What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-12 · 217 added, 160 removed, 413 unchanged (48% of the section changed)

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(in thousands, except per share and share amounts)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Current assets

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Total assets $ 776,589 $ 656,024

LIABILITIES AND STOCKHOLDERS' DEFICIT

LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)

Current Liabilities

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Commitments and contingencies (Note 13)

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Series A Redeemable Perpetual Preferred Stock of $ 0.001 par value - 500,000 authorized;

350,000 and none issued as of September 30, 2021 and December 31, 2020;

liquidation preference of $ 352.8 million and zero at September 30, 2021 and December 31, 2020

Stockholders’ equity/(deficit)

Preferred stock of $ 0.001 par value - 4,500,000 shares authorized;

none issued as of June 30, 2021 and December 31, 2020

zero issued as of September 30, 2021 and December 31, 2020

Common stock of $ 0.001 par value - 1,000,000,000 shares authorized;

126,994,467 shares issued as of June 30, 2021 and December 31, 2020

134,869,467 and 126,994,467 shares issued as of September 30, 2021 and December 31, 2020

Additional paid-in capital 251,330 140,473

Accumulated deficit ( 244,181 ) ( 221,499 )

Total stockholders’ deficit ( 68,609 ) ( 80,899 )

Total liabilities and stockholders’ deficit $ 622,318 $ 656,024

Total stockholders’ equity/(deficit) 7,284 ( 80,899 )

Total liabilities, redeemable perpetual preferred stock and stockholders’ equity/(deficit) $ 776,589 $ 656,024

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Total operating expenses 25,413 31,838 77,299 69,897

Income from operations 5,706 1,211 18,759 102,559

Income (loss) from operations ( 16,134 ) ( 5,107 ) 2,625 97,452

Other expense

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Total other expense ( 13,406 ) ( 702 ) ( 29,266 ) ( 10,476 )

Income (loss) before income tax expense ( 1,067 ) ( 3,442 ) 2,899 92,785

Income (loss) before income tax expense (benefit) ( 29,540 ) ( 5,809 ) ( 26,641 ) 86,976

Income tax expense (benefit) ( 3,988 ) 1,423 ( 3,959 ) 18,131

Net income (loss) $ ( 25,552 ) $ ( 7,232 ) $ ( 22,682 ) $ 68,845

Preferred dividends and accretion ( 5,479 ) — ( 5,479 ) —

Net income (loss) to common shareholders $ ( 31,031 ) $ ( 7,232 ) $ ( 28,161 ) $ 68,845

Earnings (loss) per share

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and Subsidiaries

Condensed Consolidated Statements of Changes in Member’s Equity/Stockholders’ Deficit

Condensed Consolidated Statements of Changes in Member’s Equity/Redeemable Perpetual Preferred Stock and Stockholders’ Equity/(Deficit)

(in thousands)

For the Three Months Ended June 30, 2021

Preferred Stock Common Stock Additional

Shares Amount Shares Amount paid-in capital Retained earnings Total Stockholders’ Deficit

Balance, March 31, 2021 — $ — 127 148,370 ( 218,612 ) $ ( 70,115 )

Equity-based compensation — — — — 1,523 — 1,523

Net Income — — — — — ( 17 ) ( 17 )

For the Three Months Ended September 30, 2021

Temporary Equity Permanent Equity

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

Shares Amount Shares Amount Shares Amount Additional paid-in capital Accumulated deficit Total Stockholders’ Equity/(Deficit)

Balance, June 30, 2021 — $ — — $ — 126,994 127 149,893 ( 218,629 ) $ ( 68,609 )

For the Three Months Ended June 30, 2020

Units (*) Total Members’ Equity

Balance, March 31, 2020 1 $ 380,594

Equity-based compensation — — — — — — 2,160 — 2,160

Net Income — 2,392

Issuance of Series A Preferred, net of fees 350 229,799 — — — — — — —

Issuance of common stock, net — — — — 7,875 8 104,756 — 104,764

Preferred cumulative dividends plus accretion — 5,479 — — — — ( 5,479 ) — ( 5,479 )

Net loss — — — — — — — ( 25,552 ) ( 25,552 )

Balance, September 30, 2021 350 $ 235,278 — $ — 134,869 $ 135 $ 251,330 $ ( 244,181 ) $ 7,284

For the Three Months Ended September 30, 2020

Units (*) Total Members’ Equity

Balance, June 30, 2020 1 $ 383,639

Equity-based compensation — 853

Net loss — ( 7,232 )

Balance, September 30, 2020 1 $ 377,260

(*) See note 2 - Summary of Significant Accounting Policies - corporate conversion and stock split.

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and Subsidiaries

Condensed Consolidated Statements of Changes in Member’s Equity/Stockholders’ Deficit (continued)

Condensed Consolidated Statements of Changes in Member’s Equity/Redeemable Perpetual Preferred Stock and Stockholders’ Equity/(Deficit) (continued)

(in thousands)

For the Six Months Ended June 30, 2021

Preferred Stock Common Stock Additional

Shares Amount Shares Amount paid-in capital Retained deficit Total Stockholders’ Deficit

For the Nine Months Ended September 30, 2021

Temporary Equity Permanent Equity

Series A Redeemable Perpetual Preferred Stock Preferred Stock Common Stock

Shares Amount Shares Amount Shares Amount Additional paid-in capital Accumulated deficit Total Stockholders’ Equity/(Deficit)

Balance, December 31, 2020 — $ — — $ — 126,994 $ 127 $ 140,473 $ ( 221,499 ) $ ( 80,899 )

Equity-based compensation — — — — — — 11,580 — 11,580

Net Income — — — — — 2,870 2,870

Balance, June 30, 2021 — $ — 126,994 $ 127 $ 149,893 $ ( 218,629 ) $ ( 68,609 )

For the Six Months Ended June 30, 2020

Issuance of common stock, net — — — — 7,875 8 104,756 — 104,764

Issuance of Series A Preferred net of fees 350 229,799 — — — — — — —

Preferred cumulative dividends plus accretion — 5,479 — — — — ( 5,479 ) — ( 5,479 )

Net loss — — — — — — — ( 22,682 ) ( 22,682 )

Balance, September 30, 2021 350 $ 235,278 — $ — 134,869 $ 135 $ 251,330 $ ( 244,181 ) $ 7,284

For the Nine Months Ended September 30, 2020

Units (*) Total Members’ Equity

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Net income — 68,845

Balance, June 30, 2020 1 $ 383,639

Balance, September 30, 2020 1 $ 377,260

(*) See note 2 - Summary of Significant Accounting Policies - corporate conversion and stock split.

