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2023
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
GENESIS PARK ACQUISITION CORP.
Delaware | 98-1550429 | |||||||
(State or other jurisdiction of | (I.R.S. Employer Identification No.) |
8226 Philips Highway, Suite Jacksonville, Florida | ||||||||
(Address of | ( |
(713) 489-4650
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||
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RDW | ||||||||||
RDW WS |
Yes ☐
No ☒ Yes ☐ Act.Yes
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||||||||||
Non-accelerated filer | ☒ | Smaller reporting company | ☒ | |||||||||||
Emerging growth company | ☒ |
As of March 29, 2021, 16,377,622 Class A ordinary shares, par value $0.0001 per share, and 4,094,406 Class B ordinary shares, par value $0.0001 per share, were issued and outstanding.
Documents Incorporated by Reference: 15, 2024.
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Cautionary Statement Regarding Forward-Looking Statements
Certain
our abilityAnnual Report on Form 10-K, particularly in Part I, Item 1A. “Risk Factors” and other important factors disclosed from time to select an appropriate target business or businesses;
our ability to complete our initial business combination, including our recently announced proposed business combination with Redwire, LLC (“Redwire”);
our ability to select an appropriate target business or businesses;
our ability to complete our initial business combination, including due to the uncertainty resulting from the recent COVID-19 pandemic;
our success in retaining or recruiting, or changes requiredtime in our officers, key employees or directors following our initial business combination;
our officersother filings with the Securities and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination;
our potential ability to obtain additional financing to complete our initial business combination;
our pool of prospective target businesses;
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the ability of our officers and directors to generate a number of potential acquisition opportunities;
our public securities’ potential liquidity and trading;
the use of proceedsUndue reliance should not held in the Trust Account or available to us from interest incomebe placed on the Trust Account balance;
the Trust Account not being subject to claims of third parties; or
our financial performance following the IPO.
these forward-looking statements. The forward-looking statements contained in this reportAnnual Report on Form 10-K are based on our current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but areWe do not limited to, those factors described under the section of this annual report entitled “Risk Factors” beginning on page 9 and those factors that will be included in our preliminary prospectus/proxy statement to be included in a Registration Statement on Form S-4 that we will file with the SEC relating to our proposed business combination with Redwire. Should one or more of these risks or uncertainties materialize, or shouldundertake any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Summary Risk Factors
Below
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PART I
In this Annual Report on Form 10-K (the “Form 10-K”), referencesour business, financial condition and results of operations;
We arefinal receipt of a Cayman Islands exempted company incorporated on July 29, 2020 whose business purpose is to effect a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses, which we refer to herein as our initial business combination. We may seek a target in any industry or geographic region. While contract;
On July 30, 2020, our sponsor, Genesis Park Holdings (“Sponsor”) paid $25,000, or approximately $0.004 per share, to cover certain offering costs in consideration for Class B ordinary shares, par value $0.0001 (the “Founder Shares”), representing 20% of the Company’s issued and outstanding ordinary shares after we consummated our initial public offering (“IPO”). On November 27, 2020, we consummated our IPO of 16,377,622 units (the “Units”), including the issuance of 1,377,622 Units as a result of the underwriter’s partial exercise of its over-allotment option. Each Unit consisted of one Class A ordinary share, $0.0001 par value, and one-half of one redeemable warrant entitling its holder to purchase one Class A ordinary share at a price of $11.50 per share. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $163,776,220.
Simultaneously with the closing of the IPO, the Company consummated the private placement (the “Sponsor Private Placement”) with our Sponsor for an aggregate of 7,292,541 warrants (“Sponsor Private Warrants”), each at a price of $1.00 per Sponsor Private Warrant, generating total proceeds of $7,292,541, and the private placement (“Jefferies Private Placement” and together with the Sponsor Private Placement, the “Private Placement”) with Jefferies LLC (“Jefferies”), underwriter for the IPO, of an aggregate of 439,627 warrants (the “Jefferies Private Warrants” and together with Sponsor Private Warrants, “Private Warrants”), each at a price of $1.00 per Jefferies Private Warrant, generating total proceeds of $439,627, for an aggregate purchase price of $7,732,168.
As of the closing of the IPO, transaction costs related to the IPO amounted to $9,640,145, consisting of $3,275,524 of underwriting discount, $5,732,168 of deferred underwriter’s fee and $632,453 of other offering costs. In addition, as of the closing of the IPO, $1,291,131 of cash was held outside of the Trust Account (as defined below) and is available for working capital purposes.
Following the closing of the IPO on November 27, 2020, an amount of $166,232,864 ($10.15 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Warrants was placed in a trust account (the “Trust Account”) which will be invested 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 certain conditions under Rule 2a-7 promulgated under the Investment Company Act which invest only in direct U.S. government treasury obligations. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its tax obligations, the proceeds from IPO and the sale of the Private Warrants will not be released from the Trust Account until the earliest to occur of: (a) the completion of the Company’s initial business combination, (b) the redemption of any public shares properly submitted in connection with a shareholder vote to amend the Company’s amended and restated memorandum and articles of association (i) to modify the substance or timing of the Company’s obligation to provide for the redemption of its public shares in connection with an initial business combination or to redeem 100% of its public shares if the Company does not complete its initial business combination by May 27, 2022 or (ii) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity, and (c) the redemption of the Company’s public shares if the Company is unable to complete its initial Business Combination by May 27, 2022.
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For further details regarding our business, see the section titled “Proposed Business” contained in our prospectus dated November 23, 2020, which section is incorporated by reference herein (the “prospectus”).
Effecting a Business Combination
General
We are not presently engaged in, and we will not engage in, any operations until after the consummation of our initial business combination. We intend to utilize cash derived from the proceeds of our IPO and the private placement of Private Warrants, our capital stock, debt or a combination of these in effecting a business combination. Although substantially all of the net proceeds of the IPO and the private placement of Private Warrants are intended to be applied generally toward effecting a business combination, the proceeds are not otherwise being designated for any more specific purposes.
If we pay for our initial business combination using shares or debt securities, or we do not use all of the funds released from the Trust Account for payment of the purchase price in connection with our business combination or for redemptions or purchases of our ordinary shares, we may apply the balance of the cash released to us from the Trust Account for general corporate purposes, including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest due on indebtedness incurred in consummating our initial business combination, to fund the purchase of other companies or for working capital.
A business combination may involve the acquisition of, or merger with, a company which does not need substantial additional capital but which desires to establish a public trading market for its shares, while avoiding what it may deem to be adverse consequences of undertaking a public offering itself. These include time delays, significant expense, loss of voting control and compliance with various Federal and state securities laws. In the alternative, we may seek to consummate a business combination with a company that may be financially unstable or in its early stages of development or growth. While we may seek to effect simultaneous business combinations with more than one target business, we will probably have the ability, as a result of our limited resources, to effect only a single business combination.
Sources of Target Businesses
We anticipate that target business candidates will be brought to our attention from various unaffiliated sources, including investment bankers and investment professionals. Target businesses may be brought to our attention by such unaffiliated sources as a result of being solicited by us by calls or mailings. These sources may also introduce us to target businesses in which they think we may be interested on an unsolicited basis, since many of these sources will have read the prospectus and know what types of businesses we are targeting. Our officers and directors, as well as our Sponsor and its affiliates, may also bring to our attention target business candidates that they become aware of through their business contacts as a result of formal or informal inquiries or discussions they may have, as well as attending trade shows, conferences or conventions. In addition, we expect to receive a number of proprietary deal flow opportunities that would not otherwise necessarily be available to us as a result of the business relationships of our officers and directors and our Sponsor and their respective industry and business contacts as well as their affiliates. While we do not presently anticipate engaging the services of professional firms or other individuals that specialize in business acquisitions on any formal basis, we may engage these firms or other individuals in the future invest significant resources in which event we may pay a finder’s fee, consulting fee, advisory fee or other compensation to be determined in an arm’s length negotiation based ondeveloping new offerings and exploring the terms of the transaction. We will engage a finder only to the extent our management determines that the use of a finder may bring opportunities to us that may not otherwise be available to us or if finders approach us on an unsolicited basis with a potential transaction that our management determines is in our best interest to pursue. Payment of finder’s fees is customarily tied to completion of a transaction, in which case any such fee will be paid out of the funds held in the Trust Account. In no event, however, will our Sponsor or anyapplication of our existing officers or directors, or any entity with which our Sponsor or officers are affiliated, be paid any finder’s fee, reimbursement, consulting fee, monies in respect of any payment of a loan ortechnologies for other compensation by the Company prior to, or in connection with any services rendered for any services they render in order to effectuate, the completion of our initial business combination (regardless of the type of transaction that it is). Although none of our Sponsor, executive officers or directors, nor any of their respective affiliates, will be allowed to receive any compensation,
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finder’s fees or consulting fees from a prospective business combination target in connection with a contemplated initial business combination, •we do not have a policy that prohibits our Sponsor, executive officers or directors, or any of their respective affiliates, from negotiating for the reimbursement of out-of-pocket expenses by a target business. Some of our officers and directors may enter into employment or consulting agreements with the post-transaction company following our initial business combination.
The presence or absence of any such fees or arrangements will not be used as a criterion in our selection process of an initial business combination candidate.
We are not prohibited from pursuing an initial business combination with an initial business combination target that is affiliated with our Sponsor, officers or directors or making the initial business combination through a joint venture or other form of shared ownership with our Sponsor, officers or directors. In the event we seek to complete our initial business combination with an initial business combination target that is affiliated with our Sponsor, officers or directors, we, or a committee of independent directors, will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that such an initial business combination is fair to our company from a financial point of view.
If any of our executive officers or directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he or she has then-existing fiduciary or contractual obligations, he or she may be required to present such business combination opportunity to such entity prior to presenting such business combination opportunity to us. Certain of our executive officers currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. We believe, however, that the fiduciary duties or contractual obligations of our officers and directors will not materially affect our ability to complete our initial business combination.
Selection of a Target Business and Structuring of a Business Combination
NYSE rules require that we must consummate an initial business combination with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting commissions). The fair market value of our initial business combination will be determined by our board of directors based upon one or more standards generally accepted by the financial community, such as discounted cash flow valuation, a valuation based on trading multiples of comparable public businesses or a valuation based on the financial metrics of M&A transactions of comparable businesses. If our board of directors is not able to independently determine the fair market value of our initial business combination (including with the assistance of financial advisors), we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors will not be able to make an independent determinationconvert our orders in backlog into revenue;
growth potential;
brand recognition and potential;
experience and skill of management and availability of additional personnel;
capital requirements;
competitive position;
barriers to entry;
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stage of development of the products, processes,•if we are not successful in attracting or services;
existing distribution and potential for expansion;
degree of current or potential market acceptance of the products, processes, or services;
impact of regulation on the business;
regulatory environment of the industry;
costs associated with effecting the business combination;
industry leadership, sustainability of market share and attractiveness of market industries in which a target business participates; and
macro competitive dynamics in the industry within which the company competes.
Fair Market Value of Target Business
Pursuant to NYSE rules, our initial business combination must occur with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (net of amounts disbursed to management for working capital purposes, if permitted, and excluding the amount of any deferred underwriting commissions). Our board of directors will make the determination as to the fair market value of our initial business combination. If our board of directors is not able to independently determine the fair market value of our initial business combination,retaining highly qualified personnel, we will obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions with respect to the satisfaction of such criteria. While we consider it unlikely that our board of directors willmay not be able to makesuccessfully implement our business strategy;
Lack of Business Diversification
For an indefinite period of time after the completionSecurities Act. Future sales of our initialcommon stock may cause the market price of our securities to drop significantly, even if our business combination,is doing well.
subject us to negative economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to a business combination, and
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cause us to depend on the performance of a single operating business or the development or market acceptance of a single or limited number of products, processes or services.
Shareholders May Not Have the Ability to Approve an Initial Business Combination
We may conduct redemptions without a shareholder votesecurities held by such parties. In addition, pursuant to the tender offer rules of the SEC. However, we will seek shareholder approval if it is requiredRegistration Rights Agreements, dated October 28, 2022, by law or applicable stock exchange rule, or we may decide to seek shareholder approval for business or other legal reasons. The Companies Law (2020 Revision) of the Cayman Islands (as the same may be supplemented or amended from time to time, the “Companies Law”)and among us and the common law of the Cayman Islands do not currently require, and we are not aware of any other applicable law that will require, shareholder approval of our initial business combination.
Under the NYSE’s listing rules, shareholder approval would be required for our initial business combination if, for example:
we issue ClassInvestors (the “Series A ordinary shares that will be equal to or in excess of 20% of the number of Class A ordinary shares then outstanding;
any of our directors, officers or substantial security holders (as defined by the NYSE rules) has a 5% or greater interest, directly or indirectly, in the target business or assets to be acquired and if the number of ordinary shares to be issued, or if the number of ordinary shares into which the securities may be convertible or exercisable, exceeds either (a) 1% of the number of ordinary shares or 1% of the voting power outstanding before the issuance in the case of any of our directors and officers or (b) 5% of the number of ordinary shares or 5% of the voting power outstanding before the issuance in the case of any substantial security holders; or
the issuance or potential issuance of ordinary shares will result in our undergoing a change of control.
The decision as to whether we will seek shareholder approval of a proposed business combination in those instances in which shareholder approval is not required by law will be made by us, solely in our discretion, and will be based on business and legal reasons, which include a variety of factors, including, but not limited to:
the timing of the transaction, including in the event we determine shareholder approval would require additional time and there is either not enough time to seek shareholder approval or doing so would place the company at a disadvantage in the transaction or result in other additional burdens on the Company;
the expected cost of holding a shareholder vote;
The risk the shareholders would fail to approve the proposed business combination
other time and budget constraints of the Company; and
additional legal complexities of a proposed business combination that would be time-consuming and burdensome to present to shareholders.
Redemption of Public Shares and Liquidation if No Business Combination
Our amended and restated memorandum and articles of association provide that we will have until May 27, 2022 to complete our initial business combination. If we are unable to complete our initial business combination by May 27, 2022, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 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 our taxes (less up to $100,000 of interest to pay dissolution expenses)Registration Rights Agreement”), divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. There are no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial business combination May 27, 2022.
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Our Sponsor, officers and directors have entered into a letter agreement with us, pursuant to which they have waived their rights to liquidating distributions from the Trust Account with respect to any Founder Shares held by them if we fail to complete our initial business combination by May 27, 2022. However, the public shares acquired by our Sponsor, officers or directors in or after the IPO are entitled to liquidating distributions from the Trust Account with respect to such public shares if we fail to complete our initial business combination by May 27, 2022.
Our Sponsor, officers and directors have agreed, pursuant to a written agreement with us, that they will not propose any amendment to our amended and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by May 27, 2022 or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity, unless we provide our public shareholders with the opportunity to redeem their Class A ordinary shares upon approval of any such amendment 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 our taxes, divided by the number of then outstanding public shares. However, we will only redeem our public shares so long as (after such redemption) our net tangible assets will be at least $5,000,001 either immediately prior to or upon consummation of our initial business combination and after payment of deferred underwriters’ fees and commissions (so that we are not subject to the SEC’s “penny stock” rules). If this optional redemption right is exercised with respect to an excessive number of public shares such that we cannot satisfy the net tangible asset requirement (described above), we would not proceed with the amendment or the related redemption of our public shares at such time.
We expect that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts remaining out of the approximately $1,000,000 of proceeds held outside the Trust Account, although we cannot assure you that there will be sufficient funds for such purpose. We will depend on sufficient interest being earned on the proceeds held in the Trust Account to pay any tax obligations we may owe. However, if those funds are not sufficient to cover the costs and expenses associated with implementing our plan of dissolution, to the extent that there is any interest accrued in the Trust Account not required to pay taxes on interest income earned on the Trust Account balance, we may request the trustee to release to us an additional amount of up to $100,000 of such accrued interest to pay those costs and expenses.
If we were to expend all of the net proceeds from the IPO and the sale of the Private Warrants, other than the proceeds deposited in the Trust Account, and without taking into account interest, if any, earned on the Trust Account, the per-share redemption amount received by shareholders upon our dissolution would be approximately $10.15. The proceeds deposited in the Trust Account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our public shareholders. We cannot assure you that the actual per-share redemption amount received by shareholders will not be substantially less than $10.15. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to pay or provide for all creditors’ claims.
Although we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public shareholders, such parties may not execute such agreements or even if they execute such agreements, they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to enter into an agreement waiving such claims to the monies held in the Trust Account, our management will consider whether competitive alternatives are reasonably available to the Company, and will only enter into an agreement with such third party if our management believes that such third party’s engagement would be in the best interests of the Company under the circumstances. Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. WithumSmith+Brown, PC, our independent registered public accounting firm, and the underwriters of the offering will not execute agreements with us waiving such claims to the monies held in the Trust Account.
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In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to providefile a shelf registration statement to permit the public resale of the shares of common stock underlying the Investors’ Series A Convertible Preferred Stock, and each party will also have additional demand and “piggyback” registration rights with respect to those shares. We are also a party to a Registration Rights Agreement, dated April 14, 2022, by and between us and B. Riley (the “B. Riley Registration Rights Agreement”), pursuant to which B. Riley is entitled to demand that we register the resale of its securities subject to certain minimum requirements.
In the event that the proceeds in the Trust Account are reduced below (i) $10.15 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, and our Sponsor asserts that it is unable to satisfy its indemnification obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment may choose not to do so if, for example, the cost of such legal action is deemed by the independent directors to be too high relative to the amount recoverable or if the independent directors determine that a favorable outcome is not likely. We have not asked our Sponsor to reserve for such indemnification obligations and we cannot assure you that our Sponsor would be able to satisfy those obligations, and believe that our Sponsor’s only assets are securities of our company. Accordingly, we cannot assure you that due to claims of creditors the actual value of the per-share redemption price will not be less than $10.15 per public share.
We will seek to reduce the possibility that our Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. Our Sponsor will also not be liable as to any claims under our indemnity of the underwriters of IPO against certain liabilities, including liabilities under the Securities Act. We will have access to up to approximately $1,000,000 from the proceeds of the IPO with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation, currently estimated to be no more than approximately $100,000). In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, shareholders who received funds from our Trust Account could be liable for claims made by creditors. In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds from the funds not to be held in the Trust Account. In such case, the amount of funds we intend to
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be held outside the Trust Account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the Trust Account would increase by a corresponding amount.
If we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency petition is filed against us that is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our shareholders. To the extent any bankruptcy or insolvency claims deplete the Trust Account, we cannot assure you we will be able to return $10.15 per share to our public shareholders. Additionally, if we file a bankruptcy or insolvency petition or an involuntary bankruptcy or insolvency petition is filed against us that is not dismissed, any distributions received by shareholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover some or all amounts received by our shareholders. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and our company to claims of punitive damages, by paying public shareholders from the Trust Account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public shareholders will be entitled to receive funds from the Trust Account only upon the earlier to occur of: (i) the completion of our initial business combination, (ii) the redemption of any public shares properly submitted in connection with a shareholder vote to amend any provisions of our amended and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by May 27, 2022 or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity, and (iii) the redemption of all of our public shares if we are unable to complete our business combination by May 27, 2022, subject to applicable law. In no other circumstances will a shareholder have any right or interest of any kind to or in the Trust Account. In the event we seek shareholder approval in connection with our initial business combination, a shareholder’s voting in connection with the initial business combination alone will not result in a shareholder’s redeeming its shares to us for an applicable pro rata share of the Trust Account. Such shareholder must have also exercised its redemption rights as described above. These provisions of our amended and restated memorandum and articles of association, like all provisions of our amended and restated memorandum and articles of association, may be amended with a shareholder vote.
Competition
In identifying, evaluating and selecting a target business for our initial business combination, we may encounter competition from other entities having a business objective similar to ours, including other blank check companies, private equity groups and leveraged buyout funds, public companies and operating businesses seeking strategic business combinations. Many of these entities are well established and have extensive experience identifying and effecting business combinations directly or through affiliates. Moreover, many of these competitors possess greater financial, technical, human and other resources than we do. Our ability to acquire larger target businesses will be limited by our available financial resources. This inherent limitation gives others an advantage in pursuing the initial business combination of a target business. Furthermore, our obligation to pay cash in connection with our public shareholders who exercise their redemption rights may reduce the resources available to us for our initial business combination and our outstanding warrants, and the future dilution they potentially represent, may not be viewed favorably by certain target businesses. Either of these factors may place us at a competitive disadvantage in successfully negotiating an initial business combination.
Human Capital Resources
We currently have three officers. These individuals are not obligated to devote any specific number of hours to our matters but they intend to devote as much of their time as they deem necessary to our affairs until we have completed our initial business combination. The amount of time they will devote in any time period will vary based on whether a target business has been selected for our initial business combination and the stage of the initial business combination process we are in. We do not intend to have any full time employees prior to the completion of our initial business combination.
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An investment in our securities involves a high degree of risk. You should consider carefully all of the risks described below, together with the other information contained in this Annual Report on Form 10-K, including our audited financial statements and related notes, before making a decision to invest in our securities. If any of the following events occur, our business, financial condition and operating results may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment. The risks and uncertainties described below are notcommon stock to decrease.
Risk Factors Specific to Our Business
We may not be able to complete our initial business combination within the prescribed time frame, in which case we would cease all operations exceptpaid by B. Riley for the purposeshares of winding up and we would redeem our public shares and liquidate, in which case our public shareholders may receive only $10.15 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
Our amended and restated memorandum and articles of association provide that we must complete our initial business combination by May 27, 2022. We may not be able to find a suitable target business and complete our initial business combination within such time period. Our ability to complete our initial business combination may be negatively impacted by general market conditions, political considerations, volatility in the capital and debt markets and the other risks described herein. For example, the outbreak of COVID-19 continues to grow both in the United States and globally and, while the extent of the impact of the outbreak on us will depend on future developments, it could limit our ability to complete our initial business combination, including as a result of increased market volatility, decreased market liquidity and third-party financing being unavailable on terms acceptable to us or at all. Additionally, the outbreak of COVID-19 may negatively impact businesses we may seek to acquire. If we have not completed our initial business combination within such time period, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than 10 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 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 shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. In such case, our public shareholders may receive only $10.15 per share, and our warrants will expire worthless. In certain circumstances, our public shareholders may receive less than $10.15 per share on the redemption of their shares. See “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.15 per share” and other risk factors below.
Our public shareholders may not be afforded an opportunity to vote on our proposed initial business combination, and even if we hold a vote, holders of our Founder Shares will participate in such vote, which means we may complete our initial business combination even though a majority of our public shareholders do not support such a combination.
We may choose not to hold a shareholder vote to approve our initial business combination unless the initial business combination would require shareholder approval under applicable law orcommon stock exchange listing requirements. In such case, the decision as to whether we will seek shareholder approval of a proposed initial business combination or will allow shareholders to sell their shares to us in a tender offer will be made by us, solely in our discretion, and will be based on a variety of factors, such as the timing of the transaction and whether the terms of the transaction would otherwise require us to seek shareholder approval. Even if we seek shareholder approval, the holders of our Founder Shares will participate in the vote on such approval. Accordingly, we may complete our initial business combination even if holders of a majority of our issued and outstanding public shares do not approve of the initial business combination we complete. Please see the section herein entitled “Shareholders May Not Have the Ability to Approve Our Initial Business Combination” for additional information.
