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Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-03 · 435 added, 128 removed, 6 unchanged (99% of the section changed)

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 Vector Acquisition Corporation.

References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Vector Acquisition Partners, 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 includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities and Exchange Act of 1934, as amended (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 Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy, the plans and objectives of management for future operations and our ability to complete our business combination with Rocket Lab USA, Inc.

(“Rocket Lab”), are forward-looking statements.

Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and variations thereof 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 Part I, Item 1A.

Risk Factors in the Company’s Annual Report on Form 10-K

for the year ended December 31, 2021, filed with the Securities and Exchange Commission (the “SEC”) on March 31, 2021, as amended by Amendment No.

1 thereto, filed with the SEC on May 3, 2021 (as so amended, the “Form 10-K”),

as well as the “Risk Factors” section included in the Company’s Quarterly Report on Form 10-Q

for the quarter ended March 31, 20201, filed with the SEC on May 24, 2021, and the the Company’s Registration Statement on Form S-4

relating to the Company’s business combination with Rocket Lab, initially filed with the SEC on June 25, 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.

We are a blank check company incorporated on July 28, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities.

We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the sale of the private placement warrants, our shares, debt or a combination of cash, equity and debt.

We expect to continue to incur significant costs in the pursuit of our acquisition plans.

We cannot assure you that our plans to complete a business combination will be successful.

Rocket Lab Business Combination

On March 1, 2021, we entered into an Agreement and Plan of Merger (as amended by Amendment No.

1 thereto dated as of May 7, 2021, and as the same may be further amended or supplemented, the “Merger Agreement”) with Rocket Lab, and Prestige USA Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Rocket Lab (“Merger Sub”).

The Merger Agreement and the transactions contemplated thereby (the “Business Combination”) were unanimously approved by the boards of directors of each of the Company and Rocket Lab.

In contemplation of the Business Combination, we will domesticate as a Delaware corporation (the “Domestication” and the company following the Domestication, “Vector Delaware”) and, in connection therewith, (a) the Class A ordinary shares and the Class B ordinary shares issued and outstanding immediately prior to the Domestication will convert into an equal number of shares of Class A common stock, par value $0.0001 per share, and Class B common stock, par value $0.0001 per share, of Vector Delaware, respectively (such shares of Class A common stock and Class B common stock, together the “Vector Delaware Common Stock”);

(b) our warrants to purchase Class A ordinary shares issued and outstanding immediately prior to the Domestication will convert into an equal number of warrants to purchase Vector Delaware Class A common stock (the “Vector Delaware Warrants”) and (c) our units that have not been separated into Class A ordinary shares and warrants issued and outstanding immediately prior to the Domestication will convert into an equal number of units of Vector Delaware (the “Vector Delaware Units”).

The Merger Agreement further contemplates that the Business Combination will be effected through the following transactions:

in connection with the Domestication, (i) Vector’s Class A ordinary shares, par value $0.0001 per share (the “Class A ordinary shares”), issued and outstanding immediately prior to the Domestication will convert into an equal number of shares of Class A common stock, par value $0.0001 per share, of Vector Delaware (the “Vector Delaware Class A common stock”), and Vector’s Class B ordinary shares, par value $0.0001 per share (the “Class B ordinary shares”) issued and outstanding immediately prior to the Domestication will convert into an equal number of shares of Class B common stock, par value $0.0001 per share, of Vector Delaware (together with the Vector Delaware Class A common stock, the “Vector Delaware common stock”);

(ii) Vector’s warrants to purchase Class A ordinary shares issued and outstanding immediately prior to the Domestication will convert into an equal number of warrants to purchase Vector Delaware Class A common stock (the “Vector Delaware warrants”) and (iii) Vector’s units that have not been separated into Class A ordinary shares and warrants issued and outstanding immediately prior to the Domestication will convert into an equal number of units of Vector Delaware (the “Vector Delaware units”);

concurrently with the Domestication, Rocket Lab will amend and restate its certificate of incorporation (the “Charter Amendment”), and in connection therewith, among other things, (i) each issued and outstanding share of preferred stock, par value $0.0001 per share, of Rocket Lab will convert into shares of common stock, par value $0.0001 per share, of Rocket Lab (the “Rocket Lab Common Stock”), in accordance with the terms thereof;

(ii) each issued and outstanding share of Rocket Lab Common Stock (after giving effect to the conversion contemplated by clause (i)) will convert automatically into a number of shares of Rocket Lab Common Stock equal to the Exchange Ratio (as defined below) and (iii) each then issued and outstanding Rocket Lab warrant will convert into a new warrant of Rocket Lab (a “Rocket Lab New Warrant”) for a number of shares of Rocket Lab Common Stock and with the applicable exercise price per share determined in accordance with the Merger Agreement;

Rocket Lab will enter into redemption agreements with certain members of its management pursuant to which Rocket Lab will redeem from such individuals shares of Rocket Lab Common Stock (the “Management Redemption Shares”) for an aggregate purchase price not to exceed $40,000,000;

immediately following the Domestication, Merger Sub will merge with and into Vector Delaware, with Vector Delaware surviving the merger as a wholly owned subsidiary of Rocket Lab (the “First Merger”), and in connection therewith, (a) the shares of Vector Delaware Common Stock (other than any treasury shares, shares held by Vector Delaware or any dissenting shares) issued and outstanding immediately prior to the effective time of the First Merger (the “First Effective Time”) will convert into an equal number of shares of Rocket Lab Common Stock;

