(Mark One)
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2023
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DMY TECHNOLOGY GROUP, INC.
from_______to_______
Delaware | ||||||||
(State or other jurisdiction of incorporation or organization) | ( | Identification No.) |
1180 North Town Center Drive, Suite 100
Las Vegas, Nevada 89144
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code:(702) 781-4313
Not Applicable
(Former name or former address, if changed since last report)
900 N. Michigan Avenue, Suite 950 Chicago, Illinois60611 | (773) 893-5855 | ||||
(Address of principal executive offices, including zip code) | (Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol(s) |
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Class A common stock, $0.0001 par value
| RSI | The New York Stock Exchange | ||||||||
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Large accelerated filer | ¨ | Accelerated filer | ||||||||||||
Non-accelerated filer | ¨ | Smaller reporting company | ¨ | |||||||||||
Emerging growth company | x | |||||||||||||
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F-1 | ||||||||||||
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Item 2. | ||||||||||||
Item 6. | ||||||||||||
Assets: Current assets: Cash Prepaid expenses Total current assets Investments held in Trust Account Deferred offering costs associated with the proposed public offering Total Assets Liabilities and Stockholders’ Equity: Current liabilities: Accounts payable Accrued expenses Franchise tax payable Income tax payable Total current liabilities Deferred underwriting commissions associated with initial public offering Total Liabilities Commitments and Contingencies Class A common stock, $0.0001 par value; 21,868,007 and-0- shares subject to possible redemption at $10.00 per share at March 31, 2020 and December 31, 2019, respectively Stockholders’ Equity: Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding Class A common stock, $0.0001 par value; 380,000,000 shares authorized; 1,131,993 and-0- shares issued and outstanding (excluding 21,868,007 and-0- shares subject to possible redemption) at March 31, 2020 and December 31, 2019, respectively Class B common stock, $0.0001 par value; 20,000,000 shares authorized; 5,750,000 shares issued and outstanding (1) Additionalpaid-in capital Retained earning (accumulated deficit) Total Stockholders’ Equity Total Liabilities and Stockholders’ Equity March 31, 2020 December 31, 2019 (unaudited) $ 1,462,947 $ — 330,358 — 1,793,305 — 230,520,409 — — 73,356 $ 232,313,714 $ 73,356 $ 384,448 $ 33,440 50,000 15,636 50,500 — 98,690 — 583,638 49,076 8,050,000 — 8,633,638 49,076 218,680,070 — — — 113 — 575 575 4,748,894 24,425 250,424 (720 ) 5,000,006 24,280 $ 232,313,714 $ 73,356 (1) As of December 31, 2019, this number includes up to 750,000 Class B common stock subject to forfeiture if the over-allotment option is not exercisedfull or in part by the underwriters. On February 25, 2020, the underwriter exercised its over-allotment option in full; thus, the Founder Shares were no longer subject to forfeiture.Thethousands except for share and per share data)March 31,
2023December 31,
2022(Unaudited) ASSETS Current assets Cash and cash equivalents $ 147,289 $ 179,723 Restricted cash 28,308 26,358 Players’ receivables 8,113 11,174 Due from affiliates 28,754 35,904 Prepaid expenses and other current assets 15,441 11,312 Total current assets 227,905 264,471 Intangible assets, net 75,775 69,025 Property and equipment, net 9,035 9,764 Operating lease assets 1,464 1,852 Other assets 5,111 5,234 Total assets $ 319,290 $ 350,346 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Accounts payable $ 17,759 $ 29,803 Accrued expenses 61,165 64,903 Players’ liabilities 41,673 42,512 Current deferred royalty liabilities 2,010 1,526 Current operating lease liabilities 666 722 Other current liabilities 6,680 4,479 Total current liabilities 129,953 143,945 Non-current deferred royalty liabilities 13,685 14,106 Non-current operating lease liabilities 841 1,177 Other non-current liabilities 418 244 Total liabilities 144,897 159,472 Commitments and contingencies Stockholders’ equity Class A common stock, $0.0001 par value, 750,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 67,314,375 and 65,111,616 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 7 6 Class V common stock, $0.0001 par value, 200,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 154,455,584 and 155,955,584 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 15 16 Additional paid-in capital 181,578 177,683 Accumulated other comprehensive loss (1,594) (1,648) Accumulated deficit (127,272) (120,012) Total stockholders’ equity attributable to Rush Street Interactive, Inc. 52,734 56,045 Non-controlling interests 121,659 134,829 Total stockholders’ equity 174,393 190,874 Total liabilities and stockholders’ equity $ 319,290 $ 350,346 are an integral part of theseto unaudited condensed consolidated financial statements.
DMY TECHNOLOGY GROUP,
For the Three Months Ended March 31, 2020 | ||||
General and administrative expenses | $ | 120,120 | ||
Franchise tax expense | 50,500 | |||
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Loss from operations | (170,620 | ) | ||
Gain on marketable securities (net), dividends and interest, held in Trust Account | 520,454 | |||
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Income before income tax expense | 349,834 | |||
Income tax expense | 98,690 | |||
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Net income | $ | 251,144 | ||
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Weighted average shares outstanding of Class A common stock | 23,000,000 | |||
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Basic and diluted net income per share, Class A | $ | 0.02 | ||
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Weighted average shares outstanding of Class B common stock | 5,750,000 | |||
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Basic and diluted net loss per share, Class B | $ | (0.02 | ) | |
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The
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2023 | 2022 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
Revenue | $ | 162,361 | $ | 134,938 | ||||||||||
Operating costs and expenses | ||||||||||||||
Costs of revenue | 107,154 | 99,858 | ||||||||||||
Advertising and promotions | 49,940 | 66,849 | ||||||||||||
General administration and other | 21,592 | 15,540 | ||||||||||||
Depreciation and amortization | 5,755 | 2,737 | ||||||||||||
Total operating costs and expenses | 184,441 | 184,984 | ||||||||||||
Loss from operations | (22,080) | (50,046) | ||||||||||||
Other income (expenses) | ||||||||||||||
Interest income (expense), net | 380 | (222) | ||||||||||||
Loss before income taxes | (21,700) | (50,268) | ||||||||||||
Income tax expense | 2,800 | 2,002 | ||||||||||||
Net loss | $ | (24,500) | $ | (52,270) | ||||||||||
Net loss attributable to non-controlling interests | (17,240) | (37,573) | ||||||||||||
Net loss attributable to Rush Street Interactive, Inc. | $ | (7,260) | $ | (14,697) | ||||||||||
Net loss per common share attributable to Rush Street Interactive, Inc. – basic and diluted | $ | (0.11) | $ | (0.24) | ||||||||||
Weighted average common shares outstanding – basic and diluted | 65,260,064 | 61,800,359 |
DMY TECHNOLOGY GROUP,
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||
Net loss | $ | (24,500) | $ | (52,270) | ||||||||||
Other comprehensive loss | ||||||||||||||
Foreign currency translation adjustment | 344 | 1,514 | ||||||||||||
Comprehensive loss | $ | (24,156) | $ | (50,756) | ||||||||||
Comprehensive loss attributable to non-controlling interests | (16,997) | (36,485) | ||||||||||||
Comprehensive loss attributable to Rush Street Interactive, Inc. | $ | (7,159) | $ | (14,271) |
For the Three Months Ended March 31, 2020 | ||||||||||||||||||||||||||||
Common Stock | Retained Earnings | Total | ||||||||||||||||||||||||||
Class A | Class B | Additional Paid-In | (Accumulated | Stockholders’ | ||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Capital | Deficit) | Equity | ||||||||||||||||||||||
Balance - December 31, 2019 (1) | — | $ | — | 5,750,000 | $ | 575 | $ | 24,425 | $ | (720 | ) | $ | 24,280 | |||||||||||||||
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Sale of units in initial public offering, gross | 23,000,000 | 2,300 | — | — | 229,997,700 | — | 230,000,000 | |||||||||||||||||||||
Offering costs | — | — | — | — | (13,195,348 | ) | — | (13,195,348 | ) | |||||||||||||||||||
Sale of private placement warrants to Sponsor in private placement | — | — | — | — | 6,600,000 | — | 6,600,000 | |||||||||||||||||||||
