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United States securities and exchange commission logo
November 30, 2021
Michael Clifton
Chief Financial Officer
Supernova Partners Acquisition Co II, Ltd.
4301 50th Street NW
Suite 300 PMB 1044
Washington, D.C. 20016
Re: Supernova Partners
Acquisition Co II, Ltd.
Registration
Statement on Form S-4
Filed November 3,
2021
File No. 333-260692
Dear Mr. Clifton:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Registration Statement on Form S-4
Summary of the Proxy Statement/Prospectus
The Supernova Board's Reasons for the Business Combination, page 35
1. Please clarify if the
sponsor and its affiliates can earn a positive rate of return on their
investment, even if
other SPAC shareholders experience a negative rate of return in the
post-business
combination company.
Michael Clifton
FirstName
Supernova LastNameMichael Clifton
Partners Acquisition Co II, Ltd.
Comapany 30,
November NameSupernova
2021 Partners Acquisition Co II, Ltd.
November
Page 2 30, 2021 Page 2
FirstName LastName
PIPE Financing, page 37
2. Please disclose if Supernova s sponsor, directors, officers or their
affiliates will participate
in the PIPE financing.
Ownership of New Rigetti, page 38
3. Please revise your tabular disclosures here and on page 13 to show the
potential impact
of interim levels of redemptions. In this respect, we note that
Rigetti may waive the
requirement that Supernova have at least $165,000,000 of available
cash at the Closing.
Accordingly, your disclosure of the impact of redemptions at varying
levels should
include the scenario whereby Rigetti waives that condition and the
maximum redemption
scenario is greater than 72% of public shares redeemed.
4. Please revise to disclose all possible sources and extent of dilution
that shareholders who
elect not to redeem their shares may experience in connection with the
business
combination. Provide disclosure of the impact of each significant
source of dilution,
including the amount of equity held by founders, convertible
securities, including warrants
retained by redeeming shareholders, at each of the redemption levels
detailed in your
sensitivity analysis, including any needed assumptions.
5. Quantify the value of warrants, based on recent trading prices, that
may be retained by
redeeming stockholders assuming maximum redemptions and identify any
material
resulting risks.
6. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions. Revise your disclosure to disclose the effective
underwriting fee on a
percentage basis for shares at each redemption level presented in your
sensitivity analysis
related to dilution.
7. Please revise the references to a section entitled Consideration to
Rigetti Equityholders in
the Business Combination throughout the registration statement as
we are unable to
locate this section.
Interests of Supernova's Directors and Executive Officers in the Business
Combination, page 42
8. Expand this section to also address the interests and associated
conflicts pertaining to your
Sponsor and its affiliates.
9. Please quantify the aggregate dollar amount and describe the nature of
what your Sponsor
and its affiliates have at risk that depends on completion of a
business combination.
Include the current value of securities held, loans extended, fees
due, and out-of-pocket
expenses for which your Sponsor and its affiliates are awaiting
reimbursement. Provide
similar disclosure for the company s officers and directors, if
material.
Michael Clifton
FirstName
Supernova LastNameMichael Clifton
Partners Acquisition Co II, Ltd.
Comapany 30,
November NameSupernova
2021 Partners Acquisition Co II, Ltd.
November
Page 3 30, 2021 Page 3
FirstName LastName
Summary of Risk Factors, page 49
10. Highlight the risk that your Sponsor will benefit from the completion
of a business
combination and may be incentivized to complete an acquisition of a
less favorable target
company or on terms less favorable to shareholders rather than
liquidate.
Risk Factors, page 55
11. Disclose the material risks to unaffiliated investors presented by
taking the company
public through a merger rather than an underwritten offering. These
risks could include
the absence of due diligence conducted by an underwriter that would be
subject to liability
for any material misstatements or omissions in a registration
statement.
Rigetti's business is currently dependent upon its relationship..., page 60
12. We note your disclosure in this risk factor and on page 61 of your
reliance on certain
cloud providers, including Amazon Web Services, to run your QCaaS and
QCS
businesses. Please disclose the material terms of your agreements with
such providers,
including the term and any termination provisions.
Rigetti's future growth and success depend..., page 65
13. Please disclose the percentage of your revenues that are generated by
sales to government
entities for the periods presented in the proxy statement/prospectus,
here and in other
sections as appropriate.
