SES AI (SES) - 2021 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements This section presents Ivanhoe Capital Acquisition Corp.'s unaudited condensed financial statements, including a key revision to reclassify warrants as derivative liabilities Condensed Balance Sheets The balance sheet as of March 31, 2021, reflects a significant increase in total assets to $277.3 million due to the IPO, establishing a $276.0 million Trust Account and recognizing $19.5 million in derivative warrant liabilities Condensed Balance Sheet Comparison (Unaudited) | Account | March 31, 2021 (USD) | December 31, 2020 (USD) | | :--- | :--- | :--- | | Assets | | | | Total current assets | $1,212,017 | $161,271 | | Investments held in Trust Account | $276,044,513 | $0 | | Total Assets | $277,256,530 | $574,310 | | Liabilities & Equity | | | | Total current liabilities | $187,068 | $582,131 | | Deferred underwriting commissions | $9,660,000 | $0 | | Derivative warrant liabilities | $19,488,800 | $0 | | Total Liabilities | $29,335,868 | $582,131 | | Class A ordinary shares subject to possible redemption | $242,920,660 | $0 | | Total Shareholders' Equity (Deficit) | $5,000,002 | ($7,821) | Condensed Statement of Operations For the three months ended March 31, 2021, the company reported a net income of approximately $1.53 million, primarily driven by a $2.66 million gain from derivative warrant liabilities Statement of Operations for the Three Months Ended March 31, 2021 (Unaudited) | Item | Amount (USD) | | :--- | :--- | | Total operating expenses | ($320,590) | | Income from investments held in Trust Account | $44,512 | | Change in fair value of derivative warrant liabilities | $2,659,200 | | Transaction costs - derivative warrant liabilities | ($855,043) | | Net income | $1,528,079 | | Basic and diluted net income per share, Class B | $0.22 | Condensed Statement of Changes in Shareholders' Equity (Deficit) Shareholders' equity shifted from a $7,821 deficit to a $5.0 million positive balance, driven by IPO proceeds and net income, offset by offering costs and reclassification - Shareholders' equity (deficit) changed from ($7,821) on Dec 31, 2020, to $5,000,002 on March 31, 2021[13] - The increase was primarily due to proceeds from the IPO ($261.4M), offset by offering costs ($15.0M) and the reclassification of redeemable shares ($242.9M), plus net income ($1.5M)[13] Condensed Statement of Cash Flows Net cash provided by financing activities totaled $277.3 million, primarily from IPO proceeds, while $276.0 million was used in investing activities for the Trust Account Cash Flow Summary for the Three Months Ended March 31, 2021 (Unaudited) | Activity | Net Cash Flow (USD) | | :--- | :--- | | Net cash used in operating activities | ($1,337,022) | | Net cash used in investing activities | ($276,000,000) | | Net cash provided by financing activities | $277,309,266 | | Net change in cash | ($27,756) | | Cash — end of the period | $133,515 | Notes to Unaudited Condensed Financial Statements These notes detail the company's formation, IPO, and key accounting policies, notably the reclassification of warrants as derivative liabilities following an SEC Staff Statement - The company is a blank check company formed to effect a business combination within 24 months of its IPO (by January 11, 2023)[17][28] - On January 11, 2021, the company consummated its IPO of 27,600,000 units at $10.00 per unit, generating gross proceeds of $276.0 million; simultaneously, it raised $7.5 million from a private placement of warrants to its Sponsor[19][20] - Following an SEC Staff Statement on April 12, 2021, the company reclassified its warrants from equity to derivative liabilities, requiring a restatement of its January 11, 2021 balance sheet, recognizing a $22.1 million warrant liability and expensing associated offering costs[105][106][108] - On April 9, 2021, the company issued an unsecured convertible promissory note to its CEO, allowing it to borrow up to $1.5 million for ongoing expenses; as of April 16, 2021, $500,000 was borrowed under this note[74] Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's post-IPO financial condition, reporting a $1.5 million net income driven by warrant revaluation and sufficient liquidity for the next year - The company is a blank check company that completed its IPO on January 11, 2021, raising $276.0 million in gross proceeds and placing the funds in a trust account[113][114][116] - For the three months ended March 31, 2021, the company had a net income of approximately $1.5 million, mainly from a $2.7 million gain on the change in fair value of derivative liabilities, offset by operating expenses and transaction costs[126] - As of March 31, 2021, liquidity consisted of approximately $134,000 in cash and $1.0 million in working capital; management believes this is sufficient to meet needs for the next year[121][123] - The company's warrants are classified as derivative liabilities and remeasured to fair value each period, with changes recognized in the statement of operations; this is a critical accounting policy[131] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Ivanhoe is not subject to material market or interest rate risk, with Trust Account funds invested in short-term U.S. government securities - The company is a smaller reporting company and is not required to provide the information otherwise required under this item[144] - Funds in the Trust Account are invested in U.S. government securities with maturities of 185 days or less, which management believes poses no material exposure to interest rate risk[144] Controls and Procedures Management identified a material weakness in internal controls due to incorrect warrant accounting, leading to ineffective disclosure controls, with remediation plans underway - Following an SEC Staff Statement on April 12, 2021, the company determined its warrants should be classified as derivative liabilities, not equity[146][148] - Due to this misclassification, management concluded that disclosure controls and procedures were not effective as of March 31, 2021[150] - Remediation plans include enhancing access to accounting literature and increasing communication with personnel and third-party professionals on complex accounting applications[151] PART II. OTHER INFORMATION Legal Proceedings The company reports no legal proceedings - None[152] Risk Factors A new risk factor highlights the potential for negative interest rates on Trust Account securities, which could reduce the per-share redemption amount below $10.00 - A new risk factor was added regarding the potential for negative interest rates on U.S. government treasury obligations held in the trust account[154] - Negative interest rates could reduce the value of assets in the trust, potentially causing the per-share redemption amount for public shareholders to be less than $10.00[154] Unregistered Sales of Equity Securities and Use of Proceeds This section details the unregistered sale of 5,013,333 private placement warrants for $7.5 million and the deposit of $276.0 million from IPO and private placement proceeds into the Trust Account - The company sold 5,013,333 Private Placement Warrants to the Sponsor at $1.50 per warrant, raising gross proceeds of approximately $7.5 million[155] - $276,000,000 from the IPO and Private Placement was deposited into the Trust Account[157] - The company paid approximately $5.7 million in upfront underwriting discounts and commissions and deferred an additional $9.7 million[158] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[159] Mine Safety Disclosures This item is not applicable to the company - Not applicable[161] Other Information The company reports no other information - None[162] Exhibits This section lists the exhibits filed, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2) and XBRL interactive data files[163]