(b) the Vector Delaware Warrants that are outstanding and unexercised immediately prior to the First Effective Time will convert into an equal number of warrants to purchase Rocket Lab Common Stock (the “Assumed Warrants”) and (c) the Vector Delaware Units that are outstanding immediately prior to the First Effective Time will convert into an equal number of units of Rocket Lab (the “Assumed Units”);

immediately following the First Effective Time, Rocket Lab will merge with and into Vector Delaware, with Vector Delaware surviving the merger (Vector Delaware as the surviving corporation, “New Rocket Lab” and such merger, the “Second Merger”), and in connection therewith, among other things, (i) the shares of Rocket Lab Common Stock (other than any treasury shares, shares held by Rocket Lab or dissenting shares) issued and outstanding immediately prior to the effective time of the Second Merger (the “Second Effective Time”) will convert into an equal number of shares of common stock, par value $0.0001 per share, of New Rocket Lab (the “New Rocket Lab Common Stock”);

(ii) the Rocket Lab New Warrants and the Assumed Warrants outstanding and unexercised immediately prior to the Second Effective Time will convert into an equal number of warrants to purchase New Rocket Lab Common Stock;

and (iii) each Assumed Unit that is outstanding immediately prior to the Second Effective Time will automatically be converted into a New Rocket Lab unit that, upon the closing of the Business Combination (the “Closing”), will be cancelled and will entitle the holder thereof to one share of New Rocket Lab Common Stock and one-third

of one warrant, with each whole warrant representing the right to purchase one share of New Rocket Lab Common Stock.

In addition to the above consideration, if the closing price of New Rocket Lab Common Stock is equal to or greater than $20.00 for a period of at least 20 days out of 30 consecutive trading days during the period commencing on the 90th day following the Closing and ending on the 180th day following the Closing, the Rocket Lab stockholders will be entitled to receive additional shares of New Rocket Lab Common Stock equal to 8% of the Aggregate Share Consideration (as defined below) (computed without the deduction for the Management Redemption Shares).

For purposes of the Merger Agreement, the “Exchange Ratio” equals the quotient obtained by dividing (i) the Aggregate Share Consideration by (ii) the aggregate number of shares of Rocket Lab Common Stock outstanding immediately prior to the Charter Amendment on a fully diluted basis (other than the Management Redemption Shares).

The “Aggregate Share Consideration” means the quotient obtained by dividing (i) an amount equal to $4,000,000,000 minus the Management Redemption Amount by (ii) (x) an amount equal to $10.00 plus (y) an amount equal to (a) the interest earned on funds held in the Company’s trust account divided by (b) the number of Class A ordinary shares outstanding immediately prior to the Closing.

The Business Combination is expected to close in the third quarter of 2021, subject to the satisfaction of certain customary closing conditions.

Concurrently with the execution of the Merger Agreement, we entered into subscription agreements (the “Subscription Agreements”) with certain investors (the “PIPE Investors”), pursuant to which the PIPE Investors agreed to subscribe for and purchase, and we agreed to issue and sell to such PIPE Investors, immediately prior to Closing, an aggregate of 46,700,000 shares of New Rocket Lab Common Stock for a purchase price of $10.00 per share, for aggregate gross proceeds of $467,000,000 (the “PIPE Financing”).

The closing of the PIPE Financing is contingent upon, among other things, the substantially concurrent consummation of the Business Combination.

The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition.

You should read this discussion and analysis in conjunction with the unaudited condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q,

as well as Rocket Labs’ audited consolidated financial statements and notes thereto included in the final prospectus dated October 7, 2021 (the “S-1

Prospectus”) and filed with the SEC.

Certain amounts may not foot due to rounding.

Certain information in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q

contains forward-looking statements that involve numerous risks and uncertainties, including, but not limited to, those described under the sections entitled “Cautionary Note Regarding Forward-Looking Statements” and Item II, Part 1A.

“Risk Factors” included in this Quarterly Report on Form 10-Q

and under the heading “Risk Factors” in the S-1

Prospectus filed with the SEC.

We assume no obligation to update any of these forward-looking statements.

Actual results may differ materially from those contained in any forward-looking statements.

Rocket Lab USA, Inc.

entered into a merger agreement (the “Agreement”) with Vector Acquisition Corporation (“VACQ”), on March 1, 2021, as amended by Amendment No.

1 thereto, dated May 7, 2021 and Amendment No.

2 thereto, dated June 25, 2021.

The transactions contemplated by the terms of the Agreement were completed on August 25, 2021 (the “Merger”), in conjunction with which VACQ changed its name to Rocket Lab USA, Inc.

(hereafter referred to as “Rocket Lab”, the “Company”, “we”, “us” or “our”, unless the context otherwise requires).

The transactions contemplated in the Agreement are collectively referred to as the “Business Combination”.

Rocket Lab is an end-to-end

space company with an established track record of mission success.

We deliver reliable launch services, satellites and other spacecraft, and on-orbit

management solutions that make it faster, easier and more affordable to access space.

While our business has historically been centered on the development of small-class launch vehicles and related sale of launch services, we are currently innovating in the areas of medium-class launch vehicles and launch services, space systems design and manufacturing, on-orbit

management solutions, and space data applications.