Common stock subject to possible redemption | (21,868,007 | ) | (2,187 | ) | — | — | (218,677,883 | ) | — | (218,680,070 | ) | |||||||||||||||||
Net income | — | — | — | — | — | 251,144 | 251,144 | |||||||||||||||||||||
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Balances - March 31, 2020 (unaudited) | 1,131,993 | $ | 113 | 5,750,000 | $ | 575 | $ | 4,748,894 | $ | 250,424 | $ | 5,000,006 | ||||||||||||||||
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(1) As of December 31, 2019, this number includes up to 750,000 Class B common stock subject to forfeiture if the over-allotment option is not exercised
Thethousands except for share data)
Class A Common Stock | Class V Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity Attributable To RSI | Non- Controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | 65,111,616 | $ | 6 | 155,955,584 | $ | 16 | $ | 177,683 | $ | (1,648) | $ | (120,012) | $ | 56,045 | $ | 134,829 | $ | 190,874 | |||||||||||||||||||||||||||||||||||||||||
Share-based compensation | 702,759 | — | — | — | 2,330 | — | — | 2,330 | 5,345 | 7,675 | |||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 101 | — | 101 | 243 | 344 | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A Common Stock upon RSILP Unit Exchanges | 1,500,000 | 1 | (1,500,000) | (1) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (7,260) | (7,260) | (17,240) | (24,500) | |||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of equity and non-controlling interests upon changes in RSILP ownership | — | — | — | — | 1,565 | (47) | — | 1,518 | (1,518) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 (Unaudited) | 67,314,375 | $ | 7 | 154,455,584 | $ | 15 | $ | 181,578 | $ | (1,594) | $ | (127,272) | $ | 52,734 | $ | 121,659 | $ | 174,393 |
Class A Common Stock | Class V Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders’ Equity Attributable To RSI | Non- Controlling Interests | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | 61,118,406 | $ | 6 | 158,702,329 | $ | 16 | $ | 167,270 | $ | (475) | $ | (81,381) | $ | 85,436 | $ | 222,265 | $ | 307,701 | |||||||||||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | 1,145 | — | — | 1,145 | 2,792 | 3,937 | |||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 426 | — | 426 | 1,088 | 1,514 | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A Common Stock upon RSILP Unit Exchanges | 2,808,745 | — | (2,808,745) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (14,697) | (14,697) | (37,573) | (52,270) | |||||||||||||||||||||||||||||||||||||||||||||||||
Allocation of equity and non-controlling interests upon changes in RSILP ownership | — | — | — | — | 3,458 | (8) | — | 3,450 | (3,450) | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 (Unaudited) | 63,927,151 | $ | 6 | 155,893,584 | $ | 16 | $ | 171,873 | $ | (57) | $ | (96,078) | $ | 75,760 | $ | 185,122 | $ | 260,882 |
DMY TECHNOLOGY GROUP,
For the Three Months Ended March 31, 2020 | ||||
Cash Flows from Operating Activities: | ||||
Net income | $ | 251,144 | ||
Adjustments to reconcile net income to net cash used in operating activities: | ||||
Gain on marketable securities (net), dividends and interest, held in Trust Account | (520,409 | ) | ||
Changes in operating assets and liabilities: | ||||
Prepaid expenses | (330,358 | ) | ||
Accounts payable | 383,728 | |||
Franchise tax payable | 50,500 | |||
Income tax payable | 98,690 | |||
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Net cash used in operating activities | (66,705 | ) | ||
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Cash Flows from Investing Activities | ||||
Cash deposited in Trust Account | (230,000,000 | ) | ||
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Net cash used in investing activities | (230,000,000 | ) | ||
Cash Flows from Financing Activities: | ||||
Proceeds from note payable to related party | 24,990 | |||
Repayment of note payable to related parties | (89,844 | ) | ||
Proceeds from sale of Units, gross | 230,000,000 | |||
Proceeds from sale of Private Placement Warrants | 6,600,000 | |||
Payment of offering costs | (5,005,494 | ) | ||
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Net cash provided by financing activities | 231,529,652 | |||
Net change in cash | 1,462,947 | |||
Cash - beginning of the period | — | |||
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Cash - end of the period | $ | 1,462,947 | ||
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Supplemental disclosure of noncash activities: | ||||
Offering costs included in accrued expenses | $ | 50,000 | ||
Offering costs included in note payable | $ | 64,854 | ||
Deferred underwriting commissions in connection with the initial public offering | $ | 8,050,000 | ||
Value of Class A common stock subject to possible redemption | $ | 218,680,070 | ||
Supplemental cash flow data: | ||||
Cash paid for income taxes | $ | — |
The
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(Unaudited) | (Unaudited) | ||||||||||
Cash flows from operating activities | |||||||||||
Net loss | $ | (24,500) | $ | (52,270) | |||||||
Adjustments to reconcile net loss to net cash used in operating activities | |||||||||||
Share-based compensation expense | 7,675 | 3,937 | |||||||||
Depreciation and amortization expense | 5,755 | 2,737 | |||||||||
Deferred income taxes | — | 44 | |||||||||
Noncash lease expense | 161 | 162 | |||||||||
Write off of long-lived assets | 613 | — | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Players’ receivables | 3,061 | (1,435) | |||||||||
Due from affiliates | 7,150 | (2,598) | |||||||||
Prepaid expenses and other current assets | (4,129) | (2,491) | |||||||||
Other assets | 123 | 133 | |||||||||
Accounts payable | (12,011) | (5,275) | |||||||||
Accrued expenses and other current liabilities | (7,233) | 11,078 | |||||||||
Players’ liabilities | (839) | 9,456 | |||||||||
Deferred royalty liabilities | 63 | (323) | |||||||||
Operating lease liabilities | (165) | (162) | |||||||||
Net cash used in operating activities | (24,276) | (37,007) | |||||||||
Cash flows from investing activities | |||||||||||
Purchases of property and equipment | (429) | (1,045) | |||||||||
Acquisition of gaming licenses | (79) | (927) | |||||||||
Internally developed software costs | (5,790) | (1,400) | |||||||||
Media content production costs | (169) | — | |||||||||
Net cash used in investing activities | (6,467) | (3,372) | |||||||||
Cash flows from financing activities | |||||||||||
Principal payments of finance lease liabilities | (24) | (432) | |||||||||
Net cash used in financing activities | (24) | (432) | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 283 | 1,491 | |||||||||
Net change in cash, cash equivalents and restricted cash | (30,484) | (39,320) | |||||||||
Cash, cash equivalents and restricted cash, at the beginning of the period (1) | 206,081 | 300,329 | |||||||||
Cash, cash equivalents and restricted cash, at the end of the period (1) | $ | 175,597 | $ | 261,009 |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
(Unaudited) | (Unaudited) | ||||||||||
Supplemental disclosure of noncash investing and financing activities: | |||||||||||
Operating lease assets obtained in exchange for new or modified operating lease liabilities | $ | — | $ | 410 | |||||||
Allocation of equity and non-controlling interests upon changes in RSILP ownership | $ | 1,518 | $ | 3,450 | |||||||
Property and equipment purchases in Accounts Payable and Accrued Expenses | $ | 146 | $ | 31 | |||||||
License fee purchases in Accounts Payable and Accrued Expenses | $ | 5,880 | $ | — | |||||||
Supplemental disclosure of cash flow information: | |||||||||||
Cash paid for income taxes | $ | 818 | $ | 559 | |||||||
Cash paid for interest | $ | 224 | $ | 241 |
DMY TECHNOLOGY GROUP,
Note 1—
dMY Technology Group, Inc. (the “Company”through its main operating subsidiary, Rush Street Interactive, LP and its subsidiaries (collectively, “RSILP”) was incorporated in Delaware on September 27, 2019. The Company was formed for the purpose of effecting, is a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Although the Company is not limited to a particular industry or sector for purposes of consummating a Business Combination, the Company intends to focus its search for an initial business combination on companies within the mobile application (“app”) ecosystem or consumer internet companies with enterprise valuationsleading online gaming company that provides online casino and sports betting in the range of $500 millionU.S., Canadian and Latin American markets. Rush Street Interactive, Inc. and its subsidiaries (including RSILP) are collectively referred to $1.5 billion, thoughas “RSI” or the Company’s search may span many consumer software segments worldwide.“Company.” The Company is an emerging growth companyheadquartered in Chicago, IL.