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(in thousands)

Six Months Ended

Nine Months Ended

September 30,

Cash flows used in operating activities

Net income $ 2,870 $ 76,077

Adjustments to reconcile net income to net cash used in operating activities:

Net income (loss) $ ( 22,682 ) $ 68,845

Adjustments to reconcile net income (loss) to net cash used in operating activities:

Provision for (recovery of) bad debts ( 574 ) 493

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Principal payments on term loan facility ( 132,150 ) ( 57,702 )

Proceeds from Series A issuance 224,987 —

Proceeds from common stock issuance 120,645 —

Series A equity issuance costs ( 7,195 ) —

Common stock issuance costs ( 3,873 ) —

Payments on revolving credit facility ( 102,000 ) —

Payments on related party loans — ( 45,558 )

Contingent consideration ( 7,810 ) —

Deferred offering costs — ( 3,775 )

Debt issuance costs ( 6,590 ) —

Net cash provided by (used in) financing activities 188,014 ( 107,003 )

Net decrease in cash, cash equivalents and restricted cash ( 90,759 ) ( 323,273 )

Cash, cash equivalents and restricted cash, beginning of period 108,441 361,257

Cash, cash equivalents, and restricted cash, end of period $ 17,682 $ 37,984

Net change in cash and cash equivalents 7,950 ( 334,113 )

Cash and cash equivalents, beginning of period 108,441 361,257

Cash and cash equivalents, end of period $ 116,391 $ 27,144

The accompanying notes are an integral part of these condensed consolidated financial statements.

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The Company, through its wholly-owned subsidiary, ATI Investment Holdings, Inc.

(“ATI Investment”) owns two other subsidiaries through which it conducts substantially all operations;

(“ATI Investment”) owns one subsidiary through which it conducts substantially all operations;

Array Tech, Inc.

and Array Technologies Patent Holdings Co., LLC (collectively “AT”).

(collectively “AT”).

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

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The unaudited interim financial statements have been prepared on the same basis as the audited annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of results for the interim periods reported.

The results for the three and six months ended June 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021 or any other interim periods, or any future year or period.

The results for the three and nine months ended September 30, 2021 are not necessarily indicative of results to be expected for the year ending December 31, 2021 or any other interim periods, or any future year or period.

The balance sheet as of December 31, 2020 included herein was derived from the audited financial statements as of that date.

Certain disclosures have been condensed or omitted from the interim financial statements.

These financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s 10-K filed with SEC on March 10, 2021.

These financial statements should be read in conjunction with the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 10, 2021.

Reclassifications

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The RSUs are valued at the closing stock price on the date of grant and recognized on a straight-line basis over vesting term.

The PSU grants were valued using the Monte Carlo simulation method and the assigned fair value on grant date will be recognized on a straight-line basis over the vesting term of the awards.

The PSU grants are valued using the Monte Carlo simulation method and the assigned fair value on grant date will be recognized on a straight-line basis over the vesting term of the awards.

The probability of the awards meeting the performance related vested conditions is not included in the grant date fair value, but rather will be estimated quarterly, and the Company will true-up the expense recognition accordingly upon any probability to vest revision.

The Company accounts for forfeitures as they occur.

In the case of Class B units (the “Class B Units”) and Class C units (the “Class C Units” and, together with the Class B Units, the “Units”) of the Former Parent granted to certain employees and directors of the Company, the determination of the fair value of equity awards issued to employees of the Company was based upon the underlying share price and a number of assumptions, including volatility, performance period, risk-free interest rate and expected dividends.

The Class B Units fully vested upon the completion of the Company’s follow-on offering of its common stock in March 2021 (the “2021 Follow-on Offering”) as it was considered a sale of the Former Parent and the Company recognized the remaining unamortized compensation expense of $ 6.3 million.

In the case of Class B units (the “Class B Units”) and Class C units (the “Class C Units” and, together with the Class B Units, the “Units”) of Former Parent granted to certain employees and directors of the Company, the determination of the fair value of equity awards issued to employees of the Company was based upon the underlying share price and a number of assumptions, including volatility, performance period, risk-free interest rate and expected dividends.

The Class B Units fully vested upon the completion of the Company’s follow-on offering of its common stock in March 2021 (the “2021 Follow-on Offering”) as it was considered a sale of Former Parent and the Company recognized expense of $ 8.9 million.

Temporary Equity

Equity instruments that are redeemable for cash or other assets are classified as temporary equity if the instrument is redeemable, at the option of the holder, at a fixed or determinable price on a fixed or determinable date or upon the occurrence of an event that is not solely within the control of the issuer.

Redeemable equity instruments are initially carried at the fair value of the equity instrument at the issuance date, which is subsequently adjusted at each balance sheet date if the instrument is currently redeemable, or probable of becoming redeemable.

The Series A Redeemable Preferred Stock issued in connection with the Securities Purchase Agreement as described in Note 9 is classified as temporary equity in the accompanying condensed consolidated financial statements.

The Company elected the accreted redemption value method under which it accretes changes in redemption value over the period from the date of issuance of the Series A Redeemable Perpetual Preferred Stock to the earliest costless redemption date (the fifth anniversary) using the effective interest method.

Such adjustments are included in preferred undeclared dividends and accretion on Series A Redeemable Perpetual Preferred Stock on the Company’s condensed consolidated statements of changes in equity and treated similarly to a dividend on preferred stock for GAAP purposes.

New Accounting Standards

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The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date.

The standard is effective for EGCs the fiscal year beginning after December 15, 2022, or December 15, 2021 if we were to lose EGC status in 2021.

The standard is effective for EGCs for the fiscal year beginning after December 15, 2022, or December 15, 2021 if we were to lose EGC status in 2021.

The Company will continue to assess the possible impact of this standard, but currently does not expect the adoption of this standard will have a significant impact on its consolidated financial statements and its limited history of bad debt expense relating to trade accounts receivable.

Inventories consist of the following (in thousands):

June 30, December 31,

September 30, December 31,

Raw materials $ 73,514 $ 39,051

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Property, plant and equipment consisted of the following (in thousands):

Estimated Useful Lives (Years) June 30, December 31,

Estimated Useful Lives (Years) September 30, December 31,

Land N/A $ 1,340 $ 1,340

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Property, plant and equipment, net $ 10,202 $ 9,774

Depreciation expense was $ 0.6 million and $ 0.6 million for the three months ended June 30, 2021 and 2020, respectively, of which $ 0.5 million and $ 0.5 million, respectively, has been allocated to cost of revenue and $ 0.1 million and $ 0.1 million, respectively, is included in depreciation and amortization in the accompanying condensed consolidated statements of operations for the three months ended June 30, 2021 and 2020.

Depreciation expense was $ 1.2 million and $ 1.2 million for the six months ended June 30, 2021 and 2020, respectively, of which $ 1.0 million and $ 1.0 million, respectively, has been allocated to cost of revenue and $ 0.2 million and $ 0.2 million, respectively, is included in depreciation and amortization in the accompanying consolidated statements of operations for the six months ended June 30, 2021 and 2020.

Depreciation expense was $ 0.6 million and $ 0.6 million for the three months ended September 30, 2021 and 2020, respectively, of which $ 0.5 million and $ 0.5 million, respectively, has been allocated to cost of revenue and $ 0.1 million and $ 0.1 million, respectively, is included in depreciation and amortization in the accompanying condensed consolidated statements of operations for the three months ended September 30, 2021 and 2020.