Each of these initiatives addresses a critical component of the end-to-end

solution and our value proposition for the space economy:

Launch Services is the design, manufacture, and launch of orbital rockets to deploy payloads to various Earth orbits and interplanetary destinations.

Space Systems is the design and manufacture of spacecraft components and spacecraft, as well as on-orbit

constellation management services and space data applications.

Electron is our orbital small launch vehicle that was designed from the ground up to accommodate a high launch rate business model to meet the growing and dynamic needs of our customers for small launch services.

Since its maiden launch in 2017, Electron has become the leading small spacecraft launch vehicle delivering 105 satellites to orbit for government and commercial customers across 18 successful missions through September 30, 2021.

In 2020, Electron was the second most frequently launched rocket by companies operating in the United States and established Rocket Lab as the fourth most frequent launcher globally.

Our launch services program has seen us develop many industry innovations, including 3D printed rocket engines, an electric-pump-fed

rocket engine, fully carbon composite first stage fuel tanks, a private orbital launch complex, a rocket stage that converts into a spacecraft on orbit, and the ability to successfully recover a stage from space, providing a path to reusability.

In March 2021, we announced plans to develop our reusable-ready medium-capacity Neutron launch vehicle which will increase the payload capacity of our space launch vehicles to approximately 17,000 lbs (8,000 kg), for launches to low-Earth

orbit and lighter payloads into higher orbits.

Neutron will be tailored for commercial and U.S.

government constellation launches and capable of human space flight and cargo and crew resupply to the International Space Station.

Neutron will also provide a dedicated service to orbit for larger civil, defense and commercial payloads that need a level of schedule control and high-flight cadence not available on large and heavy lift rockets.

Neutron is expected to have the capability of launching nearly all of the spacecraft that we expect to be launched through 2029 and we expect to be able to leverage Electron’s flight heritage, various vehicle subsystems designs, launch complexes and ground station infrastructure.

Our space systems initiative is centered on the design, manufacture, and sale of the Photon family of small spacecraft, which are configurable for a range of low Earth orbit, medium Earth orbit, geosynchronous orbit and interplanetary missions.

Our Photon family of spacecraft enable us to offer an end-to-end

mission solution encompassing launch, spacecraft, ground services and mission operations to provide customers with streamlined access to orbit with Rocket Lab as a single mission partner.

Our space systems initiative is also supported by the design and manufacture of a range of components for satellites and other spacecraft, including reaction wheels, star trackers, magnetic torque rods and batteries and has additional products in development to serve a wide variety of sub-system

We entered this market with our acquisition of leading spacecraft components manufacturer Sinclair Interplanetary, which brought incremental vertically-integrated capabilities for our own spacecraft and also enabled Rocket Lab to deliver high-volume manufacturing of critical spacecraft components at scale prices to the broader spacecraft merchant market.

Recent Developments

On October 12, 2021, we entered into a membership interest purchase agreement (the “ASI Purchase Agreement”) with ASI Aerospace LLC (“ASI”), Willis Vern Holdings, Inc., the shareholders of ASI, and John A.

Cuseo, as shareholder representative, pursuant to which we agreed to purchase 100% of the issued and outstanding equity interests of ASI for aggregate consideration of $40 million, subject to customary adjustments at closing for cash, working capital, transaction expenses and indebtedness, and amounts placed in escrow.

The ASI Purchase Agreement also includes an additional potential earn out payment of up to $5.5 million based on achievement of certain performance metrics for the business in its fiscal year ending December 31, 2021.

The ASI Purchase Agreement contains representations, warranties and indemnification provisions customary for transactions of this kind.

In connection with the acquisition, we entered into customary offer letters and non-competition

and non-solicitation

agreements with certain key employees of ASI.

The transactions contemplated by the ASI Purchase Agreement closed on October 12, 2021.

On November 15, 2021, we entered into an Agreement and Plan of Merger (the “PSC Merger Agreement”), by and among us, Platinum Merger Sub, Inc.

(“PSC Merger Sub”), Planetary Systems Corporation (“PSC”), and Michael Whalen as shareholder representative, which provides for, among other things, the merger of PSC Merger Sub with and into PSC, with PSC being the surviving corporation of the merger and a direct, wholly owned subsidiary of us.

Pursuant to the terms of the PSC Merger Agreement, all of the issued and outstanding shares of PSC will be cancelled in exchange for aggregate consideration of up to

approximately $42 million in cash, 1,720,841 shares of the Company’s common stock, and up to 956,023 shares of our common stock that are subject to a performance based earn-out, subject to customary adjustments at closing for cash, working capital, transaction expenses and indebtedness, and amounts held back by us (the “PSC Acquisition”).

The PSC Merger Agreement contains representations, warranties and indemnification provisions customary for transactions of this kind.

In connection with the PSC Acquisition, we have entered into customary offer letters or employment agreements with certain key employees of PSC.

We have also agreed to file a resale registration statement with respect to the common stock issued or issuable in the PSC Acquisition prior to the six-month anniversary of the date of the PSC Merger Agreement.

The transactions contemplated by the PSC Merger Agreement are expected to close in our fourth quarter of 2021.

Public Company Costs

As a consequence of the Business Combination, we are a Nasdaq listed company, which required us to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices.