As of March 31, 2020, the Company had not commenced any operations. All activity for the period from September 27, 2019 (inception) through March 31, 2020 relatesland-based casinos. In prior years, COVID-19 also impacted sports betting due to the Company’s formationrescheduling, reconfiguring, suspension, postponement and the initial public offering (the “Initial Public Offering”) described below,cancellation of sports seasons and since the closingsporting events or exclusion of the Initial Public Offering, the search forcertain players or teams from sporting events, which tended to reduce customers’ use of, and spending on, RSI’s sports betting offerings. A future pandemic may have a prospective initial Business Combination. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generatenon-operating income in the form of interest incomesimilar, material adverse impact on cash and cash equivalents from the proceeds derived from the Initial Public Offering (as defined below). The Company has selected December 31 as its fiscal year end.
RSI’s business.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 6,600,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating proceeds of $6.6 million (Note 4).
Upon the closing of the Initial Public Offering and the Private Placement, $230.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (the “Trust Account”) locatedaccounting principles generally accepted in the United States at JP Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting as trustee, and invested only in (“U.S. “government securities,” within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4)of Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public OfferingGAAP”) and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes and excluding the amount of any deferred underwriting discount held in Trust) at the time of the agreement to enter into the initial Business Combination. However, the Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940, as amended (the “Investment Company Act”).
The Company will provide holders of the Company’s outstanding shares of Class A common stock, par value $0.0001 per share, sold in the Initial Public Offering (the “Public Stockholders”) with the opportunity to redeem all
DMY TECHNOLOGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then held in the Trust Account (initially anticipated to be $10.00 per PublicShare). The per-share amount to be distributed to Public Stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 5). These Public Shares are recorded at a redemption value and classified as temporary equity upon the completion of the Initial Public Offering in accordance with the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” The Company will proceed with a Business Combination if a majority of the shares voted are voted in favor of the Business Combination. The Company will not redeem the Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Certificate of Incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rulesapplicable regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and file tender offer documentsnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K, as filed with the SEC prior to completing a Business Combination. If, however, stockholder approvalon March 2, 2023.
The Certificate of Incorporation will provide that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 20% or more of the Public Shares, without the prior consent of the Company.
The Sponsor and the Company’s officers and directors (the “initial stockholders”) have agreed not to propose an amendment to the Certificate of Incorporation to modify the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or with respect to any other material provisions relating to stockholders’rights or pre-initial Business Combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.
If the Company is unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or February 25, 2022 (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares,at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and its board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
The initial stockholders have agreed to waive their rights to liquidating distributions from the Trust Account with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the initial stockholders acquire Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributions from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights
DMY TECHNOLOGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
to the deferred underwriting commission (see Note 5) held in the Trust Account in the event the Company does not complete a Business Combination within in the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the residual assets remaining available for distribution (including Trust Account assets) will be only $10.00. In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (except for the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a lettercontrolling interest. RSI is deemed to have a controlling interest of intent, confidentiality or other similar agreement or business combination agreement (a “Target”RSILP through its wholly owned subsidiary RSI GP, LLC (“RSI GP”), reducewhich is the amountsole general partner of fundsRSILP. For consolidated entities that are less than wholly owned, third-party holdings of equity interests are presented as non-controlling interests in the Trust AccountCompany’s condensed consolidated balance sheets and condensed consolidated statements of changes in equity. The portion of net earnings attributable to below the lesser of (i) $10.00 per Public Sharenon-controlling interests is presented as net loss attributable to non-controlling interests and (ii) the actual amount per Public Share heldcomprehensive loss attributable to non-controlling interests in the Trust AccountCompany’s condensed consolidated statements of operations and condensed consolidated statements of comprehensive loss, respectively. All intercompany accounts and transactions have been eliminated upon consolidation.
Basis of Presentation
The accompanying unaudited condensedannual consolidated financial statements are presentedand, in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for financial information and pursuant to the rules and regulations of the SEC. Accordingly, they do not include all of the information and footnotes required by GAAP. In the opinion of management, the unaudited condensed financial statements reflect all adjustments, which include only normal recurring adjustments, necessary forto state fairly the fair statement of the balancesCompany’s financial condition, its operations and resultscash flows for the periods presented. OperatingThe historical results are not necessarily indicative of future results, and the results of operations for the three months ended March 31, 20202023 are not necessarily indicative of the results that mayto be expected through December 31, 2020.
The accompanying unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes thereto included in the final prospectus and the Form8-K filed by the Company with the SEC on February 21, 2020 and March 2, 2020, respectively.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and complywith the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.
DMY TECHNOLOGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
Liquidity
As of March 31, 2020, the Company had approximately $1.5 million in its operating bank account, working capital of approximately $1.2 million, and approximately $520,000 of interest income available in the Trust Account for the Company’s tax obligations, if any.
The Company’s liquidity needs to date have been satisfied through a $25,000 contribution from the Sponsor in exchange for the issuance of the Founder Shares to the Sponsor, the Note (as defined below) of approximately $90,000 from the Sponsor, and the proceeds from the consummation of the Private Placement not held in the Trust Account. On March 19, 2020, the Company repaid the Note (as defined below) in full to the Sponsor. In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsoryear or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, provide the Company Working Capital Loans (see Note 4). As of March 31, 2020, there were no amounts outstanding under any Working Capital Loan.
Management is currently evaluating the impact of theCOVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Based on the foregoing, management believes that the Company will have sufficient working capital and borrowing capacity from the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors to meet its needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, the Company will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Note 2—Summary of Significant Accounting Policies
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash accounts in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverage limit of $250,000. At March 31, 2020, the Company has not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts.
Cash and Cash Equivalents
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents.
Marketable Securities Held in Trust Account
The Company’s portfolio of marketable securities is comprised solely of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, classified as trading securities. Trading securities are presented on the balance sheet at fair value at the end of each reportingfuture period. Gains and losses resulting from the change in fair value of these securities is included in gain on marketable securities (net), dividends and interest, held in the Trust Account in the accompanying statement of operations. The estimated fair values of marketable securities held in the Trust Account are determined using available market information.
DMY TECHNOLOGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale of an asset or paid for transfer of a liability, in an orderly transaction between market participants at the measurement date. GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include:
Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets;
Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and
Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.
In some circumstances, the inputs used to measure fair value might be categorized within different levels of the fair value hierarchy. In those instances, the fair value measurement is categorized in its entirety in the fair value hierarchy based on the lowest level input that is significant to the fair value measurement.
As of March 31, 2020, the carrying values of cash, accounts payable, accrued expenses, and advances from related party approximate their fair values due to the short-term nature of the instruments. The Company’s portfolio of marketable securities held in the Trust Account is comprised mainly of investments in U.S. Treasury securities with an original maturity of 185 days or less. The fair value for trading securities is determined using quoted market prices in active markets.