Supernova Initial Shareholders Agreements, page 113
14. The disclosure indicates that the Initial Shareholders, Rigetti and/or
their directors,
officers, advisors or respective affiliates may purchase public shares
or provide incentives
through privately negotiated transactions in efforts to increase the
likelihood that the
business combination will be consummated. Explain how such purchases
would comply
with the requirements of Rule 14e-5 under the Exchange Act. With
respect to the
incentives, tell us whether you currently have any such arrangements
and how you intend
to provide disclosure about these arrangements.
Business Combination Proposal
Background of the Transactions, page 135
15. If a sponsor, a member of management or affiliates have a track record
with SPACs,
please provide balanced disclosure about this record and the outcomes
of the prior
transactions. Please also disclose if the sponsor has other SPACs in
the process of
searching for a target company, whether the SPAC s sponsors
considered more than one
active SPAC to be the potential acquirer and how the final decision
was reached.
Michael Clifton
FirstName
Supernova LastNameMichael Clifton
Partners Acquisition Co II, Ltd.
Comapany 30,
November NameSupernova
2021 Partners Acquisition Co II, Ltd.
November
Page 4 30, 2021 Page 4
FirstName LastName
Certain Projected Financial Information for Rigetti, page 146
16. Please revise the discussion of your projected financial information
to provide a more
detailed description of the material assumptions used to project
revenue growth. Your
disclosure should highlight the assumptions utilized that supports
your accelerated
revenue growth, including number of customers and pricing. Clarify
whether the systems
online are assumed to be at or near full capacity for each period
presented. Indicate the
scalability of your systems. Explain why you believe you have a
reasonable basis to
project this information five years out when your business is in the
early stages of
development and there is a high level of uncertainty and risk to
achieve and sustain
a technological advantage over your competitors.
17. Disclose whether Rigetti's management or the Supernova Board prepared
or considered
forecasted net income (loss) for the projected periods.
18. Provide us with the legal basis for the stated intentions of the
parties to not update the
disclosure regarding the prospective financial information "even in
the event that any or
all of the underlying assumptions are shown to be in error." Refer
generally to Item
10(b)(3)(iii) of Regulation S-K.
19. Please explain how the assumptions regarding the development of
multiple generations of
quantum computing systems with increasing qubit counts and fidelities,
including the
assumption of the release of a 1,000+ qubit system in 2024 and a
4,000+ qubit system in
2026, are reasonable. Clarify how these specific figures were
determined for use as part
of the assumptions underlying the financial projections.
Interests of Supernova's Directors and Executive Officers in the Business
Combination, page 148
20. Your charter waived the corporate opportunities doctrine. Please
address this potential
conflict of interest and whether it impacted your search for an
acquisition target.
21. We note that certain shareholders agreed to waive their redemption
rights. Please describe
any consideration or incentives provided in exchange for this
agreement.
U.S. Federal Income Tax Considerations, page 190
22. We note from your disclosure in this section that the parties intend
for the domestication
to qualify as a reorganization under Section 368(a) of the Tax Code.
Therefore, please file
an opinion of counsel supporting such a conclusion. Refer to Item
601(b)(8) of Regulation
S-K. See also Staff Legal Bulletin No. 19 for further guidance.
Michael Clifton
FirstName
Supernova LastNameMichael Clifton
Partners Acquisition Co II, Ltd.
Comapany 30,
November NameSupernova
2021 Partners Acquisition Co II, Ltd.
November
Page 5 30, 2021 Page 5
FirstName LastName
Unaudited Pro Forma Condensed Combined Financial Information, page 204
23. We note your pro forma adjustment (BB) for $22.3 million of Supernova
s transaction
costs related to the Business Combination and related transactions
were recorded as an
adjustment to the Pro Forma Condensed Combined Statements of
Operations. Since
the Business Combination will be treated as the equivalent of Rigetti
issuing stock for the
net assets of Supernova, the transaction costs related to the SPAC
merger should be
treated as a reduction of proceeds raised. We refer you to SEC Staff
Accounting Bulletin
Topic 5.A. That is, the transaction cost should be recorded as a
reduction of paid-in-
capital instead of expensed.
Cost of Revenue, page 253
24. Please clarify whether the cost of revenue includes all direct or
indirect cost associated
with providing your offering. In this regard, we note that "facility
costs (including
leases)" and "depreciation to support Rigetti s operations" are
included in General and
Administration expense. Clarify why these cost are not included in
your Cost of
Revenue. Ensure that your presentation complies with SAB Topic 11(B).
Be advised that
since you are presenting a gross profit subtotal, the cost of revenue
must include all cost.
Please advise.
Key Components of Results of Operations
Revenue, page 253
25. As noted on page F-46, development contracts and other services
represented 66% of your
total revenue for the six months ended July 31, 2021. Please expand
your disclosure to
explain the nature of these development contracts including whether
such contracts are
recurring in nature.
Results of Operations
Comparison of the Six Months Ended July 31, 2021 and 2020, page 254
26. Please expand your results of operations disclosures to quantify the
material factors
resulting in changes period over period. Similar concerns apply to
your disclosures
beginning on page 256. Refer to Section III.B of SEC Release No.
33-8350.
Cost of Revenue, page 256
27. Your statement to explain the significant increase in cost of revenue,
that the increase
was due to the expansion of development contracts and QCaaS revenue
seen in 2020,
does not appear to fully explain what costs increased as a result of
the increase in revenue.
Expand your disclosure to further identify and quantify the related
costs. Refer to Section
III.B of SEC Release No. 33-8350.
Michael Clifton
FirstName
Supernova LastNameMichael Clifton
Partners Acquisition Co II, Ltd.
Comapany 30,
November NameSupernova
2021 Partners Acquisition Co II, Ltd.
November
Page 6 30, 2021 Page 6
FirstName LastName
Cash Flows
Cash Flows Used in Operating Activities, page 259
28. We note that your discussion of cash flows from operating activities
is limited in nature.
This does not appear to contribute substantively to an understanding
of your cash flows.
Rather, it repeats items that are readily determinable from the
financial statements. When
preparing the discussion and analysis of operating cash flows, you
should address material
changes in the underlying drivers that affect these cash flows. These
disclosures should
also include a discussion of the underlying reasons for changes in
working capital items
that affect operating cash flows. Refer to Section IV.B.1 of SEC
Release 33-8350.
Management of New Rigetti Following the Business Combination, page 276
29. Please provide details of the business experience of Mr. Sereda and
Ms. Birch for the past
five years, including principal occupations and employment and the
name and principal
business of any corporation or other organization in which such
occupations and
employment were carried on. Refer to Item 401(e) of Regulation S-K.
Beneficial Ownership of Securities, page 282
30. Provide disclosure of the sponsor and its affiliates total
potential ownership interest in the
combined company, assuming exercise and conversion of all securities.
Notes to Condensed Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Concentrations of Credit Risk, page F-45
31. Please expand your significant customer disclosure to break out single
customers that
amount to 10% or more of revenue for your interim periods similar to
your disclosure on
page F-65. Refer to ASC 280-10-50-42.
Note 7. Segments, page F-48
32. Expand your disclosure to disclose the amount of revenues attributed
to the United States,
as well as disclose the basis for attributing revenues from external
customers to individual
countries. In addition, disclose long-lived assets located in the
United States as well as
in foreign countries. Refer to ASC 280-10-50-41. Similar concerns
apply to your
disclosures on page F-82.
Note 8. Equity Plans, page F-48
33. Please provide us with a breakdown of all equity awards granted
starting on February 1,
2021 and leading up to your filing, including the fair value of the
underlying common
stock used to value such awards as determined by your board of
directors. To the extent
there were any significant fluctuations in the fair values from period
to period, please
describe for us the factors that contributed to these fluctuations,
including any intervening
Michael Clifton
Supernova Partners Acquisition Co II, Ltd.
November 30, 2021
Page 7
events within the Company or changes in your valuation assumptions or
methodology.
Compare the most recent valuations for options granted to the fair value
of the shares of
commons stock as determined by the exchange ratio in the merger
agreement.
Note 2. Summary of Significant Accounting Policies
Revenue Recognition, page F-61
34. Expand your disclosure to clarify your development contracts' types
(i.e., fixed-price
and/or time and materials).
Note 3 Revenue Recognition, page F-67
35. Consider disaggregating revenue by contract fee type. For example,
present revenue
recognized from QCaaS subscription-based access separately from
usage-based access.
We refer you to ASC 606-10-55-91(d).
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Ryan Rohn, Senior Staff Accountant, at (202) 551-3739 or
Stephen
Krikorian, Accounting Branch Chief, at (202) 551-3488 if you have questions
regarding
comments on the financial statements and related matters. Please contact
Priscilla Dao, Staff
Attorney, at (202) 551-5997 or Joshua Shainess, Legal Branch Chief, at (202)
551-7951 with any
other questions.
Sincerely,
FirstName LastNameMichael Clifton
Division of Corporation
Finance
Comapany NameSupernova Partners Acquisition Co II, Ltd.
Office of Technology
November 30, 2021 Page 7
cc: Om K. Pandya
FirstName LastName