Desktop Metal(DM) - 2019 Q3 - Quarterly Report

Part I. Financial Information Item 1. Financial Statements This section presents the company's unaudited condensed financial statements as of September 30, 2019, including balance sheets, statements of operations, equity, and cash flows, with explanatory notes Condensed Balance Sheets | ASSETS | September 30, 2019 (unaudited) | December 31, 2018 | | :----------------------------------- | :----------------------------- | :---------------- | | Cash | $ 588,282 | $ 119,136 | | Prepaid income taxes | 392,351 | — | | Prepaid expenses | 309,314 | — | | Total Current Assets | 1,289,947 | 119,136 | | Security deposit | 23,800 | 23,800 | | Deferred offering costs | — | 182,742 | | Marketable securities held in Trust Account | 302,997,890 | — | | Total Assets | $ 304,311,637 | $ 325,678 | | LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | | | | Accounts payable and accrued expenses | $ 196,138 | $ 20,222 | | Accrued offering costs | — | 25,149 | | Promissory note – related party | — | 299,000 | | Total Current Liabilities | 196,138 | 344,371 | | Deferred tax liability | 5,189 | — | | Deferred underwriting fee payable | 10,505,250 | — | | Total Liabilities | 10,706,577 | 344,371 | | Common stock subject to possible redemption | 288,605,059 | — | | Stockholders' Equity (Deficit) | | | | Class A common stock | 141 | — | | Class B convertible common stock | 750 | 750 | | Additional paid in capital | 2,989,410 | 24,250 | | Retained earnings/(Accumulated deficit) | 2,009,700 | (43,693) | | Total Stockholders' Equity (Deficit) | 5,000,001 | (18,693) | | Total Liabilities and Stockholders' Equity (Deficit) | $ 304,311,637 | $ 325,678 | Condensed Statement of Operations | | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | | :---------------------------------- | :------------------------------------ | :----------------------------------- | | Operating costs | $ 510,526 | $ 1,181,659 | | Loss from operations | (510,526) | (1,181,659) | | Other income: | | |\ | Interest income | 1,754,117 | 3,756,180 | | Unrealized (loss) gain on marketable securities held in Trust Account | (178,078) | 24,710 |\ | Other income | 1,576,039 | 3,780,890 |\ | Income before provision for income taxes | 1,065,513 | 2,599,231 |\ | Provision for income taxes | (223,758) | (545,838) |\ | Net Income | $ 841,755 | $ 2,053,393 |\ | Weighted average shares outstanding, basic and diluted | 8,854,332 | 8,158,050 |\ | Basic and diluted net loss per common share | $ (0.05) | $ (0.11) | Condensed Statement of Changes in Stockholders' Equity (Deficit) | | Class A Common Stock Shares | Class A Common Stock Amount | Class B Common Stock Shares | Class B Common Stock Amount | Additional Paid in Capital | Retained Earnings (Accumulated Deficit) | Total Stockholders' Equity (Deficit) | | :---------------------------------------------------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :------------------------- | :-------------------------------------- | :----------------------------------- | | Balance – January 1, 2019 | — | $ — | 7,503,750 | 750 | 24,250 | (43,693) | $ (18,693) | | Sale of 30,015,000 Units, net of underwriting discount and offering expenses | 30,015,000 | 3,002 | — | — | 283,064,358 | — | 283,067,360 | | Sale of 8,503,000 Private Placement Warrants | — | — | — | — | 8,503,000 | — | 8,503,000 | | Common stock subject to possible redemption | (28,636,988) | (2,864) | — | — | (286,507,378) | — | (286,510,242) | | Net loss | — | — | — | — | — | (41,421) | (41,421) | | Balance – March 31, 2019 (unaudited) | 1,378,012 | 138 | 7,503,750 | 750 | 5,084,230 | (85,114) | 5,000,004 | | Change in value of common stock subject to possible redemption | (27,430) | (3) | — | — | (1,253,056) | — | (1,253,059) | | Net income | — | — | — | — | — | 1,253,059 | 1,253,059 | | Balance – June 30, 2019 (unaudited) | 1,350,582 | 135 | 7,503,750 | 750 | 3,831,174 | 1,167,945 | 5,000,004 | | Change in value of common stock subject to possible redemption | 61,013 | 6 | — | — | (841,764) | — | (841,758) | | Net income | — | — | — | — | — | 841,755 | 841,755 | | Balance – September 30, 2019 (unaudited) | 1,411,595 | $ 141 | 7,503,750 | 750 | 2,989,410 | $ 2,009,700 | $ 5,000,001 | Condensed Statement of Cash Flows | Cash Flows from Operating Activities: | Nine Months Ended September 30, 2019 | | :--------------------------------------------------------------------------- | :----------------------------------- | | Net income | $ 2,053,393 | | Adjustments to reconcile net income to net cash used in operating activities: | | | Interest earned on marketable securities held in Trust Account | (3,756,180) | | Unrealized gain on marketable securities held in Trust Account | (24,710) | | Deferred income taxes | 5,189 | | Changes in operating assets and liabilities: | | | Prepaid income taxes | (392,351) | | Prepaid expenses | (309,314) | | Accounts payable and accrued expenses | 175,916 | | Net cash used in operating activities | (2,248,057) | | Cash Flows from Investing Activities: | | | Investment of cash in Trust Account | (300,150,000) | | Cash withdrawn from Trust Account to pay income taxes | 933,000 | | Net cash used in investing activities | (299,217,000) | | Cash Flows from Financing Activities: | | | Proceeds from sale of Units, net of underwriting discounts paid | 294,147,000 | | Proceeds from sale of Private Placement Warrants | 8,503,000 | | Advances from related party | 150,000 | | Repayment of advances from related party | (150,000) | | Repayment of promissory note – related party | (299,000) | | Payment of offering costs | (416,797) | | Net cash provided by financing activities | 301,934,203 | | Net Change in Cash | 469,146 | | Cash – Beginning | 119,136 | | Cash – Ending | $ 588,282 | | Supplemental cash flow information: | | | Cash paid for income taxes | $ 933,000 | | Non-cash investing and financing activities: Initial classification of common stock subject to possible redemption | $ 248,644,071 | | Change in value of common stock subject to possible redemption | $ 39,960,988 | Notes to Condensed Financial Statements This section provides detailed explanations and supplementary information for the condensed financial statements, covering organization, accounting policies, IPO, related party transactions, and equity Note 1 — Description of Organization and Business Operations Trine Acquisition Corp. is a Delaware-incorporated SPAC, established on September 26, 2018, to complete an initial business combination, having raised $300,150,000 in a trust account from its March 2019 IPO and private placement - The company is a blank check company (SPAC), formed on September 26, 2018, to effect an initial business combination[25] - The company completed its Initial Public Offering (IPO) on March 19, 2019, issuing 26,100,000 units at $10.00 per unit, totaling $261 million in proceeds[27] - A total of $300,150,000 from the IPO and overallotment was deposited into a trust account for future business combinations[29][31] - The target business for the initial business combination must have a fair market value of at least 80% of the trust account assets[35][36] - If the company fails to complete an initial business combination within the prescribed timeframe, the trust account will be liquidated, and public shares redeemed[39] Note 2 — Summary of Significant Accounting Policies This note outlines the significant accounting policies for the condensed financial statements, covering GAAP presentation, emerging growth company status, estimates, cash, marketable securities, redeemable common stock, income taxes, and net loss per share - As an emerging growth company, the company has elected not to opt out of the extended transition period, adopting new accounting pronouncements on the same timeline as private companies[46] - Marketable securities held in the trust account primarily consist of U.S. Treasury bills[54] - The company classifies common stock subject to possible redemption as temporary equity, presented outside of stockholders' equity[55] - The company uses the two-class method for net loss per share calculation, excluding common stock subject to possible redemption from basic net loss per share[59] Net Loss Per Share Reconciliation Table | | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | | :------------------------------------------------------------------------- | :------------------------------------ | :----------------------------------- | | Net income | $ 841,755 | $ 2,053,393 | | Less: Income attributable to common stock subject to possible redemption | (1,241,074) | (2,940,055) | | Adjusted net loss | $ (399,319) | $ (886,662) | | Weighted average shares outstanding, basic and diluted | 8,854,332 | 8,158,050 | | Basic and diluted net loss per share | $ (0.05) | $ (0.11) | Note 3 — Initial Public Offering The company sold 30,015,000 units in its IPO at $10.00 per unit, each comprising one Class A common stock share and half a redeemable warrant exercisable at $11.50 - The company sold 30,015,000 units in its IPO at $10.00 per unit, including the full exercise of the underwriters' overallotment option[66] - Each unit consists of one share of Class A common stock and one-half of one redeemable warrant[66] - Warrants are exercisable at $11.50 per share, becoming exercisable 30 days after the initial business combination or 12 months after the IPO closing (whichever is later), and expire five years post-business combination[66] Note 4 — Private Placement Concurrently with the IPO, the company sold 8,503,000 private placement warrants to the sponsor at $1.00 per warrant, totaling $8,503,000 in proceeds deposited into the trust account - The sponsor purchased 8,503,000 private placement warrants at $1.00 per warrant, for a total purchase price of $8,503,000[69] - Proceeds from private placement warrants were deposited into the trust account, and these warrants will expire if the initial business combination is not completed within the prescribed timeframe[70] - Private placement warrants are non-redeemable and exercisable on a cashless basis as long as held by the sponsor or its permitted transferees[70] Note 5 — Related Party Transactions This note details related party transactions with the sponsor, directors, and officers, including founder shares, advances, promissory notes, and administrative support agreements during formation and IPO - The initial sponsor purchased 8,625,000 shares of Class B convertible common stock (founder shares) for $25,000, with 7,503,750 founder shares ultimately issued and outstanding after adjustments[71] - The sponsor advanced $150,000 to the company for IPO-related expenses, which was repaid upon IPO completion[74] - The sponsor provided a promissory note for up to $300,000 for IPO expenses, with $299,000 repaid upon IPO completion[77] - The company agreed to pay the CFO approximately $16,667 per month (later increased to $25,000) and an affiliate of the sponsor $35,000 per month for administrative support[80][81] Note 6 — Commitments and Contingencies This note discloses commitments and contingencies, including contingent fees with the President, registration rights, and $10,505,250 in deferred underwriting fees payable upon business combination completion - The company agreed to pay the President $12,500 per month, with half paid at IPO completion and the remainder upon initial business combination completion; $75,000 in fees accrued as of September 30, 2019[82] - Holders of founder shares, private placement warrants, and their underlying securities possess registration rights[83] - Underwriters are entitled to $10,505,250 in deferred fees, payable from the trust account upon initial business combination completion, otherwise forfeited upon liquidation[87] Note 7 — Stockholders' Equity This note details stockholders' equity composition, including authorized and issued preferred, Class A, and Class B common shares, along with warrant terms, conditions, exercise, and redemption - The company is authorized to issue 1,000,000 shares of preferred stock, none of which were issued or outstanding as of September 30, 2019, and December 31, 2018[88] - The company is authorized to issue 100,000,000 shares of Class A common stock and 10,000,000 shares of Class B convertible common stock, with Class B converting 1:1 to Class A upon initial business combination[89] - As of September 30, 2019, 1,411,595 shares of Class A common stock (excluding 28,603,405 shares subject to possible redemption) and 7,503,750 shares of Class B convertible common stock were issued and outstanding[89] - Public warrants are exercisable 30 days post-business combination or 12 months post-IPO (whichever is later), and redeemable by the company if Class A common stock reaches $18.00 or higher[91][94] - Private placement warrants share public warrant terms but are non-transferable, non-redeemable, and exercisable on a cashless basis while held by initial purchasers or permitted transferees[96] Note 8 — Fair Value Measurements This note describes the company's fair value measurement of financial assets and liabilities under ASC 820, classifying marketable securities in the trust account as Level 1 assets as of September 30, 2019 - The company follows ASC 820 guidelines for fair value measurement of financial assets and liabilities, classifying them into Level 1, Level 2, and Level 3 hierarchies[99][100][101][102] Assets Measured at Fair Value as of September 30, 2019 | Description | Level | September 30, 2019 | | :---------------------------------------- | :---- | :----------------- | | Marketable securities held in Trust Account | 1 | $ 302,997,890 | Note 9 — Subsequent Events The company evaluated subsequent events from the balance sheet date to the financial statement issuance date, finding no significant events requiring adjustment or disclosure - The company identified no significant subsequent events requiring adjustment or disclosure[105] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's discussion and analysis of financial condition and results of operations, focusing on the company's status as a blank check company and its pursuit of an initial business combination - The company is a blank check company, formed on September 26, 2018, with the objective of effecting a business combination[109] - As of September 30, 2019, the company had not commenced any operations or generated operating revenue, focusing on organizational activities, IPO preparation, and identifying target businesses[115] Summary of Results of Operations | Metric | Three Months Ended September 30, 2019 | Nine Months Ended September 30, 2019 | | :------------------- | :------------------------------------ | :----------------------------------- | | Net Income | $841,755 | $2,053,393 | | Trust Account Interest Income | $1,754,117 | $3,756,180 | | Operating Costs | $510,526 | $1,181,659 | | Provision for Income Taxes | $223,758 | $545,838 | - The company raised a total of $300,150,000 from its IPO and private placement, deposited into a trust account for future business combinations[120] - As of September 30, 2019, the trust account held $302,997,890 in marketable securities, including approximately $2,848,000 in interest income and unrealized gains[122] - The company held $588,282 in cash outside the trust account for identifying and evaluating target businesses, conducting due diligence, and completing a business combination[125] - The company has no off-balance sheet arrangements, with its primary contractual obligation being a $35,000 monthly administrative support fee to an affiliate of the