Use of Estimates
Offering Costs Associated Significant estimates and assumptions reflected in the condensed consolidated financial statements relate to and include, but are not limited to: the valuation of share-based awards; long-lived assets and investments in equity; the estimated useful lives of property and equipment, and intangible assets; redemption rate assumptions associated with the Initial Public Offering
Offering costs consisted of legal, accounting, underwriting feesCompany’s player loyalty program and other costs incurred that were directly related to the Initial Public Offering, and were charged to stockholders’ equity upon the completiondiscretionary player bonuses; deferred revenue; accrued expenses; determination of the Initial Public Offering.
Class A Common Stock Subjectincremental borrowing rate to Possible Redemption
calculate operating lease liabilities and finance lease liabilities; and deferred taxes and amounts associated with the tax receivable agreement (the “Tax Receivable Agreement”) entered into in connection with the closing of the transactions contemplated in the Business Combination Agreement on December 29, 2020 (the “Closing”).
DMY TECHNOLOGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Net Income Per Share of Common Stock
Net income per share is computed by dividing net income by the weighted-average number of common stock outstanding during the period. The Company has not considered the effect of the warrants soldthese subsidiaries at changing rates are recorded in the Initial Public Offering and the Private Placement to purchase an aggregateforeign currency translation adjustment account, which is included in equity as a component of 18,100,000 of the Company’s Class A common stock in the calculation of diluted income per share, since their inclusion would be anti-dilutive under the treasury stock method.
The Company’s statement of operations includes a presentation of income per share for common stock subject to redemptionaccumulated other comprehensive loss.
Income Taxes
Company in calendar year 2023. The Company followsadopted ASU 2016-13 and the assetsubsequent amendments on January 1, 2023, and liability method ofthe adoption did not have a material impact on its condensed consolidated financial statements and related disclosures.
Three Months Ended March 31, | ||||||||||||||
($ in thousands) | 2023 | 2022 | ||||||||||||
Online casino and online sports betting | $ | 157,672 | $ | 131,658 | ||||||||||
Retail sports betting | 3,663 | 2,330 | ||||||||||||
Social gaming | 1,026 | 950 | ||||||||||||
Total revenue | $ | 162,361 | $ | 134,938 |
Three Months Ended March 31, | ||||||||||||||
($ in thousands) | 2023 | 2022 | ||||||||||||
United States and Canada | $ | 146,697 | $ | 122,534 | ||||||||||
Latin America, including Mexico | 15,664 | 12,404 | ||||||||||||
Total revenue | $ | 162,361 | $ | 134,938 |
FASB ASC 740 prescribes a recognition threshold2023 and a measurement attribute forDecember 31, 2022 were as follows:
Three Months Ended March 31, | |||||||||||
($ in thousands) | 2023 | 2022 | |||||||||
Deferred revenue, beginning of period | $ | 7,840 | $ | 4,637 | |||||||
Deferred revenue, end of period | $ | 8,017 | $ | 4,862 | |||||||
Revenue recognized during the period from amounts included in deferred revenue during the beginning of the period | $ | 7,056 | $ | 3,917 |
($ in thousands) | Weighted Average Remaining Amortization Period (years) | Gross Carrying Amount | Accumulated Amortization | Net | |||||||||||||||||||
License Fees | |||||||||||||||||||||||
March 31, 2023 | 8.05 | $ | 59,807 | $ | (14,938) | $ | 44,869 | ||||||||||||||||
December 31, 2022 | 8.44 | $ | 54,334 | $ | (12,363) | $ | 41,971 | ||||||||||||||||
Internally Developed Software | |||||||||||||||||||||||
March 31, 2023 | 2.43 | $ | 26,651 | $ | (5,158) | $ | 21,493 | ||||||||||||||||
December 31, 2022 | 2.51 | $ | 20,860 | $ | (3,490) | $ | 17,370 | ||||||||||||||||
Developed Technology | |||||||||||||||||||||||
March 31, 2023 | 6.75 | $ | 5,931 | $ | (927) | $ | 5,004 | ||||||||||||||||
December 31, 2022 | 7.00 | $ | 5,931 | $ | (741) | $ | 5,190 | ||||||||||||||||
Trademark Asset | |||||||||||||||||||||||
March 31, 2023 | 4.17 | $ | 5,088 | $ | (848) | $ | 4,240 | ||||||||||||||||
December 31, 2022 | 4.42 | $ | 5,088 | $ | (594) | $ | 4,494 | ||||||||||||||||
Media Content | |||||||||||||||||||||||
March 31, 2023 | 2.00 | $ | 169 | $ | — | $ | 169 | ||||||||||||||||
December 31, 2022 | N/A | $ | — | $ | — | $ | — |
($ in thousands) | March 31, 2023 | December 31, 2022 | |||||||||
Computers, software and related equipment | $ | 4,498 | $ | 4,050 | |||||||
Operating equipment and servers | 4,752 | 4,610 | |||||||||
Furniture | 604 | 600 | |||||||||
Leasehold improvements | 675 | 640 | |||||||||
Property and equipment not yet placed into service | 551 | 816 | |||||||||
Total property and equipment | 11,080 | 10,716 | |||||||||
Less: accumulated depreciation | (4,687) | (3,818) | |||||||||
6,393 | 6,898 | ||||||||||
Finance lease right-of-use assets | 3,112 | 3,112 | |||||||||
Less: accumulated amortization | (470) | (246) | |||||||||
2,642 | 2,866 | ||||||||||
Property and equipment, net | $ | 9,035 | $ | 9,764 |
($ in thousands) | March 31, 2023 | December 31, 2022 | |||||||||
Accrued compensation and related expenses | $ | 4,542 | $ | 10,077 | |||||||
Accrued operating expenses | 27,017 | 24,178 | |||||||||
Accrued marketing expenses | 19,868 | 27,315 | |||||||||
Accrued professional fees | 2,306 | 1,620 | |||||||||
Due to affiliates | 466 | 649 | |||||||||
License fees payable | 5,880 | 63 | |||||||||
Other | 1,086 | 1,001 | |||||||||
Total accrued expenses | $ | 61,165 | $ | 64,903 |
Recent Accounting Pronouncements
holders other than the Company.
Note 3—Initial Public Offering
On February 25, 2020, the Company sold 23,000,000 Units, including the issuance of 3,000,000 Over-Allotment Units as a resultnon-controlling interests owned 69.65% and 70.55% of the underwriters’ exerciseRSILP Units outstanding as of their over-allotment option in full, atMarch 31, 2023 and December 31, 2022, respectively. The table below illustrates a price of $10.00 per Unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $13.2 million, inclusive of $8.05 million in deferred underwriting commissions.
Each Unit consists of one share of Class A common stock (such shares of common stock included in the Units being offered, the “PublicShares”), and one-half of one redeemable warrant (each, a “Public Warrant”). Each Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 6).
DMY TECHNOLOGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Note 4—Related Party Transactions
Founder Shares
On November 27, 2019, the Sponsor paid for certain offering costs for an aggregate price of $25,000 in exchange for issuance of 5,750,000 sharesrollforward of the Company’s Class B common stock, par value $0.0001 per share, (the “Founder Shares”). The initial stockholders have agreed to forfeit up to 750,000 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriters. The forfeiture would be adjusted to the extent that the over-allotment option is not exercised in full by the underwriters so that the Founder Shares will represent 20.0% of the Company’s issued and outstanding shares after the Initial Public Offering. The underwriter exercised its over-allotment option in full; thus, the Founder Shares were no longer subject to forfeiture.
The initial stockholders have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (i) one year after the completion of the initial Business Combination and (ii) the date following the completion of the initial Business Combination on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their common stock for cash, securities or other property. Notwithstanding the foregoing, if the closing price of the Company’s Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading dayswithin any 30-trading day period commencing at least 150 days after the initial Business Combination, the Founder Shares will be released from the lockup.
Private Placement Warrants
On February 25, 2020, simultaneously with the consummation of the Initial Public Offering, the Company consummated the private placement (“Private Placement”) of 6,600,000 Private Placement Warrants, at a price of $1.00 per Private Placement Warrant, to the Sponsor, generating proceeds of $6.6 million.