Depreciation expense was $ 1.8 million and $ 1.8 million for the nine months ended September 30, 2021 and 2020, respectively, of which $ 1.5 million and $ 1.5 million, respectively, has been allocated to cost of revenue and $ 0.3 million and $ 0.3 million, respectively, is included in depreciation and amortization in the accompanying consolidated statements of operations for the nine months ended September 30, 2021 and 2020.

Goodwill and Other Intangible Assets

Goodwill relates to the Former Parent’s acquisition of AT (the “Acquisition”) in 2016.

Goodwill relates to Former Parent’s acquisition of AT (the “Acquisition”) in 2016.

As of July 8, 2016 (the “Acquisition Date”), goodwill was $ 121.6 million.

As of June 30, 2021 and December 31, 2020 goodwill totaled $ 69.7 million, net of accumulated impairment of $ 51.9 million and is not deductible for tax purposes.

As of September 30, 2021 and December 31, 2020 goodwill totaled $ 69.7 million, net of accumulated impairment of $ 51.9 million and is not deductible for tax purposes.

Other Intangible Assets

Other intangible assets consisted of the following (in thousands):

Estimated Useful Lives (Years) June 30, December 31,

Estimated Useful Lives (Years) September 30, December 31,

Developed technology 14 $ 203,800 $ 203,800

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Total other intangible assets, net $ 180,630 $ 198,260

Amortization expense related to intangible assets amounted to $ 5.9 million for the three months ended June 30, 2021 and 2020, and $ 11.8 million for the six months ended June 30, 2021 and 2020, respectively.

Amortization expense related to intangible assets amounted to $ 5.9 million for the three months ended September 30, 2021 and 2020, and $ 17.6 million for the nine months ended September 30, 2021 and 2020, respectively.

Investment in Equity Security

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The investment is accounted for in accordance with ASC 321 at its cost less any impairment.

The investment balance as of June 30, 2021 is $ 12.0 million and is recorded in other assets on the condensed consolidated balance sheet.

There is no impairment recorded for the three and six months ended June 30, 2021.

The investment balance as of September 30, 2021 is $ 12.0 million and is recorded in other assets on the condensed consolidated balance sheet.

There is no impairment recorded for the three and nine months ended September 30, 2021.

The Company follows guidance under ASC Topic 740-270, Interim Reporting, which requires that an estimated annual effective tax rate is applied to year-to-date ordinary income.

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The tax effect of discrete items is recorded in the quarter in which the discrete events occur.

The Company recorded income tax expense (benefit) of $( 1.1 ) million and $( 5.8 ) million for the three months ended June 30, 2021 and 2020, respectively, and income tax expense of $ 29 thousand and $ 16.7 million for the six months ended June 30, 2021 and 2020.

The tax benefit in the three months ended June 30, 2021 is unfavorably impacted by non-deductible amounts for equity-based compensation and Follow-on Offering costs.

The tax benefit in the three months ended June 30, 2020 was favorably impacted by a tax benefit related to an

NOL carryback as a result of the CARES Act.

The tax expense in the six months ended June 30, 2021 was unfavorably impacted by non-deductible amounts for equity-based compensation and Follow-on Offering costs.

The tax expense in the six months ended June 30, 2020 was favorably impacted by a tax benefit related to an NOL carryback as a result of the CARES Act.

For the three and six months ended June 30, 2021 and 2020, no reserves for uncertain tax positions have been recorded.

The Company recorded income tax expense (benefit) of $( 4.0 ) million and $ 1.4 million for the three months ended September 30, 2021 and 2020, respectively, and income tax expense (benefit) of $( 4.0 ) million and $ 18.1 million for the nine months ended September 30, 2021 and 2020.

The tax benefit in the three months ended September 30, 2021 is unfavorably impacted by non-deductible amounts for equity-based compensation

and Follow-on Offering costs.

The tax benefit in the three months ended September 30, 2020 was favorably impacted by a tax benefit related to an NOL carryback as a result of the CARES Act.

The tax benefit in the nine months ended September 30, 2021 was unfavorably impacted by non-deductible amounts for equity-based compensation and Follow-on Offering costs.

The tax expense in the nine months ended September 30, 2020 was favorably impacted by a tax benefit related to an NOL carryback as a result of the CARES Act.

For the three and nine ended September 30, 2021 and 2020, no reserves for uncertain tax positions have been recorded.

The Company will continue to monitor this position each interim period.

Long-Term Debt

June 30, December 31,

September 30, December 31,

Term loan facility $ 327,850 $ 460,000

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On October 14, 2020, the Company entered into a senior secured credit facility consisting of (i) a $ 575 million senior secured seven-year term loan facility (the “Term Loan Facility”) and (ii) a $ 150 million senior secured 5-year revolving credit facility (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Senior Secured Credit Facility”).

As of June 30, 2021, the Term Loan Facility had a balance of $ 428.9 million.

As of September 30, 2021, the Term Loan Facility had a balance of $ 327.9 million.

On August 11, 2021, in connection with the sale of the Series A, the Company used the proceeds to repay $ 100.0 million of the outstanding Term Loan Facility and $ 102.0 million of the Revolving Credit Facility.

On February 23, 2021 the Company entered into the First Amendment (“First Amendment”) to its Senior Secured Credit Facility.

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The Second Amendment increases the $ 150.0 million Revolving Credit Facility from $ 150.0 million to $ 200.0 million.

The balance of the Term Loan Facility is presented in the accompanying condensed consolidated balance sheets net of debt discount and issuance costs of $ 32.7 million at June 30, 2021.

The debt discount and issuance costs are being amortized using the effective interest method and the rate as of June 30, 2021 is 5.01 %.

The Term Loan Facility has an annual excess cash flow calculation beginning with the year ended December 31, 2021 which could require the Company to make advance principal payments.

The balance of the Term Loan Facility is presented in the accompanying condensed consolidated balance sheets net of debt discount and issuance costs of $ 24.3 million at September 30, 2021.

The debt discount and issuance costs are being amortized using the effective interest method and the rate as of September 30, 2021 is 5.01 %.

The Term Loan Facility has an annual excess cash flow calculation, for which the prescribed formula does not result in requiring the Company to make any advance principal payments for the year ended December 31, 2021.

Revolving Credit Facility

Under the Revolving Credit Facility, the Company had $ 102.0 million outstanding balance, $ 11.0 million in standby letters of credit and availability of $ 87.0 million as of June 30, 2021.

Under the Revolving Credit Facility, the Company had a zero outstanding balance, $ 14.5 million in standby letters of credit and availability of $ 185.5 million as of September 30, 2021.

Redeemable Perpetual Preferred

Series A Redeemable Perpetual Preferred

On August 10, 2021, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) pursuant to which on August 11, 2021, the Company issued and sold to certain investors (the Purchasers”) 350,000 shares of a newly designated Series A Redeemable Perpetual Preferred Stock of the Company, par value $ 0.001 per share (the “Series A Redeemable Perpetual Preferred Stock” or “Series A”), and 7,098,765 shares of the Company’s common stock, par value $ 0.001 per share (“Common Stock”), for an aggregate purchase price of $ 346.0 million (the “Initial Closing”).

Further, pursuant to the Securities Purchase Agreement, the Company issued and sold to the Purchaser 776,235 shares of Common Stock for an aggregate purchase price of $ 776 .