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We may issue additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination. We may also issue Class A ordinary shares upon the conversion of the Class B ordinary shares at a ratio greater than one-to-one at the time of our initial business combination as a result of the anti-dilution provisions contained in our amended and restated memorandum and articles of association. Any such issuances would dilute the interest of our shareholders and likely present other risks.
Our amended and restated memorandum and articles of association authorizes the issuance of up to 230,000,000 Class A ordinary shares, par value $0.0001 per share, 20,000,000 Class B ordinary shares, par value $0.0001 per share, and 2,000,000 preference shares, par value $0.0001 per share. As of December 31, 2020, there are 215,000,000 and 16,250,000 (assuming, in each case, that the underwriters have not exercised their over-allotment option) authorized but unissued Class A ordinary shares and Class B ordinary shares, respectively, available for issuance, which amount does not take into account the Class A ordinary shares reserved for issuance upon exercise of outstanding warrants or the Class A ordinary shares issuable upon conversion of Class B ordinary shares. As of December 31, 2020, there are no preference shares issued and outstanding. Class B ordinary shares are convertible into Class A ordinary shares initially at a one-for-one ratio but subject to adjustment as set forth herein, including in certain circumstances in which we issue Class A ordinary shares or equity-linked securities related to our initial business combination.
We may issue a substantial number of additional Class A ordinary shares or preference shares to complete our initial business combination or under an employee incentive plan after completion of our initial business combination (although our amended and restated memorandum and articles of association provides that we may not issue additional shares that would entitleelect to sell to B. Riley under the holders thereof to receive funds fromPurchase Agreement will fluctuate based on the Trust Account or vote on any initial business combination or on matters related to our pre-initial business combination activity. We may also issue Class A ordinary shares upon conversion of the Class B ordinary shares at a ratio greater than one-to-one at the timemarket prices of our initial business combination as a result ofcommon stock during the anti-dilution provisions contained in our amended and restated memorandum and articles of association. However, our amended and restated memorandum and articles of association provides, among other things, that prior to our initial business combination, we may not issue additional shares that would entitle the holders thereof to (i) receive funds from the Trust Account, (ii) vote on any initial business combination or (iii) vote on matters related to our pre-initial business combination activity. These provisions of our amended and restated memorandum and articles of association, like all provisions of our amended and restated memorandum and articles of association, may be amended with the approval of our shareholders. However, our executive officers, directors and director nominees have agreed,applicable purchase valuation period for each purchase made pursuant to a written agreement withthe Purchase Agreement, it is not possible for us that they will not propose any amendment to our amended and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by May 27, 2022 or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity, unless we provide our public shareholders with the opportunity to redeem their ordinary shares upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest (which interest shall be net of taxes payable), divided by the number of then outstanding public shares.
The issuance of additional ordinary or preference shares:
may significantly reduce the equity interest of our existing investors, which dilution would increase if the anti-dilution provisions in the Class B ordinary shares resulted in the issuance of Class A ordinary shares on a greater than one to one basis upon conversion of the Class B ordinary shares
may subordinate the rights of holders of Class A ordinary shares if preference shares are issued with rights senior to those afforded our Class A ordinary shares;
could cause a change in control if a substantial number of our Class A ordinary shares 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; and
may adversely affect prevailing market prices for our units, Class A ordinary shares and/or warrants.
Similarly, we may issue notes or other debt securities, or otherwise incur substantial debt, to complete an initial business combination, which may adversely affect our leverage and financial condition and thus negatively impact the value of our shareholders’ investment in us. Although we have no commitmentspredict, as of the date of this reportfiling and prior to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to complete our initial business combination. We have agreedsuch sales, the number of shares of common stock that we will not incur any indebtedness unlessultimately sell to B. Riley under the Purchase Agreement, the purchase price per share that B. Riley will pay for shares purchased from us under the Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases by B. Riley under the Purchase Agreement.
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;
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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 security is payable on demand;
our inability to pay dividends on our Class A ordinary shares;
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 ordinary shares if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund 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;
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and
other disadvantages compared to our competitors who have less debt; and
our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding.
If the net proceeds of the IPO and the sale of the Private Warrants not being held in the Trust Account are insufficient to allow us to operate until May 27, 2022, we may be unable to complete our initial business combination, in which case our public shareholders may only receive $10.15 per share, or less than such amount in certain circumstances, and our warrants will expire worthless.
The funds available to us outside of the Trust Account may not be sufficient to allow us to operate until May 27, 2022, assuming that our initial business combination is not completed during that time. We believe that the funds available to us outside of the Trust Account are sufficient to allow us to operate for at least until May 27, 2022; however, we cannot assure you that our estimate is accurate. Of the funds available to us, we could use a portion of the funds available to us to pay fees to consultants to assist us with our search for a target business. We could also use a portion of the funds as a down payment or to fund a “no-shop” provision (a provision in letters of intent or merger agreements designed to keep target businesses from “shopping” around for transactions with other companies or investors on terms more favorable to such target businesses) with respect to a particular proposed initial business combination, although we do not have any current intention to do so. If we entered into a letter of intent or merger agreement where we paid for the right to receive exclusivity from a target business and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise), we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, a target business. Of the net proceeds of the IPO and the sale of the Private Warrants, only approximately $1,000,000 are available to us outside the Trust Account to fund our working capital requirements. In the event that our offering expenses exceed our estimate of $1,000,000, we may fund such excess with funds not to be held in the Trust Account. In such case, the amount of funds we hold outside the Trust Account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate of $1,000,000, the amount of funds we intend to be held outside the Trust Account would increase by a corresponding amount. If we are required to seek additional capital, we would need to borrow funds from our Sponsor, management team or other third parties to operate or may be forced to liquidate. None of our Sponsor, or any affiliate of our Sponsor or any of our officers and directors is under any obligation to advance funds to us in such circumstances. Any such advances would be repaid only from funds held outside the Trust Account or from funds released to us upon completion of our initial business combination. Up to $1,500,000 of such loans may be convertible into private placement-equivalent warrants at a price of $1.00 per warrant at the option of the lender. Prior to the completion of our initial business combination, we do not expect to seek advances or loans from parties other than our Sponsor or an affiliate of our Sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account. If we are unable to obtain these loans, we may be unable to complete our initial business combination. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.15 per share on the liquidation of our Trust Account and our warrants will expire worthless. In certain circumstances, our public shareholders may receive less
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than $10.15 per share upon our liquidation. See “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.15 per share” and other risk factors herein.
If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.15 per share.
Our placing of funds in the Trust Account may not protect those funds from third-party claims against us. Although we will seek to have all vendors, service providers, prospective target businesses and other entities with which we do business execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public shareholders, such parties may not execute such agreements, or even if they execute such agreements, they may not be prevented from bringing claims against the Trust Account, including, but not limited to, fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain advantage with respect to a claim against our assets, including the funds held in the Trust Account. If any third party refuses to enter into an agreement waiving such claims to the monies held in the Trust Account, our management will consider whether competitive alternatives are reasonably available to us, and will only enter into an agreement with such third party if our management believes that such third party’s engagement would be in our best interests under the circumstances. WithumSmith+Brown, PC, our independent registered public accounting firm, and the underwriters of the offering, will not execute agreements with us waiving such claims to the monies held in the Trust Account.
Examples of possible instances where we may engage a third party that refuses to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a service provider willing to execute a waiver. In addition, there is no guarantee that such entities will agree to waive any claims they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with us and will not seek recourse against the Trust Account for any reason. Upon redemption of our public shares, if we are unable to complete our initial business combination within the prescribed timeframe, or upon the exercise of a redemption right in connection with our initial business combination, we will be required to provide for payment of claims of creditors that were not waived that may be brought against us within the 10 years following redemption. Accordingly, the per-share redemption amount received by public shareholders could be less than the $10.15 per share initially held in the Trust Account, due to claims of such creditors. Pursuant to the LetterPurchase Agreement, our Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement or business combination agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.15 per public share and (ii) the actual amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.15 per share due to reductions in the value of the trust assets, less taxes payable; provided that such liability will not apply to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account (whether or not such waiver is enforceable) nor will it apply to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. However, we have not asked our Sponsor to reserve for such indemnification obligations, nor have we independently verified whether our Sponsor has sufficient funds to satisfy its indemnity obligations, and believe that our Sponsor’s only assets are securities of our company.without shareholder approval. As a result, if it becomes necessary for us to issue and sell to B. Riley an aggregate number of shares that would exceed the limit of 12,531,903 shares (excluding certain issuances), then before we could issue any such claims were successfully made againstshares of common stock in excess of the Trust Account,cap share issuance limit under the fundsPurchase Agreement, we would also need to obtain the requisite shareholder approval.
Our directors may decide not to enforceunder the indemnification obligations of our Sponsor, resulting in a reductionPurchase Agreement, in the amountabsence of funds in the Trust Account available for distribution to our public shareholders.
In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.15 per share and (ii) the actual amount per share held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.15 per share due to reductions in the value of the trust assets, in each case net of the interest, which may be
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withdrawn to pay taxes, and our Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related toany other financing sources, could have a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations.
While we currently expect that our independent directors would take legal actionmaterial adverse effect on our behalf against our Sponsorbusiness.
Public Company
If we are forced to enter into an insolvent liquidation, any distributions received by shareholders could be viewed as an unlawful payment if it was proved that immediately following the date on which the distribution was made, we were unable to pay our debts as they fall due in the ordinary course of business. As a result, a liquidator could seek to recover some or all amounts received by our shareholders. Furthermore, our directors may be viewed as having breached their fiduciary duties to us or our creditors and/or may have acted in bad faith, thereby exposing themselves and our company to claims, by paying public shareholders from the Trust Account prior to addressing the claims of creditors. Claims may be brought against us for these reasons. We and our directors and officers who knowingly and willfully authorized or permitted any distribution to be paid out of our share premium account while we were unable to pay our debts as they fall due in the ordinary course of business would be guilty of an offence and may be liable for a fine of $18,292.68 and imprisonment for five years in the Cayman Islands.
You may be unable to ascertain the merits or risks of any particular target business’s operations.
We will seek to complete an initial business combination with companies in a variety of industries, except that we will not, under our amended and restated memorandum and articles of association, be permitted to effectuate our initial business combination with another blank check company or similar company with nominal operations. To the extent we complete our initial business combination, we may be affected by numerous risks inherent in the business operations with which we combine. For example, if we combine with a financially unstable business or an entity lacking an established record of sales or earnings, we may be affected by the risks inherent in the business and operations of a financially unstable or a development stage entity. Although our officers and directors will endeavor to evaluate the risks inherent in a particular target business, we cannot assure you that we will properly ascertain or assess all of the significant risk factors or that we will have adequate time to complete due diligence. Furthermore, some of these risks may be outside of our control and leave us with no ability to control or reduce the chances that those risks will adversely impact a target business. We also cannot assure you that an investment in our units will ultimately prove to be more favorable to investors than a direct investment, if such opportunity were available, in a business combination target. Accordingly, any shareholders who choose to remain shareholders following our initial business combination could suffer a reduction in the value of their securities. Such shareholders are unlikely to have a remedy for such reduction in value.
Our ability to successfully effect our initial business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, some of whom may join us following our initial business combination. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our ability to successfully effect our initial business combination is dependent upon the efforts of our key personnel. The role of our key personnel in the target business, however, cannot presently be ascertained. Although some of our key personnel may remain with the target business in senior management or advisory positions following
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our initial business combination, it is likely that some or all of the management of the target business will remain in place. While we intend to closely scrutinize any individuals we engage after our initial business combination, we cannot assure you that our assessment of these individuals will prove to be correct. These individuals may be unfamiliar with the requirements of operating a company regulated by the SEC, which could cause us to have to expend time and resources helping them become familiar with such requirements. In addition, the officers and directors of an initial business combination candidate may resign upon completion of our initial business combination. The departure of an initial business combination target’s key personnel could negatively impact the operations and profitability of our post-combination business. The role of an initial business combination candidate’s key personnel upon the completion of our initial business combination cannot be ascertained at this time. Although we contemplate that certain members of an initial business combination candidate’s management team will remain associated with the initial business combination candidate following our initial business combination, it is possible that members of the management of an initial business combination candidate will not wish to remain in place. The loss of key personnel could negatively impact the operations and profitability of our post-combination business.
Our ability to evaluate the management team of any prospective target business may be limited.
Although we intend to closely scrutinize the management of a prospective target business when evaluating the desirability of effecting our initial business combination with that business, our assessment of the target business’s management may not prove to be correct. In addition, the future management may not have the necessary skills, qualifications or abilities to managehas limited experience managing a public company. Furthermore, the future role of members of our management team, if any, in the target business cannot presently be stated with any certainty. The determination as to whether any
We cannot assure you that any of our keyadequate personnel will remain in senior management or advisory positions with the combined company. The determination asappropriate level of knowledge, experience and training in the accounting policies, practices or internal control over financial reporting required of public companies in the U.S. Our failure to whether any ofmaintain an enterprise system suitable for a public company could impact our key personnel will remainability or prevent us from timely reporting our operating results, timely filing required reports with the combined company will be made at the time of our initial business combination.
Following our initial business combination, we may seek to recruit additional managers to supplement the incumbent management of the target business. We cannot assure you that we will have the ability to recruit additional managers, or that additional managers will have the requisite skills, knowledge or experience necessary to enhance the incumbent management.
Our key personnel may negotiate employment or consulting agreements as well as reimbursement of out-of-pocket expenses, if any,SEC and complying with a target business in connection with a particular business combination. These agreements may provide for them to receive compensation or reimbursement for out-of-pocket expenses, if any, following our initial business combination and as a result, may cause them to have conflicts of interest in determining whether a particular business combination is the most advantageous.
Our key personnel may be able to remain with the combined company after the completion of our initial business combination only if they are able to negotiate employment or consulting agreements in connection with the initial business combination. Additionally, they may negotiate reimbursement of any out-of-pocket expenses incurred on our behalf prior to the consummation of our initial business combination, should they choose to do so. Such negotiations would take place simultaneously with the negotiation of the initial business combination and could provide for such individuals to receive compensation in the form of cash payments and/or our securities for services they would render to us after the completion of the initial business combination, or as reimbursement for such out-of-pocket expenses. The personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business. However, we believe the ability of such individuals to remain with us after the completion of our initial business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. There is no certainty, however, that any of our key personnel will remain with us after the completion of our initial business combination. We cannot assure you that any of our key personnel will remain in senior management or advisory positions with us. The determination as to whether any of our key personnel will remain with us will be made at the time of our initial business combination.
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Our officers and directors will allocate their time to other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest could have a negative impact on our ability to complete our initial business combination.
Our officers and directors are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between our operations and our search for an initial business combination and their other businesses. Each of our officers is engaged in other business endeavors for which he may be entitled to substantial compensation and our officers are not obligated to contribute any specific number of hours per week to our affairs. Our independent directors may also serve as officers or board members for other entities. If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our ability to complete our initial business combination. For a complete discussion of our officers’ and directors’ other business affairs, please see the section entitled “Management—Directors and Officers” contained in the prospectus, which section is incorporated by reference herein.
Since our Sponsor, officers and directors will lose their entire investment in us if our initial business combination is not completed (except with respect to any public shares the may hold), a conflict of interest may arise in determining whether a particular business combination target is appropriate for our initial business combination.
As of the closing of our IPO, our Sponsor owns the Founder Shares representing 20% of our issued and outstanding ordinary shares. The Founder Shares will be worthless if we do not complete an initial business combination. In addition, in connection with the closing of our IPO, our Sponsor purchased an aggregate of 7,292,541 Private Warrants for a purchase price of $1.00 per warrant that will also be worthless if we do not complete an initial business combination. Holders of Founder Shares have agreed (A) to vote any shares owned by them in favor of any proposed initial business combination and (B) not to redeem any Founder Shares in connection with a shareholder vote to approve a proposed initial business combination or in connection with a shareholder vote to approve an amendment to our amended and restated memorandum and articles of association. In addition, we may obtain loans from our Sponsor, affiliates of our Sponsor or an officer or director. The personal and financial interests of our officers and directors may influence their motivation in identifying and selecting a target business combination, completing an initial business combination and influencing the operation of the business following the initial business combination.
Certain of our officers and directors are now, and all of them may in the future become, affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in allocating their time and determining to which entity a particular business opportunity should be presented.
Until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or more businesses. Our Sponsor and officers and directors are, and may in the future become, affiliated with entities (such as operating companies or investment vehicles) that are engaged in a similar business.
Our officers and directors also may become aware of business opportunities that may be appropriate for presentation to us and the other entities to which they owe certain fiduciary or contractual duties.
Accordingly, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. These conflicts may not be resolved in our favor and a potential target business may be presented to another entity prior to its presentation to us. Our amended and restated memorandum and articles of association provide that we renounce our interest in any corporate opportunity offered to any director or officer unless such opportunity is expressly offered to such person solely in his or her capacity as a director or officer of our company and such opportunity is one we are legally and contractually permitted to undertake and would otherwise be reasonable for us to pursue, and to the extent the director or officer is permitted to refer that opportunity to us without violating another legal obligation.
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For a complete discussion of our officers’ and directors’ business Conflict of Interests and the potential conflicts of interest that you should be aware of, please see the sections entitled “Management—Officers, Directors and Director Nominees,” “Management—Conflicts of Interest” and “Certain Relationships and Related Party Transactions” contained in the prospectus, which sections are incorporated by reference herein.
We are an emerging growth company and a smaller reporting company within the meaning of the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies and smaller reporting companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.
We are an “emerging growth company” within the meaning of the Securities Act, as modified by the JOBS Act, and we 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 auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act reduced disclosure obligations regarding executive compensation in our periodic reportsof 2002 (“SOX”), when applicable. The maintenance of the standards and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. As a result, our shareholders may not have access to certain information they may deem important. We could be an emerging growth companycontrols necessary for up to five years, although circumstances could cause us to losesupport the level of accounting standards required of a public company in the U.S. may require costs greater than expected. It is possible that status earlier, including if the market value of our Class A ordinary shares held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict whether investors will find our securities less attractive because we will rely on these exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
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 hadexpand our employee base and hire additional employees to support our operations as 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 a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. We have 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, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our ordinary shares held by non-affiliates exceeds $250 million as of the end of the prior June 30th, or (2) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our ordinary shares held by non-affiliates exceeds $700 million as of the prior June 30th. To the extent we take advantage of such reduced disclosure obligations, it may also make comparison of our financial statements with other public companies difficult or impossible.
We may be able to complete only one business combination with the proceeds of the IPO and the sale of the Private Warrants, which will cause us to be solely dependent on a single business, which may have a limited number of products or services and limited operating activities. This lack of diversification may negatively impactincrease our operating results and profitability.
Of the net proceeds from our IPO and the sale of the Private Warrants, only $166,230,646 is available to complete our initial business combination and pay related fees and expenses (which includes up to $5,250,000, or up to $6,037,500 if the over-allotment option is exercisedcosts in full, for the payment of deferred underwriting commissions being held in the Trust Account).
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solely dependent upon the performance of a single business, property or asset, or
dependent upon the development or market acceptance of a single or limited number of products, processes or services.
This lack of diversification may subject us to numerous economic, competitive and regulatory risks, any or all of which may have a substantial adverse impact upon the particular industry in which we may operate subsequent to our initial business combination.
We may be unable to obtain additional financing to complete our initial business combination or to fund the operations and growth of a target business, which could compel us to restructure or abandon a particular business combination.
We have not selected any specific business combination target but intend to target businesses with enterprise values that are greater than we could acquire with the net proceeds of the IPO and the sale of the Private Warrants. As a result, if the cash portion of the purchase price exceeds the amount available from the Trust Account, net of amounts needed to satisfy any redemption by public shareholders, we may be required to seek additional financing to complete such proposed initial business combination. We cannot assure you that such financing will be available on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to complete our initial business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target business candidate. Further, we may be required to obtain additional financing in connection with the closing of our initial business combination for general corporate purposes, including for maintenance or expansion of operations of the post-transaction businesses, the payment of principal or interest due on indebtedness incurred in completing our initial business combination, or to fund the purchase of other companies. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.15 per share plus any pro rata interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes on the liquidation of our Trust Account and our warrants will expire worthless. In addition, even if we do not need additional financing to complete our initial business combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could have a material adverse effect on the continued development or growth of the target business. None of our Sponsor, officers, directors or shareholders is required to provide any financing to us in connection with or after our initial business combination. If we are unable to complete our initial business combination, our public shareholders may only receive approximately $10.15 per share on the liquidation of our Trust Account, and our warrants will expire worthless. Furthermore, as described in the risk factor entitled “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.15 per share,” under certain circumstances our public shareholders may receive less than $10.15 per share upon the liquidation of the Trust Account.
If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete our initial business combination.
If we are deemed to be an investment company under the Investment Company Act, our activities may be restricted, including:
restrictions on the nature of our investments; and
restrictions on the issuance of securities.
In addition, we may have imposed upon us certain burdensome requirements, including:
registration as an investment company;
adoption of a specific form of corporate structure; and
reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations.
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In order not to be regulated as an investment company under the Investment Company Act, unless we can qualify for an exclusion, we must ensure that we are engaged primarily in a business other than investing, reinvesting or trading in securities and that our activities do not include investing, reinvesting, owning, holding or trading “investment securities” constituting more than 40% of our total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. Our business is to identify and complete an initial business combination and thereafter to operate the post-transaction business or assets for the long term. We do not plan to buy businesses or assets with a view to resale or profit from their resale. We do not plan to buy unrelated businesses or assets or to be a passive investor.
We do not believe that our anticipated principal activities will subject us to the Investment Company Act. To this end, the proceeds held in the Trust Account may only be invested in U.S. “government securities,” within the meaning of Section 2(a)(16) of the Investment Company Act, having a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act, which invest only in direct U.S. government treasury obligations. Pursuant to the trust agreement, the trustee is not permitted to invest in other securities or assets. By restricting the investment of the proceeds to these instruments, and by having a business plan targeted at acquiring and growing businesses for the long term (rather than on buying and selling businesses in the manner of a merchant bank or private equity fund), we intend to avoid being deemed an “investment company” within the meaning of the Investment Company Act. The IPO was not intended for persons who were seeking a return on investments in government securities or investment securities. The Trust Account is intended as a holding place for funds pending the earliest to occur of: (i) the completion of our initial business combination; (ii) the redemption of any public shares properly submitted in connection with a shareholder vote to amend our amended and restated memorandum and articles of association to (A) modify the substance or timing of our obligation to provide for the redemption of our public shares in connection with an initial business combination or to redeem 100% of our public shares if we do not complete our initial business combination by May 27, 2022 or (B) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity; or (iii) absent an initial business combination by May 27, 2022, our return of the funds held in the Trust Account to our public shareholders as part of our redemption of the public shares. If we do not invest the proceeds as discussed above, we may be deemed to be subject to the Investment Company Act. If we were deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we have not allotted funds and may hinder our ability to complete an initial business combination or may result in our liquidation. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.15 per share, or less in certain circumstances described herein, on the liquidation of our Trust Account and our warrants will expire worthless.
