exchangeable for one Class A ordinary share, subject to certain procedures and restrictions.
Basis of Presentation and Accounting Policies
The unaudited pro forma condensed combined financial information has been adjusted to include transaction accounting adjustments related to the Business Combination in accordance with GAAP.
We determined that the Business Combination qualified as a common control transaction and, therefore, was accounted for akin to a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Legacy ProKidney is considered the accounting acquirer primarily based on the evaluation of the following facts and circumstances:
Under the guidance in ASC 805 for transactions between entities under common control, the assets, liabilities, and noncontrolling interests of Legacy ProKidney and SCS were recognized at their carrying amounts on the date of the Business Combination. Under this method of accounting, SCS was treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination was treated as the equivalent of Legacy ProKidney issuing stock for the net assets of SCS, accompanied by a recapitalization. The net assets of SCS were stated at their historical value within the pro formas with no goodwill or other intangible assets recorded.
Upon completion of the Business Combination, GP became the sole general partner of Legacy ProKidney. Giving effect to the redemption of 22,829,769 Class A ordinary shares, ProKidney has the sole voting interest in Legacy ProKidney through its ownership of GP. As a result, ProKidney consolidated the financial results of Legacy ProKidney and reports a non-controlling interest related to the Post-Combination ProKidney Units held by Legacy ProKidney’s investors prior to the Closing on ProKidney’s consolidated balance sheet. The computation of the non-controlling interest following the Closing, is as follows:
| Units |
|
| Percentage |
| ||
Interest in ProKidney LP held by the Issuer |
| 61,540,231 |
|
|
| 25.5 | % |
Noncontrolling interest in the Issuer |
| 180,000,000 |
|
|
| 74.5 | % |
Total |
| 241,540,231 |
|
|
| 100.0 | % |
Proposed Accounting Treatment of the Earnout Rights
As discussed in this Note 1, the Earnout Participants received 17,500,000 Earnout Rights upon Closing. Upon satisfaction, during the five-year period after the Closing, of certain volume weighted average price (“VWAP”) thresholds, or a change in control with a per share price exceeding the VWAP thresholds within a five-year period immediately following the Closing, the Earnout Rights will automatically vest and convert into Post-Combination ProKidney Common Units and ProKidney Class B ordinary shares. As the Business Combination was accounted for as a reverse recapitalization, the issuance of the Earnout Rights to the Legacy ProKidney unitholders was accounted for as an equity transaction. Since the Earnout Rights were payable to the Legacy ProKidney unitholders (i.e., the accounting acquirer in the business combination), the accounting for the Earnout Rights arrangement did not fall under Accounting Standards Codification (“ASC”) Topic 805, Business Combinations nor Topic 718, Stock Compensation.
The accounting for the Earnout Rights was also evaluated under ASC Topic 480, Distinguishing Liabilities from Equity, to determine if the arrangement should be classified as a liability. As part of that preliminary analysis, it was determined that the Earnout Rights did not meet the criteria to be accounted for as a liability. Additionally, the Earnout
7
Rights were evaluated under ASC Topic 815, Derivatives. As part of that preliminary analysis, it was determined that the Earnout Rights met the definition of a derivative; however, they meet the scope exception criteria as they were clearly and closely related to the entity’s own stock, and met the criteria for equity treatment. Therefore, an adjustment to recognize the Earnout Rights would have no net impact on any financial statement line item as it would simultaneously increase and decrease additional paid-in capital. Thus, no adjustment has been applied to the unaudited pro forma combined financial information related to the Earnout Rights.
2. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. The adjustments in the unaudited pro forma condensed combined financial information have been identified and presented to provide relevant information necessary for an illustrative understanding of the combined company upon consummation of the Business Combination in accordance with GAAP.
The unaudited pro forma condensed combined financial information has been presented for illustrative purposes only and is not necessarily indicative of the operating results and financial position that would have been achieved had the Business Combination occurred on the dates indicated. The unaudited pro forma condensed combined financial information does not purport to project the future operating results or financial position of ProKidney following the completion of the Business Combination. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of this unaudited pro forma condensed combined financial information and are subject to change as additional information becomes available and analyses are performed. SCS and Legacy ProKidney did not have any historical relationship prior to the transactions. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
The unaudited pro forma condensed combined financial statements give effect to the redemption of 22,829,769 Class A ordinary shares.
3. Transaction Adjustments
Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2022
(in thousands) | Note |
|
| |
SCS cash held in Trust Account | (1) | $ | 250,371 |
|
Payment of deferred underwriting fees | (2) |
| (7,700 | ) |
PIPE Financing | (3) |
| 574,800 |
|
Payment to redeeming Public Stockholders | (4) |
| (228,636 | ) |
Payment of other transaction costs | (5) |
| (37,300 | ) |
Repayment of related party notes payable | (6) |
| (35,250 | ) |
Repayment of related party advance | (7) |
| (81 | ) |
Excess cash to balance sheet from Business Combination |
| $ | 516,204 |
|
8
(in thousands) | Note |
|
| |
PIPE Financing | (j) | $ | 574,743 |
|
Reclassification of common stock subject to redemption to permanent equity | (h) |
| 21,735 |
|
Issuance of Class B ordinary shares to existing ProKidney owners | (k) |
| (18 | ) |
Transaction related fees | (m) |
| (37,300 | ) |
Issuance of Earnout Shares | (n) |
| - |
|
Reclassification of ProKidney deferred offering costs to equity upon close | (c) |
| (6,905 | ) |
Noncontrolling interest | (i) |
| (410,388 | ) |
Adjusted additional paid in capital |
| $ | 141,867 |
|
9
Adjustments to Unaudited Pro Forma Condensed Combined Statement of Operations for the Six Months Ended June 30, 2022
10