We expect to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting, legal and administrative resources, including increased audit and legal fees.

Additionally, we expect our capital and operating expenditures will increase significantly in connection with ongoing activities as we:

increase our investment in marketing, advertising, sales and distribution infrastructure for our existing and future products and services;

develop additional new products and enhancements to existing products;

obtain, maintain and improve our operational, financial and management performance;

hire additional personnel;

obtain, maintain, expand and protect our intellectual property portfolio;

operate as a public company.

Key Metrics and Select Financial Data

We monitor the following key financial and operational metrics that assist us in evaluating our business, measuring our performance, identifying trends and making strategic decisions.

Launch Vehicle Build-Rate and Launch Cadence

We built approximately three launch vehicles in 2019 and approximately eight launch vehicles in 2020.

We anticipate we will build a total of approximately eight launch vehicles by the end of 2021.

Although we experienced a negative impact in 2020 and 2021 as a result of the COVID-19 shutdowns and restrictions on our operations discussed in more detail below under “ Key

Factors Affecting Our Performance—Covid-19 Pandemic,”

we believe that the growth in build rate prior to such COVID-19 restrictions is a positive indicator of our ability to scale our manufacturing operations in support of our anticipated growth rate in revenue in the coming years.

We launched six vehicles in 2019 and seven vehicles in 2020.

We have launched four vehicles through the nine months ended September 30, 2021, including one vehicle in the three months ended September 30, 2021.

The number of launches is an indicator of our ability to convert mission awards into revenue in a timely manner and demonstrate the scalability of our launch operations.

Growth rates between launches and total launch service revenue are not perfectly correlated because our total revenue is affected by other variables, such as the revenue per launch, which can vary considerably based on factors such as unique orbit and insertion requirements, payload handling needs, launch location, time sensitivity of mission completion and other factors.

Although we experienced a negative impact in 2020 and 2021 as a result of the COVID-19 shutdowns and restrictions on our operations discussed in more detail below under “ Key

Factors Affecting Our Performance—Covid-19 Pandemic,”

we believe that the growth in launch rate prior to such COVID-19 restrictions is a positive indicator of our ability to scale our launch operations in support of our anticipated growth rate in revenue in the coming years.

Revenue Growth

Three Months Ended September 30, 2021 and 2020

We generated $5.3 million and $10.7 million in revenue for the three months ended September 30, 2021 and 2020, respectively, representing a year-on-year

decrease in revenue of approximately 50%.

This year-on-year

decrease primarily resulted from impacts related to the novel coronavirus (“COVID-19”)

affecting our ability to provide launch services to our customers, which was slightly offset by broad based growth across our space systems products and services.

Nine Months Ended September 30, 2021 and 2020

We generated $34.8 million and $19.4 million in revenue for the nine months ended September 30, 2021 and 2020, respectively, representing a year-on-year

increase in revenue of approximately 79%.

This year-on-year

increase primarily resulted from a higher average contractual price per launch service and broad based growth across our space systems products and services.

Revenue Value Per Launch

Revenue value per launch represents the average revenue per launch contract attributable to launches that occurred during a period, regardless of when the revenue was recognized.

Revenue value per launch can be a useful metric to provide insight into general competitiveness and price sensitivity in the marketplace.

Revenue value per launch can vary considerably, based on factors such as unique orbit and insertion requirements, payload handling needs, launch location, time sensitivity of mission completion and other factors, and as such may not provide absolute clarity with regards to pricing and competitive dynamics in the marketplace.

Three Months Ended September 30, 2021 and 2020

In the three months ended September 30, 2021 and 2020, our revenue value per launch was $12.1 million and $4.7 million, respectively.

Meanwhile, cost per launch was $21.3 million and $6.0 million for the three months ended September 30, 2021 and 2020, respectively.

The increase in cost per launch in the three months ended September 30, 2021 was driven by stock based compensation charges related to the Business Combination and related stock units as well as lower manufacturing absorption driven by COVID-19 impacts.

Nine Months Ended September 30, 2021 and 2020

In the nine months ended September 30, 2021 and 2020, our revenue value per launch was $8.8 million and $5.8 million, respectively.

Meanwhile, cost per launch was $10.1 million and $6.7 million for the nine months ended September 30, 2021 and 2020, respectively.

The increase in cost per launch in the nine months ended September 30, 2021 was driven by stock based compensation charges related to the Business Combination and related stock units as well as lower manufacturing absorption driven by COVID-19 impacts.

Backlog represents future revenues that we would recognize in connection with the completion of all contracts and purchase orders that have been entered into by our customers, excluding any customer options for future products or services that have not yet been exercised.

Contracts for launch services and spacecraft builds typically include termination rights that may be exercised by customers upon advanced notice and payment of a specified termination fee.

As of September 30, 2021, our backlog totaled $183.1 million.

We expect to recognize approximately 52% of our backlog over the next 12 months and the remainder recognized thereafter.

Key Factors Affecting Our Performance

COVID-19 Pandemic

In December 2019, COVID-19

surfaced in Wuhan, China.

The World Health Organization (“WHO”) declared a global emergency on January 30, 2020 with respect to the outbreak, and several countries have initiated travel restrictions, closed borders and given social distancing directives, including instructions requiring “shelter-in-place”.