Subsequent to the completion of our initial business combination, we may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and our share price, and which could cause you to lose some or all of your investment.
Even if we conduct extensive due diligence on a target business with which we combine, we cannot assure you that this diligence will identify all material issues that may be present within a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later write-down or write-off assets, restructure our operations or incur impairment or other charges that could result in our reporting losses. Even if our due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue of our obtaining debt financing to partially finance the initial business combination or thereafter. Accordingly, any shareholders who choose to remain shareholders following the initial business combination could suffer a reduction in the value of their shares. Such shareholders are unlikely to have a remedy for such reduction in value.
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The requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential business combination targets, in particular as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our shareholders.
Any potential target business with which we enter into negotiations concerning an initial business combination will be aware that we must complete our initial business combination by May 27, 2022. Consequently, such target business may have leverage over us in negotiating an initial business combination, knowing that if we do not complete our initial business combination with that particular target business, we may be unable to complete our initial business combination with any target business. This risk will increase as we get closer to the timeframe described above. In addition, we may have limited time to conduct due diligence and may enter into our initial business combination on terms that we would have rejected upon a more comprehensive investigation.
We are not required to obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions, and consequently, you may have no assurance from an independent source that the price we are paying for the target(s) of our initial business combination is fair to our company from a financial point of view.
Unless we complete our initial business combination with an affiliated entity or our board of directors cannot independently determine the fair market value of the target business or businesses (including with the assistance of financial advisors), we are not required to obtain an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that the price we are paying is fair to our company from a financial point of view. If no opinion is obtained, our shareholders will be relying on the judgment of our board of directors, who will determine fair market value based on standards generally accepted by the financial community. Such standards used will be disclosed in our proxy materials or tender offer documents, as applicable, related to our initial business combination.
Resources could be wasted in researching business combinations that are not completed, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.15 per share, or less than such amount in certain circumstances, on the liquidation of our Trust Account and our warrants will expire worthless.
We anticipate that the investigation of each specific target business and the negotiation, drafting and execution of relevant agreements, disclosure documents and other instruments will require substantial management time and attention and substantial costs for accountants, attorneys, consultants and others. If we decide not to complete a specific initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we reach an agreement relating to a specific target business, we may fail to complete our initial business combination for any number of reasons, including those beyond our control. Any such event will result in a loss to us of the related costs incurred, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are unable to complete our initial business combination, our public shareholders may receive only approximately $10.15 per share on the liquidation of our Trust Account and our warrants will expire worthless. In certain circumstances, our public shareholders may receive less than $10.15 per share on the redemption of their shares. See “—If third parties bring claims against us, the proceeds held in the Trust Account could be reduced and the per-share redemption amount received by shareholders may be less than $10.15 per share” and other risk factors herein.
Because we are incorporated under the laws of the Cayman Islands, you may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited.
We are an exempted company incorporated under the laws of the Cayman Islands and certain of our officers and directors are residents of jurisdictions outside the United States. As a result, it may be difficult for investors to effect service of process within the United States upon our directors or executive officers, or enforce judgments obtained in the United States courts against our directors or officers.
Our corporate affairs and the rights of shareholders are governed by our amended and restated memorandum and articles of association, the Companies Law and the common law of the Cayman Islands. We are also subject to
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the federal securities laws of the United States. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from English common law, the decisions of whose courts are of persuasive authority, but are not binding on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are different from what they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a different body of securities laws as compared to the United States, and certain states, such as Delaware, may have more fully developed and judicially interpreted bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a shareholders derivative action in a Federal court of the United States. For a more detailed discussion of the principal differences between the provisions of the Companies Law applicable to us and, for example, the laws applicable to companies incorporated in the United States and their shareholders, see the section captioned “Description of Securities—Certain Differences in Corporate Law” contained in the prospectus, which section is incorporated by reference herein.
Shareholders of Cayman Islands exempted companies like the Company have no general rights under Cayman Islands law to inspect corporate records or to obtain copies of the register of members of these companies. Our directors have discretion under our amended and restated memorandum and articles of association to determine whether or not, and under what conditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders. This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder motion or to solicit proxies from other shareholders in connection with a proxy contest.
We have been advised by Maples and Calder, our Cayman Islands legal counsel, that the courts of the Cayman Islands are unlikely (i) to recognize or enforce against us judgments of courts of the United States predicated upon the civil liability provisions of the federal securities laws of the United States or any state; and (ii) in original actions brought in the Cayman Islands, to impose liabilities against us predicated upon the civil liability provisions of the federal securities laws of the United States or any state, so far as the liabilities imposed by those provisions are penal in nature. In those circumstances, although there is no statutory enforcement in the Cayman Islands of judgments obtained in the United States, the courts of the Cayman Islands will recognize and enforce a foreign money judgment of a foreign court of competent jurisdiction without retrial on the merits based on the principle that a judgment of a competent foreign court imposes upon the judgment debtor an obligation to pay the sum for which judgment has been given provided certain conditions are met. For a foreign judgment to be enforced in the Cayman Islands, such judgment must be final and conclusive and for a liquidated sum, and must not be in respect of taxes or a fine or penalty, inconsistent with a Cayman Islands judgment in respect of the same matter, impeachable on the grounds of fraud or obtained in a manner, or be of a kind the enforcement of which is, contrary to natural justice or the public policy of the Cayman Islands (awards of punitive or multiple damages may well be held to be contrary to public policy). A Cayman Islands Court may stay enforcement proceedings if concurrent proceedings are being brought elsewhere.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a United States company.
If we effect our initial business combination with a company with locations or operations or opportunities outside of the United States, we would be subject to a variety of additional risks that may negatively impact our operations.
If we effect our initial business combination with a company with locations or operations or opportunities outside of the United States, we would be subject to any special considerations or risks associated with companies operating in an international setting, including any of the following:
higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;
rules and regulations regarding currency redemption;
complex corporate withholding taxes on individuals;
laws governing the manner in which future business combinations may be effected;
tariffs and trade barriers;
regulations related to customs and import/export matters;
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longer payment cycles and challenges in collecting accounts receivable;
tax issues, including, but not limited to, tax law changes and variations in tax laws as compared to the United States;
currency fluctuations and exchange controls;
rates of inflation;
cultural and language differences;
changes in industry, regulatory or environmental standards within the jurisdictions where we operate;
crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;
deterioration of political relations with the United States; and
Government appropriations of assets.
We may not be able to adequately address these additional risks. Ifremain in compliance with the continued listing requirements of the NYSE, and if the NYSE delists our common stock, it would have an adverse impact on the trading, liquidity and market price of our common stock.
Because we must furnisha reduced interest in us from investors, analysts and other market participants. In addition, a suspension or delisting could impair our shareholders with target business financial statements, we may lose the ability to complete an otherwise advantageous initial business combination with some prospective target businesses.
The federal proxy rules require thatraise additional capital through the proxy statement with respectpublic markets and our ability to attract and retain employees by means of equity compensation.
Risk Factors Relating to our Securities
The Class A ordinary shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitledprevented or detected on a timely basis.
responsibilities in pursuit of financial reporting objectives, as demonstrated by, among other things, insufficient segregation of duties in our finance and accounting functions.
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business combination, warrantholders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act; provided that such exemption is available.
If you exercise your public warrants on a “cashless basis,” you will receive fewer Class A ordinary shares from such exercise than if you were to exercise such warrants for cash.
Under the following circumstances, the exercise of the public warrants may be required or permitted to be made on a cashless basis: (i) If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th business day after the closing of our initial business combination, warrantholders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act or another exemption; (ii) if our ordinary shares aresecurity risk assessments at the time of any exerciseonboarding, contract renewal, and upon detection of an increase in risk profile. We use a warrant not listedvariety of inputs in such risk assessments, including information supplied by providers and third parties. In addition, we require our providers to meet appropriate security requirements, controls and responsibilities and investigate security incidents that have impacted our third-party providers, as appropriate.
The grant of registration rights to our initial shareholders and Jefferies may make it more difficult to complete our initial business combination,space industry, and the future exercisecurrent footprint is sufficient to support near-term growth. However, as we continue to grow, we plan to continue and even accelerate the pace of such rights may adversely affect the market priceleasehold improvements so that our facility capacity is not a limiting factor on our growth. Expansion and reconfiguration of our Class A ordinary shares.
Pursuantexisting facilities are also being studied to an agreement to be entered into concurrently with the issuancesupport further growth and sale of the securitiescost optimization in the IPO, our initial shareholders, Jefferiesfuture.
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stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A ordinary shares that is expected when the securities owned by our initial shareholders or holders of working capital loans or their respective permitted transfereesbusiness. Although legal proceedings are registered for resale.
We may amend the terms of the warrants in a manner that may be adverse to holders of public warrants with the approval by the holders of at least a majority of the then outstanding public warrants. As a result, the exercise price of your warrants could be increased, the exercise period could be shortened and the number of Class A ordinary shares purchasable upon exercise of a warrant could be decreased, all without your approval.
Our warrants were issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but requires the approval by the holders of at least a majority of the then outstanding public warrants to make any change that adversely affects the interests of the registered holders of public warrants. Accordingly, we may amend the terms of the public warrants in a manner adverse to a holder of public warrants if holders of at least a majority of the then outstanding public warrants approve of such amendment. Although our ability to amend the terms of the public warrants with the consent of at least a majority of the then outstanding public warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the warrants, convert the warrants into cash or shares, shorten the exercise period or decrease the number of Class A ordinary shares purchasable upon exercise of a warrant.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and other governing instruments, including their warrant agreements. We cannot assure you that we will not seek to amend our amended and restated memorandum and articles of association or governing instruments in a manner that will make it easier for us to complete our initial business combination that our shareholders may not support.
In order to effectuate an initial business combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments, including their warrant agreements. For example, blank check companies have amended the definition of business combination, increased redemption thresholds, changed industry focus and extended the time to consummate an initial business combination and, with respect to their warrants, amended their warrant agreements to require the warrants to be exchanged for cash and/or other securities. Amending our amended and restated memorandum and articles of association requires at least a special resolution of our shareholders as a matter of Cayman Islands law, meaning the approval of holders of not less than two-thirds of our ordinary shares who attend and vote at a general meeting ofinherently unpredictable, the Company and amending our warrant agreement will require a vote of holders of at least a majority of the public warrants and, solelybelieves that it has valid defenses with respect to any amendmentmatters currently pending against the Company and intends to defend itself vigorously. Excluding pending matters referenced below, the outcome of these matters, individually and in the aggregate, is not expected to have a material impact on the Company’s consolidated financial statements.
The NYSE may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
Our Class A ordinary shares and warrants are separately listedconsolidated financial statements. For further information on the NYSE. Although we expectrisks associated with existing and future investigations, lawsuits, arbitration, claims, enforcement actions and other legal proceedings, please refer to meet, on a pro forma basis, the minimum initial listing standards set forth in the NYSE listing standards, we cannot assure you that our securities will be, or will continue to be, listed on the NYSE in the future or prior to our initial business combination. In order to continue listing our securities on the NYSE prior to our initial business combination, we must maintain certain financial, distributionItem 1A. “Risk Factors.”
a limited availability of market quotations for our securities;
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reduced liquidity with respect to our securities;
a determination that our Class A ordinary shares are a “penny stock” which will require brokers trading in our Class A ordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities;
a limited amount of news and analyst coverage for our company; and
a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our units, Class A ordinary shares and warrants are listed on the NYSE, our units, Class A ordinary sharesNew York Stock Exchange and warrants are covered securities. Althoughtrade under the states are preempted from regulatingsymbols “RDW” and “RDW WS”, respectively. Each warrant entitles the saleregistered holder to purchase one share of our securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While we are not aware of a state having used these powers to prohibit or restrict the sale of securities issued by blank check companies, other than the State of Idaho, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if we were no longer listed on the NYSE, our securities would not be covered securities and we would be subject to regulation in each state in which we offer our securities, including in connection with our initial business combination.
The ability of our public shareholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure.
At the time we enter into an agreement for our initial business combination, we will not know how many shareholders may exercise their redemption rights, and therefore will need to structure the transaction based on our expectations as to the number of shares that will be submitted for redemption. If our initial business combination agreement requires us to use a portion of the cash in the Trust Account to pay the purchase price, or requires us to have a minimum amount of cash at closing, we will need to reserve a portion of the cash in the Trust Account to meet such requirements, or arrange for third-party financing. In addition, if a larger number of shares are submitted for redemption than we initially expected, we may need to restructure the transaction to reserve a greater portion of the cash in the Trust Account or arrange for third-party financing. Raising additional third-party financing may involve dilutive equity issuances or the incurrence of indebtedness at higher than desirable levels. Furthermore, this dilution would increase to the extent that the anti-dilution provision of the Class B ordinary shares results in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B ordinary shares at the time of our business combination. The above considerations may limit our ability to complete the most desirable business combination available to us or optimize our capital structure. The amount of the deferred underwriting commissions payable to the underwriters is not required to be adjusted for any shares that are redeemed in connection with an initial business combination. The per-share amount we will distribute to shareholders who properly exercise their redemption rights will not be reduced by deferred underwriting commissions and after such redemptions, the per-share value of shares held by non-redeeming shareholders will reflect our obligation to pay the deferred underwriting commissions.
Our initial shareholders may exert a substantial influence on actions requiring a shareholder vote, potentially in a manner that you do not support.
As of the closing of our IPO, our initial shareholders own shares representing 20% of our issued and outstanding ordinary shares. Accordingly, they may exert a substantial influence on actions requiring a shareholder
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vote, potentially in a manner that you do not support, including amendments to our amended and restated memorandum and articles of association and approval of major corporate transactions. In addition, our board of directors, whose members were appointed by our initial shareholders, is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being appointed in each year. We may not hold an annual general meeting of shareholders to appoint new directors prior to the completion of our initial business combination, in which case all of the current directors will continue in office until at least the completion of the initial business combination. If there is an annual general meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for appointment and our initial shareholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our initial shareholders will continue to exert control at least until the completion of our initial business combination.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
We have the ability to redeem outstanding warrants at any time after they become exercisable and prior to their expiration,common stock at a price of $0.01$11.50 per warrant; provided that the reported closing priceshare, subject to certain adjustments. As of March 15, 2024, there were 65,578,724 shares of common stock outstanding and 8,188,811 public warrants outstanding.
The grant of registration rights to our initial shareholders and Jefferies may make it more difficult to complete our initial business combination, and the future exercise of such rights may adversely affect the market price of our Class A ordinary shares.
Pursuant to an agreement entered into concurrently with the issuance and sale of the securities in our IPO, our initial shareholders, Jefferies and their respective permitted transferees can demand that we register the resale of Private Warrants, the Class A ordinary shares issuable upon conversion of the Founder Shares and the Private Warrants held, or to be held by thembrokerage firms and holders of warrants that may be issued upon conversion of working capital loans may demand that we register the resale of such warrants or the Class A ordinary shares issuable upon exercise of such warrants. We will bear the cost of registering these securities. The registration and availability of such a significant number of securities for trading in the public market may have an adverse effect on the market price of our Class A ordinary shares. In addition, the existence of the registration rights may make our initial business combination more costly or difficult to conclude. This is because the shareholders of the target business may increase the equity stake they seek in the combined entity or ask for more cash consideration to offset the negative impact on the market price of our Class A ordinary shares that is expected when the securities owned by our initial shareholders or holders of working capital loans or their respective permitted transferees are registered for resale.
General Risk Factors
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) pandemic.
The COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected 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
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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 for an extensive period of time, 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.
In addition, our ability to consummate a transaction may be dependent on the ability to raise equity and debt financing, which may be impacted by COVID-19 and other events, including as a result of increased market volatility and decreased market liquidity in third-party financing being unavailable on terms acceptable to us or at all.
Finally, the outbreak of COVID-19 may also have the effect of heightening many of the other risks described in this “Risk Factors” section, such as those related to the market for our securities and cross-border transactions.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
We maintain our principal executive offices at 2000 Edwards St., Suite B, Houston, TX 77007. This space is being provided to us by our Sponsor, for a monthly fee of $15,000 for office space, secretarial and administrative services. We consider our current office space otherwise available to our executive officers, adequate for our current operations.
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Our units, Class A ordinary shares and warrants are listed on The New York Stock Exchange (“NYSE”). Class A ordinary shares and warrants that are separated trade on NYSE under the symbols “GNPK” and “GNPK WS”. Those units not separated from the Class A ordinary shares trade on the NYSE under the symbol “GNPK.U.”
Holders
As of December 31, 2020, there was 1 holder of record of our units, 0 holders of record of our Class A ordinary shares and 2 holders of record of our warrants.
Dividends
Board may deem relevant.
Offerings
On November 27, 2020, the Company consummated its initial public offeringAnalysis of 16,377,622 units (the “Units”), including the issuanceFinancial Condition and Results of 1,377,622 Units as a result of the underwriter’s partial exercise of its over-allotment option. Each Unit consisted of one Class A ordinary share, $0.0001 par value, and one-half of one redeemable warrant entitling its holder to purchase one Class A ordinary share at a price of $11.50 per share. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $163,776,220.
Simultaneously with the closing of the IPO, the Company consummated the Sponsor Private Placement with the Sponsor for Sponsor Private Warrants, each at a price of $1.00 per Sponsor Private Warrant, generating total proceeds of $7,292,541, and the Jefferies Private Placement with Jefferies, underwriter for the IPO, of the Jefferies Private Warrants, each at a price of $1.00 per Jefferies Private Warrant, generating total proceeds of $439,627, for an aggregate purchase price of $7,732,168.
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Transaction costs to date amounted to $9,640,145, consisting of $3,275,524 of underwriting discount, $5,732,168 of deferred underwriter’s fee and $632,453 of other offering costs. In addition, as of December 31, 2020, $1,295,380 of cash was held outside of the Trust Account and is available for working capital purposes.
We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account (less taxes paid and deferred underwriting commissions) to complete our initial business combination. We may withdraw interest to pay taxes. Our annual income tax obligations will depend on the amount of interest and other income earned on the amounts held in the Trust Account. We expect the interest earned on the amount in the Trust Account will be sufficient to pay our income taxes. To the extent that our shares or debt is used, in whole or in part, as consideration to complete our initial business combination, the remaining proceeds held in the Trust Account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies.
Prior to the completion of our initial business combination, we will have available to us the approximately $1,000,000 of proceeds held outside the Trust Account. We will use these funds to, among other expenditures described herein, identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete an initial business combination.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our auditedthe consolidated financial statements and theaccompanying notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report on Form 10-K. Certain information contained in thethis discussion and analysis set forth below includes forward-looking statements.statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. For information identifying important factors includingthat could cause actual results to differ materially from those set forth under “Specialanticipated in the forward-looking statements, please refer to Item 1A. “Risk Factors” and the "Cautionary Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere inStatements” sections of this Annual Report on Form 10-K.
Unless the context otherwise requires, all references in this section to the “Company,” “Redwire,” “we,” “us” or “our” refer to Redwire Corporation and its consolidated subsidiaries.
We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful.
Results of Operations
We have not engaged in any operations to date and our only revenues relate to interest earned on investments in the trust account. Following our IPO, we will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash and cash equivalents after our IPO. After our IPO, we have incurred 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. We expect our expenses to continue to increase substantially.
Forcommercialization.
Going Concern, LiquidityCompany continued to deliver improved operations and Capital Resources
On November 27, 2021, we consummated the IPO of 16,377,622 Units, at a price of $10.00 per unit, generating gross proceeds of $163,776,220. Simultaneously with the closing of the IPO, we consummated the sale of 7,292,541 private placement warrants to our sponsor at a price of $1.00 per warrant, generating gross proceeds of $7,292,541.
Following the IPO and the sale of the private placement warrants, a total of $163,776,220 was placed in the trust account. Transaction costs amounted to $9,640,145 consisting of $3,275,524 of upfront underwriting discount, $5,732,168 deferred underwriter’s discount and $632,453 of other offering costs. In addition, $1,291,131 of cash was held outside of the Trust Account and was availablefinancial performance year-over-year.
For the year ended December 31, 2020,2023 compared to the same period in 2022.
As of December 31, 2020, we had marketable securities held in the trust account of $166,243,614. We intend2022.
As of December 31, 2020, we had cash of $1,295,380 held outside the trust account. We intend to use the funds held outside the trust account to primarily identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a business combination.
We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business prior to our initial business combination. However, if our estimates of the costs of identifying a target business, undertaking in-depth due diligence and negotiating an initial business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. In order to fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete our initial business combination, we would repay such loaned amounts. In the event that our initial business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants of the post business combination entity at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the private placement warrants. Prior to the completion of our initial business combination, we do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our trust account.
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Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements$372.8 million as of December 31, 2020. 2023, as compared to $313.1 million as of December 31, 2022.
Year Ended | $ Change from prior year period | % Change from prior year period | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands, except percentages) | December 31, 2023 | % of revenues | December 31, 2022 | % of revenues | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 243,800 | 100 | % | $ | 160,549 | 100 | % | $ | 83,251 | 52 | % | |||||||||||||||||||||||||||||||||||||||||||||||
Cost of sales | 185,831 | 76 | 131,854 | 82 | 53,977 | 41 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Gross margin | 57,969 | 24 | 28,695 | 18 | 29,274 | 102 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 68,525 | 28 | 70,342 | 44 | (1,817) | (3) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Transaction expenses | 13 | — | 3,237 | 2 | (3,224) | (100) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment expense | — | — | 96,623 | 60 | (96,623) | (100) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Research and development | 4,979 | 2 | 4,941 | 3 | 38 | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income (loss) | (15,548) | (6) | (146,448) | (91) | 130,900 | (89) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense, net | 10,699 | 4 | 8,219 | 5 | 2,480 | 30 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (income) expense, net | 1,503 | 1 | (16,075) | (10) | 17,578 | (109) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Income (loss) before income taxes | (27,750) | (11) | (138,592) | (86) | 110,842 | (80) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Income tax expense (benefit) | (486) | — | (7,972) | (5) | 7,486 | (94) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | (27,264) | (11) | (130,620) | (81) | 103,356 | (79) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | (1) | — | (3) | — | 2 | (67) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to Redwire Corporation | $ | (27,263) | (11) | % | $ | (130,617) | (81) | % | $ | 103,354 | (79) | % |
Year Ended | ||||||||||||||||||||||||||||||||
(in thousands, except percentages) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||
Income tax expense (benefit) | $ | (486) | $ | (7,972) | ||||||||||||||||||||||||||||
Effective tax rate | 1.8 | % | 5.8 | % |
Year Ended | ||||||||||||||||||||||||||||||||
(in thousands) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||
Net income (loss) | $ | (27,264) | $ | (130,620) | ||||||||||||||||||||||||||||
Interest expense, net | 10,699 | 8,220 | ||||||||||||||||||||||||||||||
Income tax expense (benefit) | (486) | (7,972) | ||||||||||||||||||||||||||||||
Depreciation and amortization | 10,724 | 11,288 | ||||||||||||||||||||||||||||||
Impairment expense | — | 96,623 | ||||||||||||||||||||||||||||||
Acquisition deal costs (i) | 13 | 3,237 | ||||||||||||||||||||||||||||||
Acquisition integration costs (i) | 546 | 3,915 | ||||||||||||||||||||||||||||||
Purchase accounting fair value adjustment related to deferred revenue (ii) | 15 | 139 | ||||||||||||||||||||||||||||||
Severance costs (iii) | 313 | 1,311 | ||||||||||||||||||||||||||||||
Capital market and advisory fees (iv) | 8,607 | 5,547 | ||||||||||||||||||||||||||||||
Litigation-related expenses (v) | 1,235 | 2,877 | ||||||||||||||||||||||||||||||
Equity-based compensation (vi) | 8,658 | 10,786 | ||||||||||||||||||||||||||||||
Committed equity facility transaction costs (vii) | 259 | 1,364 | ||||||||||||||||||||||||||||||
Debt financing costs (viii) | 17 | 102 | ||||||||||||||||||||||||||||||
Warrant liability change in fair value adjustment (ix) | 2,011 | (17,784) | ||||||||||||||||||||||||||||||
Adjusted EBITDA | 15,347 | (10,967) | ||||||||||||||||||||||||||||||
Pro forma impact on Adjusted EBITDA (x) | — | 3,932 | ||||||||||||||||||||||||||||||
Pro Forma Adjusted EBITDA | $ | 15,347 | $ | (7,035) |
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreementthe year in which they occurred. For the periods presented, the pro forma impact included the results of Space NV.
