Dune Acquisition (DUNE) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements Dune Acquisition Corporation presents unaudited condensed financial statements for Q1 2021, reporting $6.05 million net income, primarily from derivative warrant liabilities, with $172.6 million in its trust account Condensed Balance Sheets As of March 31, 2021, total assets were $173.3 million, liabilities $14.6 million (including $8.4 million derivative warrant liabilities), and stockholders' equity $5.0 million Condensed Balance Sheet Highlights (as of March 31, 2021) | Metric | March 31, 2021 (Unaudited) ($) | December 31, 2020 ($) | | :--- | :--- | :--- | | Cash | $415,903 | $941,242 | | Investments held in Trust Account | $172,573,340 | $172,511,212 | | Total Assets | $173,291,696 | $173,769,443 | | Derivative warrant liabilities | $8,373,980 | $14,580,610 | | Total Liabilities | $14,598,391 | $21,127,272 | | Class A common stock subject to possible redemption | $153,693,300 | $147,642,170 | | Total Stockholders' Equity | $5,000,005 | $5,000,001 | Condensed Statement of Operations Net income for Q1 2021 was $6.05 million, driven by a $6.21 million non-cash gain from derivative warrant liabilities, offset by operating expenses Statement of Operations (For the Three Months Ended March 31, 2021) | Item | Amount ($) | | :--- | :--- | | Total operating expenses | ($215,123) | | Change in fair value of derivative warrant liabilities | $6,206,630 | | Gain on investments held in Trust Account | $62,128 | | Income before income tax expense | $6,053,649 | | Net income | $6,051,134 | | Basic and diluted net income per share, Class B | $1.40 | Condensed Statement of Changes in Stockholders' Equity Stockholders' equity remained stable at approximately $5.0 million for Q1 2021, with net income offset by reclassification to common stock subject to redemption - Stockholders' equity increased slightly from $5,000,001 at December 31, 2020, to $5,000,005 at March 31, 2021, with net income of $6,051,134 offset by a $6,051,130 reclassification to common stock subject to possible redemption[15] Condensed Statement of Cash Flows Net cash used in operating activities was $525,339 for Q1 2021, with cash balance decreasing from $941,242 to $415,903 Cash Flow Summary (For the Three Months Ended March 31, 2021) | Item | Amount ($) | | :--- | :--- | | Net income | $6,051,134 | | Change in fair value of derivative warrant liabilities | ($6,206,630) | | Net cash used in operating activities | ($525,339) | | Cash - beginning of the period | $941,242 | | Cash - end of the period | $415,903 | Notes to Unaudited Condensed Financial Statements Notes detail SPAC organization, accounting policies, Public Offering specifics, related party transactions, commitments, and derivative warrant liabilities - The company is a blank check company formed to effect a Business Combination and has not commenced any operations, with all activity relating to its formation and the Public Offering[23][24] - The company has 18 months from the closing of its Public Offering (until June 22, 2022) to complete a Business Combination, or it will be required to liquidate and redeem public shares[32] - Public and Private Placement Warrants are recognized as derivative liabilities at fair value, with changes in fair value recognized in the statement of operations[48] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, Q1 2021 net income of $6.1 million, and liquidity of $415,903 unrestricted cash and $172.6 million in the Trust Account - The company is a blank check company formed for the purpose of effecting a business combination and has not engaged in any significant business operations to date[93][95] - Net income for the quarter was $6.1 million, largely attributable to a $6.2 million gain from the change in fair value of derivative warrant liabilities[96] - As of March 31, 2021, liquidity consisted of $415,903 in unrestricted cash and $172,573,340 held in the Trust Account, with working capital funded by proceeds from the Public Offering held outside the trust[99] - Critical accounting policies include the treatment of investments in the Trust Account, Class A common stock subject to redemption, net income per share calculation using a two-class method, and accounting for derivative warrant liabilities[101][102][104][106] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Dune Acquisition Corporation is not required to provide market risk disclosures and has not engaged in hedging - The company is a smaller reporting company and is not required to provide the information otherwise required under this item[111] Controls and Procedures Management concluded disclosure controls and procedures were ineffective as of March 31, 2021, due to a material weakness in internal control over financial reporting - Management concluded that due to a material weakness in internal control over financial reporting, the company's disclosure controls and procedures were not effective as of March 31, 2021[114] PART II. OTHER INFORMATION Legal Proceedings The company reported no legal proceedings - None[118] Risk Factors No material changes to risk factors have occurred since the Annual Report on Form 10-K/A filed on June 21, 2021 - As of the date of this report, there have been no material changes to the risk factors disclosed in the company's Annual Report on Form 10-K/A[120] Unregistered Sales of Equity Securities and Use of Proceeds Details unregistered sales, including 4,850,000 warrants to the Sponsor for $4.85 million, and the use of $172.5 million IPO proceeds in a trust account - The company completed a private placement of 4,850,000 warrants to its Sponsor at $1.00 per warrant, generating gross proceeds of $4,850,000[121][124] - From the gross proceeds of the initial public offering and private placement, $172,500,000 was placed in a trust account[126] Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[126] Mine Safety Disclosures This item is not applicable to the company - Not applicable[126] Other Information The company reported no other information - None[128] Exhibits Exhibits filed include CEO and CFO certifications and XBRL data files as part of the Quarterly Report on Form 10-Q - Exhibits filed include CEO and CFO certifications pursuant to SEC rules and the Sarbanes-Oxley Act, as well as XBRL Instance and Taxonomy documents[131]