The Company used net proceeds from the Initial Closing to repay all of the outstanding amounts under the Company’s existing revolving credit facility and prepaid $ 100 million under the Company’s term loan and for general corporate purposes.

The Purchaser is entitled to designate one representative to be appointed to the Company’s board of directors, and to appoint three non-voting observers to the Board, in each case until such time as the Purchaser no longer beneficially own shares of the Series A Redeemable Perpetual Preferred Stock with at least $ 100 million aggregate Liquidation Preference (as defined below).

The Series A have no maturity date.

Additional Closings

The Securities Purchase Agreement gives the Company the option to require the Purchaser to purchase, in one or more additional closings, up to 150,000 shares, until June 30, 2023, of the Series A Redeemable Perpetual Preferred Stock and up to 3,375,000 shares of Common Stock (or up to 6,100,000 shares of Common Stock in the event of certain price-related adjustments) (subject to certain equitable adjustments pursuant to any stock dividend, stock split, stock combination, reclassification or similar transaction) for an aggregate purchase price up to $ 148 million.

This represents a committed financing put right with an initial fair value of $ 12.4 million.

The Series A preferred stock was recorded as temporary equity, net of issuance costs, on the condensed consolidated balance sheets as it has redemption features upon certain triggering events that are outside the Company’s control, such as a fundamental change.

The net proceeds of the Series A offering of $ 334.6 million have been allocated on the balance sheet by each instruments relative fair values, net of fees, to the Series A Redeemable Perpetual Preferred Stock of $ 229.8 million, Common Stock of $ 105.4 million, a debit to additional paid-in capital of $ 12.4 million for the committed financing put right and $ 11.7 million for a prepaid forward contract on the issuance of 776,235 shares of Common Stock which was settled on September 27, 2021.

On or prior to the fifth anniversary of the Initial Closing, the Company may pay dividends on the Series A Redeemable Perpetual Preferred Stock either in cash at the then-applicable Cash Regular Dividend Rate (as defined below), through accrual to the Liquidation Preference at the Accrued Regular Dividend Rate of 6.25 % (the “Permitted Accrued Dividends”), or a combination thereof.

Following the fifth anniversary of the Initial Closing, dividends shall be payable only in cash.

To the extent the Company does not declare such dividends and pay in cash following the fifth anniversary of the Initial Closing, the dividends accrue to the Liquidation Preference (“Default Accrued Dividends”) at the then-applicable Cash Regular Dividend Rate plus 200 basis points.

In the event there are Default Accrued Dividends outstanding for six consecutive quarters, the Company, at the option of the holder of the Series A Redeemable Perpetual Preferred Stock (each a “Holder”), will pay 100 % of the amount of Default Accrued Dividends by delivering to the Holder a number of shares of

Common Stock equal to the quotient of (i) the amount of Default Accrued Dividends) divided by (ii) 95 % of the 30-day VWAP of the Common Stock (“Non-Cash Dividend”).

The “Cash Regular Dividend Rate” of the Series A Redeemable Perpetual Preferred Stock means (i) initially, 5.75 % per annum on the Liquidation Preference and (ii) increased by (a) 50 basis points on each of the fifth, sixth and seventh anniversaries of the Initial Closing and (b) 100 basis points on each of the eighth, ninth and tenth anniversaries of the Initial Closing.

The “Accrued Regular Dividend Rate” on the Series A Redeemable Perpetual Preferred Stock means 6.25 % per annum on the Liquidation Preference.

The Series A preferred stock have similar characteristics of an “Increasing Rate Security” as described by SEC Staff Accounting Bulletin Topic 5Q, Increasing Rate Preferred Stock.

As a result, the discount on Series A preferred stock is considered an unstated dividend cost that is amortized over the period preceding commencement of the perpetual dividend using the effective interest method, by charging imputed dividend cost against retained earnings, or additional paid in capital in the absence of retained earnings, and increasing the carrying amount of the Series A preferred stock by a corresponding amount.

The discount of $ 120.2 million is therefore being amortized over five years using the effective yield method.

The amortization in each period is the amount which, together with the stated dividend in the period, results in a constant rate of effective cost with regard to the carrying amount of the Series A preferred stock.

The Company has presented the Series A Redeemable Perpetual Preferred Stock in temporary equity and is accreting the discount on the increasing rate dividends using the effective interest method.

Such accretion totaled $ 2.7 million for the three and nine months ended September 30, 2021.

The Company accreted to the carrying value of the Series A Preferred the regular cash rate of dividends of 5.75 %, or $ 2.8 million in dividends for the three and nine months ended September 30, 2021.

Until June 30, 2023, the Company will pay the Purchaser a cash commitment premium on the unpurchased portion of Delayed Draw Commitment as follows:

0 % through the six-month anniversary of the Initial Closing;

1.5 % from the six-month anniversary of the Initial Closing through the 12-month anniversary of the Initial Closing;

3.0 % from the 12-month anniversary of the Initial Closing through June 30, 2023.

The Company may terminate some or all of the Delayed Draw Commitment, from time to time, at its sole discretion.

Customary Covenants

The Securities Purchase Agreement, Certificate of Designations and Registration Rights Agreement (as defined below) contain other customary covenants and agreements, including certain standstill provisions and customary preemptive rights.

The Delayed Draw Commitment is subject to certain customary anti-dilution adjustments provided under the Securities Purchase Agreement and Certificate of Designations, including for stock splits, reclassifications, combinations and dividends or distributions made by the Company on the Common Stock.

Transfer Restrictions

A Redeemable Perpetual Preferred Stock and Common Stock until the one-year anniversary of the Initial Closing.

Ranking and Liquidation Preference

The Series A Redeemable Perpetual Preferred Stock ranks senior to the Common Stock with respect to dividend rights and rights upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (a “Liquidation”).

Upon a Liquidation, each share of Series A Redeemable Perpetual Preferred Stock would be entitled to receive an amount per share (the “Liquidation, Redemption or Repurchase Amount”) equal to the greater of (i) the Liquidation Preference of such share, plus all accrued and unpaid dividends (including any Accrued Dividends) thereon and (ii) an amount in cash equal to the sum of (a) 130.0 % of the Initial Liquidation Preference (as defined below) of such share, minus (b) the cumulative amount of cash dividends paid in respect of such share prior to such payment.

As used herein, “Liquidation Preference” means, with respect to any share of the Series A Redeemable Perpetual Preferred Stock, the initial liquidation preference of $ 1,000 per share (the “Initial Liquidation Preference”) plus any Accrued Dividends of such share as of the time of determination.

Redemption Rights

The Company may redeem all or any portion of the Series A Redeemable Perpetual Preferred Stock (in increments of not less than $ 200 million based on the Liquidation Preference of such shares of Series A Redeemable Perpetual Preferred Stock to be redeemed at such time (or such lesser amount to the extent the Company chooses to redeem all of the outstanding shares of Series A Redeemable Perpetual Preferred Stock)) for an amount in cash equal to the Liquidation, Redemption or Repurchase Amount.