March 11, 2020, the WHO declared the COVID-19 outbreak

As a result of the pandemic, the United States and New Zealand governments shut down various sectors of the respective economies.

In the United States, we were deemed an essential service and no pauses were made to our United States’ based operations.

As a result of the shutdown in New Zealand, we had to delay certain scheduled launches to a later date.

In addition to existing travel restrictions, some locales may impose prolonged quarantines and further restrict travel, which may significantly impact the ability of our employees to get to their places of work to produce products, may make it such that we are unable to obtain certain long lead time components on a timely basis or at a cost-effective price, or may significantly hamper our customers from traveling to our launch facilities to prepare payloads for launch.

Rocket Lab has taken temporary precautionary measures intended to help minimize the risk of the virus to its employees, including temporarily requiring some employees to work remotely and implementing social distancing protocols for all work conducted onsite.

Rocket Lab has suspended non-essential travel

worldwide for employees and is discouraging employee attendance at other gatherings.

The extent of COVID-19’s effect

on our operational and financial performance will depend on future developments, including the duration, spread and intensity of the pandemic, all of which are uncertain and difficult to predict considering the rapidly evolving landscape.

At this time, it is not possible to determine the magnitude of the overall impact of COVID-19 on

our business.

However, it could have a material adverse effect on our business, financial condition, liquidity, results of operations and cash flows.

Ability to sell additional launch services, space systems and service and spacecraft components to new and existing customers

Our results will be impacted by our ability to sell our launch services, space systems and services, and spacecraft components to new and existing customers.

We have had success with Electron successfully launching 18 times delivering 105 satellites to orbit through September 30, 2021.

Our spacecraft components have flown on more than 100 spacecrafts and our family of Photon spacecraft has been awarded missions to the Moon, Mars and Venus.

Our growth opportunity is dependent on our ability to expand our addressable launch services market with larger volumetric and higher mass payloads capabilities of our recently announced medium-capacity Neutron launch vehicle, which will address large commercial and government constellation launch opportunities.

Our growth opportunity is also dependent on our ability to win satellite spacecraft constellation missions and expand our portfolio of strategic spacecraft components.

Our ability to sell additional products to existing customers is a key part of our success, as follow-on

purchases indicate customer satisfaction and decrease the likelihood of competitive substitution.

To sell additional products and services to new and existing customers, we will need to continue to invest significant resources in our products and services.

If we fail to make the right investment decisions, if customers do not adopt our products and service, or if our competitors are able to develop technology or products and services that are superior to ours, our business, prospects, financial condition and operating results could be adversely affected.

Ability to improve profit margins and scale our business

We intend to continue investing in initiatives to improve our operating leverage and significantly ramp production.

We believe continued reduction in costs and an increase in production volumes will enable the cost of launch vehicles to decline and expand our gross margins.

Our ability to achieve our production-efficiency objectives could be negatively impacted by a variety of factors including, among other things, lower-than-expected facility utilization rates, manufacturing and production cost overruns, increased purchased material costs and unexpected supply-chain quality issues or interruptions.

If we are unable to achieve our goals, we may not be able to reduce operating costs, which would negatively impact gross margin and profitability.

Government expenditures and private enterprise investment into the space economy

Government expenditures and private enterprise investment has fueled the growth in our target markets.

We expect the continued availability of government expenditures and private investment for our customers to help fund purchases of our products and services will remain.

This is an important factor in our company’s growth prospects.

Components of Results of Operations

Our revenues are derived from a combination of long-term fixed price contracts for launch services and spacecraft builds, and purchase order spacecraft components sales.

Revenues from long-term contracts are recognized using either the “point-in-time” or

“over-time” method of revenue recognition.

Point-in-time revenue

recognition results in cash payments being initially accrued to the balance sheet as deferred revenue as contractual milestones are accomplished and then recognized as revenue once the final contractual obligation is completed.

Over-time revenue recognition is based on an input measure of progress based on costs incurred compared to estimated total costs at completion.

Each project has a contractual revenue value and an estimated cost.

The over-time revenue is recognized based on the percentage of the total project cost that has been realized.

Estimating future revenues and associated costs and profit is a process requiring a high degree of management judgment, including management’s assumptions regarding our future operational performance as well as general economic conditions.

Frequently, the period of performance of a contract extends over a long period of time and, as such, revenue recognition and our profitability from a particular contract may be affected to the extent that estimated costs to complete are revised, delivery schedules are delayed, performance-based milestones are not achieved or progress under a contract is otherwise impeded.

Accordingly, our recorded revenues and operating profit from period to period can fluctuate significantly depending on when the point-in-time or

over-time contractual obligations are achieved.

In the event cost estimates indicate a loss on a contract, the total amount of such loss is recorded in the period in which the loss is first estimated.

For a description of our revenue recognition policies, see the section titled “— Critical Accounting Policies and Estimates

Cost of revenues

Cost of revenues consists primarily of direct material and labor costs, manufacturing overhead, other personnel-related expenses, which include salaries, bonuses, benefits and stock-based compensation expense, reserves for estimated warranty costs, freight expense and depreciation expense.

Cost of revenues also includes charges to write-down the carrying value of inventory when it exceeds its estimated net realizable value, including on-hand inventory

that is either obsolete or in excess of forecasted demand.

We expect our cost of revenues to increase in absolute dollars in future periods as we sell more launch services, space systems and components.