Each whole Private Placement Warrant is exercisable for one whole share of Class A common stock at a price of $11.50 per share. A portion of the proceeds from the sale of the Private Placement Warrants to the Sponsor was added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the Private Placement Warrants will expire worthless. The Private Placement Warrantswill be non-redeemable for cash and exercisable on a cashless basis so long as they are held by the Sponsor or its permitted transferees.
The Sponsor and the Company’s officers and directors has agreed, subject to limited exceptions, not to transfer, assign or sell any of their Private Placement Warrants until 30 days after the completion of the initial Business Combination.
Related Party Loans
On November 27, 2019, the Sponsor agreed to loan the Company an aggregate of up to $200,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Note”). Thisloan is non-interest bearing and payable upon the completion of the Initial Public Offering. Prior to the consummation of the Initial Public Offering, the Company borrowed approximately $90,000 under the Note. On March 19, 2020, the Company repaid the Note in full to the Sponsor.
In addition, in order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be
DMY TECHNOLOGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
repaid upon consummation of a Business Combination or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into warrants of the post Business Combination entity at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. To date, the Company had no borrowings under the Working Capital Loans.
Administrative Services Agreement
The Company entered into an agreement that will provide that, subsequent to the closing of the Initial Public Offering and continuing until the earlier of the Company’s consummation of a Business Combination or the Company’s liquidation, to the Company will pay the Sponsor a total of $10,000 per month for office space, secretarial and administrative services. The Company incurred $10,000 in expenses in connection with such servicesnon-controlling interest percentages during the three months ended March 31, 2023:
Non-Controlling Interest % | ||||||||
Non-controlling interest % as of December 31, 2022: | 70.55 | % | ||||||
Issuance of Class A Common Stock upon RSILP Unit Exchanges | (0.68) | % | ||||||
Issuance of Class A Common Stock in connection with the vesting of certain share-based equity grants | (0.22) | % | ||||||
Non-controlling interest % as of March 31, 2023: | 69.65 | % |
Non-Controlling Interest % | ||||||||
Non-controlling interest % as of December 31, 2021: | 72.20 | % | ||||||
Issuance of Class A Common Stock upon RSILP Unit Exchanges | (1.28) | % | ||||||
Non-controlling interest % as of March 31, 2022: | 70.92 | % |
The Sponsor, executive officersamended from time to time (the “2020 Plan”), to attract, retain and incentivize employees, certain consultants and directors or any of their respective affiliates,who will be reimbursedfor any out-of-pocket expenses incurred in connection with activities on the Company’s behalf such as identifying potential target businesses and performing due diligence on suitable Business Combinations. The Company’s audit committee will review on a quarterly basis all payments that were madecontribute to the Sponsor, officers, directors or their affiliates.
Note 5—Commitments & Contingencies
Registration Rights
The holderssuccess of Founder Shares, Private Placement Warrants and warrantsthe Company. Awards that may be issued upon conversiongranted under the 2020 Plan include incentive stock options, non-qualified stock options, stock appreciation rights, restricted awards, performance share awards, cash awards and other equity-based awards. Upon adoption of Working Capital Loans, if any, (and anythe 2020 Plan, there was an aggregate of 13.4 million shares of Class A common stock issuable uponCommon Stock reserved under the exercise2020 Plan, which may consist of authorized and unissued shares, treasury shares or shares reacquired by the Company. During the three months ended March 31, 2023, the Compensation Committee of the Private Placement WarrantsBoard and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement entered into in connection with the consummation of the Initial Public Offering. These holders will be entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled tofull Board each approved an underwriting discount of $0.20 per unit, or $4.6 million in the aggregate, paid upon the closing of the Initial Public Offering. An additional fee of $0.35 per unit, or $8.05 million in the aggregate will be payableamendment to the underwriters for deferred underwriting commissions. The deferred fee will become payable2020 Plan to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement.
Note 6—Stockholders’ Equity
Class A Common Stock—The Company is authorized to issue 380,000,000 shares of Class A common stock with a par value of $0.0001 per share. As of December 31, 2019, there were no shares of Class A common stock issued or outstanding. As of March 31, 2020, there were 23,000,000 shares of Class A common stock issued or outstanding, including 21,868,007 shares of Class A common stock subject to possible redemption.
Class B Common Stock—The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. In November 2019, the Company issued 5,750,000 shares of Class B common stock, including an aggregate of up to 750,000 shares of Class B common stock that were subject to forfeiture, to the Company by the initial stockholders for no consideration to the extent that the underwriter’s over-allotment option was not exercised in full or in part, so that the initial stockholders would collectively own 20% of the Company’s issued and outstanding common stock after the Initial Public Offering. On February 25, 2020, the underwriter exercised its over-allotment option in full; thus, the Founder Shares were no longer subject to forfeiture. As of March 31, 2020 and December 31, 2019, there were 5,750,000 shares of Class B common stock issued outstanding.
DMY TECHNOLOGY GROUP, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
Stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of our stockholders except as required by law.
The Class B common stock will automatically convert into Class A common stock at the time of the initial Business Combinationon a one-for-one basis, subject to adjustment for stock splits, stock dividends, reorganizations, recapitalizations and the like, and subject to further adjustment as provided herein. In the case that additional shares of Class A common stock or equity-linked securities are issued or deemed issued in connection with the initial Business Combination,increase the number of shares of Class A common stock issuable upon conversion of all Founder Shares will equal, inCommon Stock reserved under the aggregate,on an as-converted basis, 20% of the total number of2020 Plan by 22.38 million shares of Class A common stock outstanding after such conversion (after giving effect to any redemptions of shares of Class A common stock by Public Stockholders)(the “Plan Amendment”), including the total number of shares of Class A common stock issued, or deemed issued or issuable upon conversion or exercise of any equity-linked securities or rights issued or deemed issued, by the Company in connection with or in relation to the consummation of the initial Business Combination, excluding any shares of Class A common stock or equity-linked securities or rights exercisable for or convertible into shares of Class A common stock issued, or to be issued, to any seller in the initial Business Combination and any Private Placement Warrants issued to the Sponsor, officers or directors upon conversion of Working Capital Loans, provided that such conversion of Founder Shares will never occur on aless than one-for-one basis.
Preferred Stock—The Company is authorized to issue 1,000,000 shares of preferred stock, par value $0.0001 per share, with such designations, voting and other rights and preferences as may be determined from timeamendment being subject to timeapproval by the Company’s boardstockholders at the Company's 2023 annual meeting of directors. As ofstockholders. The 2020 Plan will terminate on December 29, 2030.
Warrants—Public Warrants may only be exercised for a whole number of shares. No fractional Public Warrants will be issued upon separation of the Units and only whole Public Warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that2023, the Company has an effective registration statement underissued equity awards to its officers, directors and certain other individuals, with such grants being contingent upon the Securities Act covering the shares of Class A common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available (or the Company permits holders to exercise their Public Warrants on a cashless basis and such cashless exercise is exempt from registration under the Securities Act). The Company has agreed that as soon as practicable, but in no event later than 15 business days, after the closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the Public Warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless” basis, and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
If (x) the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faithPlan Amendment being approved by the Company’s board of directorsstockholders. Management has determined that obtaining stockholder approval is essentially a formality because management and in the case of any such issuance to the initial stockholders or their affiliates, without taking into account any Founder Shares held by the initial stockholders or such affiliates, as applicable, prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60%members of the totalBoard control enough votes to approve the grants, therefore the equity proceeds, and interest thereon, available for the funding of the initial Business Combination (net of redemptions), and (z) the volume weighted average trading price of the Class A common stockawards were deemed to be granted during the 20 trading dayquarter.
DMY TECHNOLOGY GROUP,RUSH STREET INTERACTIVE, INC.
the $18.00 per share redemption trigger price of the Warrants will be adjusted (to the nearest cent) to be equal to 180% of the higher of the Market Value and the Newly Issued Price.