Upon a “Fundamental Change” (involving a change of control, bankruptcy, insolvency or liquidation of the Company as further described in the Certificate of Designations), each Holder shall have the right to require the Company to redeem all or any part of the Holder’s Series A Redeemable Perpetual Preferred Stock for an amount in cash equal to the Liquidation, Redemption or Repurchase Amount.

Voting and Consent Rights

Each Holder of Series A Redeemable Perpetual Preferred Stock will have one vote per share on any matter on which Holders of Series A Redeemable Perpetual Preferred Stock are entitled to vote separately as a class (as described below), whether at a meeting or by written consent.

The Holders of shares of Series A Redeemable Perpetual Preferred Stock do not otherwise have any voting rights.

The consent of the Holders of a majority of the outstanding shares of Series A Redeemable Perpetual Preferred Stock will be required for so long as the Threshold Amount remains outstanding for (i) amendments to the Company’s organizational documents that have an adverse effect on the Holders, (ii) issuances by the Company of securities that are senior to, or equal in priority with, the Series A Redeemable Perpetual Preferred Stock, (iii) entrance into, or amendments to, transactions with affiliates of the Company, (iv) incurrence by the Company of indebtedness, unless the Consolidated Total Leverage Ratio (as defined in the Certificate of Designations) would not exceed 8.5 -to-1 after giving effect to such incurrence (other than drawdowns by the Company under the Company’s current Revolving Credit Facility) or (v) any payment of dividends or making of distributions on equity securities of the Company ranking junior to the Series A Redeemable Perpetual Preferred Stock or redemptions, purchases or direct or indirect acquisitions of such equity securities ranking junior to or parity with the Series A Redeemable Perpetual Preferred Stock by the Company, unless the Consolidated Total Leverage Ratio (as defined in the Certificate of Designations) would not exceed 8.5 -to-1 after giving effect to such dividends, distributions, redemptions, purchases or acquisitions.

Registration Rights

In connection with the Securities Purchase Agreement, on August 10, 2021, the Company and the Purchaser entered into a Registration Rights Agreement pursuant to which, among other things, the Company granted the Purchaser certain registration rights with respect to Common Stock purchased pursuant to the Securities Purchase Agreement and Non-Cash Dividend pursuant to the Certificate of Designations, including customary shelf registration rights and “piggyback” registration rights.

Related Party Loan

The Company had a senior secured promissory note, as amended, with a unit holder of Former Parent that had a balance, net of debt discount and issuance costs as of June 30, 2020 of $ 41.8 million for which the Company paid interest expense for the three and six months ended June 30, 2020 of $ 1.7 million and $ 3.5 million, which consisted of cash interest, PIK interest and amortization of the debt discount.

The note was no longer outstanding as of June 30, 2021 and had no balance or interest expense for the three months ended June 30, 2021.

The Company had a senior secured promissory note, as amended, with a unit holder of Former Parent that had a balance, net of debt discount and issuance costs as of June 30, 2020 of $ 41.8 million for which the Company paid off the balance on July 31, 2020 to settle the obligation with respect to the Senior Secured Loan.

The Company paid interest expense for the three and nine months ended September 30, 2020 of $ 0.3 million and $ 3.8 million, which consisted of cash interest, PIK interest and amortization of the debt discount.

The note was no longer outstanding as of June 30, 2021 and had no balance or interest expense for the three months ended September 30, 2021.

Based on Topic 606 provisions, the Company disaggregates its revenue from contracts with customers by those sales recorded over-time and sales recorded at a point in time.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and deferred revenue (contract liabilities) on the consolidated balance sheets.

The majority of the Company’s contract amounts are billed as work progresses in accordance with agreed-upon contractual terms, which generally coincide with the shipment of one or more phases of the project.

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unbilled receivables) and the corresponding amounts recorded in revenue relate to fluctuations in the timing and volume of billings for the Company’s revenue recognized over-time.

Contract assets consisting of unbilled receivables are recorded within accounts receivable on the consolidated balance sheets on a contract-by-contract basis at the end of the reporting period and consisted of the following (in thousands):

June 30, 2021 December 31, 2020

Contract assets consisting of unbilled receivables are recorded within accounts receivable on the condensed consolidated balance sheets on a contract-by-contract basis at the end of the reporting period and consisted of the following (in thousands):

September 30, 2021 December 31, 2020

Unbilled receivables $ 61,108 $ 18,073

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Contract liabilities consisting of deferred revenue recorded on a contract-by-contract basis at the end of each reporting period were as follows (in thousands):

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Deferred revenue $ 81,347 $ 149,821

During the six months ended June 30, 2021, the Company converted $ 149.8 million deferred revenue to revenue which represented 100.0 % of the prior years deferred revenue balance.

During the nine months ended September 30, 2021, the Company converted $ 149.8 million deferred revenue to revenue which represented 100.0 % of the prior years deferred revenue balance.

Remaining Performance Obligations

As of June 30, 2021, the Company had $ 197.5 million of remaining performance obligations.

As of September 30, 2021, the Company had $ 591.0 million of remaining performance obligations.

The Company expects to recognize revenue on 100 % of these performance obligations in the next twelve months .

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net (loss) income $ ( 25,552 ) $ ( 7,232 ) $ ( 22,682 ) $ 68,845

Preferred dividends and accretion ( 5,479 ) ( 5,479 ) —

Net income (loss) to common shareholders $ ( 31,031 ) $ ( 7,232 ) $ ( 28,161 ) $ 68,845

Weighted-average shares 130,955 119,994 128,315 119,994

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Earnings (loss) per share $ ( 0.24 ) $ ( 0.06 ) $ ( 0.22 ) $ 0.57

Potentially dilutive common shares issuable pursuant to equity-based awards were not included for the three months ended June 30, 2021 as their potential effect was anti-dilutive as the Company generated a net loss.

Potentially dilutive common shares issuable pursuant to equity-based awards were not included for the three months ended September 30, 2021 as their potential effect was anti-dilutive as the Company generated a net loss.

Commitments and Contingencies

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On May 14, 2021, a putative class action was filed in the Southern District of New York against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11, 12(a)(2) and 15 of the Securities Exchange Act of 1933 (“Plymouth Action”).

The Plymouth Action alleges misstatements and/or omissions in the Company’s registration statements and prospectuses related to the Company’s October 2020 initial public

offering, the Company’s December 2020 offering, and the Company’s March 2021 offering during the putative class period of October 14, 2020 through May 11, 2021.

Lead plaintiff motions were filed on July 13, 2021, and the Court is expected to appoint a lead plaintiff by August 12, 2021.

The Court has not yet set a schedule for the filing of an amended complaint or defendants’ anticipated motion to dismiss.

On June 30, 2021, a second putative class action was filed in the Southern District of New York against the Company and certain officers and directors alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5, promulgated thereunder, and Sections 11 and 15 of the Securities Exchange Act of 1933 alleging misstatements and/or omissions in certain of the Company’s registration statements and prospectuses related to the Company’s October 2020 initial public offering, the Company’s December 2020 offering, and the Company’s March 2021 offering during the putative class period of October 14, 2020 through May 11, 2021.

