Business Context and Reporting Period
This Form 10-Q was filed by DMY Technology Group, Inc., not Rush Street Interactive, Inc., for the three and nine months ended September 30, 2020. DMY was a blank-check company formed to complete a business combination and had not commenced operating activities or generated operating revenue.
On February 25, 2020, DMY completed its initial public offering of 23.0 million units at $10.00 per unit, raising $230.0 million, and sold 6.6 million private placement warrants for $6.6 million. On July 27, 2020, DMY entered into a business combination agreement with Rush Street Interactive, LP; the agreement was amended on October 9, 2020.
Key Financial Metrics
| Metric | Three Months Ended September 30, 2020 | Nine Months Ended September 30, 2020 |
|---|---|---|
| Operating revenue | $0 | $0 |
| General and administrative expense | $2.351 million | $2.917 million |
| Franchise tax expense | $50,000 | $150,500 |
| Interest and Trust Account income | $117,725 | $758,751 |
| Net loss | $2.297 million | $2.437 million |
| Net loss per Class B share | $0.41 | $0.51 |
| Net cash used in operating activities | Not separately provided | $958,672 |
The filing does not provide meaningful operating margins because the company had no operating revenue. Interest and investment income primarily represented earnings on the Trust Account and did not reflect business operations.
Balance Sheet, Cash Flow, Debt and Liquidity
- Cash outside the Trust Account was $481,610 at September 30, 2020.
- Investments held in the Trust Account totaled $230.759 million, primarily U.S. Treasury securities and cash.
- Total assets were $231.630 million; total liabilities were $10.733 million.
- Deferred underwriting commissions were $8.050 million and payable only if a business combination is completed.
- Class A shares subject to possible redemption were recorded as temporary equity at $215.897 million.
- Stockholders’ equity was $5.000 million, while working capital was a deficit of approximately $1.8 million.
- There was no long-term debt, capital lease obligation, operating lease obligation or outstanding Working Capital Loan at September 30, 2020. The prior approximately $90,000 Sponsor note was repaid on March 19, 2020.
- Nine-month financing cash inflows were $231.440 million, primarily from the public offering and private placement. Investing cash outflows of $230.0 million reflected the deposit into the Trust Account.
Material Changes Versus the Prior Comparable Period
- Compared with December 31, 2019, the company’s assets increased from $73,356 to $231.630 million following the February 2020 public offering.
- The company moved from having no cash and no public shares at year-end 2019 to $481,610 of operating cash and 23.0 million Class A shares issued, including 21.590 million shares subject to redemption.
- The accumulated deficit increased from $720 to $2.437 million, reflecting formation, public-company and transaction-related expenses.
- Because DMY had no operations in the prior comparable period, operating performance comparisons are not meaningful.
Guidance, Outlook, Risks and Unusual Items
- Management provided no operating revenue or earnings guidance. Operating revenue was expected only after completion of an initial business combination.
- DMY was required to complete a business combination by February 25, 2022 or liquidate and redeem the public shares from the Trust Account, subject to applicable requirements.
- Management stated that the company did not have sufficient standalone liquidity to meet anticipated obligations for the following year, but expected Sponsor funding to support working capital needs through the business combination or one year from issuance of the financial statements.
- COVID-19 could adversely affect the company’s financial position, operations or search for a target, although the specific impact was not determinable at the reporting date.
- Public stockholders had redemption rights in connection with a business combination. The transaction could also involve significant dilution from new equity, conversion of Founder Shares, warrants or debt financing.
- If no business combination occurred, the public warrants could expire worthless and the Sponsor’s Founder Shares would not receive liquidation proceeds.
- The company reported no legal proceedings, no off-balance-sheet arrangements and no material changes to previously disclosed risk factors. Management concluded that disclosure controls were effective.
Investor Verification Items
- Issuer identity: Verify whether the intended filing is DMY Technology Group, Inc. or Rush Street Interactive, Inc.; the supplied filing is DMY’s 2020 third-quarter Form 10-Q.
- Business combination status: Verify the terms, amendments, closing conditions, financing and subsequent completion of the DMY–Rush Street Interactive transaction.
- Redemption exposure: Verify the number of public shares redeemed and the amount remaining in the Trust Account at closing.
- Liquidity support: Confirm the availability and terms of Sponsor funding given the reported working capital deficit and going-concern disclosure.
- Dilution: Review Founder Share conversion, public and private warrants, additional financing and any equity issued to target sellers.
- Trust Account obligations: Confirm payment of the $8.050 million deferred underwriting commission and any restrictions on Trust Account funds.