The Private Placement Warrants are identical to the Public Warrants, except that the Private Placement Warrants and the shares of Class A common stock issuable upon exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrantswill be non-redeemable so long as they are held by the Sponsor or its permitted transferees. If the Private Placement Warrants are held by someone other than the Sponsor or its permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
in wholethree months ended March 31, 2023 and not in part;
at2022, respectively. RSUs with market-based conditions generally vest over a price of $0.01 per warrant;
upon a minimum of 30 days’ prior written notice of redemption;three year period and
if, and only if, the last sales price of the Class A common stock equals or exceeds $18.00 per share on each of 20 trading dayswithin the 30-trading day period ending on the third business day prior to the date on which the Company sends the notice of redemption to the warrant holders.
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.
In no event will the Company be required to net cash settle any warrant. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
Note 7—Fair Value Measurements
The following table presents information about the Company’s assets that are measured at fair value onwas determined using a recurring basis as ofMonte Carlo Simulation using the following assumption:
March 31, 2023 | |||||
Volatility rate | 69.78 | % | |||
Risk-free interest rate | 3.85 | % | |||
Average expected life (in years) | 2.8 | ||||
Dividend yield | None | ||||
Stock price at grant date | $ | 3.28 |
Description | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Unobservable Inputs (Level 3) | |||||||||
Investments held in Trust | $ | 230,520,409 | $ | — | $ | — | ||||||
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As of March 31, 2020, the Investments held in the Trust Account were held entirely in cashfollowing weighted-average assumptions:
March 31, 2023 | |||||
Volatility rate | 70.00 | % | |||
Risk-free interest rate | 3.80 | % | |||
Average expected life (in years) | 6.0 | ||||
Dividend yield | None | ||||
Stock price at grant date | $ | 3.28 | |||
Exercise price | $ | 3.28 |
Transfers to/from Levels 1, 2, and 3 are recognized at the end of the reporting period. There were no transfers between levelsstock option activity for the three months ended March 31, 2020.
Level 1 instruments include investments in money market funds2023 and U.S. Treasury securities. 2022, was as follows:
RSUs | Options | ||||||||||||||||||||||
Number of units | Weighted-average grant price | Number of options | Weighted-average exercise price | ||||||||||||||||||||
Unvested balance at December 31, 2022 | 7,492,613 | $ | 7.48 | 854,888 | $ | 4.93 | |||||||||||||||||
Granted | 3,943,321 | 4.12 | 1,061,454 | 3.28 | |||||||||||||||||||
Vested | (902,759) | 4.03 | — | — | |||||||||||||||||||
Forfeited | (4,216) | 8.81 | — | — | |||||||||||||||||||
Unvested balance at March 31, 2023 | 10,528,959 | $ | 6.52 | 1,916,342 | $ | 4.01 | |||||||||||||||||
RSUs | Options | ||||||||||||||||||||||
Number of units | Weighted average grant price | Number of options | Weighted-average exercise price | ||||||||||||||||||||
Unvested balance at December 31, 2021 | 3,076,158 | $ | 16.08 | 96,827 | $ | 15.40 | |||||||||||||||||
Granted | 20,000 | 7.99 | — | — | |||||||||||||||||||
Vested | — | — | — | — | |||||||||||||||||||
Forfeited | (6,000) | 15.85 | — | — | |||||||||||||||||||
Unvested balance at March 31, 2022 | 3,090,158 | $ | 16.02 | 96,827 | $ | 15.40 |
DMY TECHNOLOGY GROUP,
Note 8—Subsequent Events
Three Months Ended March 31, | ||||||||||||||
($ in thousands) | 2023 | 2022 | ||||||||||||
Costs of revenue | $ | 257 | $ | 244 | ||||||||||
Advertising and promotions | 536 | 505 | ||||||||||||
General administration and other | 6,882 | 3,188 | ||||||||||||
Total share-based compensation expense | $ | 7,675 | $ | 3,937 |
Three Months Ended March 31, | ||||||||||||||
($ in thousands) | 2023 | 2022 | ||||||||||||
Income tax provision | $ | 2,800 | $ | 2,002 |
Three Months Ended March 31, | ||||||||||||||
2023 | 2022 | |||||||||||||
Numerator: | ||||||||||||||
Net loss | $ | (24,500) | $ | (52,270) | ||||||||||
Less: Net loss attributable to non-controlling interests | (17,240) | (37,573) | ||||||||||||
Net loss attributable to Rush Street Interactive, Inc. – basic and diluted | $ | (7,260) | $ | (14,697) | ||||||||||
Denominator: | ||||||||||||||
Weighted average common shares outstanding – basic and diluted | 65,260,064 | 61,800,359 | ||||||||||||
Net loss per Class A common share – basic and diluted | $ | (0.11) | $ | (0.24) |
Three Months Ended March 31, | |||||||||||
2023 | 2022 | ||||||||||
RSILP Units(1) | 154,455,584 | 155,893,584 | |||||||||
Unvested Restricted Stock Units | 10,528,959 | 10,528,959 | 3,090,158 | ||||||||
Unvested Stock Options | 1,916,342 | 1,916,342 | 96,827 |
Remainder of 2023 | $ | 17,107 | |||
Year ending December 31, 2024 | 11,582 | ||||
Year ending December 31, 2025 | 8,656 | ||||
Year ending December 31, 2026 | 5,463 | ||||
Year ending December 31, 2027 | 4,969 | ||||
Thereafter | 32,789 | ||||
Total(1) | $ | 80,566 |
(1) | Includes operating lease and finance lease obligations under non-cancelable lease contracts totaling $2.1 million, obligations under non-cancelable contracts with marketing vendors totaling $23.9 million, and license and market access commitments totaling $54.6 million. Certain market access arrangements require the Company to make additional payments at a contractual milestone date if the market access fees paid through that milestone date do not meet a minimum contractual threshold. In these instances, the Company calculates the future minimum payment as the total milestone payment less any amounts already paid to the partner and includes such payments in the period in which the milestone date occurs. |
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References to the “Company,” “our,” “us” or “we” refer to dMY Technology Group, Inc.
Cautionaryassumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections of this Report captioned “Cautionary Note Regarding Forward-Looking Statements
Statements” and “Risk Factors.” For a discussion of limitations in measuring certain of our key metrics, see the section of this Report captioned “Limitations of Key Metrics and Other Data.”