Last Twelve Months | ||||||||||||||||||||||||||||||||
(in thousands, except ratio) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||
Contracts awarded | $ | 300,042 | $ | 327,035 | ||||||||||||||||||||||||||||
Revenues | 243,800 | 160,549 | ||||||||||||||||||||||||||||||
Book-to-bill ratio | 1.23 | 2.04 |
(in thousands) | December 31, 2023 | December 31, 2022 | |||||||||||||||
Organic backlog, beginning balance | $ | 313,057 | $ | 139,742 | |||||||||||||
Organic additions during the period | 300,042 | 327,035 | |||||||||||||||
Organic revenue recognized during the period | (243,800) | (160,549) | |||||||||||||||
Foreign currency translation | 3,491 | 6,829 | |||||||||||||||
Organic backlog, ending balance | 372,790 | 313,057 | |||||||||||||||
Acquisition-related contract value, beginning balance | — | — | |||||||||||||||
Acquisition-related backlog, ending balance | — | — | |||||||||||||||
Contracted backlog, ending balance | $ | 372,790 | $ | 313,057 | |||||||||||||
The underwriters are entitled to a deferred feeremaining contract value as of $0.35 per unit, or $5,732,168January 1 not yet recognized as revenue and additional orders awarded during the period for those entities treated as organic. Acquisition-related contract value includes remaining contract value as of the acquisition date not yet recognized as revenue and additional orders awarded during the period for entities not treated as organic. Organic revenue includes revenue earned during the period presented for those entities treated as organic, while acquisition-related revenue includes the same for all other entities, excluding any pre-acquisition revenue earned during the period. There is no acquisition-related backlog activity presented in the aggregate, which 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
The preparation of consolidated financial statements and related disclosures in conformitytable above as all acquired entities have completed four fiscal quarters post-acquisition.
Shares of Class A Common Stock Subject to Redemption
We account for shares of our Class A ordinary shares subject to possible conversion in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Shares of Class A ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature 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, ordinary shares are classified as shareholders’ equity. Our Class A ordinary shares feature certain redemption rightscontracts that are considered to be outsidefirm, terminations, amendments or contract cancellations may occur, which could result in a reduction in our total backlog. In addition, some of our control andmulti-year contracts are subject to the occurrence of uncertain future events. Accordingly,annual funding. Management fully expects all amounts reflected in contracted backlog to ultimately be fully funded. Contracted backlog from foreign operations in Luxembourg and Belgium was $106.0 million and $129.9 million as of December 31, 2020, 15,454,614 shares of Class A ordinary shares2023 and December 31, 2022, respectively. These amounts are subject to possible redemption were presented at redemption value as temporary equity, outside offoreign exchange rate translations from euros to U.S. dollars that could cause the shareholders’ equity section of the Company’sremaining backlog balance sheet.
Net Income (Loss) per Ordinary Share
We apply the two-class method in calculating earnings per share. Net income per ordinary share, basic and diluted for shares of our Class A ordinary shares subject to possible redemption is calculated by dividing the interest income earned on the Trust Account, net of applicable taxes, if any, by the weighted average number of shares of our Class A ordinary shares subject to possible redemption outstanding for the period. Net loss per ordinary share, basic and diluted for non-redeemable shares of Class B ordinary shares is calculated by dividing net loss less income attributable to shares of Class A ordinary shares subject to possible redemption, by the weighted average number of shares of non-redeemable Class B ordinary shares outstanding for the period presented.
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our consolidated financial statements.
Recent Accounting Standards
Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our consolidated financial statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of the period ended December 31, 2020, we were not subject to any market or interest rate risk. Following the consummation of our IPO, the net proceeds of our IPO, including amounts deposited in the Trust Account, may be invested in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less, or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk when and if the net proceeds are invested in such securities.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information appears following Item 16 of this annual report and is incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
ITEM 9A. CONTROL AND PROCEDURES
Disclosure controls are procedures that are designedfluctuate with the objectiveforeign exchange rate at the time of ensuring that information requiredmeasurement.
We do not expect thatdebt management strategy, we continuously evaluate opportunities to further strengthen our disclosure controlsfinancial and procedures will prevent all errors and all instancesliquidity position, including the issuance of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected alladditional equity or debt securities, refinance or otherwise restructure our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and thereexisting credit facilities, or enter into new financing arrangements. There can be no assurance that any designof
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directorsthe Purchase Agreement to the Company will depend on the frequency and Executive Officers
Our officersprices at which the Company sells shares of its common stock to B. Riley. The Company intends to use the net proceeds from this Purchase Agreement to further support its growth strategy through initiatives such as accretive acquisitions and directors areinternal investments, to bolster working capital and/or for general corporate purposes.
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David N. Siegel servesof December 31, 2023:
2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
Adams Street Term Loan | $ | 310 | $ | 310 | $ | 29,902 | $ | — | $ | — | $ | — | $ | 30,522 | |||||||||||||||||||||||||||
Adams Street Delayed Draw Term Loan | 150 | 150 | 14,469 | — | — | — | 14,769 | ||||||||||||||||||||||||||||||||||
Adams Street Incremental Term Loan | 320 | 320 | 30,948 | — | — | — | 31,588 | ||||||||||||||||||||||||||||||||||
Adams Street Revolving Credit Facility | — | — | 12,000 | — | — | — | 12,000 | ||||||||||||||||||||||||||||||||||
2022 D&O Financing Loan | 598 | — | — | — | — | — | 598 | ||||||||||||||||||||||||||||||||||
Total long-term debt maturities | 1,378 | 780 | 87,319 | — | — | — | 89,477 | ||||||||||||||||||||||||||||||||||
Future minimum operating lease payments | 4,582 | 4,098 | 3,509 | 3,371 | 1,852 | 1,572 | 18,984 | ||||||||||||||||||||||||||||||||||
Future minimum finance lease payments | 564 | 479 | 363 | 289 | 136 | — | 1,831 | ||||||||||||||||||||||||||||||||||
Total contractual obligations | $ | 6,524 | $ | 5,357 | $ | 91,191 | $ | 3,660 | $ | 1,988 | $ | 1,572 | $ | 110,292 |
Year Ended | ||||||||||||||||||||
(in thousands) | December 31, 2023 | December 31, 2022 | ||||||||||||||||||
Cash and cash equivalents at beginning of year | $ | 28,316 | $ | 20,523 | ||||||||||||||||
Operating activities: | ||||||||||||||||||||
Net income (loss) | (27,264) | (130,620) | ||||||||||||||||||
Non-cash adjustments | 21,700 | 94,900 | ||||||||||||||||||
Changes in working capital | 6,795 | 4,063 | ||||||||||||||||||
Net cash provided by (used in) operating activities | 1,231 | (31,657) | ||||||||||||||||||
Net cash provided by (used in) investing activities | (8,327) | (37,382) | ||||||||||||||||||
Net cash provided by (used in) financing activities | 9,060 | 76,560 | ||||||||||||||||||
Effect of foreign currency rate changes on cash and cash equivalents | (2) | 272 | ||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 1,962 | 7,793 | ||||||||||||||||||
Cash and cash equivalents at end of period | $ | 30,278 | $ | 28,316 |
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Paul W. Hobby serves as Chief Executive Officer and Director. Hethere is a Founding Partner at Genesis Park LP, a Houston-based private equity firm specializing in growth businesses, distressed situations and public company carveouts. Mr. Hobby maintains extensive relationships with industry-leading aviation executives, private equity firms, family offices and privately owned businesses across the aerospace and aviation sectors. Additionally he has over 20 years of sourcing experience focused on alignment and partnership with management teams and shareholders. At Genesis Park, directly and through its portfolio companies, Mr. Hobby has recapitalized and redirected ten public company divisions in multiple industries. For two of those transactions, Mr. Hobby served as Chief Executive Officer post-acquisition: (i) at Texas Monthly, LLC from 2016 to 2019 and (ii) at Alpheus Communications, LLC, a fiber optic network and data center provider, from 2004 to 2011. In another carveout from a bankrupt parent, he served as Chairman of CapRock Services, Inc. from 2002 to 2007 and as a director of CapRock from 2007 to 2011. Under his firm’s leadership, the CapRock business grew from $24 million in revenue to over $600 million to become one of the largest providers of satellite services globally. Furthermore, Mr. Hobby has served on the board of directors of NRG (NYSE:NRG), a leading integrated power company, since March 2006. In an activist posture, he became a member of the board of directors of Flotek Industries, Inc. (NYSE:FTK) in March of 2019, where he facilitated the retirement of the incumbent CEO and recruited a new management team to redirect the company. Mr. Hobby is former Chairman of the Houston Branch of the Federal Reserve Bank of Dallas, the Greater Houston Partnership, the Texas Business Hall of Fame, the Texas General Services Commission and the Texas Ethics Commission, and today serves on the Baylor College of Medicine Board of Trustees. He also served on the board of directors of Global Logistics, Stewart Title, Coastal Banc, Amegy Bank and Aronex Pharmaceuticals. Early in his career, Mr. Hobby served as Assistant U.S. Attorneyno comparable activity for the Southern District of Texas, Chief of Staffyear ended December 31, 2023. This was partially offset by an increase in capital expenditures related to licensed software for internal-use.
Jonathan E. Baliff serves as President, Chief Financial Officer and Director. He has been a leader in the aviation and infrastructure sector for over 25 years, acting as a public company senior executive in addition to an investment and commercial banker. Most recently, Mr. Baliffyear ended December 31, 2023. This was at Bristow (formerly NYSE:BRS), the world’s largest commercial helicopter and industrial aviation company serving the energy and government sectors, where he served first as Chief Financial Officer from 2010 to 2014 and President and Chief Executive Officer from 2014 to 2018. During his time at Bristow, the company consistently led its peers in safety, operational and financial performance with over $1.5 billion in business and long-term contract acquisitions. Despite significant turmoil in the offshore transportation services market following the 2014 global oil price collapse, Bristow continued to recognize revenue growth while Bristow’s peer group’s revenues fellpartially offset by an average of ~10% annually with most competitors filing for bankruptcy over the same period. Bristow filed for Chapter 11 bankruptcy protection in May 2019. Mr. Baliff is currently named as a defendant in a class-action lawsuit against Bristow and certain of its former directors and officers, which is currently entering mediation. A related derivative lawsuit has already been dismissed. Prior to joining Bristow, Mr. Baliff acted as Executive Vice President for Strategy at NRG (NYSE:NRG), the largest independent electric power generator in the United States, from 2007 to 2010. As both a banker to and an employee of NRG, Mr. Baliff was part of the team that led the company out of bankruptcy in 2004 to become a member of the Fortune 500 and systematically changed the company’s business by pursuing a retail customer and low-carbon energy strategy. This strategy included completing over $5 billion in acquisitions including the purchase of Reliant Energy and Green Mountain Energy, growing the retail footprint of NRG to over three million customers. Prior to NRG, Mr. Baliff acted as a Managing Director in Credit Suisse’s Global Energy Group from 1996 to 2007 and an associate in J.P. Morgan’s Natural Resources Group from 1995 to 1996, where he was responsible for corporate finance and M&A executions during the era of natural gas and electric utility deregulation, with over $50 billion in M&A transactions and financings completed. Additionally, Mr. Baliff served on active duty in the U.S. Air Force from 1985 to 1993 as an aviator flying the F-4 Phantom fighter aircraft. Currently, Mr. Baliff serves on the board of directors and Risk Committee of Texas Capital Bancshares, Inc. (NASDAQ:TCBI), the parent company of Texas Capital Bank. Mr. Baliff has served on the Board of TCBI since 2017, during which period the company generated an average annual increase in net income availableproceeds received from debt $10.0 million during the year ended December 31, 2023 compared to common shareholdersnet repayments of 29.1%. Mr. Baliff holds a Bachelor of Aerospace Engineering$1.0 million in the same period in 2022. The increase in proceeds received from debt was driven primarily by increased draws from the Georgia InstituteAdams Street Revolving Credit Facility during the year ended December 31, 2023 compared to the same period in 2022.
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Wayne Gilbert West serves as a Director. Throughout his over 30 years of experience, Mr. West has held a multitude of leadership roles across the aerospace and aviation industries, including positions at Boeing (NYSE:BA), Delta (NYSE:DAL), Northwest (formerly NYSE:NWA) and United (NASDAQ:UAL). While at Delta, from 2008 to 2020, Mr. West held a variety of roles, including Senior Vice President of Airport Customer Service and Technical Operations, Senior Executive Vice President and Chief Operating Officer. While Chief Operating Officer from 2014 to 2020, Mr. West managed a team of over 70,000 employees and was responsible for managing safe, reliable operations globally by overseeing the fleet, technical operations and asset procurement and performance. Prior to joining Delta, Mr. West served as President and Chief Executive Officer of Laidlaw Transit Services Inc., which provided bus transportation through intercity, interstate and interurban bus lines, from 2006 to 2007. After joining TIMCO Aviation Services, Inc. in 2001 as Executive Vice President and Chief Operating Officer, Mr. West served as President from 2002 to 2005 and was instrumental in achieving the company’s 4-year 5.7% compounded annual growth rate. He also served as an executive at Northwest from 1996 to 2001 and held various managerial positions with United, Rohr Industries, Sundstrand Corporation and Boeing Commercial Aircraft. Mr. West currently serves on the board of directors of Forward Air Corporation (NASDAQ:FWRD), which he joined in October 2018, and Wheels Up, which he joined in February 2019. Mr. West holds a B.S. in Mechanical Engineering from North Carolina State University and an M.B.A. from National University in San Diego.
Richard H. Anderson serves as a Director. Mr. Anderson served as Chief Executive Officer of Delta (NYSE:DAL) from September 2007 to May 2016 and was Executive Chairman from May 2016 until his retirement in October 2016. He joined Delta as the company was emerging from Chapter 11 bankruptcy court protection and played the main leadership role in leading Delta to achieve an average annual revenue growth rate of 8.4% and taking the company from a $4.5 billion market capitalization in 2007 to a $29.1 billion market capitalization in 2016. Mr. Anderson led Delta to record profitability – from bankruptcy to GAAP pre-taxcomprehensive income of $7.1 billion and return on invested capital of 28% in 2015, his final year running Delta. Furthermore, in October 2008, Mr. Anderson led Delta to complete the acquisition of Northwest (formerly NYSE:NWA) for an aggregate value of $2.7 billion. Prior to his time at Delta, Mr. Anderson served as Executive Vice President and President of Commercial Services at UnitedHealth (NYSE:UNH) from 2004 to 2007 and led the formation of Optum. Prior to UnitedHealth, Mr. Anderson was at Northwest, which he joined in 1990 and served as Vice President, Deputy General Counsel, Senior Vice President of Technical Operations and Chief Operating Officer prior to his role as Chief Executive Officer from 2001 to 2004. During his time at Northwest, Mr. Anderson led the company to experience a compounded annual revenue growth rate of 4.4% from 2001 to 2004. Most recently, Mr. Anderson served as the volunteer President and Chief Executive Officer of National Railroad Passenger Corporation (“Amtrak”) from June 2017 to April 2020. During his time at Amtrak, the company reported record ridership and revenues and cut operating losses to near breakeven. Mr. Anderson currently serves on the board of directors of Medtronic plc, which he joined in 2004, and the board of directors of Cargill Inc.(loss), which he joined in 2006. Mr. Anderson served on the board of directors of Northwest, Delta, Mesaba Aviation, Inc., Xcel Energy Inc. and Securian Financial Group, Inc., and he was elected Chairman of Airlines for America and Chairman of the International Air Transportation Association while CEO at Delta. He also was selected by the FAA as the Chairman of the Next Gen Advisory Committee. Mr. Anderson holds a B.S. from the University of Houston, Clear Lake City, and a J.D. from the South Texas College of Law, Houston.
Andrea Fischer Newman serves as a Director. For over 25 years, Ms. Newman has worked at the intersection of business, law, policy and politics. From 2008 to 2017, Ms. Newman served as Senior Vice President of Government Affairs at Delta Air Lines, Inc. (NYSE:DAL) (“Delta”), where she led Delta’s efforts to reform the Export-Import Bank, as well as, on the value of certain assets and liabilities on our consolidated balance sheets. We base our assumptions, judgments and estimates on historical experience and various other factors
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Thomas Dan Friedkin serves as a Director. Mr. Friedkin is currently Chairman and Chief Executive Officer of The Friedkin Group, a privately held consortium of businesses and investments in the automotive, entertainment and hospitality industries. Mr. Friedkin is also the Chairman and Chief Executive Officer of Gulf States Toyota, a subsidiary of The Friedkin Group and one of the world’s largest independent distributors of Toyota vehicles and parts, serving more than 150 dealers. Under Mr. Friedkin’s leadership, Gulf States Toyota sold $9 billion of vehicles in 2018. Gulf States Toyota has consistently been recognized by the Houston Chronicle as one of the “Top Private Companies” in Houston and was recognized by Forbes as one of America’s “Best Midsize Employers.” Furthermore, Mr. Friedkin founded media investment company 30West, which controls Neon Group, the company responsible for funding the release and distribution of Oscar best picture, Parasite. Mr. Friedkin also founded Imperative Entertainment, which has financially backed major motion films including The Mule, The Square and I, Tonya. In addition to his experience in the media space, Mr. Friedkin also serves as Chairman of Auberge Resorts Collection, a portfolio of luxury hotels, resorts and residences, spanning across eight time zones and three continents. Mr. Friedkin also founded Pursuit Aviation, an aerial photography company that has used their breakthrough platform, known as JETCAM, to pair shot-over camera systems with aerobatic jet aircraft to perform work for acclaimed movies and television, including Dunkirk, Thor and Ray Donovan. Mr. Friedkin has a long history tied to aviation, stemming from his father, a famed aviator and owner of Carlsbad Jet Center, and grandfather, the founder of the discount airline Pacific Southwest Air. Mr. Friedkin holds a B.A. from Georgetown University and an M.B.A. from Rice University.
Our board of directors is divided into three classes with only one class of directors being appointed in each year and each class (except for those directors appointed prior to our first annual general meeting) serving a three-year term. The term of office of the first class of directors, consisting of Messrs. Anderson and Baliff, will expire at our first annual general meeting. The term of office of the second class of directors, consisting of Messrs. Friedkin and Hobby, will expire at the second annual general meeting. The term of office of the third class of directors, consisting of Ms. Newman and Messrs. West and Siegel, will expire at the third annual general meeting.
Director Independence
NYSE listing standards require that a majority of our board of directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that Messrs. Friedkin, Siegel, West and Anderson and Ms. Newman are “independent directors” as defined in the NYSE listing standards and applicable SEC rules. Our independent directors will have regularly scheduled meetings at which only independent directors are present.
Audit Committee
We have established an audit committee of our board of directors effective November 2020. Messrs. Friedkin and Siegel and Mr. Anderson serve as members of our audit committee, and Mr. Anderson chairs the audit committee.
Under the NYSE listing standards and applicable SEC rules, we are required to have at least three members of the audit committee, all of whom must be independent. Each of Messrs. Friedkin and Siegel and Mr. Anderson meet the independent director standard under NYSE listing standards and under Rule 10-A-3(b)(1) of the Exchange Act.
Each member of the audit committee is financially literate and our board of directors has determined that Mr. Siegel qualifies as an “audit committee financial expert” as defined in applicable SEC rules.
Our audit committee charter details the principal functions of the audit committee, including:
pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;
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setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations;
setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii) all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence;
reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and
reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significantuncontracted backlog, subcontractor agreements, changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.
Nominating and Corporate Governance Committee
Effective November 23, 2020, we established a nominating and corporate governance committee. The members of our nominating and corporate governance committee are Messrs. Friedkin and West and Ms. Newman, and Ms. Newman serves as chair of the nominating and corporate governance committee.
The primary purposes of our nominating and corporate governance committee will be to assist the board in:
identifying, screening and reviewing individuals qualified to serve as directors and recommending to the board of directors candidates for nomination for appointment at the annual general meeting or to fill vacancies on the board of directors;
developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines;
coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and
reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.
The nominating and corporate governance committee is governed by a charter that complies with the rules of NYSE. Our board of directors adopted corporate governance guidelines in accordance with the corporate governance rules of the NYSE that serve as a flexible framework within which our board of directors and its committees operate. These guidelines cover a number of areas including board membership criteria and director qualifications, director responsibilities, board agenda, roles of the chairman of the board, chief executive officer and presiding director, meetings of independent directors, committee responsibilities and assignments, board member access to management and independent advisors, director communications with third parties, director compensation, director orientation and continuing education, evaluation of senior management and management succession planning. A copy of our corporate governance guidelines is posted on our website at www.genesis-park.com.
Guidelines for Selecting Director Nominees
Our nominating and corporate governance committee will recommend to the board of directors candidates for nomination for appointment at the annual general meeting of the shareholders. We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our shareholders.
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Compensation Committee
Effective November 23, 2020, we established a compensation committee of our board of directors. Messrs. West and Siegel and Ms. Newman serve as members of our compensation committee. Under the NYSE listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent. Messrs. West and Siegel and Ms. Newman are independent and Mr. West chairs the compensation committee.