On July 6, 2021, the Court entered an order, based on the record before the Court, that this action was in all material respects substantially similar to the Plymouth Action and both actions arise out of the same or similar operative facts, and that the parties are substantially the same parties.

The Court consolidated this action with the Plymouth Action for all pretrial purposes, ordered all filings in connection with this Action to be made in the Plymouth Action, and removed this action from the docket.

On July 16, 2021, a verified derivative complaint was filed against certain officers and directors of the Company.

The Plymouth Action alleges misstatements and/or omissions in the Company’s registration statements and prospectuses related to the Company’s October 2020 initial public offering, the Company’s December 2020 offering, and the Company’s March 2021 offering during the putative class period of October 14, 2020 through May 11, 2021.

The Court appointed the Array Institutional Investor Group as lead plaintiff and the deadline for an amended complaint is November 19, 2021.

The Keippel Action similarly alleged misstatements and/or omissions in certain of the Company’s registration statements and prospectuses related to the Company’s October 2020 initial public offering, the Company’s December 2020 offering, and the Company’s March 2021 offering during the putative class period of October 14, 2020 through May 11, 2021.

On July 6, 2021, the Court entered an order that the Keippel Action was in all material respects substantially similar to the Plymouth Action that both actions arise out of the same or similar operative facts, and that the parties are substantially the same parties.

The Court accordingly consolidated the Keippel Action with the Plymouth Action for all pretrial purposes and, ordered all filings to be made in the Plymouth Action.

On July 16, 2021, a verified derivative complaint was filed against certain officers and directors of the Company (“First Derivative Action”).

The complaint alleges:

(1) violations of Section 14(a) of the Securities Exchange Act of 1934 for misleading proxy statements, (2) breach of fiduciary duty, (3) unjust enrichment, (4) abuse of control, (5) gross mismanagement, (6) corporate waste, (7) aiding and abetting breach of fiduciary duty, and (8) contribution under sections 10(b) and 21D of the Securities Exchange Act of 1934.

On July 21, 2021, the Court entered an order, based on the record before the Court, that this action was in all material respects substantially similar to the Plymouth Action and both actions arise out of the same or similar operative facts, and that the parties are substantially the same parties.

On July 30, 2021, a second and related verified derivative complaint was filed against certain officers and directors of the Company.

On August 24, 2021, the case was consolidated with the Second Derivative Action, the Court appointed co-lead counsel, and the case was temporarily stayed pending the entry of an order on all motions to dismiss directed at the pleadings filed in the Plymouth Action.

The stay shall remain in effect until the later of (a) the entry of an order on any motions to dismiss the Plymouth Action or, (b) to the extent the complaint in the Plymouth Action is amended, the entry of an order on any motions to dismiss any such amended complaints in the Plymouth Action.

On July 30, 2021, a second and related verified derivative complaint was filed against certain officers and directors of the Company (“Second Derivative Action”).

The complaint alleges:

(1) violations of Section 14(a) of the Securities Exchange Act of 1934 for causing the issuance of a false/misleading proxy statement, (2) breach of fiduciary duty, and (3) aiding and abetting breaches of fiduciary duty.

The Court has not yet entered an order consolidating this case with the Plymouth case.

On August 24, 2021, the Second Derivative Action was consolidated with the First Derivative Action, the Court appointed co-lead counsel, and the case was temporarily stayed pending the entry of an order on all motions to dismiss directed at the pleadings filed in the Plymouth Action.

The stay shall remain in effect until the later of (a) the entry of an order

on any motions to dismiss the Plymouth Action or, (b) to the extent the complaint in the Plymouth Action is amended, the entry of an order on any motions to dismiss any such amended complaints in the Plymouth Action.

On September 21, 2021, the Court appointed a group comprised of institutional investors Plymouth County Retirement Association and Carpenters Pension Trust Fund for Northern California as lead plaintiff in the Plymouth Action.

The deadline for the lead plaintiff to file an amended complaint in the Plymouth action is November 19, 2021

At this time the Company believes that the likelihood of any material loss related to these matters is remote given the preliminary stage of the claims and strength of the Company’s defenses.

The Company has not recorded any material loss contingency in the Condensed Consolidated Balance Sheets as of June 30, 2021.

The Company has not recorded any material loss contingency in the condensed consolidated balance sheets as of September 30, 2021.

Contingent Consideration

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tax benefits deemed realized in post-closing taxable periods by Array, from the use of certain deductions generated by the increase in the tax value of the developed technology.

The TRA is accounted for as contingent consideration and subsequent changes in fair value of the contingent liability are recognized in contingent consideration in the accompanying consolidated

statements of operations.

As of June 30, 2021 and December 31, 2020, the fair value of the TRA was $ 12.0 million and $ 19.7 million, respectively.

The TRA is accounted for as contingent consideration and subsequent changes in fair value of the contingent liability are recognized in contingent consideration in the accompanying condensed consolidated statements of operations.

As of September 30, 2021 and December 31, 2020, the fair value of the TRA was $ 13.0 million and $ 19.7 million, respectively.

Estimating the amount of payments that may be made under the TRA is by nature imprecise.

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TRA Earn-Out Liability Contingent Consideration

Balance, March 31, 2021 $ 19,839 $ — $ 19,839

Balance, June 30, 2021 $ 12,016 $ — $ 12,016

Payments — — —

Fair value adjustment 936 — 936

Balance, September 30, 2021 $ 12,952 $ — $ 12,952

Balance, June 30, 2020 $ 18,845 $ 1,822 $ 20,667

Balance, March 31, 2020 $ 17,113 $ 124 $ 17,237

Fair value adjustment ( 521 ) 14,112 13,591

Balance, June 30, 2020 $ 18,845 $ 1,822 $ 20,667

Balance, September 30, 2020 $ 18,324 $ 15,934 $ 34,258

TRA Earn-Out Liability Contingent Consideration

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Payments ( 7,810 ) — ( 7,810 )

Fair value adjustments 135 — 135

Balance, June 30, 2021 $ 12,016 $ — $ 12,016

Fair value adjustment 1,071 — 1,071

Balance, September 30, 2021 $ 12,952 $ — $ 12,952

Balance, December 31, 2019 $ 17,808 $ 442 $ 18,250

Fair value adjustment 516 15,492 16,008

Balance, June 30, 2020 $ 18,845 $ 1,822 $ 20,667

Balance, September 30, 2020 $ 18,324 $ 15,934 $ 34,258

The TRA and earn-out liabilities require significant judgment and are classified as Level 3 in the fair value hierarchy.

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The 2020 Plan authorized 6,683,919 new shares, subject to adjustments pursuant to the 2020 Plan.

In the six months ended June 30, 2021, the Company granted an aggregate of 513,463 RSU’s to employees and board of director members and 177,472 Performance Stock Units (PSUs) to certain executives.

In the nine months ended September 30, 2021, the Company granted an aggregate of 605,319 RSUs to employees and board of director members and 177,472 Performance Stock Units (PSUs) to certain executives.

The PSUs cliff vest after three years and upon meeting certain revenue and adjusted EPS targets.