Jurisdictions | Online Casino | Online Sports Betting | Retail Sports Betting | |||||||||||||||||
Domestic: | ||||||||||||||||||||
Arizona | ü | |||||||||||||||||||
Colorado | ü | |||||||||||||||||||
Connecticut* | ü | ü | ||||||||||||||||||
Illinois | ü | ü | ||||||||||||||||||
Indiana | ü | ü | ||||||||||||||||||
Iowa | ü | |||||||||||||||||||
Louisiana | ü | |||||||||||||||||||
Maryland | ü | ü | ||||||||||||||||||
Michigan | ü | ü | ü | |||||||||||||||||
New Jersey | ü | ü | ||||||||||||||||||
New York | ü | ü | ||||||||||||||||||
Ohio | ü | |||||||||||||||||||
Pennsylvania | ü | ü | ü | |||||||||||||||||
Virginia | ü | ü | ||||||||||||||||||
West Virginia | ü | ü | ||||||||||||||||||
International: | ||||||||||||||||||||
Colombia | ü | ü | ||||||||||||||||||
Ontario (Canada) | ü | ü | ||||||||||||||||||
Mexico | ü | ü |
Three Months Ended March 31, | ||||||||||||||
($ in thousands) | 2023 | 2022 | ||||||||||||
Net loss | $ | (24,500) | $ | (52,270) | ||||||||||
Interest (income) expense, net | (380) | 222 | ||||||||||||
Income tax expense | 2,800 | 2,002 | ||||||||||||
Depreciation and amortization | 5,755 | 2,737 | ||||||||||||
Share-based compensation expense | 7,675 | 3,937 | ||||||||||||
Adjusted EBITDA | $ | (8,650) | $ | (43,372) |
Three Months Ended March 31, | Change | ||||||||||||||||||||||
($ in thousands) | 2023 | 2022 | $ | % | |||||||||||||||||||
Revenue | $ | 162,361 | $ | 134,938 | $ | 27,423 | 20 | % | |||||||||||||||
Costs of revenue | 107,154 | 99,858 | 7,296 | 7 | % | ||||||||||||||||||
Advertising and promotions | 49,940 | 66,849 | (16,909) | (25) | % | ||||||||||||||||||
General administration and other | 21,592 | 15,540 | 6,052 | 39 | % | ||||||||||||||||||
Depreciation and amortization | 5,755 | 2,737 | 3,018 | 110 | % | ||||||||||||||||||
Loss from operations | (22,080) | (50,046) | 27,966 | (56) | % | ||||||||||||||||||
Interest income (expense), net | 380 | (222) | 602 | (271) | % | ||||||||||||||||||
Loss before income taxes | (21,700) | (50,268) | 28,568 | (57) | % | ||||||||||||||||||
Income tax expense | 2,800 | 2,002 | 798 | 40 | % | ||||||||||||||||||
Net loss | $ | (24,500) | $ | (52,270) | $ | 27,770 | (53) | % |
Three Months Ended March 31, | |||||||||||
($ in thousands) | 2023 | 2022 | |||||||||
Net cash used in operating activities | $ | (24,276) | $ | (37,007) | |||||||
Net cash used in investing activities | (6,467) | (3,372) | |||||||||
Net cash used in financing activities | (24) | (432) | |||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 283 | 1,491 | |||||||||
Net change in cash, cash equivalents and restricted cash | $ | (30,484) | $ | (39,320) |
Overview
We are a blank check company incorporated in Delaware on September 27, 2019. We were formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). Although we are not limited to a particular industry or sector for purposes of consummating a Business Combination, we intend to focus our search for an initial business combination on companies within the mobile application (“app”) ecosystem or consumer internet companies with enterprise valuations in the range of $500 million to $1.5 billion, though our search may span many consumer software segments worldwide. Our sponsor is dMY Sponsor, LLC, a Delaware limited liability company (the “Sponsor”).
Our registration statement for our initial public offering (the “Initial Public Offering”) was declared effective on February 20, 2020. On February 25, 2020, we consummated our Initial Public Offering of 23,000,000 units (the “Units” and, with respect to the Class A common stock included in the Units being offered, the “Public Shares”), including the issuance of 3,000,000 Units as a resulttake advantage of the underwriters’ exercise of their over-allotment option in full (the “Over-Allotment Units”), at $10.00 per Unit, generating gross proceeds of $230.0 million, and incurring offering costs of approximately $13.2 million, inclusive of $8.05 million in deferred underwriting commissions.
Simultaneously with the closingextended transition period exemptions for emerging growth companies because of the Initial Public Offering, we consummated the private placement (“Private Placement”) of 6,600,000 warrants (each, a “Private Placement Warrant” and collectively, the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrantpotential differences in a private placement to the Sponsor, generating proceeds of $6.6 million.
Upon the closing of the Initial Public Offering and the Private Placement, $230.0 million ($10.00 per Unit) of the net proceeds of the Initial Public Offering and certain of the proceeds of the Private Placement was placed in a trust account (the “Trust Account”) located in the United States at JP Morgan Chase Bank, N.A. with Continental Stock Transfer & Trust Company acting as trustee, and invested only in U.S. “government securities,” within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or in money market funds meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4)of Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations, as determined by us, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the Trust Account as described below.
If we are unable to complete a Business Combination within 24 months from the closing of the Initial Public Offering, or February 25, 2022 (the “Combination Period”), we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares,at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay for our taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
We intend to effectuate our Initial Business Combination using cash from the proceeds of the Initial Public Offering and the Private Placement of the Private Placement Warrants, the proceeds of the sale of our shares in connection with our Initial Business Combination (pursuant to forward purchase agreements or backstop agreements we may enter into following the consummation of this offering or otherwise), shares issued to the owners of the target, debt issued to bank or other lenders or the owners of the target, or a combination of the foregoing.
The issuance of additional shares in connection with a business combination to the owners of the target or other investors:
may significantly dilute the equity interest of investors in this offering, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A common stock on a greaterthan one-to-one basis upon conversion of the Class B common stock;
may subordinate the rights of holders of Class A common stock if shares of preferred stock are issued with rights senior to those afforded our Class A common stock;
could cause a change in control if a substantial number of shares of our Class A common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and
may adversely affect prevailing market prices for our Class A common stock and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant debt to bank or other lenders or the owners of a target, it could result in:
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;
our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;
our inability to pay dividends on our Class A common stock;
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.
As indicated in the accompanying financial statements, at March 31, 2020, we had approximately $1.5 million in our operating bank account. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete our Initial Business Combination will be successful.
Results of Operations
Our entire activity since inception through March 31, 2020 related to our formation, the preparation for the Initial Public Offering, and since the closing of the Initial Public Offering, the search for a prospective Initial Business Combination. We have neither engaged in any operations nor generated any revenues to date. We will not generate any operating revenues until after completion of our Initial Business Combination. Wewill generate non-operating income in the form of interest income on cash and cash equivalents. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.
For the three months ended March 31, 2020, we had net income of approximately $251,000, which consisted of approximately $520,000 in interest earned on marketable securities held in the Trust Account, offset by approximately $120,000 in general and administrative expenses, $50,500 in franchise tax expense, and approximately $99,000 in income tax expense.
Liquidity and Capital Resources
As of March 31, 2020, we had approximately $1.5 million in its operating bank account, working capital of approximately $1.2 million, and approximately $520,000 of interest income available in the Trust Account for our tax obligations, if any.
Our liquidity needs to date have been satisfied through a $25,000 contribution from our Sponsor in exchange for the issuance of the Founder Shares to our Sponsor, the note of approximately $90,000 from our Sponsor, and the proceeds from the consummation of the Private Placement not held in the Trust Account. On March 19, 2020, we repaid the note in full to our Sponsor. In addition, in order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor, or certain of our officers and directors may, but are not obligated to, provide us Working Capital Loans. As of March 31, 2020, there were no amounts outstanding under any Working Capital Loan.
Our management is currently evaluating the impact of theCOVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on our financial position, results of our operations and/or search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Based on the foregoing, management believes that we will have sufficient working capital and borrowing capacity from our Sponsor or an affiliate of our Sponsor, or certain of our officers and directors to meet our needs through the earlier of the consummation of a Business Combination or one year from this filing. Over this time period, we will be using these funds for paying existing accounts payable, identifying and evaluating prospective initial Business Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target business to merge with or acquire, and structuring, negotiating and consummating the Business Combination.
Contractual Obligations
We do not have any long-term debt obligations, capital lease obligations, operating lease obligations, purchase obligations or long-term liabilities, other than an agreement to pay our Sponsor a monthly fee of $10,000 for office space, secretarial and administrative services.
Registration Rights
The holders of Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans, if any, (and any shares of Class A common stock issuable upon the exercise of the Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement entered into in connection with the consummation of the Initial Public Offering. These holders will be entitled to certain demand and “piggyback” registration rights. We will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The underwriters were entitled to an underwriting discount of $0.20 per unit, or $4.6 million in the aggregate, paid upon the closing of the Initial Public Offering. An additional fee of $0.35 per unit, or $8.05 million in the aggregate will be payable to the underwriters for deferred underwriting commissions. The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that we complete a Business Combination, subject to the terms of the underwriting agreement.