As we grow into our current capacity and execute on cost-reduction initiatives, we expect our cost of revenues as a percentage of revenue to decrease over time.

Because direct labor costs and manufacturing overhead comprise more than 60% of cost of revenues, increasing our production rate resulting in greater absorption of these costs is our most critical cost reduction initiative.

Increasing our production rate is a cross-functional effort involving manufacturing, engineering, supply chain and finance.

Operating Expenses

Our operating expenses consist of research and development and selling, general and administrative expenses.

Research and Development

Research and development expense consists primarily of personnel-related expenses, consulting and contractor expenses, validation and testing expense, prototype parts and materials and depreciation expense.

We intend to continue to make significant investments in developing new products and enhancing existing products.

Research and development expense will be variable relative to the number of products that are in development, validation or testing.

However, we expect it to decline as a percentage of total revenue over time.

Selling, General and Administrative

Selling, general and administrative expenses consist primarily of personnel-related expenses for our sales, marketing, supply chain, finance, legal, human resources and administrative personnel, as well as the costs of customer service, information technology, professional services insurance, travel, allocated overhead and other marketing, communications and administrative expenses.

We will continue to actively promote our products.

We also expect to invest in our corporate organization and incur additional expenses associated with transitioning to, and operating as, a public company, including increased legal and accounting costs, investor relations costs, higher insurance premiums and compliance costs.

As a result, we expect that selling, general and administrative expenses will increase in absolute dollars in future periods but decline as a percentage of total revenue over time.

Interest (expense) income, net

Interest expense consists primarily of interest expense incurred on debt and interest income consists primarily of interest income earned on our cash and cash equivalents and short-term investments balances.

Gain (loss) on foreign exchange

Gain (loss) on foreign exchange relates to currency fluctuations that generate foreign exchange gains or losses on invoices denominated in currencies other than the U.S.

Change in fair value of liability classified warrants

Change in fair value of liability classified warrants relates to changes in the fair value of warrant liabilities.

Other expense (income), net

Other expense (income), net relates to other expense and income.

Results of Operations

We have neither engaged in any operations nor generated any revenues to date.

Our only activities from inception to June 30, 2021 were organizational activities, those necessary to prepare for the initial public offering, described below, and, after the initial public offering, identifying a target company for a business combination, and proceeding with the closing of the business combination disclosed in Note 6.

We do not expect to generate any operating revenues until after the completion of our 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 a business combination.

For the three months ended June 30, 2021, we had a net loss of $1,059,094, which consisted of formation and operating expenses of $1,145,290 offset by interest income on marketable securities held in the trust account of $4,863 and the change in fair value of warrant liabilities of $81,333.

For the six months ended June 30, 2021, we had a net loss of $24,619,357, which consisted of formation and operating expenses of $3,075,696 and the change in fair value of the warrant liabilities offset by interest income on marketable securities held in the trust account of $9,673.

The following table sets forth our consolidated statements of operations information and data as a percentage of revenue for each of the periods indicated (in thousands, except percentages):

Three months ended

September 30, 2021

September 30, 2020

Cost of revenues

Operating expenses:

Research and development, net

Selling, general and administrative

Total operating expenses

Operating loss

Other income (expense):

Interest income (expense), net

Gain (loss) on foreign exchange

Change in fair value of liability classified warrants

Other income (expense), net

Total other income (expense), net

Loss before income taxes

Benefit for income taxes

Nine months ended

September 30, 2021

September 30, 2020

Cost of revenues

Operating expenses:

Research and development, net

Selling, general and administrative

Total operating expenses

Operating loss

Other income (expense):

Interest income (expense), net

Gain (loss) on foreign exchange

Change in fair value of liability classified warrants

Other income (expense), net

Total other income (expense), net

Loss before income taxes

Benefit for income taxes

Comparison of the Three Months Ended September 30, 2021 and September 30, 2020

Three months ended

(in thousands, except percentages)

September 30,

Revenue decreased by $5.4 million, or 50%, for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020.

Launch services revenue was $1.1 million in the three months ended September 30, 2021, a decrease of $8.6 million, or 88%, primarily due to a lower launch cadence driven by COVID-19

related impacts to business operations and lower content due to over-time revenue recognition versus point-in-time

revenue recognition in the three months ended September 30, 2021 as compared to the three months ended September 30, 2020.

Space systems revenue was $4.2 million in the three months ended September 30, 2021, an increase of $3.3 million, or 360% driven by broad based growth across all of our space systems products and services.

Cost of Revenues

Three months ended

(in thousands, except percentages)

September 30,

Cost of revenues

Cost of revenues increased by $5.2 million, or 41%, for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020.

The increase in cost of revenue was primarily driven by a step-up related to our Business Combination and vesting of restricted stock units in stock-based compensation of $7.6 million during the three months ended September 30, 2021 as compared to the three months ended September 30, 2020.

Cost of revenues for the three months ended September 30, 2021 also increased to 336% of total revenue during the three months ended September 30, 2021 as compared to 118% during the three months ended September 30, 2020.

Research and Development, Net

Three months ended

(in thousands, except percentages)

September 30,

Research and development, net

Research and development expense increased by $9.3 million, or 189%, for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020, primarily due to a $5.6 million increase in a step-up related to our Business Combination and vesting of restricted stock units in stock-based compensation, Neutron development, a baseline low earth orbit and interplanetary spacecraft platform and increased labor and prototype spend focused on broadening our spacecraft component product portfolio.