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Forfeited ( 61,817 ) $ 26.33

Unvested, June 30, 2021 970,424 $ 23.49

Unvested, September 30, 2021 1,043,508 $ 22.77

PSU Number of Shares Weighted Average Grant Date Fair Value

2 unchanged sentences

Forfeited ( 17,460 ) $ 30.74

Unvested, June 30, 2021 163,093 $ 28.03

Unvested, September 30, 2021 160,012 $ 27.98

Class B Units

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Actual results may vary depending on the assumptions applied within the model.

On March 23, 2021, in connection with the closing of the 2021 Follow-on Offering, all of the outstanding Class B Units of Former Parent were immediately vested per the terms of the equity awards, resulting in the Company accelerating the recognition of the remaining unamortized compensation expense of $ 6.3 million in the three months ended March 31, 2021.

For the three and six months ended June 30, 2021, the Company recognized $ 4.1 million and $ 12.0 million in equity-based compensation, respectively.

For the three and six months ended June 30, 2020, the Company recognized $ 0.7 million and $ 2.4 million in equity-based compensation, respectively.

As of June 30, 2021, the Company had $ 19.1 million of unrecognized compensation costs which is expected to be recognized over a period of 2.5 years.

There were 57,424 forfeitures during both of the three and six months ended June 30, 2021 and no forfeitures during the three and six month ended June 30, 2020.

For the three and nine months ended September 30, 2021, the Company recognized $ 2.2 million and $ 14.3 million in equity-based compensation, respectively.

For the three and nine months ended September 30, 2020, the Company recognized $ 0.9 million and $ 3.3 million in equity-based compensation, respectively.

As of September 30, 2021, the Company had $ 18.4 million of unrecognized compensation costs which is expected to be recognized over a period of 2.3 years.

There were 18,772 and 79,277 forfeitures during the three and nine months ended September 30, 2021 and no forfeitures during the three and nine month ended September 30, 2020.

Effective January 1, 2021, the Company adopted ASC 842 Leases using the modified retrospective approach.

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The following table summarizes the balances as it relates to leases at the end of the period (in thousands):

(*) June 30, 2021

(*) September 30, 2021

ROU Asset Other assets $ 9,008

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The details of the Company’s operating leases are as follows (in thousands):

Three Months Ended

June 30, 2021

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2021

Operating lease expense $ 1,651 $ 4,955

2 unchanged sentences

Total lease expense $ 1,678 $ 5,034

The following table presents the maturities of lease liabilities as of June 30, 2021 (in thousands):

Fiscal year ending June 30, Operating Leases

The following table presents the maturities of lease liabilities as of September 30, 2021 (in thousands):

Fiscal year ending September 30, Operating Leases

Total lease payments 9,648

4 unchanged sentences

Total $ 14,435

The Company’s weighted-average remaining lease-term and weighted-average discount rate are as follows (in thousands):

Three Months Ended

June 30, 2021

Weighted average remaining lease-term 2.0 years

The Company’s weighted-average remaining lease-term and weighted-average discount rate are as follows:

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2021

Weighted average remaining lease-term 1.7 years 1.7 years

Weighted average discount rate 5 % 5 %

Supplemental cash flow and other information related to operating leases are as follows:

Three Months Ended

June 30, 2021

Supplemental cash flow and other information related to operating leases are as follows (in thousands):

Three Months Ended Nine Months Ended

September 30, 2021 September 30, 2021

Operating cash flows from operating leases $ 1,465 $ 4,794

As of January 1, 2021

Non cash investing activities:

Lease liabilities arising from obtaining right-of-use assets as of January 1, 2021 $ 13,464

Lease liabilities arising from obtaining right-of-use assets $ 13,464

Related Party Transactions

Accounts Payable-Related Party

The Company had $ 0.6 million and $ 2.2 million as of June 30, 2021 and December 31, 2020, respectively, of accounts payable - related party with the former shareholders of Array.

The Company had $ 0.6 million and $ 2.2 million as of September 30, 2021 and December 31, 2020, respectively, of accounts payable-related party with the former shareholders of Array.

The payables relate to a federal tax refund related to the pre-Acquisition periods, restricted cash at Acquisition Date which were due to the sellers of Array upon release of the restriction offset by a receivable related to a sales/use tax audit from the pre-Acquisition period for which the seller provided the Company with indemnification.

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Subsequent Events

S ecurities Purchase Agreement

On August 10, 2021, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with BCP Helios Aggregator L.P., a Delaware limited partnership (the “Purchaser”), an investment vehicle of funds affiliated with Blackstone Inc.

Pursuant to the Securities Purchase Agreement, on August 11, 2021, the Company issued and sold to the Purchaser 350,000 shares of a newly designated Series A Perpetual Preferred Stock of the Company, par value $ 0.001 per share (the “Series A Perpetual Preferred Stock”), having the powers, designations, preferences, and other rights set forth in the Certificate of Designations (as defined below), and 7,098,765 shares of the Company’s common stock, par value $ 0.001 per share (“Common Stock”), for an aggregate purchase price of $ 346.0 million (the “Initial Closing”).

Further, pursuant to the Securities Purchase Agreement, and subject to the terms and conditions set forth therein, including the expiry or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the Company has agreed to issue and sell to the Purchaser 776,235 shares of Common Stock for an aggregate purchase price of $ 776 .

The Company intends to use the net proceeds from the Initial Closing to repay all of the outstanding amounts under the Company’s existing revolving credit facility and to prepay at least $ 100 million under the Company’s term loan and for general corporate purposes.

Pursuant to the Securities Purchase Agreement, the Purchaser is entitled to designate one representative (the “Series A Director”) to be appointed to the Company’s board of directors (the “Board”), and to appoint three non-voting observers to the Board, in each case until such time as the Purchaser and its Permitted Transferees (as defined in the Securities Purchase Agreement) no longer beneficially own shares of the Series A Perpetual Preferred Stock with at least $ 100 million aggregate Liquidation Preference (as defined below).

On or prior to the fifth anniversary of the Initial Closing, the Company may pay dividends on the Series A Perpetual Preferred Stock either in cash at the then-applicable Cash Regular Dividend Rate, through accrual to the Liquidation Preference at the Accrued Regular Dividend Rate (the “Permitted Accrued Dividends”), or a combination thereof.

Folloing the fifth anniversary of the Initial Closing, dividends shall be payable only in

To the extent the Comany does not declare such dividends and pay in cash following the fifth anniversary of the Initial Closing, such dividends shall accrue to the Liquidation Preference (“Default Accrued Dividends”, and together with Permitted Accrued Dividends, “Accrued Dividends”) at the then-applicable Cash Regular Dividend Rate plus 200 basis points.

In the event there are Default Accrued Dividends outstanding for six consecutive quarters, the Company, at the option of the holder of the Series A Perpetual Preferred Stock (each a “holder”), will pay 100 % of the amount of Default Accrued Dividends by delivering to the Holder a number of shares of Common Stock equal to the quotient of (i) the amount of Default Accrued Dividends) divided by (ii) 95 % of the 30-day VWAP of the Common Stock (“Non-Cash Dividend”).