Critical Accounting Policies
This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with GAAP. The preparation of our financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to fair value of financial instruments and accrued expenses. We base our estimates on historical experience, known trends and events and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. We have identified the following as its critical accounting policies:
Class A Common Stock Subject to Possible Redemption
We account for our Class A common stock subject to possible redemption in accordance with the guidance in ASC Topic 480 “Distinguishing Liabilities from Equity.” Class A common stock subject to mandatory redemption (if any) is classified as liability instruments and are measured at fair value. Conditionally redeemable Class A common stock (including Class A common stock that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) are classified as temporary equity. At all other times, Class A common stock is classified as stockholders’ equity. Our Class A common stock feature certain redemption rights that are considered to be outside of our control and subject to the occurrence of uncertain future events. Accordingly, at March 31, 2020, 21,868,007 shares of Class A common stock subject to possible redemption is presented as temporary equity, outside of the stockholders’ equity section of our balance sheet.
Net Income Per Share of Common Stock
Net income per share is computed by dividing net income by the weighted-average number of common stock outstanding during the period. We have not considered the effect of the warrants sold in the Initial Public Offering and the Private Placement to purchase an aggregate of 18,100,000 of the Company’s Class A common stock in the calculation of diluted income per share, since their inclusion would be anti-dilutive under the treasury stock method.
Our statement of operations includes a presentation of income per share for common stock subject to redemption in a manner similarto the two-class method of income per share. Net income per common stock, basic and diluted for Class A common stock are calculated by dividing the interest income earned on investments and marketable securities held in the Trust Account of approximately $520,000, net of approximately $149,000 of tax obligations, resulting in a total of approximately $371,000 for the three months ended March 31, 2020, by the weighted average number of Class A common stock outstanding for the period. Net loss per common stock, basic and diluted for Class B common stock is calculated by dividing the net income of approximately $251,000, less income attributable to Class A common stock of approximately $371,000, resulted to a net loss of approximately $120,000, by the weighted average number of Class B common stock outstanding for the period.
Recent Accounting Pronouncements
Our management does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying financial statements.
Off-Balance Sheet Arrangements
As of March 31, 2020, we did not haveany off-balance sheet arrangements as defined in Item 303(a)(4)(ii) ofRegulation S-K.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We qualify as an “emerging growth company” under the JOBS Act and are allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We elected to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is requiredfor non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
As an “emerging growth company”, we are not required to, among other things, (i) provide an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404, (ii) provide all of the compensation disclosure that may be requiredof non-emerging growth public companies under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (iii) comply with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis), and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the CEO’s compensation to median employee compensation. These exemptions will apply for a period of five years following the completion of our initial public offering or until we are no longer an “emerging growth company,” whichever is earlier.
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Underour management, including our principal executive officerChief Executive Officer and principal financial and accounting officer,our Chief Financial Officer, we conductedhave carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the fiscal quarter ended March 31, 2020, as such term is defined inRules 13a-15(e) and15d-15(e) under the Exchange Act. Based on this evaluation, our chief
executive officer concluded that during the period covered by this report, ourReport. Our disclosure controls and procedures were effective.
Disclosure controls and procedures are designed to ensureprovide reasonable assurance that information we are required to be disclosed by usdisclose in ourreports that are filed or submitted under the Exchange Act reportsis accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified inby the SEC’s rulesSEC. Our Chief Executive Officer and forms,Chief Financial Officer concluded that our disclosure controls and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions,procedures were effective as appropriate to allow timely decisions regarding required disclosure.
of March 31, 2023.
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None.
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The significant
Industry and General Economic Risks
Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the recent coronavirus (COVID-19) outbreak.
In December 2019, a novel strain of coronavirus was reported to have surfaced in Wuhan, China, which has and is continuing to spread throughout China and other parts of the world, including the United States. On January 30, 2020, the World Health Organization declared the outbreak of the coronavirus disease (COVID-19) a “Public Health Emergency of International Concern.” On January 31, 2020, U.S. Health and Human Services Secretary Alex M. Azar II declared a public health emergency for the United States to aid the U.S. healthcare community in responding to COVID-19, and on March 11, 2020 the World Health Organization characterized the outbreak as a “pandemic”. A significant outbreak of COVID-19 and other infectious diseases could result in a widespread health crisis that could adversely affect the economies and financial markets worldwide, and the business of any potential target business with which we consummate a business combination could be materially and adversely affected. Furthermore, we may be unable to complete a business combination if continued concerns relating to COVID-19 restrict travel, limit the ability to have meetings with potential investors or the target company’s personnel, vendors and services providers are unavailable to negotiate and consummate a transaction in a timely manner. The extent to which COVID-19 impacts our search for a business combination will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. If the disruptions posed by COVID-19 or other matters of global concern continue, our ability to consummate a business combination, or the operations of a target business with which we ultimately consummate a business combination, may be materially adversely affected.
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Unregistered Sales of Equity Securities
Simultaneously with the closing of the Public Offering, pursuant to the Private Placement Warrants Purchase Agreement, the Company completed the private sale of an aggregate of 6,600,000 Private Placement Warrants to dMY Sponsor, LLC (the “Sponsor”) at a purchase price of $1.00 per Private Placement Warrant, generating gross proceeds to the Company of $6,600,000. The Private Placement Warrants are identical to the Warrants sold as part of the Units in the Public Offering, except that the Private Placement Warrants, so long as they are held by the Sponsor or its permitted transferees, (i) are not redeemable by the Company for cash, (ii) may not (including the Class A Common Stock issuable upon exercise of the Private Placement Warrants), subject to certain limited exceptions, be transferred, assigned or sold by such holders until 30 days after the completion of the Company’s initial Business Combination, (iii) may be exercised by the holders on a cashless basis and (iv) will be entitled to registration rights. No underwriting discounts or commissions were paid with respect to such sales. The issuance of the Private Placement Warrants was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.
Use of Proceeds
On February 25, 2020, we consummated the Initial Public Offering of 23,000,000 Units, including the issuance of 3,000,000 Units as a result of the underwriters’ partial exercise of their over-allotment option. Each Unit consists of one share of Class A Common Stock and one-half of one redeemable Warrant. Each whole Warrant entitles the holder thereof to purchase one share of Class A Common Stock for $11.50 per share, and only whole Warrants are exercisable. The Warrants will become exercisable on the later of 30 days after the completion of our initial Business Combination and 12 months from the closing of the Initial Public Offering and will expire five years after the completion of our initial Business Combination or earlier upon redemption or liquidation. Subject to certain terms and conditions, we may redeem the warrants either for cash once the warrants become exercisable or for shares of our Class A Common Stock commencing 90 days after the warrants become exercisable.
The units were sold at a price of $10.00 per unit, generating gross proceeds to the Company of $230,000,000. Goldman Sachs & Co. LLC and UBS Securities LLC were representatives of the several underwriters. The securities sold in the Initial Public Offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-236208). The SEC declared the registration statement effective on February 20, 2020.
We paid a total of $4,600,000 in underwriting discounts and commissions. Goldman Sachs & Co. LLC and UBS Securities LLC, representatives of the several underwriters in the Initial Public Offering, received a portion of the underwriting discounts and commissions related to the Initial Public Offering. After deducting the underwriting discounts and commissions and incurred offering costs, $230,000,000 (or $10.00 per unit sold in the Public Offering) was placed in the Trust Account.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Quarterly Report.
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None.
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Not applicable.
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None.
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Exhibit Number | Description | |||||||
2.1 | ||||||||
10.1§* | ||||||||
31.1* | ||||||||
31.2* | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS* | Inline XBRL Instance Document–the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document. | |||||||
101.SCH* | Inline XBRL Taxonomy Extension Schema. | |||||||
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase. | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase. | |||||||
104 | Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit). |
* | Filed herewith. | |||||
RUSH STREET INTERACTIVE, INC. | ||||||||
May 4, 2023 | By: | /s/ Kyle Sauers | ||||||
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