Selling, General and Administrative

Three months ended

(in thousands, except percentages)

September 30,

Selling, general and administrative

Selling, general and administrative expense increased by $19.6 million, or 324%, for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020, primarily due to a $17.1 million increase in a step-up related to our Business Combination and vesting of restricted stock units in stock-based compensation and redemption compensation expense, increased costs associated with being a public company and third party professional fees related to the recently announced acquisition of ASI Aerospace LLC.

Interest Income (Expense), Net

Three months ended

(in thousands, except percentages)

September 30,

Interest income (expense), net

Interest expense increased by $2.9 million, or 10,166%, for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020, primarily due to borrowings under our secured term loan agreement.

Gain (Loss) on Foreign Exchange

Three months ended

(in thousands, except percentages)

September 30,

Gain (loss) on foreign exchange

Loss on foreign exchange declined by $0.1 million, or 112%, for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020, primarily due to fluctuations in the foreign exchange of the New Zealand Dollar and Canadian Dollar as compared to the U.S.

Change in Fair Value of Liability Classified Warrants

Three months ended

(in thousands, except percentages)

September 30,

Change in fair value of liability classified warrants

Change in fair value of liability classified warrants expense increased by $33.4 million, or 5,940%, for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020, primarily as a result of the change in fair value of liability classified warrants assumed in connection with the Business Combination.

Other Income (Expense), Net

Three months ended

(in thousands, except percentages)

September 30,

Other income (expense), net

Other expense increased by $0.4 million, or 1,025%, for the three months ended September 30, 2021 as compared to the three months ended September 30, 2020, primarily due to bank fees related to our term loan initiation with Hercules and the termination of the SVB term loan.

Benefit for Income Taxes

Three months ended

(in thousands, except percentages)

September 30,

Benefit for income taxes

We recorded income tax benefit of $1.7 million and $1.0 million for the three months ended September 30, 2021 and September 30, 2020, respectively.

The annual effective tax rate was 1.9% for the three months ended September 30, 2021, compared to 7.4% for the three months ended September 30, 2020.

The annual effective tax rate was lower than the federal statutory rate due primarily to a full valuation allowance in the United States and was partially offset by recurring items such as foreign taxes based on local country statutory rates, excess tax benefits related to share-based compensation, and foreign withholding taxes, as well as by discrete items that may occur in any given year but are not consistent from year to year.

Comparison of the Nine Months Ended September 30, 2021 and September 30, 2020

Nine months ended

(in thousands, except percentages)

September 30,

Revenue increased by $15.3 million, or 79%, for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.

Launch services revenue was $25.2 million in the nine months ended September 30, 2021, an increase of $7.0 million, or 38%, primarily due to higher content per launch service agreement in the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.

Space systems revenue was $9.6 million in the nine months ended September 30, 2021, an increase of $8.4 million, or 698%, primarily due to broad based growth across space systems products and service offerings.

Cost of Revenues

Nine months ended

(in thousands, except percentages)

September 30,

Cost of revenues

Cost of revenues increased by $16.2 million, or 59%, for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.

The increase in cost of revenues was driven by a step-up related to our Business Combination and vesting of restricted stock units in stock-based compensation of $7.5 million and lower production utilization due to COVID-19

related impacts during the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020.

Cost of revenues for the nine months ended September 30, 2021 also decreased to 125% of total revenue from 140% for the nine months ended September 30, 2020 due to an increase in revenues, partially offset by the aforementioned step-up of stock-based compensation expense and COVID-19

related impacts.

Research and Development, Net

Nine months ended

(in thousands, except percentages)

September 30,

Research and development, net

Research and development expense increased by $18.8 million, or 171%, for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020, primarily due to a step-up related to our Business Combination and vesting of restricted stock units in stock-based compensation of $6.1 million and increased labor and prototype spend focused on broadening our spacecraft component product portfolio and a baseline low earth orbit and interplanetary spacecraft platform.

Selling, General and Administrative

Nine months ended

(in thousands, except percentages)

September 30,

Selling, general and administrative

Selling, general and administrative expense increased by $22.0 million, or 126%, for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020, primarily due to a $17.1 million increase in a step-up related to our Business Combination and vesting of restricted stock units in stock-based compensation and redemption compensation expense, increased costs associated with being a public company including third party services and higher staff cost related to supporting public company reporting requirements.

Interest Income (Expense), Net

Nine months ended

(in thousands, except percentages)

September 30,

Interest income (expense), net

Interest expense increased by $3.6 million, or 1,685%, for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020, primarily due to borrowings under our secured term loan agreement.

Loss on Foreign Exchange

Nine months ended

(in thousands, except percentages)

September 30,

Loss on foreign exchange

Loss on foreign exchange declined by $0.2 million, or 31%, for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020, primarily due to fluctuations in the foreign exchange of New Zealand Dollar and Canadian Dollar as compared to the U.S.

Change in Fair Value of Liability Classified Warrants

Nine months ended

(in thousands, except percentages)

September 30,

Change in fair value of liability classified warrants

Change in fair value of liability classified warrants expense increased by $39.0 million, or 9,176%, for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020, primarily as a result of the change in fair value of liability classified warrants assumed in connection with the Business Combination.