As used herein, “Cash Regular Dividend Rate” with respect to the Series A Perpetual Preferred Stock means (i)

initially, 5.75 % per annum on the Liquidation Preference and (ii) increased by (a) 50 basis points on each of the fifth, sixth and seventh anniversaries of the Initial Closing and (b) 100 basis points on each of the eighth, ninth and tenth anniversaries of the Initial Closing.

The “Accrued Regular Dividend Rate” with respect to the Series A Perpetual Preferred Stock means 6.25 % per annum on the Liquidation Preference.

Additional Closings

Pursuant to the Securities Purchase Agreement, until June 30, 2023, the Company, subject to the terms and conditions set forth therein, shall have the option to require the Purchaser to purchase, in the aggregate, in one or more additional closings (the “Additional Closings”), up to 150,000 shares (the “Delayed Draw Commitment”) of the Series A Perpetual Preferred Stock and up to 3,375,000 shares of Common Stock (or up to 6,100,000 shares of Common Stock in the event of certain price-related adjustments) (subject to certain equitable adjustments pursuant to any stock dividend, stock split, stock combination, reclassification or similar transaction) for an aggregate purchase price up to $ 148 million.

Until June 30, 2023, the Company will pay the Purchaser a cash commitment premium on the unpurchased portion of Delayed Draw Commitment as follows:

0 % through the six-month anniversary of the Initial Closing;

1.5 % from the six-month anniversary of the Initial Closing through the 12-month anniversary of the initial closing;

3.0 % from the 12-month anniversary of the Initial Closing through June 30, 2023.

The Company may terminate some or all of the Delayed Draw Commitment, from time to time, at its sole discretion.

Customary Covenants

The Delayed Draw Commitment is subject to certain customary anti-dilution adjustments provided under the Securities Purchase Agreement and Certificate of Designations, including for stock splits, reclassifications, combination’s and dividends or distributions made by the Company on the Common Stock.

Transfer Restrictions

After the Initial Closing, subject to certain customary exceptions including transfers to Permitted Transferees (as defined in the Securities Purchase Agreement), the Purchaser will be restricted from transferring the Series A Perpetual Preferred Stock and Common Stock until the one-year anniversary of the Initial Closing.

Ranking and Liquidation Preference

The Series A Perpetual Preferred Stock ranks senior to the Common Stock with respect to dividend rights and rights upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company (a “Liquidation”).

Upon a Liquidation, each share of Series A Perpetual Preferred Stock would be entitled to

receive an amount per share (the “Liquidation, Redemption or Repurchase Amount”) equal to the greater of (i) the Liquidation Preference of such share, plus all accrued and unpaid dividends (including any Accrued Dividends) thereon and (ii) an amount in cash equal to the sum of (a) 130.0 % of the Initial Liquidation Preference of such share, minus (b) the cumulative amount of cash dividends paid in respect of such share prior to such payment.

As used herein, “Liquidation Preference” means, with respect to any share of the Series A Perpetual Preferred Stock, the initial liquidation preference of $ 1,000 per share (the “Initial Liquidation Preference”) plus any Accrued Dividends of such share as of the time of determination.

Redemption Rights

The Company may redeem all or any portion of the Series A Perpetual Preferred Stock (in increments of not less than $ 200 million based on the Liquidation Preference of such shares of Series A Perpetual Preferred Stock to be redeemed at such time (or such lesser amount to the extent the Company chooses to redeem all of the outstanding shares of Series A Perpetual Preferred Stock)) for an amount in cash equal to the Liquidation, Redemption or Repurchase Amount.

Upon a “Fundamental Change” (involving a change of control, bankruptcy, insolvency or liquidation of the Company as further described in the Certificate of Designations), each Holder shall have the right to require the Company to redeem all or any part of the Holder’s Series A Perpetual Preferred Stock for an amount in cash equal to the Liquidation, Redemption or Repurchase Amount.

Voting and Consent Rights

Each Holder of Series A Perpetual Preferred Stock will have one vote per share on any matter on which Holders of Series A Perpetual Preferred Stock are entitled to vote separately as a class (as described below), whether at a meeting or by written consent.

The Holders of shares of Series A Perpetual Preferred Stock do not otherwise have any voting rights.

The consent of the Holders of a majority of the outstanding shares of Series A Perpetual Preferred Stock will be required for so long as the Threshold Amount remains outstanding for (i) amendments to the Company’s organizational documents that have an adverse effect on the holders of Series A Perpetual Preferred Stock, (ii) issuances by the Company of securities that are senior to, or equal in priority with, the Series A Perpetual Preferred Stock, (iii) entrance into, or amendments to, transactions with affiliates of the Company, (iv) incurrence by the Company of indebtedness, unless the Consolidated Total Leverage Ratio (as defined in the Certificate of Designations) would not exceed 8.5 -to-1 after giving effect to such incurrence (other than drawdowns by the Company under the Company’s current revolving credit facility) or (v) any payment of dividends or making of distributions on equity securities of the Company ranking junior to the Series A Perpetual Preferred Stock or redemptions, purchases or direct or indirect acquisitions of such equity securities ranking junior to or parity with the Series A Perpetual Preferred Stock by the Company, unless the Consolidated Total Leverage Ratio (as defined in the Certificate of Designations) would not exceed 8.5 -to-1 after giving effect to such dividends, distributions, redemptions, purchases or acquisitions.

Registration Rights Agreement

In connection with the Securities Purchase Agreement, on August 10, 2021, the Company and the Purchaser entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company granted the Purchaser certain registration rights with respect to Common Stock purchased pursuant to the Securities Purchase Agreement and Non-Cash Dividend pursuant to the Certificate of Designations, including customary shelf registration rights and “piggyback” registration rights.

On November 11, 2021, the Company entered into a definitive agreement with Amixa Capital, S.L.

and Aurica Trackers, S.L.

to acquire 100 % of the share capital of Soluciones Técnicas Integrales Norland, S.L.

and its subsidiaries (collectively, “STI”), for a purchase price of € 579.0 million ($ 662.7 million at current exchange rates), € 228.0 million ($ 264.0 million at current exchange rates), of which will be paid at closing in common stock of the Company with the remaining € 351.0 million in cash ($ 401.7 million at current exchange rates) to be paid in cash.

The purchase price will be increased by the amount that is four times the audited Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) of the target less € 47.0 million ($ 53.5 million at current exchange rates), such that the amount of contingent consideration is subject to a cap of € 55.0 million ($ 63.0 million at current exchange rates).

The transaction is expected to close in the first quarter of 2022, following receipt of required regulatory approvals and satisfaction of other customary closing conditions.

Bridge Loan Commitment

In connection with the entry into the Purchase Agreement, the Company entered into a debt commitment letter dated November 11, 2021 pursuant to which third party financial institutions have committed, subject to the satisfaction of standard conditions, to provide the Company with a bridge loan facility in aggregate principal amount of up to $ 300 million.

The Company currently intends to finance the transaction and related fees and expenses with cash on hand, borrowings under its senior credit facilities and through one or more debt capital markets transactions, subject to market conditions and other factors, and, only to the extent necessary, borrowings under the bridge loan facility.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements