UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended SeptemberJune 30, 20202021
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-39092
Galileo Acquisition Corp.
(Exact Name of Registrant as Specified in Its Charter)
Cayman Islands |
N/A | ||
(State or other jurisdiction of
| (I.R.S. Employer
|
| | |
1049 Park Ave. 14A | 10028 | |
(Address of principal executive offices) | |
(Zip Code) |
(347) (347) 517-1041
(Issuer’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on | ||
Units, each consisting of one ordinary share and one Redeemable Warrant | | GLEO.U | | The New York Stock Exchange |
Ordinary Shares, par value $0.0001 per share | | GLEO | | The New York Stock Exchange |
Redeemable Warrants, each warrant exercisable for one Ordinary Share at an exercise price of $11.50 | | GLEO WS | | The New York Stock Exchange |
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x☒ No ¨☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x☒ No ¨☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
Emerging growth company | ☒ | ||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes x☒ No ¨☐
As of November 6, 2020,August 12, 2021, 17,400,000 ordinary shares, $0.0001 par value, issued and outstanding.
GALILEO ACQUISITION CORP.
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBERJUNE 30, 20202021
TABLE OF CONTENTS
GALILEO ACQUISITION CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
| | | | | | |
|
| June 30, |
| December 31, | ||
|
| 2021 |
| 2020 | ||
|
| | (Unaudited) | | | |
ASSETS |
| |
|
| |
|
Current assets |
| |
|
| |
|
Cash | | $ | 241,416 | | $ | 624,830 |
Prepaid expenses and other current assets | |
| 64,794 | |
| 65,301 |
Total current assets | |
| 306,210 | |
| 690,131 |
| | | | | | |
Cash and marketable securities held in Trust Account | |
| 139,188,838 | |
| 139,158,500 |
TOTAL ASSETS | | $ | 139,495,048 | | $ | 139,848,631 |
| | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | |
| | |
|
|
Current liabilities – Accounts payable and accrued expenses | | $ | 1,412,610 | | $ | 209,732 |
Convertible promissory note – related party | | | 1,350,000 | | | 500,000 |
Warrant liability | | | 12,330,000 | | | 3,452,400 |
Total Liabilities | |
| 15,092,610 | |
| 4,162,132 |
| | | | | | |
Commitments and Contingencies | |
| | |
|
|
| | | | | | |
Ordinary shares subject to possible redemption, 13,800,000 and 13,068,649 shares at $10.00 redemption value at June 30, 2021 and December 31, 2020, respectively | |
| 138,000,000 | |
| 130,686,490 |
| | | | | | |
Shareholders’ Equity | |
| | |
|
|
Preference shares, $0.0001 par value; 2,000,000 shares authorized; 0 issued and outstanding | |
| — | |
| — |
Ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 3,600,000 and 4,331,351 shares issued and outstanding (excluding 13,800,000 and 13,068,649 shares subject to possible redemption) at June 30, 2021 and December 31, 2020, respectively | |
| 360 | |
| 433 |
Additional paid-in capital | |
| 0 | |
| 6,909,687 |
Accumulated deficit | |
| (13,597,922) | |
| (1,910,111) |
Total Shareholders’ (Deficit) Equity | |
| (13,597,562) | |
| 5,000,009 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 139,495,048 | | $ | 139,848,631 |
The accompanying notes are an integral part of these condensed financial statements.
1
GALILEO ACQUISITION CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
September 30, 2020 | December 31, 2019 | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 322,550 | $ | 712,062 | ||||
| Prepaid expenses and other current assets | 94,085 | 129,666 | ||||||
| Total current assets | 416,635 | 841,728 | ||||||
| Cash and marketable securities held in Trust Account | 139,129,803 | 138,414,479 | ||||||
| TOTAL ASSETS | $ | 139,546,438 | $ | 139,256,207 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current liabilities – Accrued expenses | $ | 15,147 | $ | 65,716 | ||||
| Total Liabilities | 15,147 | 65,716 | ||||||
| Commitments and Contingencies | ||||||||
| Ordinary shares subject to possible redemption, 13,453,129 and 13,419,049 shares at $10.00 redemption value at September 30, 2020 and December 31, 2019, respectively | 134,531,290 | 134,190,490 | ||||||
| Shareholders’ Equity | ||||||||
| Preference shares, $0.0001 par value; 2,000,000 shares authorized; none issued and outstanding | — | — | ||||||
| Ordinary shares, $0.0001 par value; 200,000,000 shares authorized; 3,946,871 and 3,980,951 shares issued and outstanding (excluding 13,453,129 and 13,419,049 shares subject to possible redemption) at September 30, 2020 and December 31, 2019, respectively | 395 | 398 | ||||||
| Additional paid-in capital | 4,417,147 | 4,757,944 | ||||||
| Retained earnings | 582,459 | 241,659 | ||||||
| Total Shareholders’ Equity | 5,000,001 | 5,000,001 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 139,546,438 | $ | 139,256,207 | ||||
| | | | | | | | | | | | |
| | Three Months Ended | | Six Months Ended | ||||||||
| | June 30, | | June 30, | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Operating and formation costs | | $ | 1,399,263 | | $ | 75,232 | | $ | 1,586,799 | | $ | 275,269 |
Loss from operations | |
| (1,399,263) | | | (75,232) | |
| (1,586,799) | | | (275,269) |
| | | | | | | | | | | | |
Other (expense) income: | |
| | | | | |
| | | | |
Interest earned on marketable securities held in Trust Account | |
| 6,389 | | | 129,744 | |
| 30,338 | | | 676,375 |
Change in fair value of convertible promissory note – related party | | | (850,000) | | | — | | | (850,000) | | | — |
Change in fair value of warrant liability | | | (10,069,500) | | | (1,356,300) | | | (8,877,600) | | | (411,000) |
Other (expense) income, net | | | (10,913,111) | | | (1,226,556) | | | (9,697,262) | | | 265,375 |
| | | | | | | | | | | | |
Net loss | | $ | (12,312,374) | | $ | (1,301,788) | | $ | (11,284,061) | | $ | (9,894) |
| | | | | | | | | | | | |
Weighted average shares outstanding of redeemable ordinary shares | |
| 13,800,000 | | | 13,800,000 | |
| 13,800,000 | | | 13,800,000 |
Basic and diluted net income per ordinary share, redeemable | | $ | — | | $ | 0.01 | | $ | — | | $ | 0.05 |
| | | | | | | | | | | | |
Weighted average shares outstanding of non-redeemable ordinary shares | |
| 3,600,000 | | | 3,600,000 | |
| 3,600,000 | | | 3,600,000 |
Basic and diluted net loss per ordinary share, non-redeemable | | $ | (3.42) | | $ | (0.40) | | $ | (3.14) | | $ | (0.19) |
The accompanying notes are an integral part of these unaudited condensed financial statements.
