Desktop Metal(DM) - 2020 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the company's unaudited condensed financial statements and accompanying detailed notes Condensed Balance Sheets Condensed Balance Sheet Highlights (March 31, 2020 vs. December 31, 2019) | Metric | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Cash | $80,512 | $138,533 | | Marketable securities held in Trust Account | $305,339,309 | $304,528,924 | | Total Assets | $305,795,975 | $305,124,794 | | Convertible promissory note – related party | $376,801 | — | | Total Liabilities | $11,275,560 | $10,844,095 | | Common stock subject to possible redemption | $289,520,410 | $289,280,690 | | Total Stockholders' Equity | $5,000,005 | $5,000,009 | Condensed Statements of Operations Condensed Statements of Operations Highlights (Three Months Ended March 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Operating costs | $506,516 | $237,171 | | Interest income | $810,385 | $190,608 | | Income (loss) before provision for income taxes | $303,869 | $(40,055) | | Provision for income taxes | $(64,153) | $(1,366) | | Net income (loss) | $239,716 | $(41,421) | | Basic and diluted net loss per common share | $(0.05) | $(0.03) | - Net income for the three months ended March 31, 2020, was $239,716, a significant improvement from a net loss of $41,421 in the prior year, primarily driven by increased interest income[12] Condensed Statements of Changes in Stockholders' Equity (Deficit) Changes in Stockholders' Equity (Three Months Ended March 31, 2020) | Metric | Amount | | :--- | :--- | | Balance – January 1, 2020 | $5,000,009 | | Change in value of common stock subject to possible redemption | $(239,720) | | Net income | $239,716 | | Balance – March 31, 2020 | $5,000,005 | Changes in Stockholders' Equity (Three Months Ended March 31, 2019) | Metric | Amount | | :--- | :--- | | Balance – January 1, 2019 | $(18,693) | | Sale of 30,015,000 Units, net | $283,067,360 | | Sale of 8,503,000 Private Placement Warrants | $8,503,000 | | Common stock subject to possible redemption | $(286,510,242) | | Net loss | $(41,421) | | Balance – March 31, 2019 | $5,000,004 | Condensed Statements of Cash Flows Condensed Statements of Cash Flows Highlights (Three Months Ended March 31) | Cash Flow Activity | 2020 | 2019 | | :--- | :--- | :--- | | Net cash used in operating activities | $(434,822) | $(490,246) | | Net cash used in investing activities | — | $(300,150,000) | | Net cash provided by financing activities | $376,801 | $301,935,902 | | Net Change in Cash | $(58,021) | $1,295,656 | | Cash – Ending | $80,512 | $1,414,792 | Notes to Condensed Financial Statements Note 1 — Description of Organization and Business Operations - Trine Acquisition Corp is a blank check company (SPAC) incorporated in Delaware on September 26, 2018, formed to effect a business combination[25] - As of March 31, 2020, the company had not commenced any operations and generates non-operating income from interest on cash and marketable securities in its Trust Account[26] - The Initial Public Offering (IPO) was consummated on March 19, 2019, selling 26,100,000 units at $10.00 per unit, generating $261,000,000[27] - An additional 3,915,000 units were sold due to the underwriters' over-allotment option[29] - A total of $300,150,000 from the IPO and Private Placement Warrants was placed in a Trust Account, invested in U.S government treasury bills or money market funds, to be used for the Initial Business Combination or distributed upon liquidation[29][31] - Transaction costs amounted to $17,082,640, including $6,003,000 of underwriting fees and $10,505,250 of deferred underwriting fees[30] - The Initial Business Combination must have an aggregate fair market value of at least 80% of the assets held in the Trust Account[35][36] - If the company is unable to complete an Initial Business Combination within the Combination Period (by March 19, 2021), it will redeem all Public Shares and liquidate[32][39] Note 2 — Summary of Significant Accounting Policies - The unaudited condensed financial statements are prepared in accordance with GAAP for interim financial information and SEC rules (Form 10-Q, Article 8 of Regulation S-X)[43] - The company is an 'emerging growth company' and has elected not to opt out of the extended transition period for complying with new or revised financial accounting standards[45] - Common stock subject to possible redemption is classified as temporary equity, outside of the stockholders' equity section, due to redemption rights outside the company's control[54][130] - Net loss per common share is computed using the two-class method, excluding shares subject to possible redemption from basic loss per share calculation, and warrants from diluted loss per share due to contingent exercise[57][58][131] - Marketable securities held in the Trust Account are primarily invested in money market funds (U.S Treasury securities) as of March 31, 2020, and U.S Treasury Bills as of December 31, 2019[50] - Management does not believe that any recently issued, but not yet effective, accounting standards would have a material effect on the condensed financial statements[62][132] Note 3 — Initial Public Offering - The company sold 30,015,000 units at $10.00 per unit, each consisting of one Class A common stock and one-half of one redeemable warrant[63] - Each whole warrant entitles the holder to purchase one share of Class A common stock at $11.50 per share, exercisable after 30 days post-business combination or 12 months from IPO closing[63] - Warrants are redeemable by the company at $0.01 per warrant if the Class A common stock price equals or exceeds $18.00 for 20 trading days within a 30-trading day period[63] Note 4 — Private Placement - The Sponsor purchased 8,503,000 Private Placement Warrants at $1.00 per warrant, generating $8,503,000 in gross proceeds[64] - Private Placement Warrants are non-redeemable and exercisable on a cashless basis as long as held by the Sponsor or its permitted transferees, and will expire worthless if no Initial Business Combination is completed[65] Note 5 — Related Party Transactions - The Initial Sponsor purchased 8,625,000 Class B convertible common stock (Founder Shares) for $25,000; after adjustments, 7,503,750 Founder Shares were issued and outstanding[66] - Founder Shares and Private Placement Warrants are subject to transfer restrictions and lock-up periods[70][71] - The Sponsor and officers/directors agreed to vote their shares in favor of an Initial Business Combination[71] - The company issued an unsecured promissory note of up to $1,500,000 to the Sponsor on February 24, 2020, with $376,801 outstanding as of March 31, 2020[75] - The company incurred $75,000 in fees for its Chief Financial Officer and $105,000 for administrative support from an affiliate of the Sponsor for the three months ended March 31, 2020[77][78] Note 6 — Commitments and Contingencies - The President is entitled to a contingent fee of $12,500 per month, with $112,500 in contingent fees accrued as of March 31, 2020[80] - Holders of Founder Shares, Private Placement Warrants, and certain other securities are entitled to registration rights[81] - A deferred underwriting fee of $10,505,250 is payable to underwriters from the Trust Account upon completion of an Initial Business Combination[83] Note 7 — Stockholders' Equity - The company is authorized to issue 1,000,000 shares of preferred stock ($0.0001 par value), with none issued or outstanding[84] - Authorized common stock includes 100,000,000 shares of Class A and 10,000,000 shares of Class B convertible common stock[85] Common Stock Issued and Outstanding (excluding shares subject to redemption) | Class | March 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | Class A common stock | 1,548,649 | 1,510,538 | | Class B common stock | 7,503,750 | 7,503,750 | - Public Warrants become exercisable on the later of 30 days after an Initial Business Combination or 12 months from the IPO closing[89] - The company may redeem Public Warrants at $0.01 per warrant if the Class A common stock price equals or exceeds $18.00 for 20 trading days within a 30-trading day period[90] - Private Placement Warrants are identical to Public Warrants but are non-transferable for 30 days post-Initial Business Combination and exercisable on a cashless basis[92] Note 8 — Fair Value Measurements - The company uses ASC 820 for fair value measurements, classifying assets and liabilities into a three-level hierarchy based on the observability of inputs[98][99] - Marketable securities held in the Trust Account are measured at fair value using Level 1 inputs (quoted prices in active markets for identical assets)[99][100] Marketable Securities Held in Trust Account (Fair Value) | Date | Amount | | :--- | :--- | | March 31, 2020 | $305,339,309 | | December 31, 2019 | $304,528,924 | Note 9 — Subsequent Events - The company evaluated subsequent events up to the issuance date of the condensed financial statements and identified no events requiring adjustment or disclosure[101] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition, operational results, liquidity, and risks associated with its business combination strategy - The company is a blank check company formed to effect an Initial Business Combination and has not generated any operating revenues to date[105][110][111] - Issuance of additional shares for an Initial Business Combination may significantly dilute equity interest, subordinate rights, or cause a change in control[106] - Incurring significant debt could lead to default, acceleration of obligations, inability to obtain financing, or limitations on cash flow and flexibility[107][109] Net Income (Loss) and Key Components (Three Months Ended March 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Net income (loss) | $239,716 | $(41,421) | | Interest income on marketable securities | $810,385 | $190,608 | | Operating costs | $506,516 | $237,171 | | Provision for income taxes | $64,153 | $1,366 | - As of March 31, 2020, the company had $305,339,309 in marketable securities held in the Trust Account and $80,512 cash held outside the Trust Account for working capital[120][122] - The company has no off-balance sheet arrangements as of March 31, 2020[125] - Contractual obligations include a monthly fee of $35,000 for administrative support and a deferred underwriting fee of $10,505,250 payable upon completion of an Initial Business Combination[126][127] Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk The company's investments in short-term U.S government treasury bills or money market funds result in no material exposure to interest rate risk - Due to the short-term nature of investments in U.S government treasury bills or money market funds, the company believes there is no associated material exposure to interest rate risk[133] Item 4. Controls and Procedures This section confirms the effectiveness of disclosure controls and procedures with no material changes in internal controls Evaluation of Disclosure Controls and Procedures - Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2020[134] Changes in Internal Control Over Financial Reporting - There has been no change in the company's internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, its internal control over financial reporting[136] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company reports no current legal proceedings - The company has no legal proceedings[140] Item 1A. Risk Factors This section updates risk factors to include the potential adverse impact of the COVID-19 outbreak - The recent coronavirus (COVID-19) outbreak may materially adversely affect the company's search for a business combination and the operations of any target business[142][143] - The extent of COVID-19's impact is highly uncertain and depends on future developments[143] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the use of proceeds from the Initial Public Offering and private placement of warrants - The company consummated its Initial Public Offering, selling 30,015,000 units at $10.00 per unit, generating total gross proceeds of $300,150,000[144] - A private placement of 8,503,000 Private Placement Warrants was made to the Sponsor at $1.00 per warrant, generating $8,503,000[145] - $300,150,000 of the gross proceeds from the IPO was placed in the Trust Account[147] - The company paid $6,003,000 in underwriting discounts and commissions and deferred $10,505,250 in additional underwriting discounts and commissions[147] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - The company has no defaults upon senior securities[150] Item 4. Mine Safety Disclosures This item is not applicable to the company - This item is not applicable to the company[151] Item 5. Other Information No other material information is reported - No other information was reported[152] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report - Key exhibits include a Promissory Note (dated February 24, 2020), Certifications of Principal Executive Officer and Principal Financial Officer, and various XBRL taxonomy documents[155] SIGNATURES - The report was signed on May 12, 2020, by Leo Hindery, Jr, Chief Executive Officer, and Pierre M Henry, Chief Financial Officer, on behalf of Trine Acquisition Corp[158][159]