We adopted a compensation committee charter, which will detail the principal functions of the compensation committee, including:
reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation;
reviewing and approving on an annual basis the compensation, if any is paid by us, of all of our other officers;
reviewing on an annual basis our executive compensation policies and plans;
implementing and administering our incentive compensation equity-based remuneration plans;
assisting management in complying with our proxy statement and annual report disclosure requirements;
approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
if required, producing a report on executive compensation to be included in our annual proxy statement; and
reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.
No compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing shareholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination.
The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by the NYSE and the SEC.
Code of Ethics
Effective November 23, 2020, we adopted a code of ethics applicable to our directors, officers and employees. You are able to review a copy of the code of ethics by accessing our public filings at the SEC’s web site at www.sec.gov.and a copy will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our code of ethics in a Current Report on Form 8-K.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation
No executive officer has received any cash compensation for services rendered to us. Since November 23, 2020 through the acquisition of a target business, we will pay our Sponsor $15,000 per month for providing us with office space and certain office and secretarial services. However, this arrangement is solely for our benefit and is not intended to provide our executive officers or directors compensation in lieu of a salary.
Other than the $15,000 per month administrative fee, there will be no finder’s fees, reimbursement, consulting fee, non-cash payments, monies in respect of any payment of a loan or other compensation paid by us to our Sponsor, officers or directors, or any affiliate of our Sponsor or officers, prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that
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it is). However, the following payments may be made to our Sponsor, officers or directors, or our or their affiliates, none of which will be made from the proceeds of the IPO held in the Trust Account prior to the completion of our initial business combination:
Repayment of up to an aggregate of up to $300,000 in loans made to us by our Sponsor to cover offering-related and organizational expenses;
Reimbursement for any out-of-pocket expenses related to identifying, investigating, negotiating and completing an initial business combination; and
coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and
Repayment of loans which may be made by our Sponsor or an affiliate of our Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant at the option of the lender. The warrants would be identical to the Private Warrants, including as to exercise price, exercisability and exercise period. The terms of such working capital, loans by our Sponsor or its affiliates, or our officerslong-term business plans and directors, if any, have not been determinedhistorical operating performance. These estimates and no written agreements exist with respect to such loans.
Our audit committee reviews on a quarterly basis all payments that were made to our Sponsor, officers or directors, or our or their affiliates.
After the completion of our initial business combination, directors or members of our management team who remain with us may be paid consulting or management fees from the combined company. All of these fees will be fully disclosed to shareholders, to the extent then known, in the proxy solicitation materials or tender offer documents furnished to our shareholders in connection with a proposed initial business combination. We have not established any limit on the amount of such fees that may be paid by the combined company to our directors or members of management. It is unlikely the amount of such compensation will be knownjudgments are based upon information available at the time and have been deemed reasonable by management as of the proposed initial business combination, becausemeasurement date. The discount rates utilized in the directorsDCF model are based on the respective reporting unit’s weighted average cost of capital (“WACC”), which takes into account the relative weights of debt and equity components within the Company’s existing capital structure and represents the expected cost of new capital, adjusted as appropriate to consider the risk inherent in future cash flows of the post-combination business will be responsiblerespective reporting unit. Actual results could differ from these assumptions.
We dothe accompanying notes to the consolidated financial statements for additional information.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS
The following table sets forth information regarding the beneficial ownership of our ordinary shares by:
each person known by usreturn in accordance with Belgium Regulation. Accordingly, all Space NV employees are eligible to be the beneficial owner of more than 5% of our outstanding Class A ordinary shares;
each of our officers and directors; and
all of our officers and directors as a group.
Unless otherwise indicated, we believe that all persons namedparticipate in the tablesupplementary pensions immediately upon entry into service and until the legal age of retirement. The Company is also required to maintain dormant accounts for former employees who have sole voting and investment power with respect to all Class A ordinary shares beneficially owned by them. The following table does not reflect record of beneficial ownership of the warrants included in the units offered in the IPO or the Private Warrants as these warrants are not exercisable within 60 days of the date hereof.
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Name and Address of Beneficial Owner(1) | Amount and Nature of Beneficial Ownership | Approximate Percentage of Outstanding Shares | ||||||
Genesis Park Holdings (our Sponsor) (2) | 5,094,405.5 | 24.9 | % | |||||
Richard H. Anderson | 25,000 | * | ||||||
Jonathan Baliff | 0 | * | ||||||
David Bilger | 0 | * | ||||||
Thomas D. Friedkin | 20,000 | * | ||||||
Paul W. Hobby | 100,000 | * | ||||||
Andrew F. Newman | 0 | * | ||||||
David N. Siegel | 0 | * | ||||||
Wayne Gilbert West | 0 | * | ||||||
All directors and executive officers as a group (eight individuals) | 145,000 | * | ||||||
Five Percent Holders: | ||||||||
Citadel Advisors LLC (3) | 1,244,999 | 7.6 | % | |||||
Crescent Park Management, LP(4) | 2,390,000 | 14.6 | % | |||||
Integrated Core Strategies (US) LLC (5) | 830,000 | 5.1 | % |
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Our Sponsor, officers and directors have agreed (i) to vote any shares owned by them in favor of any proposed initial business combination and (ii)elected not to redeem any shares in connectiontransfer plan contributions to their new employer. In addition, Belgium Regulation currently provides for statutory minimum guaranteed returns on employee and employer contributions up to a specified annual rate.
Our Sponsor and our executive officers and directors are deemed to be our “promoters” as such term is defined in the securities laws.
The Founder Shares, Private Warrants purchased by our Sponsor and any Class A ordinary shares issued upon conversion or exercise thereof are each subject to transfer restrictions pursuant to lock-up provisions ingroup policy.
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any forward purchase agreement or similar arrangement or in connection with the consummation of an initial business combination at prices no greater than the price at which the shares or warrants were originally purchased; (f) in the event of our liquidationservice for periods prior to the completion of our initial business combination; or (g) by virtue of the laws of the Cayman Islands or the limited liability company agreement of our Sponsor or Jefferies upon termination or dissolution of our Sponsor; provided, however, that in the case of clauses (a) through (e) or (g) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and the other restrictions contained in the letter agreement and by the same agreements entered into by our Sponsor and Jefferies, as applicable, with respect to such securities (including provisions relating to voting, the Trust Account and liquidation distributions described elsewhere in the prospectus). Additionally, to the extent that the Private Warrants are held by Jefferies or its designees or affiliates, they have been deemed compensation by FINRA and are therefore subject to a 180-day lock-up pursuant to Rule 5110(g)(1) of the FINRA Manual commencing on the effective date of the registrationamendment, which generates prior service costs or credits. The Company has elected to immediately recognize actuarial gains and losses as a component of net periodic pension cost for both plan assets and obligations.
Equity Compensation Plans
As of December 31, 2020, we had no compensation plans (including individual compensation arrangements) under which equity securities of the registrant were authorized for issuance.
ContentsITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
For a complete discussion regarding certain relationships and related transactions, see the section titled “Certain Relationships and Related Party Transactions” contained in the prospectus, which section is incorporated by reference herein.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Audit Fees
Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements, reviews of our quarterly financial statements and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings. Audit fees amounted to $62,315, for the period ended December 31, 2020.
Audit-Related Fees
None
Tax Fees
None
All Other Fees
None
Audit Committee Approval
Our audit committee was formed upon the consummation of the IPO. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit).
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ITEM 15. EXHIBITS, FINANCIAL STATEMENTS, AND SCHEDULES
(a) 1. and 2. Financial statements and financial statement schedules.
The financial statements and financial statement schedules listed in the Index toItem 8. Financial Statements in Item 8 are filed as part of this Form 10-K.
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GENESIS PARK ACQUISITION CORP.
Genesis Park Acquisition Corp
Page | ||||||||
Report of Independent Registered Public Accounting Firm (PCAOB ID: 185) | ||||||||
Report of Independent Registered Public Accounting Firm (PCAOB ID: 238) | ||||||||
Note A – Description of the Business | ||||||||
Note B – Summary of Significant Accounting Policies | ||||||||
Note C – Business Combinations | ||||||||
Note D – Fair Value of Financial Instruments | ||||||||
Note E – Accounts Receivable, net | ||||||||
Note F – Inventory | ||||||||
Note G – Property, Plant and Equipment, net | ||||||||
Note H – Intangible Assets, net | ||||||||
Note I – Goodwill | ||||||||
Note J – Debt | ||||||||
Note K – Leases | ||||||||
Note L – Warrants | ||||||||
Note M – Income Taxes | ||||||||
Note N – Commitments and Contingencies | ||||||||
Note O – Convertible Preferred Stock | ||||||||
Note P – Shareholders’ Equity | ||||||||
Note Q – Revenues | ||||||||
Note R – Employee Benefit Plans | ||||||||
Note S – Equity-Based Compensation | ||||||||
Note T – Impairment Expense | ||||||||
Note U – Net Income (Loss) per Common Share | ||||||||
Note V – Joint Venture | ||||||||
Note W – Related Parties | ||||||||
Note X – Subsequent Events |
Genesis Park Acquisition Corp.
accounting principles.
KPMG LLP
New York, New York
2023.
Genesis Park Acquisition Corp.
DECEMBER 31, 2020
Assets | ||||
Cash | $ | 1,295,380 | ||
Prepaid expenses and other current assets | 185,011 | |||
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Total current assets | 1,480,391 | |||
Cash and marketable securities held in Trust Account | 166,243,614 | |||
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Total Assets | $ | 167,724,005 | ||
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Liabilities and Shareholders’ Equity | ||||
Current liabilities: | ||||
Accounts payable | $ | 125,000 | ||
Due to related party | 2,500 | |||
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Total current liabilities | 127,500 | |||
Deferred underwriting discount | 5,732,168 | |||
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Total liabilities | 5,859,668 | |||
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Commitments and Contingencies | ||||
Class A ordinary shares subject to possible redemption, 15,454,614 shares at $10.15 per share | 156,864,332 | |||
Shareholders’ Equity: | ||||
Preference shares, $0.0001 par value; 2,000,000 shares authorized; none issued and outstanding | — | |||
Class A ordinary shares, $0.0001 par value; 230,000,000 shares authorized; 923,008 shares issued | 93 | |||
Class B ordinary shares, $0.0001 par value; 20,000,000 shares authorized; 4,312,500 shares issued | 431 | |||
Additional paid-in capital | 5,028,387 | |||
Accumulated deficit | (28,906 | ) | ||
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Total shareholders’ equity | 5,000,005 | |||
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Total Liabilities and Shareholders’ Equity | $ | 167,724,005 | ||
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Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Redwire Corporation Opinion on the Financial Statements We have audited the |
The accompanying notes are an integral partconsolidated balance sheet of these financial statements.
Genesis Park Acquisition Corp.
FOR THE PERIOD FROM JULY 29, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
Formation and operating costs | $ | 39,657 | ||
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Loss from operations | (39,657 | ) | ||
Other income | ||||
Interest income | 10,751 | |||
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Total other income | 10,751 | |||
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Net loss | $ | (28,906 | ) | |
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Weighted average ordinary shares outstanding, basic and diluted – Class A | 16,377,622 | |||
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Basic and diluted net loss per ordinary share - Class A | $ | 0.00 | ||
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Weighted average ordinary shares outstanding, basic and diluted – Class B (1) | 3,827,271 | |||
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Basic and diluted net loss per ordinary share - Class B | $ | (0.01 | ) | |
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The accompanying notes are an integral part of these financial statements.
Genesis Park Acquisition Corp.
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
FOR THE PERIOD FROM JULY 29, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
Class A Ordinary Shares | Class B Ordinary Shares | Additional Paid-In Capital | Accumulated Deficit | Total Shareholders’ Equity | ||||||||||||||||||||||||
Shares | Amount | Shares (1) | Amount | |||||||||||||||||||||||||
Balance as of July 29, 2020 (inception) | — | $ | — | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Class B ordinary shares issued to Sponsor | — | — | 4,312,500 | 431 | 24,569 | — | 25,000 | |||||||||||||||||||||
Sale of 16,377,622 Units on November 27, 2020 through IPO, gross | 16,377,622 | 1,638 | — | — | 163,774,582 | — | 163,776,220 | |||||||||||||||||||||
Sale of 7,732,168 Private Placement Warrants on November 27, 2020 in private placement | — | — | — | — | 7,732,168 | — | 7,732,168 | |||||||||||||||||||||
Underwriting fee and offering costs charged to shareholders’ equity | — | — | — | — | (9,640,145 | ) | — | (9,640,145 | ) | |||||||||||||||||||
Change in Class A ordinary shares subject to possible redemption | (15,454,614 | ) | (1,545 | ) | — | — | (156,862,787 | ) | — | (156,864,332 | ) | |||||||||||||||||
Net loss | — | — | — | — | — | (28,906 | ) | (28,906 | ) | |||||||||||||||||||
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Balance as of December 31, 2020 | 923,008 | $ | 93 | 4,312,500 | $ | 431 | $ | 5,028,387 | $ | (28,906 | ) | $ | 5,000,005 | |||||||||||||||
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The accompanying notes are an integral part of these financial statements.
Genesis Park Acquisition Corp.
FOR THE PERIOD FROM JULY 29, 2020 (INCEPTION) THROUGH DECEMBER 31, 2020
Cash Flows from Operating Activities: | ||||
Net loss | $ | (28,906 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Interest earned on marketable securities held in Trust Account | (10,751 | ) | ||
Changes in current assets and current liabilities: | ||||
Prepaid expenses and other current assets | (185,011 | ) | ||
Accounts payable | 125,000 | |||
Due to related party | 2,500 | |||
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Net cash used in operating activities | (97,168 | ) | ||
Cash Flows from Investing Activities: | ||||
Purchase of investments held in Trust Account | (166,232,863 | ) | ||
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Net cash used in investing activities | (166,232,863 | ) | ||
Cash Flows from Financing Activities: | ||||
Proceeds from Initial Public Offering, net of underwriter’s fees | 160,500,696 | |||
Proceeds from private placement | 7,732,168 | |||
Proceeds from issuance of promissory note to related party | 30,000 | |||
Repayment of promissory note to related party | (30,000 | ) | ||
Payments of offering costs | (607,453 | ) | ||
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Net cash provided by financing activities | 167,625,411 | |||
Net Change in Cash | 1,295,380 | |||
Cash - Beginning | — | |||
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Cash - Ending | $ | 1,295,380 | ||
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Supplemental Disclosure of Non-cash Financing Activities: | ||||
Value of Class A ordinary shares subject to possible redemption at November 27, 2020 | 156,885,627 | |||
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Change is value of Class A ordinary shares subject to possible redemption | (21,295 | ) | ||
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Value of Class A ordinary shares subject to possible redemption at December 31, 2020 | $ | 156,864,332 | ||
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Deferred underwriting commissions charged to additional paid-in capital | $ | 5,732,168 | ||
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Deferred offering costs paid by Sponsor in exchange for issuance of ordinary shares | $ | 25,000 | ||
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The accompanying notes are an integral part of these financial statements.
Genesis Park Acquisition Corp.
DECEMBER 31, 2020
Note 1 — OrganizationRedwire Corporation and Business Operations
Organization and General
Genesis Park Acquisition Corp.its subsidiaries (the “Company”) was incorporated as a Cayman Islands exempted company on July 29, 2020. The Company was incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is an “emerging growth company”, as defined in Section 2(a) of the Securities Act of 1933, as amended (the Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The Company’s efforts to identify a prospective target business will not be limited to a particular industry or geographic location.
The Company has selected December 31 as its fiscal year end.
As of December 31, 2020, the Company had not yet commenced any operations. All activity for the period from July 29, 2020 (inception) through December 31, 2020 relates to the Company’s formation and the Initial Public Offering (“IPO”) described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income on cash and cash equivalents from the proceeds derived from the IPO.
Financing
The registration statement for the Company’s IPO was declared effective by the U.S. Securities and Exchange Commission (the “SEC”) on November 23, 2020 (the “Effective Date”). On November 27, 2020, the Company consummated the IPO of 16,377,622 units (the “Units”), including the issuance of 1,377,622 Units as a result of the underwriter’s partial exercise of its over-allotment option. Each Unit consists of one Class A ordinary share, $0.0001 par value (“Ordinary Share”), and one-half of one redeemable warrant (“Warrant”) entitling its holder to purchase one Class A ordinary share at a price of $11.50 per share. The Units were sold at an offering price of $10.00 per Unit, generating gross proceeds of $163,776,220 (Note 3).
Simultaneously with the closing of the IPO, the Company consummated the private placement (“Sponsor Private Placement”) with the Sponsor for an aggregate of 7,292,541 warrants (“Sponsor Private Warrants”), each at a price of $1.00 per Sponsor Private Warrant, generating total proceeds of $7,292,541 and with Jefferies LLC (“Jefferies”), underwriter for the IPO, of an aggregate of 439,627 warrants (the “Jefferies Private Warrants” and together with Sponsor Private Warrants, “Private Warrants”), each at a price of $1.00 per Jefferies Private Warrant, generating total proceeds of $439,627, which is described in Note 4.
Transaction costs amounted to $9,640,145 consisting of $3,275,524 of upfront underwriting discount, $5,732,168 deferred underwriter’s discount and $632,453 of other offering costs.
Trust Account
Following the closing of the IPO on November 27, 2020, an amount of $ 166,232,863 ($10.15 per Unit) from the net proceeds of the sale of the Units in the IPO and the sale of the Private Placement Warrant was placed in a trust account (“Trust Account”) which was invested 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. Except with respect to interest earned on the funds held in the Trust Account that may be released to the Company to pay its tax obligations, the proceeds from IPO and the sale of the Private Placement Warrants will not be released from the Trust Account until the earliest to occur of: (a) the completion of the Company’s
initial Business Combination, (b) the redemption of any public shares properly submitted in connection with a shareholder vote to amend the Company’s amended and restated memorandum and articles of association (i) to modify the substance or timing of the Company’s obligation to provide for the redemption of its public shares in connection with an initial Business Combination or to redeem 100% of its public shares if the Company does not complete its initial Business Combination within 18 months from the closing of the IPO or (ii) with respect to any other material provisions relating to shareholders’ rights or pre-initial Business Combination activity, and (c) the redemption of the Company’s public shares if the Company is unable to complete its initial Business Combination within 18 months from November 27, 2020 (the “Combination Period”), the closing of the IPO.
Initial Business Combination
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the IPO 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.
The Company must complete one or more initial Business Combinations having an aggregate fair market value of at least 80% of the value of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account) 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 outstanding 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”). There is no assurance that the Company will be able to complete a Business Combination successfully.
The Company will provide its public shareholders with the opportunity to redeem all or a portion of their public shares upon the completion of the initial business combination either (i) in connection with a shareholder meeting called to approve the initial business combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a proposed initial business combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount then on deposit in the Trust Account (initially approximately $10.15 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations).
The ordinary shares subject to redemption will be recorded at a redemption value and classified as temporary equity upon the completion of the IPO, in accordance with Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” In such case, the Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of the issued and outstanding shares voted are voted in favor of the Business Combination.
If a shareholder vote is not required by law and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Memorandum and Articles of Association (the “Amended and Restated Memorandum and Articles of Association”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination.
If, however, shareholder approval of the transactions is required by law, or the Company decides to obtain shareholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. Additionally, each Public Shareholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the foregoing redemption rights, if the Company seeks shareholder approval of its initial business combination and the Company does not conduct redemptions in connection with its initial business combination pursuant to the tender offer rules, the Amended and Restated Memorandum and Articles of Association will provide that a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the shares sold in this offering, without the Company’s prior consent.
The Sponsor and the Company’s officers and directors (the “initial shareholders”) have agreed not to propose any amendment to Amended and Restated Memorandum and Articles of Association (a) that would modify the substance or timing of the Company’s obligation to provide for the redemption of its public shares in connection with an initial business combination or to redeem 100% of our public shares if the Company does not complete its initial business combination within 18 months from the closing of the Proposed Public Offering (the “Combination Period”) or (b) with respect to any other material provisions relating to shareholders’ rights or pre-initial business combination activity, unless the Company provides its public shareholders with the opportunity to redeem their Class A ordinary shares in conjunction with any such amendment.
If the Company is unable to complete its initial business combination within 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 (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 Shareholders’ rights as shareholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining shareholders and the Company’s board of directors, liquidate and dissolve, subject in the case of clauses (ii) and (iii) to the Company’s obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law.
The Company’s initial shareholders agreed to waive their rights to liquidating distributions from the Trust Account with respect to any founder shares held by them if the Company fails to complete its initial business combination within the Combination Period. However, if the initial shareholders acquire public shares in or after the IPO, 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 the Combination Period.
On January 13, 2021, the Company announced that the holders of the Units may elect to separately trade the Class A Ordinary Shares and Warrants comprising the Units commencing on January 14, 2021. Those Units not separated will continue to trade on The New York Stock Exchange under the symbol “GNPK.U,” and the Class A Ordinary Shares and Warrants that are separated will trade on The New York Stock Exchange under the symbols “GNPK” and “GNPK WS,” respectively. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Holders of the Units will need to have their brokers contact Continental Stock Transfer & Trust Company, the Company’s transfer agent, in order to separate the Units into Class A Ordinary Shares and Warrants. (See Note 9)
Liquidity and Capital Resources
As of December 31, 2020, the Company had cash outside the Trust Account of $1,295,380 available for working capital needs. All remaining cash held in the Trust Account is generally unavailable for the Company’s use, prior to an initial Business Combination, and is restricted for use either in a Business Combination, pay tax obligations or to redeem ordinary share. As of December 31, 2020, none of the amount in the Trust Account was available to be withdrawn as described above.
Through December 31, 2020, the Company’s liquidity needs were satisfied through a capital contribution from the Sponsor of $25,000, to cover certain offering costs, in exchange for the founder shares (see Note 5), the loan under an unsecured promissory note from the Sponsor of $30,000 (see Note 5), and the net proceeds from the consummation of the Private Placement not held in the Trust Account. The promissory note from the Sponsor was paid in full on November 27, 2020.
The Company anticipates that the $1,295,380 outside of the Trust Account as of December 31, 2020, will be sufficient2022, and the related consolidated statements of operations and comprehensive income (loss), of changes in equity (deficit), and of cash flows for the year then ended, including the related notes (collectively referred to allowas the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company to operate for at leastas of December 31, 2022, and the next 12 months from the issuance of these financial statements, assuming that a Business Combination is not consummated during that time. Until consummationresults of its Business Combination,operations and its cash flows for the Company will be using the funds not held in the Trust Account, and any additional Working Capital Loans (as defined in Note 5) from the shareholders, the Company’s officers and directors, or their respective affiliates (which is described in Note 5), for
identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target businesses, traveling to and from the offices, plants or similar locations of prospective target businesses, reviewing corporate documents and material agreements of prospective target businesses, selecting the target business to acquire and structuring, negotiating and consummating the Business Combination.
The Company does not believe it will need to raise additional funds in order to meet the expenditures required for operating its business. However, if the Company’s estimates of the costs of undertaking in-depth due diligence and negotiating the Business Combination is less than the actual amount necessary to do so, the Company may have insufficient funds available to operate its business prior to the Business Combination. Moreover, the Company will need to raise additional capital through loans from its Sponsor, officers, directors, or third parties. None of the Sponsor, officers or directors are under any obligation to advance funds to, or to invest in, the Company. If the Company is unable to raise additional capital, it may be required to take additional measures to conserve liquidity, which could include, but not necessarily be limited to, curtailing operations, suspending the pursuit of its business plan, and reducing overhead expenses. The Company cannot provide any assurance that new financing will be available to it on commercially acceptable terms, if at all.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements are presentedyear then ended in conformity with accounting principles generally accepted in the United States of America (“US GAAP”)America.
Emerging Growth Company Status
Securities and Exchange Commission and the PCAOB.
December 31, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 30,278 | $ | 28,316 | |||||||
Accounts receivable, net | 32,411 | 26,726 | |||||||||
Contract assets | 36,961 | 31,041 | |||||||||
Inventory | 1,516 | 1,469 | |||||||||
Income tax receivable | 636 | 688 | |||||||||
Prepaid insurance | 1,083 | 2,240 | |||||||||
Prepaid expenses and other current assets | 6,428 | 5,687 | |||||||||
Total current assets | 109,313 | 96,167 | |||||||||
Property, plant and equipment, net of accumulated depreciation of $6,538 and $3,032, respectively | 15,909 | 12,761 | |||||||||
Right-of-use assets | 13,181 | 13,103 | |||||||||
Intangible assets, net of accumulated amortization of $18,509 and $11,247, respectively | 62,985 | 66,871 | |||||||||
Goodwill | 65,757 | 64,618 | |||||||||
Equity method investments | 3,613 | 3,269 | |||||||||
Other non-current assets | 511 | 909 | |||||||||
Total assets | $ | 271,269 | $ | 257,698 | |||||||
Liabilities, Convertible Preferred Stock and Equity (Deficit) | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | 18,573 | $ | 17,584 | |||||||
Notes payable to sellers | — | 1,000 | |||||||||
Short-term debt, including current portion of long-term debt | 1,378 | 2,578 | |||||||||
Short-term operating lease liabilities | 3,737 | 3,214 | |||||||||
Short-term finance lease liabilities | 439 | 299 | |||||||||
Accrued expenses | 32,902 | 36,581 | |||||||||
Deferred revenue | 52,645 | 29,817 | |||||||||
Other current liabilities | 2,362 | 3,666 | |||||||||
Total current liabilities | 112,036 | 94,739 | |||||||||
Long-term debt, net | 86,842 | 74,745 | |||||||||
Long-term operating lease liabilities | 12,302 | 12,670 | |||||||||
Long-term finance lease liabilities | 1,137 | 579 | |||||||||
Warrant liabilities | 3,325 | 1,314 | |||||||||
Deferred tax liabilities | 2,402 | 3,255 | |||||||||
Other non-current liabilities | 400 | 506 | |||||||||
Total liabilities | $ | 218,444 | $ | 187,808 | |||||||
Commitments and contingencies (Note N – Commitments and Contingencies) | |||||||||||
REDWIRE CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands of U.S. dollars, except share data) | |||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||
Convertible preferred stock, $0.0001 par value, 125,292.00 shares authorized; 93,890.20 and 81,250.00 issued and outstanding as of December 31, 2023 and December 31, 2022, respectively. Liquidation preference of $187,780 and $162,500 as of December 31, 2023 and December 31, 2022, respectively(1). | $ | 96,106 | $ | 76,365 | |||||||
Shareholders’ Equity (Deficit): | |||||||||||
Preferred stock, $0.0001 par value, 99,874,708 shares authorized; none issued and outstanding as of December 31, 2023 and December 31, 2022, respectively | — | — | |||||||||
Common stock, $0.0001 par value, 500,000,000 shares authorized; 65,546,174 and 64,280,631 issued and outstanding as of December 31, 2023 and December 31, 2022, respectively | 7 | 6 | |||||||||
Treasury stock, 353,470 and 141,811 shares, at cost, as of December 31, 2023 and December 31, 2022, respectively | (951) | (381) | |||||||||
Additional paid-in capital | 188,323 | 198,126 | |||||||||
Accumulated deficit | (233,791) | (206,528) | |||||||||
Accumulated other comprehensive income (loss) | 2,903 | 2,076 | |||||||||
Total shareholders’ equity (deficit) | (43,509) | (6,701) | |||||||||
Noncontrolling interests | 228 | 226 | |||||||||
Total equity (deficit) | (43,281) | (6,475) | |||||||||
Total liabilities, convertible preferred stock and equity (deficit) | $ | 271,269 | $ | 257,698 |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Revenues | $ | 243,800 | $ | 160,549 | ||||||||||||||||||||||||||||
Cost of sales | 185,831 | 131,854 | ||||||||||||||||||||||||||||||
Gross margin | 57,969 | 28,695 | ||||||||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||||||||
Selling, general and administrative expenses | 68,525 | 70,342 | ||||||||||||||||||||||||||||||
Transaction expenses | 13 | 3,237 | ||||||||||||||||||||||||||||||
Impairment expense(1) | — | 96,623 | ||||||||||||||||||||||||||||||
Research and development | 4,979 | 4,941 | ||||||||||||||||||||||||||||||
Operating income (loss) | (15,548) | (146,448) | ||||||||||||||||||||||||||||||
Interest expense, net | 10,699 | 8,219 | ||||||||||||||||||||||||||||||
Other (income) expense, net | 1,503 | (16,075) | ||||||||||||||||||||||||||||||
Income (loss) before income taxes | (27,750) | (138,592) | ||||||||||||||||||||||||||||||
Income tax expense (benefit) | (486) | (7,972) | ||||||||||||||||||||||||||||||
Net income (loss) | (27,264) | (130,620) | ||||||||||||||||||||||||||||||
Net income (loss) attributable to noncontrolling interests | (1) | (3) | ||||||||||||||||||||||||||||||
Net income (loss) attributable to Redwire Corporation | (27,263) | (130,617) | ||||||||||||||||||||||||||||||
Less: dividends on Convertible Preferred Stock | 20,021 | 1,760 | ||||||||||||||||||||||||||||||
Net income (loss) available to common shareholders | $ | (47,284) | $ | (132,377) | ||||||||||||||||||||||||||||
Net income (loss) per common share: | ||||||||||||||||||||||||||||||||
Basic and diluted | $ | (0.73) | $ | (2.09) | ||||||||||||||||||||||||||||
Weighted-average shares outstanding: | ||||||||||||||||||||||||||||||||
Basic and diluted | 64,654,153 | 63,324,416 | ||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||
Net income (loss) attributable to Redwire Corporation | $ | (27,263) | $ | (130,617) | ||||||||||||||||||||||||||||
Foreign currency translation gain (loss), net of tax | 830 | 1,987 | ||||||||||||||||||||||||||||||
Total other comprehensive income (loss), net of tax | 830 | 1,987 | ||||||||||||||||||||||||||||||
Total comprehensive income (loss) | $ | (26,433) | $ | (128,630) | ||||||||||||||||||||||||||||
Common Stock | Treasury Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity (Deficit) | Noncontrolling Interests | Total Equity (Deficit) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | 62,690,869 | $ | 6 | — | $ | — | $ | 183,024 | $ | (75,911) | $ | 103 | $ | 107,222 | $ | — | $ | 107,222 | |||||||||||||||||||||||||||||||||||||||||
Equity-based compensation expense | — | — | — | — | 10,786 | — | — | 10,786 | — | 10,786 | |||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued under the committed equity facility | 909,669 | — | — | — | 3,047 | — | — | 3,047 | — | 3,047 | |||||||||||||||||||||||||||||||||||||||||||||||||
Committed equity facility fee settled in common stock | 127,751 | — | — | — | 756 | — | — | 756 | — | 756 | |||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for share-based awards | 427,941 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased for settlement of employee tax withholdings on share-based awards | — | — | 141,811 | (381) | — | — | — | (381) | — | (381) | |||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interests acquired in business combination | — | — | — | — | — | — | — | — | 215 | 215 | |||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax | — | — | — | — | — | — | 1,973 | 1,973 | 14 | 1,987 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | (130,617) | — | (130,617) | (3) | (130,620) | |||||||||||||||||||||||||||||||||||||||||||||||||
Other | 124,401 | — | — | — | 513 | — | — | 513 | — | 513 | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2022 | 64,280,631 | $ | 6 | 141,811 | $ | (381) | $ | 198,126 | $ | (206,528) | $ | 2,076 | $ | (6,701) | $ | 226 | $ | (6,475) | |||||||||||||||||||||||||||||||||||||||||
Equity-based compensation expense | — | — | — | — | 8,658 | — | — | 8,658 | — | 8,658 | |||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued under the committed equity facility | 497,392 | — | — | — | 1,280 | — | — | 1,280 | — | 1,280 | |||||||||||||||||||||||||||||||||||||||||||||||||
Common stock issued for share-based awards | 768,151 | 1 | — | — | — | — | — | 1 | — | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased for settlement of employee tax withholdings on share-based awards | — | — | 211,659 | (570) | — | — | (570) | — | (570) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Convertible preferred stock paid-in-kind dividend | — | — | — | — | (19,741) | — | — | (19,741) | — | (19,741) | |||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation, net of tax | — | — | — | — | — | — | 827 | 827 | 3 | 830 | |||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | — | — | — | — | — | (27,263) | — | (27,263) | (1) | (27,264) | |||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2023 | 65,546,174 | $ | 7 | 353,470 | $ | (951) | $ | 188,323 | $ | (233,791) | $ | 2,903 | $ | (43,509) | $ | 228 | $ | (43,281) |
Year Ended | ||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||
Cash flows from operating activities: | ||||||||||||||||||||
Net income (loss) | $ | (27,264) | $ | (130,620) | ||||||||||||||||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Depreciation and amortization expense | 10,724 | 11,288 | ||||||||||||||||||
Amortization of debt issuance costs and discount | 608 | 490 | ||||||||||||||||||
Equity-based compensation expense | 8,658 | 10,786 | ||||||||||||||||||
(Gain) loss on change in fair value of committed equity facility | 255 | 631 | ||||||||||||||||||
(Gain) loss on change in fair value of warrants | 2,011 | (17,784) | ||||||||||||||||||
Deferred provision (benefit) for income taxes | (925) | (8,238) | ||||||||||||||||||
Impairment expense | — | 96,623 | ||||||||||||||||||
Income from equity method investments | (245) | (58) | ||||||||||||||||||
Non-cash lease expense | 327 | 264 | ||||||||||||||||||
Non-cash interest expense | 525 | 690 | ||||||||||||||||||
Other | (238) | 208 | ||||||||||||||||||
Changes in assets and liabilities: | ||||||||||||||||||||
(Increase) decrease in accounts receivable | (5,562) | (6,646) | ||||||||||||||||||
(Increase) decrease in contract assets | (5,442) | 813 | ||||||||||||||||||
(Increase) decrease in inventory | (44) | (978) | ||||||||||||||||||
(Increase) decrease in prepaid insurance | 1,157 | 579 | ||||||||||||||||||
(Increase) decrease in prepaid expenses and other assets | (928) | 266 | ||||||||||||||||||
Increase (decrease) in accounts payable and accrued expenses | (3,280) | (1) | ||||||||||||||||||
Increase (decrease) in deferred revenue | 22,736 | 8,270 | ||||||||||||||||||
Increase (decrease) in operating lease liabilities | (325) | — | ||||||||||||||||||
Increase (decrease) in other liabilities | (960) | 1,760 | ||||||||||||||||||
Increase (decrease) in notes payable to sellers | (557) | — | ||||||||||||||||||
Net cash provided by (used in) operating activities | 1,231 | (31,657) | ||||||||||||||||||
Cash flows from investing activities: | ||||||||||||||||||||
Acquisition of businesses, net of cash acquired | — | (33,230) | ||||||||||||||||||
Purchases of property, plant and equipment, net | (5,620) | (3,626) | ||||||||||||||||||
Purchase of intangible assets | (2,707) | (526) | ||||||||||||||||||
Net cash provided by (used in) investing activities | (8,327) | (37,382) | ||||||||||||||||||
Cash flows from financing activities: | ||||||||||||||||||||
Proceeds received from debt | 36,696 | 22,696 | ||||||||||||||||||
Repayments of debt | (26,683) | (23,658) | ||||||||||||||||||
Payment of debt issuance fees to third parties | (163) | (1,254) | ||||||||||||||||||
Repayment of finance leases | (395) | (55) | ||||||||||||||||||
Proceeds from issuance of common stock | 1,241 | 2,956 | ||||||||||||||||||
Payment of committed equity facility transaction costs | (571) | (161) | ||||||||||||||||||
Proceeds from issuance of convertible preferred stock | — | 81,250 | ||||||||||||||||||
Payments of issuance costs related to convertible preferred stock | (52) | (4,833) | ||||||||||||||||||
Shares repurchased for settlement of employee tax withholdings on share-based awards | (570) | (381) | ||||||||||||||||||
Payment of contingent earnout | (443) | — | ||||||||||||||||||
Net cash provided by (used in) financing activities | 9,060 | 76,560 | ||||||||||||||||||
Effect of foreign currency rate changes on cash and cash equivalents | (2) | 272 | ||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 1,962 | 7,793 | ||||||||||||||||||
Cash and cash equivalents at beginning of period | 28,316 | 20,523 | ||||||||||||||||||
Cash and cash equivalents at end of period | $ | 30,278 | $ | 28,316 | ||||||||||||||||
Level 1: | Quoted prices for identical instruments in active markets; | ||||
Level 2: | Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets; and | ||||
Level 3: | Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Year Ended | |||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||
Supplemental cash flow information: | |||||||||||
Cash paid (received) during the period for: | |||||||||||
Interest | $ | 9,082 | $ | 6,868 | |||||||
Income taxes | — | — | |||||||||
Non-cash investing and financing activities: | |||||||||||
Convertible Preferred Stock dividends paid-in-kind | $ | 19,741 | $ | — | |||||||
Capital expenditures not yet paid | 1,321 | 1,209 | |||||||||
Equity financing transaction costs not yet paid | — | 622 |
Estimated useful life in years | |||||
Computer equipment | 3 | ||||
Furniture and fixtures | 7 | ||||
Laboratory equipment | 3-10 | ||||
Leasehold improvements | shorter of 5 or lease term | ||||
Assets subject to finance lease | lease term |
Year Ended | |||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||
Advertising costs | $ | 1,199 | $ | 1,306 |
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 of 1933 registration statement declared effective or do not have a class of securities registered under the Securities Exchange Act)Act of 1934) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that aan emerging growth company can elect to opt out of the extended transition period and comply with 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.
Use
the FASB Accounting Standards Codification (“ASC”). Subsequent to the issuance of ASU 2016-13, there were various updates that amended and clarified the impact of ASU 2016-13. ASU 2016-13 broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The preparationamendments in ASU 2016-13 require an entity to record an allowance for credit losses for certain financial instruments and financial assets, including accounts receivable, based on expected losses rather than incurred losses. The measurement of financial statements in conformity with US GAAP requires management to make estimatesexpected credit losses is based on relevant information about past events, including historical experience, current conditions, and assumptionsreasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The use of forecasted information incorporates more timely information in the estimate of expected credit losses. Effective January 1, 2023, the Company adopted ASU 2016-13 using a modified retrospective transition method with a cumulative effect adjustment in the period of adoption. Adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or
October 31, 2022 | |||||
Cash paid | $ | 36,930 | |||
Purchase consideration | $ | 36,930 | |||
Assets: | |||||
Cash | $ | 3,700 | |||
Accounts receivable and other receivable | 3,606 |
October 31, 2022 | |||||
Contract assets | 18,830 | ||||
Prepaid expenses and other current assets | 3,100 | ||||
Property, plant and equipment | 5,656 | ||||
Right-of-use assets | 1,166 | ||||
Intangible assets | 13,935 | ||||
Equity method investments | 3,000 | ||||
Total assets | 52,993 | ||||
Liabilities: | |||||
Accounts payable | 4,201 | ||||
Short-term operating lease liabilities | 199 | ||||
Short-term finance lease liabilities | 279 | ||||
Accrued expenses | 18,636 | ||||
Deferred revenue | 5,513 | ||||
Other current liabilities | 399 | ||||
Long-term operating lease liabilities | 908 | ||||
Long-term finance lease liabilities | 563 | ||||
Deferred tax liabilities | 2,727 | ||||
Other non-current liabilities | 281 | ||||
Total liabilities | 33,706 | ||||
Fair value of net identifiable assets acquired | 19,287 | ||||
Less: Fair value of noncontrolling interests | 215 | ||||
Goodwill | $ | 17,858 |
October 31, 2022 | Weighted average useful life in years | ||||||||||
Technology | $ | 4,700 | 7 | ||||||||
Customer relationships | 7,400 | 30 | |||||||||
Software | 235 | 2 | |||||||||
IPR&D | 1,600 | ||||||||||
Total intangible assets | $ | 13,935 |
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. The Company had $1,295,380 in cash atyear ended December 31, 2020.
Investment Held in Trust Account
Investment held in Trust Account consist of United States Treasury securities. The Company classifies its United States Treasury securities as held-to-maturity in accordance with FASB ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which2023, the Company hasrecorded a non-cash measurement period adjustment to goodwill of $0.5 million, which increased the abilitybalance of goodwill to $17.9 million as of December 31, 2023.
A decline in the market value of held-to-maturity securities below cost that is deemedperiod from October 31, 2022 to be other than temporary, results in an impairment that reduces the carrying costs to such securities’ fair value. The impairment is charged to earnings and a new cost basis for the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.
Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest method. Such amortization and accretion isDecember 31, 2022 have been included in the “interest income” line itemresults of operations for the year ended December 31, 2022. The table below presents the post-acquisition revenues, net income (loss) attributable to Redwire Corporation, and acquisition-related costs (included in transaction expenses) of Space NV included in the consolidated statements of operations. Interestoperations and comprehensive income is recognized when earned.
Fair Value Measurements
FASB ASC Topic 820 “Fair Value Measurements and Disclosures” (“ASC 820”) defines fair value,(loss) for the methods used to measure fair value andfollowing period:
December 31, 2022 | |||||||||||
Post-acquisition revenues | $ | 11,658 | |||||||||
Net income (loss) attributable to Redwire Corporation | $ | (294) | |||||||||
Transaction expenses | $ | 3,112 |
Year Ended | |||||||||||||||||
December 31, 2022 | |||||||||||||||||
Revenues | $ | 207,761 | |||||||||||||||
Net income (loss) attributable to Redwire Corporation | (129,645) |
future. Accordingly, the pro forma financial information should not be relied upon as being indicative of the results that would have been realized had the business combination occurred as of the date indicated or that may be achieved in the future.
Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuationshort-term nature of these securities does not entail a significant degree of judgment.
Level 2 — Valuations based on (i) quoted prices in active markets for similarfinancial assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.
Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
liabilities.
Concentration of Credit Risk
Financial instruments that potentially subject
Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares$11.50 per share, subject to possibleadjustment. The warrants will expire on September 2, 2026, at 5:00 p.m., New York City time, or earlier upon redemption or liquidation. The private warrants were established as a liability at issuance. Classification of the private warrants as liability instruments was based on an analysis of the guidance in accordance with U.S. GAAP and in a statement issued by the guidance inStaff of the SEC regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies.” Ordinary shares subjectThe Company considered whether the private warrants display the three characteristics of a derivative, and concluded the private warrants meet the definition of a derivative. However, the private warrants fail to mandatory redemption (if any)meet the equity scope exception and thus are classified as a liability instrument and measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights thatvalue, subject to remeasurement at each
December 31, 2023 | December 31, 2022 | ||||||||||||||||
Fair value per share | $ | 0.43 | $ | 0.17 | |||||||||||||
Warrants outstanding | 7,732,168 | 7,732,168 | |||||||||||||||
Exercise price | $ | 11.50 | $ | 11.50 | |||||||||||||
Common stock price | $ | 2.85 | $ | 1.98 | |||||||||||||
Expected option term | 2.67 years | 3.67 years | |||||||||||||||
Expected volatility | 74.20 | % | 60.70 | % | |||||||||||||
Risk-free rate of return | 4.00 | % | 4.10 | % | |||||||||||||
Expected annual dividend yield | — | % | — | % |
December 31, 2023 | |||||||||||||||||||||||||||||
Balance Sheet Location | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Committed equity facility | Prepaid expenses and other current assets | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||
Total assets | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Private warrants | Warrant liabilities | $ | — | $ | — | $ | 3,325 | $ | 3,325 | ||||||||||||||||||||
Contingent consideration | Notes payable to sellers | — | — | — | — | ||||||||||||||||||||||||
Total liabilities | $ | — | $ | — | $ | 3,325 | $ | 3,325 | |||||||||||||||||||||
December 31, 2022 | |||||||||||||||||||||||||||||
Balance Sheet Location | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||||||
Committed equity facility | Other non-current assets | $ | — | $ | — | $ | 216 | $ | 216 | ||||||||||||||||||||
Total assets | $ | — | $ | — | $ | 216 | $ | 216 | |||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||
Private warrants | Warrant liabilities | $ | — | $ | — | $ | 1,314 | $ | 1,314 | ||||||||||||||||||||
Contingent consideration | Notes payable to sellers | — | — | 1,000 | 1,000 | ||||||||||||||||||||||||
Total liabilities | $ | — | $ | — | $ | 2,314 | $ | 2,314 |
Assets: | Committed Equity Facility | Total Level 3 | |||||||||||||||||||||||||||
December 31, 2021 | $ | — | $ | — | |||||||||||||||||||||||||
Additions | 756 | 756 | |||||||||||||||||||||||||||
Changes in fair value | (540) | (540) | |||||||||||||||||||||||||||
Settlements | — | — | |||||||||||||||||||||||||||
December 31, 2022 | $ | 216 | $ | 216 | |||||||||||||||||||||||||
Additions | — | — | |||||||||||||||||||||||||||
Changes in fair value | (216) | (216) | |||||||||||||||||||||||||||
Settlements | — | — | |||||||||||||||||||||||||||
December 31, 2023 | $ | — | $ | — |
Liabilities: | Contingent Consideration | Private Warrants | Total Level 3 | ||||||||||||||
December 31, 2021 | $ | 1,000 | $ | 19,098 | $ | 20,098 | |||||||||||
Additions | — | — | — | ||||||||||||||
Changes in fair value | — | (17,784) | (17,784) | ||||||||||||||
Settlements | — | — | — | ||||||||||||||
December 31, 2022 | $ | 1,000 | $ | 1,314 | $ | 2,314 | |||||||||||
Additions | — | — | — | ||||||||||||||
Changes in fair value | — | 2,011 | 2,011 | ||||||||||||||
Settlements | (1,000) | — | (1,000) | ||||||||||||||
December 31, 2023 | $ | — | $ | 3,325 | $ | 3,325 |
December 31, 2023 | December 31, 2022 | ||||||||||
Billed receivables | $ | 28,926 | $ | 25,518 | |||||||
Unbilled receivables | 3,485 | 1,208 | |||||||||
Total accounts receivable, net | $ | 32,411 | $ | 26,726 |
December 31, 2023 | December 31, 2022 | ||||||||||
Raw materials | $ | 1,452 | $ | 995 | |||||||
Work in process | 64 | 474 | |||||||||
Inventory | $ | 1,516 | $ | 1,469 |
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
United States | Europe | Total | United States | Europe | Total | ||||||||||||||||||||||||||||||
Computer equipment | $ | 1,755 | $ | 559 | $ | 2,314 | $ | 1,256 | $ | 252 | $ | 1,508 | |||||||||||||||||||||||
Furniture and fixtures | 1,181 | 39 | 1,220 | 1,062 | 38 | 1,100 | |||||||||||||||||||||||||||||
Laboratory equipment | 5,086 | 594 | 5,680 | 3,646 | 483 | 4,129 | |||||||||||||||||||||||||||||
Leasehold improvements | 2,764 | 4,683 | 7,447 | 2,229 | 4,475 | 6,704 | |||||||||||||||||||||||||||||
Finance lease ROU assets | — | 2,004 | 2,004 | — | 944 | 944 | |||||||||||||||||||||||||||||
Construction in process | 3,782 | — | 3,782 | 1,408 | — | 1,408 | |||||||||||||||||||||||||||||
Property, plant and equipment, gross | 14,568 | 7,879 | 22,447 | 9,601 | 6,192 | 15,793 | |||||||||||||||||||||||||||||
Less: accumulated depreciation | (4,631) | (1,907) | (6,538) | (2,785) | (247) | (3,032) | |||||||||||||||||||||||||||||
Total property, plant and equipment, net | $ | 9,937 | $ | 5,972 | $ | 15,909 | $ | 6,816 | $ | 5,945 | $ | 12,761 |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Depreciation expense | $ | 3,512 | $ | 3,325 | ||||||||||||||||||||||||||||
December 31, 2023 | |||||||||||||||||||||||
Gross carrying amount | Accumulated amortization | Net carrying amount | Weighted average useful life in years | ||||||||||||||||||||
Finite-lived intangible assets: | |||||||||||||||||||||||
Customer relationships | $ | 39,824 | $ | (6,181) | $ | 33,643 | 21 | ||||||||||||||||
Technology | 32,861 | (8,833) | 24,028 | 15 | |||||||||||||||||||
Trademarks | 3,172 | (1,684) | 1,488 | 9 | |||||||||||||||||||
Internal-use software licenses | 3,256 | (1,811) | 1,445 | 4 | |||||||||||||||||||
In-process internal-use software | 2,081 | — | 2,081 | ||||||||||||||||||||
Indefinite-lived intangible assets: | |||||||||||||||||||||||
Cosmos Tradename | 300 | — | 300 | ||||||||||||||||||||
IPR&D | — | — | — | ||||||||||||||||||||
Total intangible assets | $ | 81,494 | $ | (18,509) | $ | 62,985 |
December 31, 2022 | ||||||||||||||||||||||||||
Gross carrying amount | Accumulated amortization | Net carrying amount | Weighted average useful life in years | |||||||||||||||||||||||
Finite-lived intangible assets: | ||||||||||||||||||||||||||
Customer relationships | $ | 39,593 | $ | (4,037) | $ | 35,556 | 21 | |||||||||||||||||||
Technology | 30,954 | (5,012) | 25,942 | 13 | ||||||||||||||||||||||
Trademarks | 3,172 | (1,278) | 1,894 | 7 | ||||||||||||||||||||||
Internal-use software licenses | 2,387 | (920) | 1,467 | 3 | ||||||||||||||||||||||
Indefinite-lived intangible assets: | ||||||||||||||||||||||||||
Cosmos Tradename | 300 | — | 300 | |||||||||||||||||||||||
IPR&D | 1,712 | — | 1,712 | |||||||||||||||||||||||
Total intangible assets | $ | 78,118 | $ | (11,247) | $ | 66,871 |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Amortization expense | $ | 7,212 | $ | 7,963 |
Year | Total | ||||
2024 | $ | 6,816 | |||
2025 | 5,968 | ||||
2026 | 5,465 | ||||
2027 | 5,111 | ||||
2028 | 4,743 | ||||
Thereafter | 32,501 | ||||
Total future amortization expense on intangible assets | $ | 60,604 |
Gross Goodwill | Accumulated Impairment | Net Goodwill | |||||||||||||||
Balance of goodwill as of December 31, 2021 | $ | 96,314 | $ | — | $ | 96,314 | |||||||||||
Goodwill arising from the Space NV acquisition | 17,313 | — | 17,313 | ||||||||||||||
Impairment expense | — | (49,916) | (49,916) | ||||||||||||||
Change arising from impact of foreign currency | 907 | — | 907 | ||||||||||||||
Balance of goodwill as of December 31, 2022 | $ | 114,534 | $ | (49,916) | $ | 64,618 | |||||||||||
Measurement period adjustment - Space NV | 545 | — | 545 | ||||||||||||||
Change arising from impact of foreign currency | 808 | (214) | 594 | ||||||||||||||
Balance of goodwill as of December 31, 2023 | $ | 115,887 | $ | (50,130) | $ | 65,757 |
Effective interest rate | December 31, 2023 | December 31, 2022 | |||||||||||||||
Adams Street Term Loan | 12.27 | % | $ | 30,522 | $ | 30,626 | |||||||||||
Adams Street Revolving Credit Facility | 16.71 | 12,000 | — | ||||||||||||||
Adams Street Delayed Draw Term Loan | 12.27 | 14,769 | 14,819 | ||||||||||||||
Adams Street Incremental Term Loan | 12.14 | 31,588 | 31,695 | ||||||||||||||
D&O Financing Loans | 1.92 | 598 | 1,798 | ||||||||||||||
Total debt | 89,477 | 78,938 | |||||||||||||||
Less: unamortized discounts and issuance costs | 1,257 | 1,615 | |||||||||||||||
Total debt, net | 88,220 | 77,323 | |||||||||||||||
Less: Short-term debt, including current portion of long-term debt | 1,378 | 2,578 | |||||||||||||||
Total long-term debt, net | $ | 86,842 | $ | 74,745 |
Eurocurrency Rate | Base Rate | ||||||||||
Term loans | 6.00 | % | 5.00 | % | |||||||
Revolving credit facility: | |||||||||||
Aggregate principal of $5.0 million or less | 6.00 | 5.00 | |||||||||
Aggregate principal in excess of $5.0 million | 7.50 | 6.50 |
2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
Adams Street Term Loan | $ | 310 | $ | 310 | $ | 29,902 | $ | — | $ | — | $ | — | $ | 30,522 | |||||||||||||||||||||||||||
Adams Street Delayed Draw Term Loan | 150 | 150 | 14,469 | — | — | — | 14,769 | ||||||||||||||||||||||||||||||||||
Adams Street Incremental Term Loan | 320 | 320 | 30,948 | — | — | — | 31,588 | ||||||||||||||||||||||||||||||||||
Adams Street Revolving Credit Facility | — | — | 12,000 | — | — | — | 12,000 | ||||||||||||||||||||||||||||||||||
2022 D&O Financing Loan | 598 | — | — | — | — | — | 598 | ||||||||||||||||||||||||||||||||||
Total long-term debt maturities | $ | 1,378 | $ | 780 | $ | 87,319 | $ | — | $ | — | $ | — | $ | 89,477 |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Interest expense on debt | $ | 10,702 | $ | 8,220 |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Finance lease cost: | ||||||||||||||||||||||||||||||||
Amortization of ROU assets | $ | 434 | $ | 54 | ||||||||||||||||||||||||||||
Interest on lease liabilities | 98 | 6 | ||||||||||||||||||||||||||||||
Operating lease costs | 4,251 | 3,339 | ||||||||||||||||||||||||||||||
Variable lease costs | 29 | — | ||||||||||||||||||||||||||||||
Short-term lease costs | 230 | 251 | ||||||||||||||||||||||||||||||
Total lease costs | $ | 5,042 | $ | 3,650 | ||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||
Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||||||||||
Right-of-use assets, net reflected in the following balance sheet line items: | |||||||||||||||||||||||
Property, plant and equipment, net | $ | — | $ | 1,551 | $ | — | $ | 899 | |||||||||||||||
Right-of-use assets | 13,181 | — | 13,103 | — | |||||||||||||||||||
Total right-of-use assets | $ | 13,181 | $ | 1,551 | $ | 13,103 | $ | 899 | |||||||||||||||
Current lease balance reflected in the following balance sheet line items: | |||||||||||||||||||||||
Short-term operating lease liabilities | $ | 3,737 | $ | — | $ | 3,214 | $ | — | |||||||||||||||
Short-term finance lease liabilities | — | 439 | — | 299 | |||||||||||||||||||
Non-current lease balance reflected in the following balance sheet line items: | |||||||||||||||||||||||
Long-term operating lease liabilities | 12,302 | — | 12,670 | — | |||||||||||||||||||
Long-term finance lease liabilities | — | 1,137 | — | 579 | |||||||||||||||||||
Total lease liabilities | $ | 16,039 | $ | 1,576 | $ | 15,884 | $ | 878 |
Year Ended | |||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||
Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||||||||||||||||
Cash paid for lease liabilities | $ | 4,273 | $ | 492 | $ | 3,076 | $ | 61 | |||||||||||||||||||||
Right-of-use assets obtained in exchange for new lease liabilities | 3,418 | 1,167 | 8,615 | 944 | |||||||||||||||||||||||||
Weighted average remaining lease term (in years) | 4.4 | 3.8 | 4.8 | 3.1 | |||||||||||||||||||||||||
Weighted average discount rate | 6.3 | % | 8.4 | % | 5.6 | % | 9.3 | % |
Year | Operating Leases | Finance Leases | ||||||||||||
2024 | $ | 4,582 | $ | 564 | ||||||||||
2025 | 4,098 | 479 | ||||||||||||
2026 | 3,509 | 363 | ||||||||||||
2027 | 3,371 | 289 | ||||||||||||
2028 | 1,852 | 136 | ||||||||||||
Thereafter | 1,572 | — | ||||||||||||
Total lease payments | 18,984 | 1,831 | ||||||||||||
Less: imputed interest | 2,945 | 255 | ||||||||||||
Present value of lease liabilities | $ | 16,039 | $ | 1,576 | ||||||||||
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Current: | ||||||||||||||||||||||||||||||||
Federal | $ | — | $ | — | ||||||||||||||||||||||||||||
State | (73) | 33 | ||||||||||||||||||||||||||||||
Foreign | 512 | 259 | ||||||||||||||||||||||||||||||
Total current income tax expense (benefit) | 439 | 292 | ||||||||||||||||||||||||||||||
Deferred: | ||||||||||||||||||||||||||||||||
Federal | 48 | (6,317) | ||||||||||||||||||||||||||||||
State | 62 | (1,963) | ||||||||||||||||||||||||||||||
Foreign | (1,035) | 16 | ||||||||||||||||||||||||||||||
Total deferred income tax expense (benefit) | (925) | (8,264) | ||||||||||||||||||||||||||||||
Total income tax expense (benefit) | $ | (486) | $ | (7,972) |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Income (loss) before income taxes | $ | (27,750) | $ | (138,592) | ||||||||||||||||||||||||||||
Federal statutory income tax rate | 21.0 | % | 21.0 | % | ||||||||||||||||||||||||||||
Expected federal provision (benefit) for income taxes at the federal statutory income tax rate | (5,828) | (29,104) | ||||||||||||||||||||||||||||||
State income tax (benefit), net of federal tax benefit | (1,190) | (5,394) | ||||||||||||||||||||||||||||||
Change in fair value of warrants | 422 | (3,735) | ||||||||||||||||||||||||||||||
Nondeductible impairment of goodwill | — | 10,483 | ||||||||||||||||||||||||||||||
Permanent differences | 136 | 226 | ||||||||||||||||||||||||||||||
Tax (benefits) / non-deductible expenses related to equity-based compensation | 984 | 1,784 | ||||||||||||||||||||||||||||||
Acquisition costs | — | 620 | ||||||||||||||||||||||||||||||
Change in valuation allowance | 4,808 | 18,498 | ||||||||||||||||||||||||||||||
Other | 182 | (1,350) | ||||||||||||||||||||||||||||||
Total income tax expense (benefit) | $ | (486) | $ | (7,972) | ||||||||||||||||||||||||||||
Effective tax rate | 1.8 | % | 5.8 | % |
December 31, 2023 | December 31, 2022 | ||||||||||
Deferred tax assets: | |||||||||||
Accrued expenses and reserves | $ | 1,992 | $ | 4,997 | |||||||
Capitalized research and development expenses | 2,241 | 1,182 | |||||||||
Tax credit carryforwards | 240 | 230 | |||||||||
Deferred revenue | 1,217 | — | |||||||||
Net operating loss carryforwards | 20,371 | 19,303 | |||||||||
Interest disallowance | 6,640 | 4,046 | |||||||||
Equity-based compensation | 1,580 | 1,053 | |||||||||
Lease liability | 4,454 | 4,293 | |||||||||
Other assets | 54 | 19 | |||||||||
Total deferred tax assets | 38,789 | 35,123 | |||||||||
Less: valuation allowance | (23,821) | (19,013) | |||||||||
Deferred tax assets, net of valuation allowance | 14,968 | 16,110 | |||||||||
Deferred tax liabilities: | |||||||||||
Right-of-use asset | $ | (3,725) | $ | (3,584) | |||||||
Deferred revenue | — | (1,498) | |||||||||
Depreciation and amortization | (13,523) | (13,712) | |||||||||
Other | (122) | (571) | |||||||||
Deferred tax liabilities | (17,370) | (19,365) | |||||||||
Total net deferred tax assets (liabilities) | $ | (2,402) | $ | (3,255) |
Valuation allowance as of December 31, 2021 | $ | (515) | |||
Income tax expense | (18,498) | ||||
Valuation allowance as of December 31, 2022 | $ | (19,013) | |||
Income tax expense | (4,808) | ||||
Valuation allowance as of December 31, 2023 | $ | (23,821) |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Unrecognized tax benefits, beginning of period | $ | 1,380 | $ | 1,380 | ||||||||||||||||||||||||||||
Increase (decrease) for tax positions taken related to a prior period | — | — | ||||||||||||||||||||||||||||||
Increase (decrease) for tax positions taken during the current period | — | — | ||||||||||||||||||||||||||||||
Unrecognized tax benefits, end of period | $ | 1,380 | $ | 1,380 |
Shares | Amount | ||||||||||
Balance as of December 31, 2022 | 81,250.00 | $ | 76,365 | ||||||||
Dividends paid-in-kind | 12,640.20 | 19,741 | |||||||||
Balance as of December 31, 2023 | 93,890.20 | $ | 96,106 |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Civil space | $ | 102,594 | $ | 63,003 | ||||||||||||||||||||||||||||
National security | 59,053 | 43,906 | ||||||||||||||||||||||||||||||
Commercial and other | 82,153 | 53,640 | ||||||||||||||||||||||||||||||
Total revenues | $ | 243,800 | $ | 160,549 |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
U.S. | $ | 172,903 | $ | 142,867 | ||||||||||||||||||||||||||||
Europe | 70,814 | 17,205 | ||||||||||||||||||||||||||||||
Other | 83 | 477 | ||||||||||||||||||||||||||||||
Total revenues | $ | 243,800 | $ | 160,549 |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Customer A(1) | $ | 39,314 | $ | 17,131 | ||||||||||||||||||||||||||||
Customer B(1) | 33,621 | — | ||||||||||||||||||||||||||||||
Customer C(1) | — | 20,048 | ||||||||||||||||||||||||||||||
Customer D(1) | — | 21,705 | ||||||||||||||||||||||||||||||
Total | $ | 72,935 | $ | 58,884 |
sheets for the following periods:
December 31, 2023 | December 31, 2022 | ||||||||||
Contract assets | $ | 36,961 | $ | 31,041 | |||||||
Contract liabilities | $ | 52,645 | $ | 29,817 |
Year Ended | |||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||
Net EAC adjustments, before income taxes | $ | (3,522) | $ | (9,953) | |||||||||||||||||||
Net EAC adjustments, net of income taxes | (3,459) | (9,376) | |||||||||||||||||||||
Net EAC adjustments, net of income taxes, per diluted share | (0.05) | (0.15) |
Year Ended | |||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||
Total expense for matching contributions | $ | 2,367 | $ | 2,002 |
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
Base Plan | Performance Plans | Base Plan | Performance Plans | ||||||||||||||||||||||||||||||||
Projected benefit obligations | $ | 6,649 | $ | 3,077 | $ | 5,963 | $ | 2,486 | |||||||||||||||||||||||||||
Fair value of plan assets | 6,423 | 2,903 | 5,795 | 2,352 | |||||||||||||||||||||||||||||||
Funded (underfunded) status | $ | (226) | $ | (174) | $ | (168) | $ | (134) | |||||||||||||||||||||||||||
Consolidated Balance Sheet line item amounts: | |||||||||||||||||||||||||||||||||||
Other non-current liabilities | $ | (226) | $ | (174) | $ | (168) | $ | (134) | |||||||||||||||||||||||||||
Base Plan | Performance Plans | ||||||||||
Change in benefit obligations | |||||||||||
Beginning balance as of December 31, 2022 | $ | 5,963 | $ | 2,486 | |||||||
Service cost | 328 | 449 | |||||||||
Interest cost | 231 | 92 | |||||||||
Employee contributions | 235 | — | |||||||||
Benefits paid | (155) | — | |||||||||
Actuarial (gain) loss | (136) | (32) | |||||||||
Foreign currency translation | 183 | 82 | |||||||||
Ending balance as of December 31, 2023 | $ | 6,649 | $ | 3,077 | |||||||
Change in plan assets | |||||||||||
Beginning balance as of December 31, 2022 | $ | 5,795 | $ | 2,352 | |||||||
Expected return on plan assets | 230 | 103 | |||||||||
Employee contributions | 245 | — | |||||||||
Employer contributions | 386 | 444 | |||||||||
Benefits paid | (155) | — | |||||||||
Actuarial gain (loss) | (115) | (65) | |||||||||
Expenses paid | (140) | (9) | |||||||||
Foreign currency translation | 177 | 78 | |||||||||
Ending balance as of December 31, 2023 | $ | 6,423 | $ | 2,903 | |||||||
Funded (underfunded) status as of December 31, 2022 | $ | (168) | $ | (134) | |||||||
Funded (underfunded) status as of December 31, 2023 | (226) | (174) |
Year Ended December 31, 2023 | Two Months Ended December 31, 2022 | ||||||||||||||||||||||
Base Plan | Performance Plans | Base Plan | Performance Plans | ||||||||||||||||||||
Net periodic benefit cost: | |||||||||||||||||||||||
Service cost | $ | 328 | $ | 449 | $ | 43 | $ | — | |||||||||||||||
Interest cost | 231 | 92 | 35 | 14 | |||||||||||||||||||
Expected return on plan assets | (230) | (103) | (34) | (14) | |||||||||||||||||||
Amortization of net actuarial (gain) loss | (22) | 32 | (3) | 4 | |||||||||||||||||||
Net periodic benefit cost | $ | 307 | $ | 470 | $ | 41 | $ | 4 | |||||||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||
Base Plan | Performance Plans | Base Plan | Performance Plans | ||||||||||||||||||||
Discount rate | 3.90 | % | 3.45%-3.67% | 3.75 | % | 3.65 | % | ||||||||||||||||
Expected return on plan assets | 3.90 | % | 3.45%-3.67% | 3.75 | % | 3.65 | % | ||||||||||||||||
Retirement age | 65 | 65-67 | 65 | 65 | |||||||||||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||||||||||||
Base Plan | Performance Plans | Base Plan | Performance Plans | ||||||||||||||||||||||||||||||||
Insurance contracts at cash surrender value | $ | 6,423 | $ | 2,903 | $ | 5,795 | $ | 2,352 |
Year Ended December 31, 2023 | Two Months Ended December 31, 2022 | ||||||||||||||||||||||
Contributions by: | Base Plan | Performance Plans | Base Plan | Performance Plans | |||||||||||||||||||
Employee | $ | 245 | $ | — | $ | 35 | $ | — | |||||||||||||||
Employer | 386 | 444 | 61 | — | |||||||||||||||||||
Contributions expected to be made in 2024: | |||||||||||||||||||||||
Employee | $ | 269 | $ | — | |||||||||||||||||||
Employer | 453 | — |
Year | Base Plan | Performance Plans | |||||||||
2024 | $ | 92 | $ | — | |||||||
2025 | 73 | — | |||||||||
2026 | 459 | — | |||||||||
2027 | — | — | |||||||||
2028 | 424 | — | |||||||||
Years 2029 - 2033 | 1,783 | 3,274 |
2022 Grants | |||||||||||||||||
Expected option term (years) | 6 | ||||||||||||||||
Expected volatility | 59.50% to 72.20% | ||||||||||||||||
Risk-free rate of return | 2.90%-3.95% | ||||||||||||||||
Expected annual dividend yield | — | % |
Shares | Weighted-Average Grant Date Fair Value per Share | Weighted-Average Exercise Price per Share | Weighted-Average Remaining Contractual Term (Years) | |||||||||||||||||||||||
Outstanding as of December 31, 2021 | 1,546,400 | $ | 3.32 | $ | 10.00 | 9.67 | ||||||||||||||||||||
Granted | 995,118 | 1.78 | 3.09 | |||||||||||||||||||||||
Expired | (33,834) | 3.31 | 10.00 | |||||||||||||||||||||||
Forfeited | (354,093) | 2.76 | 7.48 | |||||||||||||||||||||||
Outstanding as of December 31, 2022 | 2,153,591 | $ | 2.70 | $ | 7.22 | 8.60 | ||||||||||||||||||||
Granted | — | — | — | |||||||||||||||||||||||
Expired | (13,001) | 3.28 | 9.86 | |||||||||||||||||||||||
Forfeited | (37,999) | 2.81 | 7.74 | |||||||||||||||||||||||
Outstanding as of December 31, 2023 | 2,102,591 | $ | 2.69 | $ | 7.20 | 7.42 |
2023 Grants | |||||||||||
Valuation date stock price | $ | 2.63 | |||||||||
Remaining term of performance period | 2.49 years | ||||||||||
Expected volatility | 81.00 | % | |||||||||
Risk-free rate of return | 4.70 | % | |||||||||
Expected annual dividend yield | — | % |
Restricted Shares | Weighted-Average Grant Date Fair Value per Share | Weighted-Average Remaining Contractual Term (in Years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Unvested as of December 31, 2021 | 1,717,950 | $ | 11.66 | 1.8 | $ | 11,596 | |||||||||||||||||
Granted | 1,710,596 | 3.27 | |||||||||||||||||||||
Vested | (694,153) | 9.91 | |||||||||||||||||||||
Forfeited | (451,615) | 8.81 | |||||||||||||||||||||
Unvested as of December 31, 2022 | 2,282,778 | $ | 6.30 | 1.3 | $ | 4,520 | |||||||||||||||||
Granted | 1,846,112 | 2.62 | |||||||||||||||||||||
Vested | (979,810) | 6.44 | |||||||||||||||||||||
Forfeited | (297,865) | 6.33 | |||||||||||||||||||||
Unvested as of December 31, 2023 | 2,851,215 | $ | 3.89 | 1.2 | $ | 8,126 |
Year Ended | ||||||||||||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
Cost of sales | ||||||||||||||||||||||||||||||||
Incentive units | $ | — | $ | 181 | ||||||||||||||||||||||||||||
Stock options | 117 | 63 | ||||||||||||||||||||||||||||||
Restricted stock units | 2,540 | 2,386 | ||||||||||||||||||||||||||||||
Performance-based restricted stock units | 13 | — | ||||||||||||||||||||||||||||||
Total cost of sales | $ | 2,670 | $ | 2,630 | ||||||||||||||||||||||||||||
Selling, general and administrative expenses | ||||||||||||||||||||||||||||||||
Incentive units | $ | — | $ | 2,171 | ||||||||||||||||||||||||||||
Stock options | 1,578 | 1,578 | ||||||||||||||||||||||||||||||
Restricted stock units | 3,982 | 4,407 | ||||||||||||||||||||||||||||||
Performance-based restricted stock units | 428 | — | ||||||||||||||||||||||||||||||
Total selling, general and administrative expenses | $ | 5,988 | $ | 8,156 | ||||||||||||||||||||||||||||
Total equity-based compensation expense | $ | 8,658 | $ | 10,786 |
Year Ended | |||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||
Property, plant and equipment, net | $ | — | $ | 13,112 | |||||||||||||||||||
Intangible assets, net | — | 30,871 | |||||||||||||||||||||
Right-of-use assets | — | 2,724 | |||||||||||||||||||||
Goodwill | — | 49,916 | |||||||||||||||||||||
Total impairment expense | $ | — | $ | 96,623 |
Year Ended | |||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||
Numerator: | |||||||||||||||||||||||
Net income (loss) attributable to Redwire Corporation | $ | (27,263) | $ | (130,617) | |||||||||||||||||||
Less: dividends on Convertible Preferred Stock | 20,021 | 1,760 | |||||||||||||||||||||
Net income (loss) available to common shareholders | $ | (47,284) | $ | (132,377) | |||||||||||||||||||
Denominator: | |||||||||||||||||||||||
Weighted-average common shares outstanding: | |||||||||||||||||||||||
Basic and diluted | 64,654,153 | 63,324,416 | |||||||||||||||||||||
Net income (loss) per common share: | |||||||||||||||||||||||
Basic and diluted | $ | (0.73) | $ | (2.09) | |||||||||||||||||||
The Company’s statement of operations includesConvertible Preferred Stock, except when antidilutive.
Net loss per ordinary share, basic and diluted, for non-redeemable Class B Ordinary Shares is calculated by dividing the net income (loss), by the weighted average number of non-redeemable Class B Ordinary Shares outstanding for the period. Non-redeemable Class B Ordinary Shares include the Founder Shares as these ordinary shares do not have any redemption features and do not participate in the income earned on the Trust Account.
Below is a reconciliation of the net loss per common share:
For the period ended December 31, 2020 | ||||
Redeemable Class A Ordinary Shares | ||||
Numerator: Earnings allocable to Redeemable Class A Ordinary Shares | ||||
Interest Income | $ | 10,751 | ||
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| |||
Net Earnings | 10,751 | |||
Denominator: Weighted Average Redeemable Class A Ordinary Shares | ||||
Redeemable Class A Ordinary Shares, Basic and Diluted | 16,377,622 | |||
Earnings/Basic and Diluted Redeemable Class A Ordinary Shares (1) | $ | 0.00 | ||
Non-Redeemable Class B Ordinary Shares | ||||
Numerator: Net Income minus Redeemable Net Earnings | ||||
Net Income (Loss) | $ | (39,657 | ) | |
|
| |||
Non-Redeemable Net Loss | $ | (39,657 | ) | |
Denominator: Weighted Average Non-Redeemable Class B Ordinary Shares | ||||
Non-Redeemable Class B Ordinary Shares, Basic and Diluted | 3,827,271 | |||
Loss/Basic and Diluted Non-Redeemable Ordinary Shares (1) | $ | (0.01 | ) |
|
Weighted average shares were reduced for the effect of an aggregate of 267,135 shares of Class B ordinary shares that were forfeited since the over-allotment option was not exercised by the underwriters (see Note 5). As of December 31, 2020,all periods presented, the Company did not have any dilutive securities andand/or other contracts that could, potentially, be exercised or converted into shares of ordinary sharescommon stock and then share in the earnings of the Company. As a result, diluted lossnet income (loss) per common share is the same as basic lossnet income (loss) per common share for the periodperiods presented.
Offering Costs
Please refer to Note D – Fair Value of Financial Instruments, Note O – Convertible Preferred Stock, and Note S – Equity-Based Compensation for additional information on the Company’s warrants, Convertible Preferred Stock, and equity-based compensation awards, respectively.
Income Taxes
The Company accounts for income taxes under ASC 740 Income Taxes (“ASC 740”).
ASC 740 also clarifies the accounting for uncertaintydetermined that Space NV had a variable interest in income taxes recognized in an entity’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim period, disclosure and transition.
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penaltiesROS as of December 31, 2020. 2023 and 2022. Due to their power to direct activities of the VIE that most significantly impact its economic performance, Space NV was determined to be the primary beneficiary and, therefore, consolidated ROS as of December 31, 2023 and 2022. Total assets and total liabilities for ROS were $0.5 million and $0.1 million, respectively, as of December 31, 2023, and $1.6 million and $1.1 million, respectively, as of December 31, 2022. Net income from ROS for the year ended December 31, 2023 and 2022 was de minimis for disclosure.
The Company is considered a Cayman Islands exempted company and is presently not subjectRSS due to income taxes or income tax filing requirements inTechcom having the Cayman Islands orpower to direct the United States.
Risks and Uncertainties
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The full impactactivities of the COVID-19 outbreak continues to evolve. TheVIE that most significantly impact its economic performance. As a result of the COVID-19 outbreak on the Company’s financial position will depend on future developments, including the durationhaving ownership greater than 20% but less than 50% and spreadholding two of the outbreak and related advisories and restrictions. These developments and the impact of the COVID-19 outbreak on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s financial position may be materially adversely affected. Additionally, the Company’s ability to complete an initial Business Combination may be materially adversely affected due to significant governmental measures being implemented to contain the COVID-19 outbreak or treat its impact, including travel restrictions, the shutdown of businesses and quarantines, among others, which may limit the Company’s ability to have meetings with potential investors or affect the ability of a potential target company’s personnel, vendors and service providers to negotiate and consummate an initial Business Combination in a timely manner. The Company’s ability to consummate an initial Business Combination may also be dependent onfive board seats, Space NV has the ability to raise additionalexercise significant influence over the entity. Accordingly, RSS is accounted for as an equity method investment.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effectis included in other (income) expense, net on the Company’s financial statements.
consolidated statements of operations and comprehensive income (loss). The carrying value of the equity method investment was $3.6 million and $3.3 million as of December 31, 2023 and 2022, respectively.
Pursuant to the IPO,W – Related Parties
Note 4 — Private Placement
Simultaneously with the closing of the IPO, the Sponsor purchased an aggregate of 7,292,541 Sponsor Private Warrants and Jefferies, an underwriter for the IPO, purchased an aggregate of 439,627 Jefferies Private Warrants, at a price of $1.00 per unit, for an aggregate purchase price of $7,732,168. A portion of the proceeds from the Private Warrants were added to the net proceeds from the Initial Public Offering held in the Trust Account.
Each Private Placement Warrant is exercisable to purchase one share of Class A ordinary share at $11.50 per share.
If the Company does not complete a Business Combination within the Combination Period, the proceeds of the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and the Private Placement Warrants will expire worthless.
Note 5 — Related Party Transactions
Founder Shares
On July 30, 2020,A, was a related party as Peter Cannito, the Sponsor paid $25,000, or approximately $0.004 per share, to cover certain offering costs in consideration for 5,750,000 Class B ordinary shares, par value $0.0001 (the “Founder Shares”). On November 16, 2020, the Sponsor surrendered an aggregate of 1,437,500 founder shares, which were cancelled, resulting in an aggregate of 4,312,500 shares outstandingCompany’s Chairman and held by the Sponsor. The Sponsor agreed to forfeit up to 562,500 Founder Shares to the extent that the over-allotment option is not exercised in full by the underwriter so that the number of Founder Shares will equal 20%CEO, and Kirk Konert, a member of the Company’s issued and outstanding ordinary shares after the IPO. On November 27, 2020, the underwriter partially exercised the over-allotment option resulting in 344,406 Founder Shares no longer subject to forfeiture. The underwriter has a 45-day option to exercise the over-allotment. At December 31, 2020, 218,094 shares remain subject to forfeiture. On January 7, 2021 the underwriter’s 45-day over-allotment option expired resulting in 218,094 founder shares forfeited to the company for no consideration. (See Note 9)
The initial shareholders will agree, subject to limited exceptions, not to transfer, assign or sell any of their Founder Shares until the earlier to occur of: (i) one year after the completion of the initial Business Combination, or (ii) the dateBoard, also serve on which the Company completes a liquidation, merger, share exchange or other similar transaction after the initial Business Combination that results in all of the Company’s shareholders having the right to exchange their Class A ordinary shares for cash, securities or other property; except to certain permitted transferees and under certain circumstances (the “lock-up”). Notwithstanding the foregoing, (1) if the closing price of Class A ordinary shares equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the initial Business Combination or (2) if the Company consummates a transaction after the initial Business Combination which results in the Company’s shareholders having the right to exchange their shares for cash, securities or other property, the Founder Shares will be released from the lock-up.
Promissory Note — Related Party
The Sponsor agreed to loan the Company an aggregate of up to $300,000 to be used for the payment of costs related to the IPO. The promissory note was non-interest bearing, unsecured and due on the earlier of March 31, 2021 or the closing of the IPO.
As of December 31, 2020, the Company had repaid in full $30,000 in borrowings that was outstanding under the promissory note. The loan was repaid out of the offering proceeds not held in the Trust Account.
Due to Related Party
The balance of $2,500 represents the amount accrued for the administrative support services provided by Sponsor.
Working Capital Loans
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. 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 repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1.5 million of such Working Capital Loans may be convertible into private placement warrants at a price of $1.00 per warrant. As of December 31, 2020, the Company had no borrowings under the Working Capital Loans.
Administrative Service Fee
Commencing on the date of the IPO, the Company has agreed to pay the Sponsor a total of $15,000 per month for office space, secretarial and administrative services. Upon completion of the Initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. For the period from November 27, 2020 (date of the IPO) to December 31, 2020 the Company has incurred $15,000 in fees for these services, of which $2,500 of such amount is included in due to related party on the accompanying balance sheet.
Note 6 — Investment Held in Trust Account
As of December 31, 2020, the investments in the Company’s Trust Account consisted of $95 in U.S. Money Market funds and $166,243,519 in U.S. Treasury Securities. All of the U.S. Treasury Securities mature on May 27, 2021. The Company classifies its United States Treasury securities as held-to-maturity in accordance with FASB ASC 320 “Investments — Debt and Equity Securities”. Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts. The Company considers all investments with original maturities of more than three months but less than one year to be short-term investments. The carrying value approximates the fair value due to its short-term maturity. The carrying value, excluding gross unrealized holding loss and fair value of held to maturity securities on December 31, 2020 are as follows:
Carrying Value/Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value as of December 31, 2020 | |||||||||||||
U.S. Money Market | $ | 95 | $ | — | $ | — | $ | 95 | ||||||||
U.S. Treasury Securities | 166,243,519 | 10,751 | (12,968 | ) | 166,230,551 | |||||||||||
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$ | 166,243,614 | $ | 10,751 | $ | (12,968 | ) | $ | 166,230,646 | ||||||||
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Note 7 — Commitments and Contingencies
Registration Rights
The holders of (i) the Founder Shares, which were issued in a private placement prior to the closing of the IPO, (ii) private placement warrants, which will be issued in a private placement simultaneously with the closing of the IPO and the Class A ordinary shares underlying such private placement warrants, (iii) private placement warrants that may be issued upon conversion of working capital loans (and the securities underlying such warrants) and (iv) the units purchased by Genesis Park in this offering and the Class A ordinary shares and warrants comprising the units (including the Class A ordinary shares underlying the warrants in the units) will have registration rights to require the Company to register a sale of any of its securities held by them (in the case of the Founder Shares, only after conversion of such shares into Class A ordinary shares) pursuant to a registration and shareholder rights agreement. These holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company registers such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by the Company, subject to certain limitations. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriters Agreement
The underwriter had a 45-day option beginning November 27, 2020 to purchase up to an additional 2,250,000 additional Units to cover over-allotments. On November 27, 2020, the underwriter partially exercised its over-allotment option and purchased an additional 1,377,622 Units.
On November 27, 2020, the underwriter was paid a cash underwriting fee of 2% of the gross proceeds of the Initial Public Offering, $3,275,524.
In addition, $0.35 per unit, or $5,732,168 in the aggregate will be payable to the underwriter for deferred underwriting commissions. The deferred fee will become payable to the underwriter 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.
As of December 31, 2020, the remaining overallotment option was not exercised. (See Note 9)
Note 8 — Shareholders’ Equity
Preference shares—The Company is authorized to issue a total of 2,000,000 shares of preference shares at par value of $0.0001 each. As of December 31, 2020, there were no preference shares issued and outstanding.
Class A Ordinary Shares—The Company is authorized to issue a total of 230,000,000 shares of Class A ordinary shares at par value of $0.0001 each. As of December 31, 2020, there were 923,008 Class A ordinary shares issued and outstanding, excluding 15,454,614 Class A ordinary shares subject to possible redemption.
Class B Ordinary Shares—The Company is authorized to issue a total of 20,000,000 shares of Class B ordinary shares at par value of $0.0001 each. Holders are entitled to one vote for each share of Class B ordinary shares. As of December 31, 2020, there were 4,312,500 shares of Class B ordinary shares issued and outstanding. Of the 4,312,500 shares of Class B ordinary shares, an aggregate of up to 218,094 shares are subject to forfeiture to the Company by the founders for no consideration to the extent that the underwriter’s over-allotment option is not exercised, so that the number of shares of Class B ordinary shares will collectively equal 20% of the Company’s issued and outstanding ordinary shares after the IPO. On January 7, 2021 the underwriter’s 45-day over-allotment option expired resulting in 218,094 founder shares forteited to the company for no consideration. (See Note 9)
Holders of the Class A ordinary shares and holders of the Class B ordinary shares will vote together as a single class on all matters submitted to a vote of our shareholders, except as required by law or stock exchange rule; provided that only holders of the Class B ordinary shares have the right to vote on the election of the Company’s directors prior to the initial Business Combination and holders of a majority of the Company’s Class B ordinary shares may remove a member of the board of directors for any reason.
The Class
As of | |||||||||||||||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||
Accounts receivable: | |||||||||||||||||||||||
Related Party A | $ | — | $ | — | |||||||||||||||||||
Related Party B | 4,849 | 258 | |||||||||||||||||||||
$ | 4,849 | $ | 258 | ||||||||||||||||||||
Year Ended | |||||||||||||||||||||||
Revenues: | December 31, 2023 | December 31, 2022 | |||||||||||||||||||||
Related Party A | $ | 955 | $ | 1,962 | |||||||||||||||||||
Related Party B | 8,250 | 7,665 | |||||||||||||||||||||
$ | 9,205 | $ | 9,627 |
Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(ii) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights(iii) | Number of Securities Remaining Available for Future Issuances Under Equity Compensation Plans (Excluding Securities Reflecting in First Column) | |||||||||||||||||
Equity Compensation Plans Approved by Security Holders(i) | 5,659,903 | $ | 7.20 | 4,401,107 | ||||||||||||||||
Equity Compensation Plans Not Approved by Security Holders | — | — | — | |||||||||||||||||
Total | 5,659,903 | $ | 7.20 | 4,401,107 |
Warrants — Public Warrants may only be exercised for a whole number of shares. 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 IPO. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of the initial Business Combination, the Company will use its best efforts to file with the SEC a registration statement registering the issuance of the Class A ordinary shares issuable upon exercise of the warrants, to cause such registration statement to become effective and to maintain a current prospectus relating to those Class A ordinary shares until the warrants expire or are redeemed, as specified in the warrant agreement. If a registration statement covering the Class A ordinary shares issuable upon exercise of the warrants is not effective by the 60th business day after the closing of the initial Business Combination or within a specified period following the consummation of the initial Business Combination, warrant holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise warrants on a “cashless basis” pursuant to the exemption provided by Section 3(a)(9) of the Securities Act; provided that such exemption is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis.
The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
The Company will not be obligated to deliver any Class A ordinary shares pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statementShareholders under the Securities Act with respect to the Class A ordinary shares underlying the warrantsheading “Security Ownership of Certain Beneficial Owners and Management” and is then effectiveincorporated herein by reference.
Once the warrants become exercisable, the Company may call the warrants for redemption:
Index to Financial Statements | |||||
Consolidated Balance Sheets | |||||
Consolidated Statements of Operations and Comprehensive Income (Loss) | |||||
Consolidated Statements of Changes in |
Consolidated Statements of Cash Flows | ||||||
Notes to Consolidated Financial Statements |
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Note 9 — Subsequent Events
The Company evaluated subsequent events and transactions that occurred after the balance sheet date up to the date that the financial statements were issued. The Company did not identify any other subsequent events, other than as described below, that would have required adjustment or disclosure in the financial statements that are not already previously disclosed.
The underwriter of the IPO was granted a 45-day option from the date of the IPO to purchase up to 2,250,000 additional Units to cover over-allotments. The over-allotment option was partially exercised to purchase 1,377,622 Units on November 27, 2020. On January 7, 2021 the remaining option to purchase additional Units expired unused. As such, 218,094 Founder Shares were forfeited to the Company for no consideration.
Redwire Business Combination
On March 25, 2021, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and among the Company, Shepard Merger Sub Corporation, a Delaware corporation and direct, wholly owned subsidiary of the Company (“Merger Sub”), Cosmos Intermediate, LLC, a Delaware limited liability company and direct, wholly owned subsidiary of Holdings (“Cosmos”), and Redwire, LLC. Pursuant to the Merger Agreement, the parties thereto will enter into a business combination transaction (the “Business Combination”) by which, (i) the Company shall domesticate as a Delaware corporation in accordance with Section 388 of the Delaware General Corporation Law and the Companies Act of the Cayman Islands, (ii) Merger Sub will merge with and into Cosmos, with Cosmos being the surviving entity in the merger (the “First Merger”), and (iii) immediately following the First Merger, Cosmos will merge with and into the Company, with the Company being the surviving entity in the merger.
For additional information regarding the Business Combination and the Merger Agreement and related agreements, see the Current Report on Form 8-K filed by the Company with the SEC on March 25, 2021.
(b) (a)(2) Financial Statement Schedules
Exhibit Number | Description | |||||||||||||||||||||||||
2.2† | ||||||||||||||||||||||||||
3.2 | ||||||||||||||||||||||||||
3.4 | ||||||||||||||||||||||||||
4.1 | ||||||||||||||||||||||||||
4.2 | ||||||||||||||||||||||||||
4.3 | ||||||||||||||||||||||||||
10.1 | ||||||||||||||||||||||||||
10.2+ | ||||||||||||||||||||||||||
10.3+ | ||||||||||||||||||||||||||
10.4+ |
Exhibit Number | Description | |||||||||||||||||||||||||
10.5+ | ||||||||||||||||||||||||||
10.6+ | ||||||||||||||||||||||||||
10.7+ | ||||||||||||||||||||||||||
10.8+ | ||||||||||||||||||||||||||
10.9 | ||||||||||||||||||||||||||
10.10 | ||||||||||||||||||||||||||
10.11 | ||||||||||||||||||||||||||
10.12 | ||||||||||||||||||||||||||
10.13+ | ||||||||||||||||||||||||||
10.14 | ||||||||||||||||||||||||||
10.16+ | ||||||||||||||||||||||||||
10.18+ | ||||||||||||||||||||||||||
10.19+ | ||||||||||||||||||||||||||
10.20 | ||||||||||||||||||||||||||
10.21 | ||||||||||||||||||||||||||
10.23 | ||||||||||||||||||||||||||
10.24+ | ||||||||||||||||||||||||||
10.25+ |
Number | Description | |||||||||||||||||||||||||
10.26 | ||||||||||||||||||||||||||
16 | ||||||||||||||||||||||||||
19 | ||||||||||||||||||||||||||
23.1 | ||||||||||||||||||||||||||
31.1 | ||||||||||||||||||||||||||
31.2 | ||||||||||||||||||||||||||
32.1* | ||||||||||||||||||||||||||
32.2* | ||||||||||||||||||||||||||
97+ | ||||||||||||||||||||||||||
Inline XBRL Taxonomy Extension Schema Document | ||||||||||||||||||||||||||
101.CAL | ||||||||||||||||||||||||||
Inline XBRL Taxonomy Extension Calculation Linkbase Document | ||||||||||||||||||||||||||
101.DEF | ||||||||||||||||||||||||||
Inline XBRL Taxonomy Extension Definition Linkbase Document | ||||||||||||||||||||||||||
101.LAB | ||||||||||||||||||||||||||
Inline XBRL Taxonomy Extension Label Linkbase Document | ||||||||||||||||||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||||||||||||||
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
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Redwire Corporation | |||||||||||||||
Date: | March 20, 2024 | By: | /s/ Peter Cannito | ||||||||||||
Name: | Peter Cannito | ||||||||||||||
Title: |
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Chief Executive Officer and Chairman | |||||||||||||||
(Principal Executive | |||||||||||||||
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jonathan E. Baliff and ,David Bilger, and each of them, as his or her true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for such individual in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or the individual’s substitute, may lawfully do or cause to be done by virtue hereof.
Signature | Title | Date | |||||||||||||
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/s/ | Chief Executive Officer and | March | |||||||||||||
/s/ Jonathan | Chief Financial Officer and Director (Principal Financial Officer) | March | |||||||||||||
Jonathan | |||||||||||||||
/s/ Chris Edmunds | Senior Vice President and Chief Accounting Officer (Principal | March 20, 2024 | |||||||||||||
Chris Edmunds | |||||||||||||||
/s/ John S. Bolton | Director | March 20, 2024 | |||||||||||||
John S. Bolton | |||||||||||||||
/s/ | Director | March | |||||||||||||
/s/ Les Daniels | Director | March 20, 2024 | |||||||||||||
Les Daniels | |||||||||||||||
/s/ Michael J. Bevacqua | Director | March 20, 2024 | |||||||||||||
Michael J. Bevacqua | |||||||||||||||
/s/ | Director | March | |||||||||||||
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/s/ David | Director | March | ||||||||||||
David | ||||||||||||||
/s/ Joanne Isham | Director | March 20, 2024 | ||||||||||||
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