2
GALILEO ACQUISITION CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSCHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(Unaudited)FOR THREE AND SIX MONTHS ENDED JUNE 30, 2021
| | | | | | | | | | | | | | |
|
| |
| | |
| Additional |
|
| |
| Total | ||
| | Ordinary Shares | | Paid-in | | Accumulated | | Shareholders’ | ||||||
|
| Shares |
| Amount |
| Capital |
| Deficit |
| Equity | ||||
Balance - January 1, 2021 |
| 4,331,351 | | $ | 433 | | $ | 6,909,687 | | $ | (1,910,111) | | $ | 5,000,009 |
| | | | | | | | | | | | | | |
Change in value of ordinary shares subject to possible redemption |
| (102,832) | |
| (11) | |
| (1,028,309) | |
| 0 | |
| (1,028,320) |
| | | | | | | | | | | | | | |
Net income | | 0 | | | 0 | | | 0 | | | 1,028,313 | | | 1,028,313 |
| | | | | | | | | | | | | | |
Balance – March 31, 2021 | | 4,228,519 | | $ | 422 | | $ | 5,881,378 | | $ | (881,798) | | $ | 5,000,002 |
| | | | | | | | | | | | | | |
Change in value of ordinary shares subject to possible redemption | | (628,519) | | | (62) | | | (5,881,378) | | | (403,750) | | | (6,285,190) |
| | | | | | | | | | | | | | |
Net loss |
| 0 | |
| 0 | |
| 0 | |
| (12,312,374) | |
| (12,312,374) |
| | | | | | | | | | | | | | |
Balance – June, 2021 | | 3,600,000 | | $ | 360 | | $ | 0 | | $ | (13,597,922) | | $ | (13,597,562) |
FOR THREE AND SIX MONTHS ENDED JUNE 30, 2020
Three Months | Nine Months | For the Period | ||||||||||
| 2020 | 2020 | 2019 | ||||||||||
| General and administrative costs | $ | 99,255 | $ | 374,524 | $ | 18,915 | ||||||
| Loss from operations | (99,255 | ) | (374,524 | ) | (18,915 | ) | ||||||
| Other income: | ||||||||||||
| Interest earned on marketable securities held in Trust Account | 38,949 | 715,324 | — | |||||||||
| Net (loss) income | $ | (60,306 | ) | $ | 340,800 | $ | (18,915 | ) | ||||
| Weighted average shares outstanding of redeemable ordinary shares | 13,800,000 | 13,800,000 | — | |||||||||
| Basic and diluted net income per ordinary share, redeemable | $ | 0.00 | $ | 0.05 | $ | — | ||||||
| Weighted average shares outstanding of non-redeemable ordinary shares | 3,600,000 | 3,600,000 | 3,150,000 | |||||||||
| Basic and diluted net loss per ordinary share, non-redeemable | $ | (0.03 | ) | $ | (0.10 | ) | $ | (0.01 | ) | |||
| | | | | | | | | | | | | | |
| | | | | | | Additional | | | | | Total | ||
| | Ordinary Shares | | Paid-in | | Accumulated | | Shareholders’ | ||||||
|
| Shares |
| | Amount |
| Capital |
| Deficit |
| Equity | |||
Balance – January 1, 2020 |
| 4,178,231 | | $ | 418 | | $ | 5,378,502 | | $ | (378,919) | | $ | 5,000,001 |
| | | | | | | | | | | | | | |
Ordinary shares subject to redemption |
| (129,189) | |
| (13) | |
| (1,291,877) | |
| 0 | |
| (1,291,890) |
| | | | | | | | | | | | | | |
Net income | | — | | | — | | | — | | | 1,291,894 | | | 1,291,894 |
| | | | | | | | | | | | | | |
Balance – March 31, 2020 |
| 4,049,042 | | $ | 405 | | $ | 4,086,625 | | $ | 912,975 | | $ | 5,000,005 |
| | | | | | | | | | | | | | |
Change in value of ordinary shares subject to possible redemption | | 130,179 | | | 13 | | | 1,301,777 | | | 0 | | | 1,301,790 |
| | | | | | | | | | | | | | |
Net loss |
| 0 | |
| 0 | |
| 0 | |
| (1,301,788) | |
| (1,301,788) |
| | | | | | | | | | | | | | |
Balance – June 30, 2020 |
| 4,179,221 | | $ | 418 | | $ | 5,388,402 | | $ | (388,813) | | $ | 5,000,007 |
The accompanying notes are an integral part of these unaudited condensed financial statements.
3
GALILEO ACQUISITION CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITYCASH FLOWS
(Unaudited)
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020
| | | | | | |
| | Six Months Ended | ||||
| | June 30, | ||||
|
| 2021 |
| 2020 | ||
Cash Flows from Operating Activities: |
| |
| | | |
Net loss | | $ | (11,284,061) | | $ | (9,894) |
Adjustments to reconcile net loss to net cash used in operating activities: | |
| | | | |
Change in fair value of warrant liability | | | 8,877,600 | | | 411,000 |
Interest earned on marketable securities held in Trust Account | | | (30,338) | | | (676,375) |
Change in fair value of convertible promissory note – related party | | | 850,000 | | | — |
Changes in operating assets and liabilities: | |
| | | | |
Prepaid expenses and other current assets | |
| 507 | | | (5,282) |
Accounts payable and accrued expenses | |
| 1,202,878 | | | (49,350) |
Net cash used in operating activities | | $ | (383,414) | | $ | (329,901) |
| | | | | | |
Net Change in Cash | |
| (383,414) | | | (329,901) |
Cash – Beginning | |
| 624,830 | | | 712,062 |
Cash – Ending | | $ | 241,416 | | $ | 382,161 |
| | | | | | |
Non-Cash Investing and Financing Activities: | |
| | | | |
| | | | | | |
Change in value of ordinary shares subject to possible redemption | | $ | 7,313,510 | | $ | (9,900) |
(Unaudited)
| Additional | Total | |||||||||||||||||||
| Ordinary Shares | Paid-in | Retained | Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Earnings | Equity | ||||||||||||||||
| Balance – January 1, 2020 | 3,980,951 | $ | 398 | $ | 4,757,944 | $ | 241,659 | $ | 5,000,001 | |||||||||||
| Change in ordinary shares subject to possible redemption | (34,659 | ) | (3 | ) | (346,587 | ) | — | (346,590 | ) | |||||||||||
| Net income | — | — | — | 346,594 | 346,594 | |||||||||||||||
| Balance – March 31, 2020 | 3,946,292 | 395 | 4,411,357 | 588,253 | 5,000,005 | |||||||||||||||
| Change in ordinary shares subject to possible redemption | (5,451 | ) | (1 | ) | (54,509 | ) | — | (54,510 | ) | |||||||||||
| Net income | — | — | — | 54,512 | 54,512 | |||||||||||||||
| Balance – June 30, 2020 | 3,940,841 | $ | 394 | $ | 4,356,848 | $ | 642,765 | $ | 5,000,007 | |||||||||||
| Change in ordinary shares subject to possible redemption | 6,030 | 1 | 60,299 | — | 60,300 | |||||||||||||||
| Net loss | — | — | — | (60,306 | ) | (60,306 | ) | |||||||||||||
| Balance – September 30, 2020 | 3,946,871 | $ | 395 | $ | 4,417,147 | $ | 582,459 | $ | 5,000,001 | |||||||||||
FOR THE PERIOD FROM JULY 30, 2019 (INCEPTION) THROUGH SEPTEMBER 30, 2019
(Unaudited)
| Additional | Total | |||||||||||||||||||
| Ordinary Shares | Paid-in | Accumulated | Shareholders’ | |||||||||||||||||
| Shares | Amount | Capital | Deficit | Equity | ||||||||||||||||
| Balance – July 30, 2019 (inception) | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
| Ordinary shares issued to Sponsor | 3,450,000 | 345 | 24,655 | — | 25,000 | |||||||||||||||
| Issuance of Representative Shares | 150,000 | 15 | 1,122 | — | 1,137 | |||||||||||||||
| Net loss | — | — | — | (18,915 | ) | (18,915 | ) | |||||||||||||
| Balance – September 30, 2019 | 3,600,000 | $ | 360 | $ | 25,777 | $ | (18,915 | ) | $ | 7,222 | ||||||||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
4
GALILEO ACQUISITION CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months | For the Period from July 30, 2019 (Inception) Through September 30, | |||||||
| 2020 | 2019 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net income (loss) | $ | 340,800 | $ | (18,915 | ) | |||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Interest earned on marketable securities held in Trust Account | (715,324 | ) | — | |||||
| Formation costs paid by Sponsor | — | 5,000 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | 35,581 | — | ||||||
| Accrued expenses | (50,569 | ) | 13,915 | |||||
| Net cash used in operating activities | (389,512 | ) | — | |||||
| Net Change in Cash and Cash Equivalents | (389,512 | ) | — | |||||
| Cash and cash equivalents – Beginning of period | 712,062 | — | ||||||
| Cash and cash equivalents – End of period | $ | 322,550 | $ | — | ||||
| Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||||||||
| Change in value of ordinary shares subject to possible redemption | $ | 340,800 | $ | — | ||||
| Issuance of Representative Shares | $ | — | $ | 1,137 | ||||
| Payment of offering costs through promissory note | $ | — | $ | 56,452 | ||||
| Deferred offering costs paid directly by shareholder from proceeds from issuance of ordinary shares to shareholder | $ | — | $ | 25,000 | ||||
The accompanying notes are an integral part of these unaudited condensed financial statements.
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
Galileo Acquisition Corp. (the “Company”) is a blank check company incorporated in the Cayman Islands on July 30, 2019. The Company was formed for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities (a “Business Combination”). The Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination.business combination.
The Company has one subsidiary, Galileo Acquisition Holdings Inc., a Delaware corporation and a wholly-owned subsidiary of the Company incorporated in Delaware on October 2, 2020 (“Merger Sub”) (see Note 6).
As of SeptemberJune 30, 2020,2021, the Company had not yet commenced any operations. All activity through SeptemberJune 30, 20202021 relates to the Company’s formation, the preparation of the initial public offering (“Initial Public Offering”), which is described below, and identifying a target company for a Business Combination.Combination, and activities in connection with the proposed acquisition of Shapeways, Inc. (see Note 6). The Company generates non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.
The registration statement for the Company’s Initial Public Offering was declared effective on October 17, 2019. On October 22, 2019, the Company consummated the Initial Public Offering of 13,800,000 units (the “Units” and, with respect to the ordinary shares included in the Units sold, the “Public Shares”), which includes the full exercise by the underwriters of their over-allotment option in the amount of 1,800,000 Units, at $10.00 per Unit, generating gross proceeds of $138,000,000 which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 4,110,000 warrants (the “Private Warrants”) at a price of $1.00 per Private Warrant in a private placement to Galileo Founders Holdings, L.P. (the “Sponsor”) and EarlyBirdCapital, Inc. (“EarlyBirdCapital”), generating gross proceeds of $4,110,000, which is described in Note 4.
Transaction costs amounted to $3,187,305, consisting of $2,760,000 of underwriting fees and $427,305 of other offering costs. In addition, at September 30, 2020, cash of $322,550 was held outside of the Trust Account (as defined below) and is available for working capital purposes.
Following the closing of the Initial Public Offering on October 22, 2019, an amount of $138,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Warrants was placed in a trust account (the “Trust Account”) and 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 approximately six months, or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule 2a-7 of the Investment Company Act of 1940, as amended, or the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combinationbusiness combination or (ii) the distribution of the Trust Account, as described below.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination.business combination. The Company’s initial Business Combinationbusiness combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (excluding taxes payable on income earned on the Trust Account) at the time of the signing of an agreement to enter into a Business Combination.business combination. The Company will only complete a Business Combinationbusiness combination if the post-Business Combinationpost-business combination 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. There is no assurance that the Company will be able to successfully effect a Business Combination.
business combination.
The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combinationbusiness combination either (i) in connection with a shareholder meeting called to approve the Business Combinationbusiness combination or (ii) by means of a tender offer. The decision as to whether the Company will seek shareholder approval of a Business Combinationbusiness combination or conduct a tender offer will be made by the Company, solely in its discretion. The shareholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then on deposit in the Trust Account ($10.00 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).
5
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
The Company will proceed with a Business Combinationbusiness combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combinationbusiness combination and, if the Company seeks shareholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination.business combination. If a shareholder vote is not required 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, offer such redemption pursuant to the tender offer rules of the Securities and Exchange Commission (“SEC”), and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
business combination.
Notwithstanding the foregoing, if the Company seeks shareholder approval of the Business Combinationbusiness combination and the Company does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and restated Memorandum and Articles of Association provides 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 in Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares.
The Sponsor and the other initial shareholders (collectively, the “initial shareholders”) have agreed (a) to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination;business combination; (b) not to propose, or vote in favor of, an amendment to the Company’s Amended and Restated Memorandum and Articles of Association with respect to the Company’s pre-Business Combinationpre-business combination activities prior to the consummation of a Business Combinationbusiness combination unless the Company provides dissenting public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment; (c) not to convert any Founder Shares (as well as any Public Shares purchased during or after the Initial Public Offering) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a Business Combinationbusiness combination (or sell any shares in a tender offer in connection with a Business Combinationbusiness combination if the Company does not seek shareholder approval in connection therewith) or a vote to amend the provisions of the Amended and Restated Memorandum and Articles of Association relating to shareholders’ rights or pre-Business Combinationpre-business combination activity and (d) that the Founder Shares shall not participate in any liquidating distributions upon winding up if a Business Combinationbusiness combination is not consummated. However, the initial shareholders will be entitled to liquidating distributions from the Trust Account with respect to any Public Shares purchased during or after the Initial Public Offering if the Company fails to complete its Business Combination.
business combination.
The Company will have until JulyOctober 22, 2021 to consummate athe proposed business combination (or up to October 22, 2021 if a definitive agreement with respect to a proposed Business Combination has been executed by July 22, 2021) (the “Combination Period”). If the Company is unable to complete a Business Combinationbusiness combination within the Combination Period, it will trigger the automatic winding up, dissolution and liquidation pursuant to the terms of the Company’s Amended and Restated Memorandum and Articles of Association. If the Company is forced to liquidate, the amount in the Trust Account (less the aggregate nominal par value of the shares of the Company’s public shareholders) under the Companies Law (2018 Revision) of the Cayman Islands (the “Companies Law”) will be treated as share premium which is distributable under the Companies Law provided that immediately following the date on which the proposed distribution is proposed to be made, the Company is able to pay the debts as they fall due in the ordinary course of business. If the Company is forced to liquidate the Trust Account, the public shareholders would be distributed the amount in the Trust Account calculated as of the date that is two days prior to the distribution (including any accrued interest, net of taxes payable).
In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company, if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amounts in the Trust Account to below $10.00 per share. This liability will not apply with respect to any claims by a third party who executed a waiver of any right, title, interest or claim of any kind in or to any monies held in the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except the Company’s independent registered public accounting firm), prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.
6
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
Going Concern
In connection with the Company'sCompany’s assessment of going concern considerations in accordance with Financial Accounting Standard Board'sBoard’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity'sEntity’s Ability to Continue as a Going Concern,” the Company has until July 22, 2021 (or up to October 22, 2021 if a definitive agreement with respect to a proposed Business Combination has been executed by July 22, 2021) to consummate athe proposed Business Combination. It is uncertain that the Company will be able to consummate athe proposed Business Combination by this time. Additionally, the Company may not have sufficient liquidity to fund the working capital needs of the Company through one year from the issuance of these financial statements. If a Business Combinationbusiness combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution of the Company. Management has determined that the liquidity condition and mandatory liquidation, should a Business Combinationbusiness combination not occur, and potential subsequent dissolution, raises substantial doubt about the Company'sCompany’s ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should the Company be required to liquidate after July 22, 2021 (or up to October 22, 2021 if a definitive agreement with respect2021. The Company intends to acomplete the proposed Business Combination has been executedbefore the mandatory liquidation date. However, there can be no assurance that the Company will be able to consummate any business combination by JulyOctober 22, 2021).2021.
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed consolidated interim financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.
The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Amended Annual Report on Form 10-K for the period ended December 31, 201910-K/A as filed with the SEC on MarchMay 26, 2020,2021, which contains the audited financial statements and notes thereto. The financial information as of December 31, 2019 is derived from the audited financial statements presented in the Company’s Annual Report on Form 10-K for the period ended December 31, 2019. The interim results for the three and ninesix months ended SeptemberJune 30, 20202021 are not necessarily indicative of the results to be expected for the year ending December 31, 20202021 or for any future interim periods.
In addition, results or performance may vary as a result of the Transaction involving Shapeways, as further described in Note 6 below. Important information is available in the Company’s registration statement on Form S-4, filed with the SEC on June 9, 2021, as further amended and filed on Form S-4/A with the SEC on July 22, 2021.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that 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 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. This may make comparison of the Company’s financial statements
7
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
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.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future events. Accordingly, the actual results could differ significantly from those estimates.
Ordinary Shares Subject to Possible Redemption
The Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption 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 the Company’s control) are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at SeptemberJune 30, 20202021 and December 31, 2019,2020, 13,800,000 and 13,068,649 ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s condensed consolidated balance sheets.sheets, respectively.
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
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 cash and cash equivalents as of SeptemberJune 30, 20202021 and December 31, 20192020 of approximately $323,000$241,416 and $712,000,$624,830, respectively.
Offering Costs
Offering costs consist of underwriting, legal, accounting, and other expenses incurred through the Initial Public Offering that are directly related to the Initial Public Offering. Offering costs amounting to $3,187,305$3,183,227 were charged to shareholders’ equity upon the completion of the Initial Public Offering. $4,078 of the offering costs were immediately expensed through the Statement of Operations in connection with the warrant liability.
Warrant Liability
The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares and whether the warrant holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity classification. This assessment, which requires the use of professional judgment, is conducted at the time of warrant issuance and as of each subsequent quarterly period end date while the warrants are outstanding.
8
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded at their initial fair value on the date of issuance, and each quarterly financial statement date thereafter. Changes in the estimated fair value of the warrants classified as liabilities are recognized as a non-cash gain or loss on the statements of operations.
Income Taxes
ASC Topic 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions 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. The Company’s management determined that the Cayman Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits, if any, as income tax expense. There were no0 unrecognized tax benefits as of SeptemberJune 30, 20202021 and December 31, 20192020 and no0 amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.
The Company may be subject to potential examination by foreign taxing authorities in the area of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with foreign tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.
The Company is considered to be an exempted Cayman Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing requirements in the Cayman Islands or the United States.
Net Income (Loss) Per Ordinary Share
Net income (loss) per ordinary share is computed by dividing net income (loss) by the weighted average number of ordinary shares outstanding for the period. The Company has not considered the effect of warrants sold in the Initial Public Offering and private placement to purchase an aggregate of 17,910,000 ordinary shares in the calculation of diluted income (loss) per share, since the exercise of the warrants are contingent upon the occurrence of future events and the inclusion of such warrants would be anti-dilutive under the treasury stock method.
The Company’s condensed statements of operations include a presentation of income (loss) per share for ordinary shares subject to possible redemption in a manner similar to the two-class method of income (loss) per share. Net income per ordinary share, basic and diluted, for Class A redeemable ordinary shares is calculated by dividing the interest income earned on the Trust Account, of $38,949 and $715,324, respectively, for the three and nine months ended September 30, 2020 by the weighted average number of Class A redeemable ordinary shares outstanding for the period of 13,800,000.since original issuance. Net loss forper share, basic and diluted, non-redeemable ordinary shares basic and diluted, is calculated by dividing the net income (loss), lessloss, adjusted for income attributable to redeemable ordinary shares, of $715,324, by the weighted average number of non-redeemable ordinary shares outstanding for the period of 3,600,000.period. Non-redeemable ordinary shares include the Founder Shares as these shares do not have any redemption features and do not participate in the income earned on the Trust Account.
9
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)JUNE 30, 2021
(Unaudited)
The following table reflects the calculation of basic and diluted net income (loss) per ordinary share (in dollars, except per share amounts):
| | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, | ||||||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Redeemable ordinary shares | | | |
| |
| | | |
| |
|
Numerator: Earnings allocable to Redeemable Ordinary Shares |
| |
|
| |
|
| |
|
| |
|
Interest Income | | $ | 6,389 | | $ | 129,744 | | $ | 30,338 | | $ | 676,375 |
Net Earnings | | $ | 6,389 | | $ | 129,744 | | $ | 30,338 | | $ | 676,375 |
Denominator: Weighted Average Redeemable Ordinary Shares Redeemable Ordinary Shares, Basic and Diluted | |
| 13,800,000 | |
| 13,800,000 | |
| 13,800,000 | |
| 13,800,000 |
Earnings/Basic and Diluted Redeemable Ordinary Shares | | $ | — | | $ | 0.01 | | $ | — | | $ | 0.05 |
| | | | | | | | | | | | |
Non-Redeemable Ordinary Shares | |
|
| |
|
| |
|
| |
|
|
Numerator: Net (Loss) Income minus Redeemable Net Earnings | |
|
| |
|
| |
|
| |
|
|
Net (Loss) Income | | $ | (12,312,374) | | $ | (1,301,788) | | $ | (11,284,061) | | $ | (9,894) |
Redeemable Net Earnings | |
| (6,389) | |
| (129,744) | |
| (30,338) | |
| (676,375) |
Non-Redeemable Net Income | | $ | (12,318,763) | | $ | (1,413,532) | | $ | (11,314,399) | | $ | (686,269) |
Denominator: Weighted Average Non-Redeemable Ordinary Shares Non-Redeemable Ordinary Shares, Basic and Diluted | |
| 3,600,000 | |
| 3,600,000 | |
| 3,600,000 | |
| 3,600,000 |
Loss/Basic and Diluted Non-Redeemable Ordinary Shares | | $ | (3.42) | | $ | (0.40) | | $ | (3.14) | | $ | (0.19) |
Note: As of June 30, 2021 and 2020, basic and diluted shares are the same as there are no securities that are dilutive to the shareholders.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist of a cash account in a financial institution, which at times, may exceed the $250,000 coverage provided by the Federal depository insurance coverage of $250,000. At September 30, 2020 and December 31, 2019, theDepository Insurance Corporation. The Company had not experienced losses on this account and management believes the Company is not exposed to significant risks on such account.
Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities (excluding warrants), which qualify as financial instruments under ASC Topic 820, “Fair Value Measurement,” approximates the carrying amounts represented in the accompanying condensed consolidated balance sheets, primarily due to their short-term nature.
The fair value of the private warrants, which are classified as liabilities, was estimated using a Binomial Lattice Model (see Note 9).
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s condensed consolidated financial statements.
NOTE 3. INITIAL PUBLIC OFFERING
Pursuant to the Initial Public Offering, the Company sold 13,800,000 Units, at a purchase price of $10.00 per Unit, which includes the full exercise by the underwriters of their over-allotment option in the amount of 1,800,000 Units at $10.00 per Unit. Each Unit consists of one1 ordinary share and one1 warrant (“Public Warrant”). Each Public Warrant entitles the holder to purchase one ordinary share at an exercise price of $11.50 per share (see Note 7)8).
10
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
NOTE 4. PRIVATE PLACEMENT
Simultaneously with the closing of the Initial Public Offering, the Sponsor and EarlyBirdCapital and its designees purchased an aggregate of 4,110,000 Private Warrants at $1.00 per Private Warrant, for an aggregate purchase price of $4,110,000. The Sponsor purchased an aggregate of 3,562,000 Private Warrants and EarlyBirdCapital and its designees purchased an aggregate of 548,000 Private Warrants. Each Private Warrant is exercisable to purchase one1 ordinary share at an exercise price of $11.50 per share (see Note 7)8). The proceeds from the Private Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combinationbusiness combination within the Combination Period, the proceeds from the sale of the Private Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Warrants will expire worthless. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the Private Warrants.
The Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants (i) will not be redeemable by the Company and (ii) may be exercised for cash or on a cashless basis, so long as they are held by the initial purchaser or any of its permitted transferees. If the Private Warrants are held by holders other than the initial purchasers or any of their permitted transferees, the Private Warrants will be redeemable by the Company and exercisable by the holders on the same basis as the Public Warrants. In addition, the Private Warrants may not be transferable, assignable or saleable until the consummation of a Business Combination,business combination, subject to certain limited exceptions.
NOTE 5. RELATED PARTY TRANSACTIONS
Founder Shares
In August 2019, the Company issued an aggregate of 2,875,000 ordinary shares (the “Founder Shares”) to the Sponsor for an aggregate purchase price of $25,000. On October 17, 2019, the Company effected a share dividend of 0.2 of a share for each ordinary share in issue, resulting in the Sponsor holding an aggregate of 3,450,000 Founder Shares. The Founder Shares include an aggregate of up to 450,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment is not exercised in full or in part, so that the initial shareholders will collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the initial shareholders do not purchase any Public Shares in the Initial Public Offering and excluding the Representative Shares (as defined in Note 7)). As a result of the underwriters’ election to fully exercise their over-allotment option, 450,000 Founder Shares are no longer subject to forfeiture.
The initial shareholders have agreed not to transfer, assign or sell any of the Founder Shares (except to certain permitted transferees) until (i) with respect to 50% of the Founder Shares, the earlier of one year after the completion of a Business Combinationbusiness combination and the date on which the closing price of the ordinary shares equals or exceeds $12.50 per share (as adjusted for share splits, share capitalizations, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing after a Business Combinationbusiness combination and (ii) with respect to the remaining 50% of the Founder Shares, one year after the completion of a Business Combination,business combination, or earlier, in either case, if, subsequent to a Business Combination,business combination, the Company completes a liquidation, merger, share exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other property.
Administrative Services Agreement
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
The Company entered into an agreement, commencing on October 17, 2019 through the earlier of the consummation of a business combination or the Company’s liquidation, to pay Ampla Capital, LLC, an affiliate of the Company’s Chief Financial Officer a monthly fee of approximately $3,000 for general and administrative services, including office space, utilities and secretarial support. For the three and six months ended June 30, 2021 and 2020, respectively, the Company incurred and paid $18,000 in fees for these services.
Promissory Note — Related Party
The Company’s Sponsor agreed to loan the Company up to $300,000 to be used for the payment of costs related to the Initial Public Offering. The Promissory Note (“Promissory Note”) was non-interest bearing, unsecured and due on the earlier of March 31, 2020 or the closing of the Initial Public Offering. The Promissory Note, in the outstanding amount of $93,798, was repaid upon the consummation of the Initial Public Offering on October 22, 2019. As of SeptemberJune 30, 20202021 and December 31, 2019, no2020, 0 amounts under the Promissory Note were outstanding.outstanding nor could the promissory note be drawn upon.
11
GALILEO ACQUISITION CORP.
Administrative Services AgreementNOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
The Company entered into an agreement, commencing on October 17, 2019 through the earlier of the consummation of a Business Combination or the Company’s liquidation, to pay Ampla Capital, LLC, an affiliate of the Company’s Chief Financial Officer a monthly fee of approximately $3,000 for general and administrative services, including office space, utilities and secretarial support. For the three and nine months ended September 30, 2020, the Company incurred and paid $9,000 and $27,000 in fees for these services, respectively.(Unaudited)
Related Party Loans
In order to finance transaction costs in connection with a Business Combination,business combination, the Initial Shareholders, the Company’s officers and directors or their affiliates may, but are not obligated to, loan the Company funds from time to time or at any time, as may be required (“Working Capital Loans”). Each Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of a Business Combination,business combination, without interest, or, at the lender’s discretion, up to $1,000,000 of the Working Capital Loans may be converted into warrants at a price of $1.00 per warrant. The warrants would be identical to the Private Warrants. In the event that a Business Combinationbusiness combination does not close, the Company may use a portion of the proceeds held outside the Trust Account to repay the Working Capital Loans, but no0 proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of SeptemberJune 30, 20202021, and December 31, 2019,2020, respectively, there are 0 amounts outstanding.
On December 14, 2020, the Company entered into a convertible promissory note with the Sponsor pursuant to which the Sponsor agreed to loan the Company up to an aggregate principal amount of $500,000 (the “Convertible Note”). The Convertible Note is non-interest bearing and payable upon the date on which the Company consummates a business combination. If the Company does not consummate a business combination, the Company may use a portion of any funds held outside the Trust Account to repay the Convertible Note; however, no Working Capital Loans were outstanding.proceeds from the Trust Account may be used for such repayment. Up to $500,000 of the Convertible Note may be converted into warrants at a price of $1.00 per warrant at the option of the Sponsor. The warrants, if issued, will be identical to the Private Warrants. As of June 30, 2021 and December 31, 2020, the outstanding balance under the Convertible Note amounted to an aggregate of $500,000 and $500,000, respectively. As of June 30, 2021, the aggregate fair market value of the Convertible Note was $1,350,000 (see Note 9).
NOTE 6. COMMITMENTS AND CONTINGENCIES
Risks and Uncertainties
Management continues to evaluate the impact of the COVID-19 pandemic on the industry and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations and/or search for a target company, the specific impact is not readily determinable as of the date of these condensed consolidated financial statements. The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Registration Rights
Pursuant to a registration rights agreement entered into on October 17, 2019, the holders of the Founder Shares, Private Warrants (and their underlying securities), Representative Shares (as a defined in Note 7) and any securities that may be issued upon conversion of the Working Capital Loans (and their underlying securities) will be entitled to registration rights. The holders of a majority of these securities are entitled to make up to two2 demands that the Company register such securities. The holders of the majority of the Founder Shares can elect to exercise these registration rights at any time commencing three months prior to the date on which these shares are to be released from escrow. The holders of a majority of the Representative Shares, Private Warrants (and underlying securities) and securities issued in payment of Working Capital Loans (or underlying securities) can elect to exercise these registration rights at any time after the Company consummates a Business Combination.business combination. Notwithstanding anything herein to the contrary, EarlyBirdCapital and/or its designees may only make a demand registration (i) on one1 occasion and (ii) during the five-year period beginning on the effective date of the Initial Public Offering. In addition, the holders will have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination.business combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Business Combination Marketing Agreement
ThePursuant to a letter agreement entered into on October 17, 2019 (the “Business Combination Marketing Agreement”), the Company engaged EarlyBirdCapital as an advisor in connection with a Business Combination to assist the Company in locatingidentifying potential target businesses for a business combination, holding meetings with its shareholders to discuss a potential Business Combinationbusiness combinations and the target business’ attributes, introduceintroducing the Company to potential investors that aremay be interested in purchasing securities assistof the Company in connection with a business
12
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
combination, assisting the Company in obtaining shareholder approval for the Business Combinationa business combination and assist the Company with its press releases and public filings in connection with a Business Combination.business combination. The Company will pay EarlyBirdCapital a cash fee equal to 3.5% of the gross proceeds of the Initial Public Offering, or $4,830,000, for such services only upon the consummation of a Business Combination. Of such amount,business combination. At the Company’s sole discretion, up to approximately 25% of such amount may be paid (subject to the Company’s discretion) to third parties who are investment banks or financial advisory firms not participating in Initial Public Offering that assist the Company in consummating its Business Combination. The election to make such payments to third parties will be solely at the discretion of the Company’s management team, and such third parties will be selected by the management team in their sole and absolute discretion.business combination. As of SeptemberJune 30, 2020,2021, the above service had not been completed and accordingly, no0 amounts have been recorded in the accompanying condensed consolidated financial statements.
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Additionally, the Company will pay EarlyBirdCapital a cash fee equal to 1.0% of the total consideration payable in the proposed Business Combinationbusiness combination if it introduces the Company to the target business with which the Company completes a Business Combination;business combination; provided that the foregoing fee will not be paid prior to the date that is 90 days from the effective date of the Initial Public Offering, unless FINRA determines that such payment would not be deemed underwriters’ compensation in connection with the Initial Public Offering pursuant to FINRA Rule 5110(c)(3)(B)(ii).
Placement Agent Agreement
Pursuant to a letter agreement dated February 23, 2021, the Company will pay Stifel Nicolaus & Company, Incorporated (“Stifel”) a placement agent fee for services provided by Stifel in connection with the placement of a private investment in a public equity transaction in connection with a business combination. Pursuant to the amended letter agreement, dated as of April 27, 2021 (the “Placement Agent Agreement”) entered into in connection with the proposed business combination with Shapeways (as defined in Note 6 below), upon consummation of the PIPE Investment referred to in Note 6, the Company will pay Stifel a placement fee equal to 4.0% of the gross proceeds to the Company from the PIPE Investment), excluding proceeds from investors in the PIPE Investment that were stockholders of Shapeways as of the date they entered into subscription agreements for the PIPE Investment and excluding proceeds from Stifel or any of its affiliates. In addition, the Company will reimburse Stifel for reasonable out-of-pocket expenses, not to exceed $25,000 in the aggregate, regardless of whether the PIPE Investment is consummated.
Merger Agreement
On April 28, 2021, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Shapeways, Inc., a Delaware corporation (“Shapeways”), Galileo Acquisition Holdings Inc., a Delaware corporation and a wholly-owned subsidiary of Galileo (“Merger Sub”), Galileo Founders Holdings, L.P., a Delaware limited partnership (the “Sponsor”), in the capacity as the representative of the shareholders of Galileo (other than the Shapeways security holders) from and after the closing (the “Closing”) of the transactions contemplated by the Merger Agreement (collectively, the “Transaction”) (in such capacity, the “Purchaser Representative”), and Fortis Advisors LLC, in the capacity as the representative of the Shapeways security holders from and after the Closing of the Transaction (in such capacity, the “Seller Representative”).
Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, (i) prior to the Closing, the Company will continue out of the Cayman Islands and into the State of Delaware to re-domicile and become a Delaware corporation (the “Domestication”) and (ii) at the Closing of the Transaction, and following the Domestication and the PIPE Investment (defined below), Merger Sub will merge with and into Shapeways (the “Merger”), with Shapeways continuing as the surviving entity and wholly-owned subsidiary of the Company, and with each Shapeways stockholder receiving shares of the Company common stock at the Closing (as further described below). Simultaneously with entering into the Merger Agreement, the Company entered into Subscription Agreements (as defined below) with investors (“PIPE Investors”) to purchase a total of 7.5 million shares of the Company common stock in a private equity investment (“PIPE”) in the Company at $10.00 per share with aggregate gross proceeds to the Company of $75,000,000. The PIPE Investors include certain existing Shapeways stockholders and a strategic investor.
The Merger Agreement contains customary conditions to Closing, including the following mutual conditions of the parties (unless waived): (i) approval of the shareholders of the Company and Shapeways; (ii) approvals of any required governmental authorities and completion of any antitrust expiration periods; (iii) no law or order preventing the Transaction; (iv) the Registration Statement having been declared effective by the SEC; (v) the satisfaction of the $5,000,001 minimum net tangible asset test by the Company; (vi) approval
13
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
of the Company’s common stock for listing on NYSE; (vii) consummation of the Domestication; and (viii) reconstitution of the post-Closing board of directors as contemplated under the Merger Agreement.
Simultaneously with the execution of the Merger Agreement, the Company and Shapeways entered into subscription agreements (collectively, the “Subscription Agreements”) with PIPE Investors for an aggregate for 7,500,000 shares of the Company’s common stock, par value $0.0001 per share (the “PIPE Shares”), at a price of $10.00 per share, for an aggregate of $75,000,000, in a private placement to be consummated simultaneously with the closing of the Transaction (the “PIPE Investment”). The consummation of the transactions contemplated by the Subscription Agreements is conditioned on the concurrent Closing and other customary closing conditions. Among other things, each PIPE Investor agreed in the Subscription Agreement that it and its affiliates will not have any right, title, interest or claim of any kind in or to any monies in the Trust Account held for its public stockholders, and agreed not to, and waived any right to, make any claim against the trust account (including any distributions therefrom). In addition, Shapeways granted certain customary resale registration rights to the PIPE Investors in the Subscription Agreements.
NOTE 7. SHAREHOLDERS’ EQUITY
Preference Shares — The Company is authorized to issue 2,000,000 preference shares with a par value of $0.0001 per share with such designation, rights and preferences as may be determined from time to time by the Company’s Board of Directors. At SeptemberJune 30, 20202021 and December 31, 2019,2020, there were no0 preference shares issued or outstanding.
Ordinary Shares — The Company is authorized to issue 200,000,000 ordinary shares with a par value of $0.0001 per share. Holders of the ordinary shares are entitled to one1 vote for each share. At SeptemberJune 30, 20202021 and December 31, 2019,2020, there were 3,946,8713,600,000 and 3,980,9514,331,351 ordinary shares issued and outstanding, excluding 13,453,12913,800,000 and 13,419,04913,068,649 ordinary shares subject to possible redemption, respectively, which includesrespectively.
The Company determined the 2,887,500 Founder Shares notordinary shares subject to forfeiture.redemption to be equal to the redemption value of approximately $10.00 per share of ordinary shares while also taking into consideration a redemption cannot result in net tangible assets being less than $5,000,001. Upon considering the impact of the PIPE financing and associated Subscription Agreements, it was concluded that the redemption value should include all shares of ordinary shares resulting in the ordinary shares subject to possible redemption being equal to $138,000,000. This resulted in a measurement adjustment to the initial carrying value of the ordinary shares subject to redemption with the offset recorded to additional paid-in capital and accumulated deficit.
NOTE 8. WARRANTS
Warrants — The Public Warrants will become exercisable on the later of (a) the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. No Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon the exercise of the Public Warrants is not effective within 90 days from the consummation of a Business Combination, the 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 the Public Warrants on a cashless basis pursuant to the exemption from registration provided by Section 3(a)(9) of the Securities Act provided that such exemption is available. If an exemption from registration is not available, holders will not be able to exercise their Public Warrants on a cashless basis. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.
The Company may redeem the Public Warrants:
| in whole and not in part; |
| at a price of $0.01 per warrant; |
| at any time while the Public Warrants are exercisable; |
| upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder; |
14
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
| if, and only if, the reported last sale price of the Company’s ordinary shares equals or exceeds $18.00 per share, for any 20 trading days within a 30-trading day period ending on the third business day prior to the notice of redemption to the warrant holders; and |
| if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption. |
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a capitalization of shares, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below their exercise price or issuance of potential extension warrants in connection with an extension of the period of time for the Company to complete a Business Combination. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
In addition, if (x) the Company issues additional ordinary shares or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at an issue price or effective issue price of less than $9.20 per share (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors, and in the case of any such issuance to the Sponsor, initial shareholders or their affiliates, without taking into account any Founder Shares held by them prior to such issuance), (y) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of a Business Combination on the date of the consummation of a Business Combination, and (z) the volume weighted average trading price of the Company’s ordinary shares during the 20 trading day period starting on the trading day prior to the day on which the Company consummates a Business Combination (such price, the “Market Value”) is below $9.20 per share, the exercise price of a warrant will be adjusted (to the nearest cent) to be equal to 115% of the greater of (i) the Market Value or (ii) the price at which the Company issues the additional ordinary shares or equity-linked securities.
Representative Shares
In August 2019, the Company issued to the designees of EarlyBirdCapital 125,000 ordinary shares (the “Representative Shares”) for a nominal consideration. On October 17, 2019, the Company effected a share dividend of 0.2 of a share for each ordinary share in issue, resulting in EarlyBirdCapital holding an aggregate of 150,000 Representative Shares. The Company accounted for the Representative Shares as an offering cost of the Proposed Offering, with a corresponding credit to shareholders’ equity. The Company estimated the fair value of Representative Shares to be $1,137 based upon the price of the Founder Shares issued to the Sponsor. The holders of the Representative Shares have agreed not to transfer, assign or sell any such shares until the completion of a Business Combination. In addition, the holders have agreed (i) to waive their redemption rights with respect to such shares in connection with the completion of a Business Combination and (ii) to waive their rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the Combination Period.
The Representative Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days immediately following the effective date of the registration statement related to the Initial Public Offering pursuant to Rule 5110(g)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the effective date of the registration statement related to the Initial Public Offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the effective date of the registration statement related to the Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners.
15
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
NOTE 8.9. FAIR VALUE MEASUREMENTS
The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:
Level 1: | Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. |
Level 2: | Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active. |
Level 3: | Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability. |
The Company classifies its U.S. Treasury and equivalent securities as held-to-maturity in accordance with ASC 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheetsheets and adjusted for the amortization or accretion of premiums or discounts.
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
At SeptemberJune 30, 2021 and December 31, 2020, assets held in the Trust Account were comprised of $5,447$.33 and $5,563 in cash equivalents and $139,124,356$139,188,837.90 and $139,152,937 in U.S. Treasury Bills at amortized cost. During the three and ninesix months ended SeptemberJune 30, 2020,2021, the Company did not withdraw any interest income from the Trust Account to pay its tax obligations.
At June 30, 2021, there were 4,110,000 Private Placement Warrants outstanding that were measured at fair value.
AtThe following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2021 and December 31, 2019, assets held in2020 and indicates the Trust Account were comprisedfair value hierarchy of $220 in cash and $138,414,259 U.S Treasury Bills, at amortized cost. During the period ended December 31, 2019,valuation inputs the Company did not withdraw any interest income from the Trust Accountutilized to pay its tax obligations.
determine such fair value. The gross holding gains and fair value of held-to-maturity securities at SeptemberJune 30, 20202021 and December 31, 20192020 are as follows:
| Held-To-Maturity | Amortized Cost | Gross Holding Gains | Fair Value | |||||||||||
| September 30, 2020 | U.S. Treasury Securities (Matured on 10/08/2020) | $ | 139,124,356 | $ | 2,253 | $ | 139,126,609 | |||||||
| December 31, 2019 | U.S. Treasury Securities (Matured on 4/16/2020) | $ | 138,414,259 | $ | 26,719 | $ | 138,440,978 | |||||||
| | | | | | | | | | | | | |
| | | | |
| | |
| Gross |
| | | |
| | | | | | Amortized | | Holding | | | | ||
|
| Held-To-Maturity |
| Level |
| Cost |
| Gains |
| Fair Value | |||
June 30, 2021 |
| Liquid Treasury Money Market Fund | | 1 | | $ | 139,188,838 | | $ | 0 | | $ | 139,188,838 |
December 31, 2020 |
| U.S. Treasury Securities (Matured on 01/07/2021) (1) | | 1 | | $ | 139,152,937 | | $ | 2,063 | | $ | 139,155,000 |
| | | | | | | | | | |
| | | | | | | | | Fair value at | |
| | | | | | Fair value at | | December 31, | ||
Liabilities: |
| Warrant Liabilities |
| Level |
| June 30, 2021 |
| 2020 | ||
| | Warrant Liability | | 3 | | $ | 12,330,000 | | $ | 3,452,400 |
| | Convertible Promissory Notes – Related Party |
| 3 | | | 1,350,000 | | | 500,000 |
| (1) | The Company notes that the U.S. Treasury Securities were reinvested with the funds from the previously matured securities |
16
GALILEO ACQUISITION CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021
(Unaudited)
The Company recognizes transfers into and out of the fair value levels at the end of the reporting period. There were 0 transfers into or out of the levels during the six months ended June 30, 2021 or December 31, 2020.
The Company established the initial fair value for the private warrants on October 22, 2019, the date of the Company’s Initial Public Offering, using a Binomial Lattice Model. The Company continues to classify the private warrants as Level 3 due to the use of unobservable inputs and continues to value the private warrants using a Binomial Lattice Model.
The key inputs into the Binomial Lattice Model for the Private Placement Warrants were as follows at June 30, 2021 and December 31, 2020:
| | | | | | | |
Input |
| June 30, 2021 |
| December 31, 2020 |
| ||
Risk-free interest rate |
| | 0.80 | % | | 0.28 | % |
Dividend yield |
| | 0.00 | % | | 0.00 | % |
Implied volatility |
| | 40.04 | % | | 15.4 | % |
Exercise price | | $ | 11.50 | | $ | 11.50 | |
Market Stock Price | | $ | 10.00 | | $ | 10.20 | |
On June 30, 2021 and December 31, 2020, the Private Placement Warrants were determined to be $3 and $0.84 and per warrant, respectively, for an aggregate value of $12.3 million and $3.5 million, respectively.
The following table presents the changes in the fair value of warrant liabilities:
| | | |
| | Private Placement | |
|
| Warrants | |
Fair value as of December 31, 2020 | | $ | 3,452,400 |
Change in valuation inputs or other assumptions | |
| 8,877,600 |
Fair value as of June 30, 2021 | | $ | 12,330,000 |
NOTE 9 10 — SUBSEQUENT EVENTS
The Company evaluated subsequent events and transactions that occurred after the balance sheetsheets date up to the date that the condensed financial statements were issued. Based upon this review, the Company did not identify any subsequent events that would have required adjustment or disclosure in the condensed financial statements.
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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Galileo Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, references to the “Sponsor” refer to Galileo Founders Holdings, L.P. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements other than statements of historical fact included in this Form 10-Q including statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section ofof: (i) the Company’s amended Annual Report on Form 10-K10-K/A for the year endingended December 31, 20192020 filed with the SEC on MarchMay 26, 2020.2021; and (ii) the Company’s registration statement on Form S-4, filed with the SEC on June 9, 2021, as further amended and filed on Form S-4/A with the SEC on July 22, 2021. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.
Overview
We are a blank check company incorporated in the Cayman Islands on July 30, 2019 formed for the purpose of effecting a merger, share exchange, asset acquisition, stock purchase, reorganization or similar Business Combination with one or more businesses. Our efforts to identify a prospective target business will not be limited to a particular industry or geographic location. However, we believe we are particularly well-positioned to capitalize on growing opportunities which are headquartered in Western Europe and are significantly export oriented towards the United States and with a clearly defined North American high growth strategy. We intend to effectuate our Business Combination using cash derived from the proceeds of the Initial Public Offering, our shares, debt or a combination of cash, shares and debt.
The issuance of additional ordinary shares in a Business Combination:
| may significantly reduce the equity interest of our shareholders; |
| may subordinate the rights of holders of ordinary shares if we issue preference shares with rights senior to those afforded to our ordinary shares; |
| will likely cause a change in control if a substantial number of our ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and most likely will also result in the resignation or removal of our present officers and directors; and |
| may adversely affect prevailing market prices for our securities. |
18
Similarly, if we issue debt securities, it could result in:
| default and foreclosure on our assets if our operating revenues after a business combination are insufficient to pay our debt obligations; |
| acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant 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; and |
| our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding. |
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception to SeptemberJune 30, 20202021 were organizational activities, those necessary to prepare for the Initial Public Offering, described below, and identifying a target company for a Business Combination.an initial business combination and activities related to the acquisition of Shapeways and Transaction in connection therewith. We do not expect to generate any operating revenues until after the completion of our initial Business Combination. We generate non-operating income in the form of interest income on marketable securities held in the Trust Account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing aan initial Business Combination.
For the three months ended SeptemberJune 30, 2020,2021, we had a net loss of $60,306,$12,312,374, which consists of general and administrativeoperating costs of $99,255,$1,399,263, change in fair value of promissory note of $850,000, change in fair value of warrant liabilities of $10,069,500, offset by interest income on marketable securities held in the Trust Account of $38,949.
$6,389.
For the ninesix months ended SeptemberJune 30, 2020,2021, we had a net incomeloss of $340,800,$11,284,061, which consists of operating costs of $1,586,799, change in fair value of promissory note of $850,000, change in fair value of warrant liabilities of $8,877,600, offset by interest income on marketable securities held in the Trust Account of $715,324, offset by general and administrative costs of $374,524.
$30,338.
For the period from Julythree months ended June 30, 2019 (inception) through September 30, 2019,2020, we had a net loss $16,126,of $1,301,788, which consistedconsists of formation and operating costs.costs of $75,232, change in fair value of warrant liabilities of $1,356,300, offset by interest income on marketable securities held in the Trust Account of $129,744.
For the six months ended June 30, 2020, we had a net loss of $9,894, which consists of operating costs of $275,269, change in fair value of warrant liabilities of $;411,000, offset by interest income on marketable securities held in the Trust Account of $676,375.
Liquidity and Capital Resources
On October 22, 2019, we consummated the Initial Public Offering of 13,800,000 Units, which included the full exercise by the underwriters of the over-allotment option to purchase an additional 1,800,000 Units, at $10.00 per Unit, generating gross proceeds of $138,000,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 4,110,000 Private Warrants to the Sponsor and EarlyBirdCapital, at a price of $1.00 per Private Warrant, generating gross proceeds of $4,110,000.
Following the Initial Public Offering, the exercise of the over-allotment option and the sale of the Private Warrants, a total of $138,000,000 was placed in the Trust Account. We incurred $3,187,305 in transaction costs, including $2,760,000 of underwriting fees and $427,305 of other offering costs.
For the ninesix months ended SeptemberJune 30, 2020,2021, cash used in operating activities was $389,512.$383,414. Net incomeloss of $340,800$11,284,061 was offsetaffected by interest earned on marketable securities held in the Trust Account of $715,324$30,338, a change in the fair value of warrant liabilities of $8,877,600, change in fair value of promissory note $850,000, and changes in operating assets and liabilities, which provided $1,203,385 of cash from operating activities.
19
For the six months ended June 30, 2020, cash used in operating activities was $329,901. Net loss of $9,894 was affected by interest earned on marketable securities held in the Trust Account of $676,375, a change in the fair value of warrant liabilities of $411,000, and changes in operating assets and liabilities, which used $14,988$54,632 of cash from operating activities.
As of SeptemberJune 30, 2020,2021, we had cash and marketable securities held in the Trust Account of $139,129,803.$139,188,838. We intend to use substantially all of the funds held in the Trust Account, including any amounts representing interest earned on the Trust Account to complete our Business Combination. To the extent that our share capital is not used, in whole or in part, as consideration to complete our 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.
As of SeptemberJune 30, 2020,2021, we had cash and cash equivalents of $322,550$241,416 held outside of the Trust Account. We intend to use the funds held outside the Trust Account primarily to 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.
Combination and general corporate purposes and administrative and management activities related to our business.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a 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 $1,000,000 of such loans may be convertible into warrants identical to the Private Warrants, at a price of $1.00 per warrant at the option of the lender.
WeOn December 14, 2020, we entered into the Convertible Note with our sponsor, pursuant to which, our sponsor agreed to loan us up to an aggregate principal amount of $500,000. The Convertible Note is non-interest bearing and payable upon the date on which an initial business combination is consummated. If we do not believeconsummate an initial business combination, we will needmay use a portion of any funds held outside the trust account to raise additional funds in orderrepay the Convertible Note; however, no proceeds from the Trust Account may be used for such repayment. Up to meet the expenditures required for operating our business. However, if our estimate$500,000 of the costsConvertible Note may be converted into warrants at a price of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than$1.00 per warrant at the actual amount necessary to do so, we may not have sufficient funds available to operate our business prior to our initial Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant numberoption of our public shares upon completionSponsor. The warrants, if issued, will be identical to the Private Warrants. As of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination.June 30, 2021 and December 31, 2020, the outstanding balance under the Convertible Note was $1,350,000 and $500,000, respectively.
Going Concern
We have until July 22, 2021 (or up to October 22, 2021 if a definitive agreement with respect to a proposed Business Combination has been executed by July 22, 2021) to consummate a Business Combination.an initial business combination. It is uncertain that we will have sufficient liquidity to fund the working capital needs of the Company until the liquidation date. Additionally, it is uncertain that we will be able to consummate a Business Combinationan initial business combination by this time. The Company may not have sufficient liquidity to fund the working capital needs of the Company until one year from the issuance of the financial statements included in this Quarterly Report. If a Business Combinationan initial business combination is not consummated by this date, there will be a mandatory liquidation and subsequent dissolution. Management has determined that the mandatory liquidation, should a Business Combinationan initial business combination not occur, and potential subsequent dissolution raises substantial doubt about our ability to continue as a going concern. No adjustments have been made to the carrying amounts of assets or liabilities should we be required to liquidate after July 22, 2021 (or up to October 22, 2021 if a definitive agreement with respect to a proposed Business Combination has been executed by July 22, 2021).2021.
Off-Balance Sheet Financing Arrangements
We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as of SeptemberJune 30, 2020.2021. We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.
Business Combination
On April 28, 2021, the Company entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with Shapeways, Inc., a Delaware corporation (“Shapeways”), Galileo Acquisition Holdings Inc., a Delaware corporation and a wholly-owned subsidiary of Galileo (“Merger Sub”), Galileo Founders Holdings, L.P., a Delaware limited partnership (the “Sponsor”), in the capacity as the representative of the shareholders of the Company (other than the Shapeways security holders) from and after the closing (the “Closing”) of the transactions contemplated by the Merger Agreement (collectively, the “Transaction”) (in such capacity, the
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“Purchaser Representative”), and Fortis Advisors LLC, in the capacity as the representative of the Shapeways security holders from and after the Closing of the Transaction (in such capacity, the “Seller Representative”).
Pursuant to the Merger Agreement, subject to the terms and conditions set forth therein, (i) prior to the Closing, the Company will continue out of the Cayman Islands and into the State of Delaware to re-domicile and become a Delaware corporation (the “Domestication”) and (ii) at the Closing of the Transaction, and following the Domestication and the PIPE Investment (defined below), Merger Sub will merge with and into Shapeways (the “Merger”), with Shapeways continuing as the surviving entity and wholly-owned subsidiary of the Company, and with each Shapeways stockholder receiving shares of Company common stock at the Closing (as further described below). Simultaneously with entering into the Merger Agreement, the Company entered into Subscription Agreements (as defined below) with investors (“PIPE Investors”) to purchase a total of 7.5 million shares of Company common stock in a private equity investment in the Company at $10.00 per share with aggregate gross proceeds to the Company of $75,000,000. The PIPE Investors include certain existing Shapeways stockholders and a strategic investor.