sponsor[128][129] Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk The company's market risk is primarily associated with short-term U.S. government Treasury bills and money market funds in the trust account, with no significant interest rate risk due to their short-term nature - Net proceeds from the IPO, including funds in the trust account, may be invested in U.S. government Treasury bills or certain money market funds with maturities of 180 days or less[135] - Due to the short-term nature of these investments, the company believes it has no significant exposure to interest rate risk[135] Item 4. Controls and Procedures Management assessed the effectiveness of disclosure controls and procedures as of September 30, 2019, concluding they are effective, with no significant changes in internal financial reporting controls during the period - As of September 30, 2019, the company's management assessed and concluded that its disclosure controls and procedures are effective[136] - Disclosure controls and procedures are designed to ensure required information is recorded, processed, summarized, and reported within SEC-prescribed timeframes[137] - No significant changes in internal control over financial reporting occurred during the most recent fiscal quarter[138] Part II. Other Information Item 1. Legal Proceedings The company reports no legal proceedings as of the end of this quarter - The company has no legal proceedings[141] Item 1A. Risk Factors As of this quarterly report, there are no material changes to the risk factors disclosed in the company's final IPO prospectus filed on March 18, 2019 - As of this quarterly report, no material changes occurred to the risk factors disclosed in the company's final IPO prospectus filed on March 18, 2019[142] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company disclosed details of its IPO, selling 30,015,000 units for $300,150,000, and a private placement of 8,503,000 warrants for $8,503,000, with all net proceeds deposited into a trust account - The company sold 30,015,000 units in its IPO at $10.00 per unit, generating total proceeds of $300,150,000[143] - The company privately placed 8,503,000 private placement warrants to the sponsor at $1.00 per warrant, totaling $8,503,000 in proceeds, exempt from registration under Section 4(a)(2) of the Securities Act[144] - Total proceeds of $300,150,000 from the IPO and private placement were deposited into a trust account[146] - The company paid $6,003,000 in underwriting discounts and commissions and deferred $10,505,250 in underwriting discounts and commissions[146] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities as of the end of this quarter - The company has no defaults upon senior securities[149] Item 4. Mine Safety Disclosures This disclosure is not applicable to the company - Mine safety disclosures are not applicable to the company[150] Item 5. Other Information The company reports no other information requiring disclosure as of the end of this quarter - The company has no other information[152] Item 6. Exhibits This section lists exhibits filed or incorporated by reference as part of this quarterly report, including various agreements and certifications Exhibit List | No. | Description of Exhibit | | :-------- | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | | 1.1 | Underwriting Agreement, dated March 14, 2019, by and among the Company, BTIG LLC and Cantor Fitzgerald & Co., as representatives of the several underwriters. (1) | | 3.1 | Amended and Restated Certificate of Incorporation. (1) | | 4.1 | Warrant Agreement, dated March 14, 2019, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent. (1) | | 10.1 | Letter Agreement, dated March 14, 2019, by and among the Company, its officers, directors and the Sponsor. (1) | | 10.2 | Investment Management Trust Agreement, dated March 14, 2019, by and between the Company and Continental Stock Transfer & Trust Company, as trustee. (1) | | 10.3 | Registration Rights Agreement, dated March 14, 2019, by and among the Company and the certain security holders. (1) | | 10.4 | Administrative Support Agreement, dated March 14, 2019, by and between the Company and Robin Trine Holdings LLC. (1) | | 10.5 | Private Placement Warrants Purchase Agreement, dated March 14, 2019, by and between the Company and the Sponsor. (1) | | 31.1* | Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |\ | 31.2* | Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |\ | 32.1** | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |\ | 32.2** | Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |\ | 101.INS* | XBRL Instance Document |\ | 101.CAL* | XBRL Taxonomy Extension Calculation Linkbase Document |\ | 101.SCH* | XBRL Taxonomy Extension Schema Document |\ | 101.DEF* | XBRL Taxonomy Extension Definition Linkbase Document |\ | 101.LAB* | XBRL Taxonomy Extension Labels Linkbase Document |\ | 101.PRE* | XBRL Taxonomy Extension Presentation Linkbase Document | SIGNATURES Signatures This report was formally signed by CEO Leo Hindery, Jr. and CFO Pierre M. Henry on November 8, 2019 - This report was signed by Chief Executive Officer Leo Hindery, Jr. and Chief Financial Officer Pierre M. Henry on November 8, 2019[158]