Matterport(MTTR) - 2021 Q1 - Quarterly Report

PART I—FINANCIAL INFORMATION Financial Statements For Q1 2021, the company reported a $30.0 million net loss, mainly from warrant liability changes, with $346.0 million in assets and a $59.2 million stockholders' deficit Balance Sheet As of March 31, 2021, total assets were $346.0 million, primarily in the Trust Account, with liabilities increasing to $60.2 million and a stockholders' deficit of $59.2 million Balance Sheet Summary (Unaudited) | Metric | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $176,595 | $633,266 | | Investments and cash held in Trust Account | $345,022,332 | $345,008,625 | | Total assets | $346,034,908 | $346,565,918 | | Liabilities & Equity | | | | Total current liabilities | $48,141,857 | $18,690,703 | | Public & Private warrants derivative liability | $44,832,500 | $18,160,000 | | Total liabilities | $60,216,857 | $30,765,703 | | Class A Common Stock subject to possible redemption | $345,000,000 | $345,000,000 | | Total stockholders' equity (deficit) | ($59,181,949) | ($29,199,785) | Statement of Operations The company reported a net loss of $29.97 million for the three months ended March 31, 2021, primarily due to a $26.67 million non-cash warrant liability charge, resulting in a ($0.70) net loss per share Statement of Operations Highlights (Unaudited) | Metric | Three Months Ended March 31, 2021 | | :--- | :--- | | Change in fair value of warrant liability | ($26,672,500) | | Professional fees and other expenses | ($3,238,968) | | Net loss from operations | ($29,961,468) | | Net loss attributable to common shares | ($29,974,034) | | Net loss per share (Class A & F) | ($0.70) | Statement of Changes in Stockholders' Equity (Deficit) The stockholders' deficit increased by $30.0 million to $59.2 million as of March 31, 2021, primarily due to the net loss for the quarter - The total stockholders' deficit increased by approximately $30.0 million during the quarter, from ($29,199,785) on January 1, 2021, to ($59,181,949) on March 31, 2021, primarily due to the net loss recorded in the period[15] Statement of Cash Flows Net cash used in operating activities was $1.0 million for the three months ended March 31, 2021, with overall cash decreasing by $456,671 to $176,595 Cash Flow Summary (Unaudited) | Metric | Three Months Ended March 31, 2021 | | :--- | :--- | | Net cash used in operating activities | ($1,034,834) | | Net cash used in investing activities | ($13,707) | | Net cash provided by financing activities | $591,870 | | Increase (Decrease) in cash | ($456,671) | | Cash at end of period | $176,595 | Notes to Interim Financial Statements Notes detail the company's SPAC formation, proposed $2.19 billion Matterport merger, key accounting policies for warrants and redeemable stock, and the 24-month business combination deadline - On February 7, 2021, the company entered into a merger agreement with Matterport, Inc. with the aggregate merger consideration valued at $2,188,750,000, payable in shares of the company's Class A common stock[22][25] - In connection with the Matterport merger, the company entered into subscription agreements for a private placement (PIPE) of 29,500,000 shares of Class A common stock at $10.00 per share[30] - The company accounts for its public and private warrants as liabilities at fair value, with changes in fair value recognized in the statement of operations, significantly affecting reported earnings[61][62] - The company has 24 months from its IPO closing date (December 15, 2020) to complete a business combination, or it will be required to liquidate and return funds held in the Trust Account to public stockholders[41] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's blank check status, the proposed Matterport merger, the $30.0 million net loss primarily from warrant liability, liquidity sources, and a related stockholder lawsuit - The company is a blank check company formed to effect a business combination and on February 7, 2021, entered into a merger agreement with Matterport[105][106] - For the three months ended March 31, 2021, the company had a net loss of ($29,974,034), of which ($26,672,500) was a non-cash loss from the change in fair value of the warrant liability[118] - As of March 31, 2021, the company had $176,595 in cash held outside the Trust Account for working capital, supplemented by a Sponsor loan facility of up to $2,000,000, with $600,000 advanced as of the quarter's end[124][125] - The company and its board were named as defendants in a stockholder lawsuit related to alleged misstatements and omissions in the Form S-4 registration statement for the proposed Matterport transaction[117] Quantitative and Qualitative Disclosures About Market Risk The company's minimal market risk primarily stems from interest rate fluctuations on the $345.0 million Trust Account investments, yielding approximately 0.0015% annualized - The company's primary market risk is interest rate fluctuations on the $345,022,332 held in the Trust Account, which is invested in money market funds[132] - As of March 31, 2021, the effective annualized rate of return on the Trust Account investments was approximately 0.0015%[132] Controls and Procedures Management concluded disclosure controls were ineffective as of March 31, 2021, due to a material weakness in internal control over financial reporting related to warrant accounting, necessitating financial statement restatement - Following a re-evaluation in light of the SEC Staff Statement on April 12, 2021, management concluded that disclosure controls and procedures were not effective as of March 31, 2021[135] - A material weakness was identified in internal control over financial reporting due to an insufficient risk assessment of the accounting for warrants, which resulted in the need to restate financial statements[135][136] PART II—OTHER INFORMATION Legal Proceedings The company reported no legal proceedings under this item, with a stockholder action noted in Part I, Item 2 - The company reported no legal proceedings for the period[139] Risk Factors No material changes to previously disclosed risk factors have occurred as of the report date - As of the date of this report, there have been no material changes to the risk factors disclosed in previous SEC filings[141] Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered sales of Founder Shares and private placement warrants, and confirms $345.0 million of public offering proceeds were placed in the Trust Account - The Sponsor purchased 8,625,000 shares of Class F Common Stock (Founder Shares) for $25,000[142] - The company completed a private sale of 4,450,000 Private Placement Warrants to the Sponsor at $2.00 per warrant, generating $8,900,000[143] - From the Public Offering and Private Placement Warrants, total net proceeds were $346,055,000, of which $345,000,000 was placed in the Trust Account[147] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[151] Mine Safety Disclosures This item is not applicable to the company - Not Applicable[151] Other Information The company reports no other information - None[152] Exhibits This section lists exhibits filed with the quarterly report, including the Matterport Merger Agreement and various corporate and financing documents - Key exhibits filed include the Merger Agreement with Matterport, Inc. and various corporate governance and financing documents[155]