The Merger Agreement contains customary conditions to Closing, including the following mutual conditions of the parties (unless waived): (i) approval of the shareholders of the Company and Shapeways; (ii) approvals of any required governmental authorities and completion of any antitrust expiration periods; (iii) no law or order preventing the Transaction; (iv) the registration statement having been declared effective by the SEC; (v) the satisfaction of the $5,000,001 minimum net tangible asset test by the Company; (vi) approval of the Company’s common stock for listing on NYSE; (vii) consummation of the Domestication; and (viii) reconstitution of the post-Closing board of directors as contemplated under the Merger Agreement.
Contractual Obligations
We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities.
We have an agreement to pay an affiliate of our Chief Financial Officer a monthly fee of $3,000 for office space, utilities and secretarial and administrative support to the Company. We began incurring these fees on October 17, 2019 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and the Company’s liquidation.
We engaged EarlyBirdCapital as an advisor in connection with a Business Combination to assist us in locating target businesses, holding meetings with our shareholders to discuss a potential Business Combination and the target business’ attributes, introduce us to potential investors that are interested in purchasing securities, assist us in obtaining shareholder approval for the Business Combination and assist us with our press releases and public filings in connection with a Business Combination. We will pay EarlyBirdCapital a cash fee equal to 3.5% of the gross proceeds of the Initial Public Offering, or $4,830,000, for such services only upon the consummation of a Business Combination. Of such amount, up to approximately 25% may be paid (subject to our discretion) to third parties who are investment banks or financial advisory firms not participating in Initial Public Offering that assist us in consummating its Business Combination. The election to make such payments to third parties will be solely at the discretion of our management team, and such third parties will be selected by the management team in their sole and absolute discretion.
Additionally, we will pay EarlyBirdCapital a cash fee equal to 1.0% of the total consideration payable in the proposed Business Combination if it introduces us to the target business with which we complete a Business Combination; provided that the foregoing fee will not be paid prior to the date that is 90 days from the effective date of the Initial Public Offering, unless FINRA determines that such payment would not be deemed underwriters’ compensation in connection with the Initial Public Offering pursuant to FINRA Rule 5110(c)(3)(B)(ii).
In connection with the Business Combination, on April 26, 2021, the Company entered into capital markets advisory agreements with Craig Hallum Capital Group LLC (“Craig Hallum”) and with Needham & Company, LLC (“Needham”), pursuant to which the Company will pay a capital markets advisory fee of $600,000 (collectively, the “Capital Markets Advisory Fees”) to each of Craig Hallum and Needham at, and contingent upon, the Closing. The Capital Markets Advisory Fees will constitute a portion of the EBC Transaction Fee pursuant to the Business Combination Marketing Agreement. Additionally, pursuant to the terms of the capital markets advisory agreement with Needham, at the Closing, the Company will reimburse Needham for reasonable out-of-pocket costs and expenses not to exceed $10,000 (including fees and disbursements to legal counsel).
Pursuant to a letter agreement dated February 23, 2021, as amended as of April 27, 2021, the Company will pay Stifel Nicolaus & Company, Incorporated (“Stifel”), upon consummation of the PIPE Investment, a placement fee equal to 4.0% of the gross proceeds to the Company from the PIPE Investment, excluding proceeds from PIPE Investors that were stockholders of Shapeways as of the date they entered into subscription agreements for the PIPE Investment and excluding proceeds from Stifel or any of its affiliates.
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In addition, the Company will reimburse Stifel for reasonable out-of-pocket expenses, not to exceed $25,000 in the aggregate, regardless of whether the PIPE Investment is consummated.
Critical Accounting Policies
The preparation of condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have identified the following critical accounting policies:
Warrant Liability
We account for the private warrants issued in connection with our Initial Public Offering in accordance with the guidance contained in ASC 815-40 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the private warrants as liabilities at their fair value and adjust the private warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheets date until exercised, and any change in fair value is recognized in our statement of operations. The fair value of the private warrants was estimated using a Binomial Lattice Model.
Ordinary Shares Subject to Possible Redemption
We account for our ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, ordinary shares subject to possible redemption is presented as temporary equity, outside of the shareholders’ equity section of our condensed consolidated balance sheets.
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 redeemable ordinary shares is calculated by dividing the interest income earned on the Trust Account, by the weighted average number of redeemable ordinary shares outstanding since original issuance outstanding for the period. Net loss per ordinary share, basic and diluted for non-redeemable ordinary shares is calculated by dividing the net income (loss), less income attributable to redeemable ordinary shares, by the weighted average number of non-redeemable ordinary shares outstanding for the period.
Recent Accounting Standards
Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed consolidated financial statements.
ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of SeptemberJune 30, 2020,2021, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds received into the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in US treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
ITEM 4.CONTROLS AND PROCEDURES
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated
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and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
AsDisclosure controls are procedures that are designed with the objective of ensuring that information required by Rules 13a-15 and 15d-15to be disclosed in our reports filed under the Exchange Act, such as this Amendment, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our Chief Executive Officermanagement, including the chief executive officer and Chief Financial Officerchief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), of the effectiveness of the design and operation of our disclosure controls and procedures as of SeptemberJune 30, 2020.2021, pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. Based upon theirthat evaluation, our Chief Executive Officer and Chief Financial OfficerCertifying Officers concluded that, as of June 30, 2021, our disclosure controls and procedures (as defined in Rules 13a-15 (e)13a-15(e) and 15d-15 (e)15d-15(e) under the Exchange Act) were effective.not effective solely due to the Company’s restatement of its financial statements to reclassify the Company’s private warrants as liabilities (as described below in “Restatement of Previously Issued Financial Statements” and the Explanatory Note to the Company’s Annual Report on Form 10-K/A filed with the SEC on May 26, 2021).
We do not expect that our disclosure controls and procedures will prevent all errors and all instances 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 all 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 there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Restatement of Previously Issued Financial Statements
On May 12, 2021, we revised our prior position on accounting for warrants and concluded that our previously issued annual financial statements for the years ended December 31, 2020 and December 31, 2019, and the financial statements for the quarters ending September 30, 2020, June 30, 2020, and March 31, 2020, as reported in the Company's Annual Reports on Form 10-Ks filed on March 25, 2021 and March 26, 2020 and in the Company’s Quarterly Reports on Form 10-Qs filed on November 6, 2020, August 10, 2020, and May 8, 2020, respectively, should no longer be relied upon due to changes required to reclassify the Company’s outstanding private warrants as liabilities.
Changes in Internal Control Over Financial Reporting
We recently filed an Amended Annual Report on Form 10-K/A (filed with the SEC on May 26, 2021) and amended our Annual Report on Form 10-K (originally filed with the SEC on March 26, 2021). During the most recently completed fiscal quarter ended on June 30, 2021, there hashave been no changeother changes other than as described herein in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management has implemented remediation steps to address the material weakness and to improve our internal control over financial reporting. Specifically, we enhanced the supervisory review of accounting procedures in this financial reporting area and expanded and improved our review process for complex securities and related accounting standards. As of June 30, 2021, the deficiency in our internal control over financial reporting has not been fully remediated.
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PART II - OTHER INFORMATION
ITEM 1.LEGAL PROCEEDINGS.
None.
ITEM 1A.RISK FACTORS.
A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements.statements or otherwise in this Quarterly Report. For more information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the Risk Factors section ofof: (i) the Company’s amended Annual Report on Form 10-K10-K/A for the year ending December 31, 20192020 filed with the SEC on MarchMay 26, 2020,2021; and (ii) the Company’s registration statement on Form S-4, filed with the SEC on June 9, 2021, as well asfurther amended and filed on Form S-4/A with the risk factor section below.SEC on July 22, 2021.
The securities in which we invest the funds held in the Trust Account could bear a negative rate of interest, which could reduce the value of the assets held in trust such that the per-share redemption amount received by public shareholders may be less than $10.00 per share.
The proceeds held in the Trust Account are invested only in U.S. government treasury obligations with a maturity of 185 days or less or in money market funds meeting certain conditions under Rule 2a-7 under the Investment Company Act, which invest only in direct U.S. government treasury obligations. While short-term U.S. government treasury obligations currently yield a positive rate of interest, they have briefly yielded negative interest rates in recent years. Central banks in Europe and Japan pursued interest rates below zero in recent years, and the Open Market Committee of the Federal Reserve has not ruled out the possibility that it may in the future adopt similar policies in the United States. In the event that we are unable to complete our initial business combination or make certain amendments to our Amended and Restated Memorandum and Articles of Association our public shareholders are entitled to receive their pro-rata share of the proceeds held in the Trust Account, plus any interest income not released to us, net of taxes payable. Negative interest rates could impact the per-share redemption amount that may be received by public shareholders
ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3.DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4.MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5.OTHER INFORMATION.
None.
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ITEM 6.EXHIBITS.
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
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25 SIGNATURES Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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