Other Income (Expense), Net

Nine months ended

(in thousands, except percentages)

September 30,

Other income (expense), net

Other expense increased by $1.2 million, or 194%, for the nine months ended September 30, 2021 as compared to the nine months ended September 30, 2020, primarily due to bank fees related to our term loan initiation with Hercules and the termination of the SVB term loan.

Benefit for Income Taxes

Nine months ended

(in thousands, except percentages)

September 30,

Benefit for income taxes

We recorded income tax benefit of $1.0 million and $0.3 million for the nine months ended September 30, 2021 and September 30, 2020, respectively.

The annual effective tax rate was 0.8% for the nine months ended September 30, 2021, compared to 0.7% for the nine months ended September 30, 2020.

Liquidity and Capital Resources

On September 29, 2020, we consummated our initial public offering of 30,000,000 units, at a price of $10.00 per unit, generating gross proceeds of $300,000,000.

Simultaneously with the closing of our initial public offering, we consummated the sale of 5,333,333 private placement warrants to our Sponsor at a price of $1.50 per private placement warrant generating gross proceeds of $8,000,000.

On October 20, 2020, in connection with the underwriters’ election to partially exercise of their over-allotment option, we consummated the sale of an additional 2,000,000 units and the sale of an additional 266,667 private placement warrants, generating total gross proceeds of $20,400,000.

Following our initial public offering, the partial exercise of the over-allotment option and the sale of the private placement warrants, a total of $320,000,000 was placed in the trust account.

We incurred $18,252,382 in transaction costs, including $6,400,000 of underwriting fees, $11,200,000 of deferred underwriting fees and $652,382 of other offering costs.

For the six months ended June 30, 2021, net cash used in operating activities was $821,057, which consisted of our net loss of $24,619,357 offset by a noncash charge derived from the change in warrant liability of $21,553,334, interest earned on investment held in the trust account of $9,673 and changes in operating assets and liabilities, which provided $2,254,639 of cash from operating activities.

As of June 30, 2021, we had investments held in the trust account of $320,014,519.

We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account, which interest shall be net of taxes payable and excluding deferred underwriting commissions, to complete our business combination.

We may withdraw interest from the trust account to pay taxes, if any.

To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a 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.

At June 30, 2021, we had cash of $44,846 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, structure, negotiate and complete a business combination.

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 may repay such loaned amounts out of the proceeds of the trust account released to us.

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 $1,500,000 of such loans may be convertible into warrants, at a price of $1.00 per warrant, at the option of the lender.

The warrants would be identical to the private placement warrants.

On July 19, 2021 the Company issued an unsecured working capital loan promissory note, pursuant to which the Company may borrow up to $300,000 from the Sponsor, for expenses related to the business combination.

All unpaid borrowings will be due on the day on which the Company consummates a Business Combination.

We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business.

However, if our estimate of the costs of identifying a target business, undertaking in-depth due

diligence and negotiating a business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination.

Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of our public shares upon completion of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination.

Sheet Financing Arrangements

We have no obligations, assets or liabilities, which would be considered off-balance

sheet arrangements as of June 30, 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

Contractual Obligations

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay our Sponsor a monthly fee of $10,000 for office space, administrative and support services, provided to the Company.

We began incurring these fees on September 24, 2020 and will continue to incur these fees monthly until the earlier of the completion of a business combination or the Company’s liquidation.

The underwriters are entitled to a deferred fee of $0.35 per unit, or $11,200,000 in the aggregate (see Note 6).

The deferred fee will become payable to the underwriters from the amounts held in the trust account solely in the event that we complete a business combination, subject to the terms of the underwriting agreement.

Critical Accounting Policies

The preparation of condensed 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 condensed financial statements, and income and expenses during the periods reported.

Actual results could materially differ from those estimates.

We have not identified any critical accounting policies.

Warrant Liabilities

We account for the warrants issued in connection with our initial public offering in accordance with the guidance contained in ASC 815-40

Since inception, we have funded our operations with proceeds from sales of our capital stock, bank debt, research and development grant proceeds, and cash flows from the sale of our products and services.

As of September 30, 2021, we had $792.7 million of cash and cash equivalents.

Our primary requirements for liquidity and capital are investment in new products and technologies, the expansion of existing manufacturing facilities, working capital, debt service, acquisitions and general corporate needs.

Historically, these cash requirements have been met through the net proceeds we received through private sales of equity securities, borrowings under our credit facilities, and payments received from customers.

We believe that our existing cash and cash equivalents and payments from customers will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months.

With the funds raised in connection with the Business Combination and the PIPE financing, we expect no additional capital will be needed to execute our business plan over the next 12 months, although we may choose to take advantage of opportunistic capital raising or refinancing transactions at any time.

We will continue to invest in increasing production and expanding our product offerings through acquisitions.

Our future capital requirements will depend on many factors, including our launch cadence, traction in space system, the expansion of sales and marketing activities, the timing and extent of spending to support product development efforts, the introduction of new and enhanced products, the continuing market adoption of our products, the timing and extent of additional capital expenditures to invest in existing and new office spaces.

We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products and technologies.

We may be required to seek additional equity or debt financing.

In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all.

If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued product innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition.

Hercules Capital Secured Term Loan

On June 10, 2021, the Company entered into a $100 million secured term loan agreement with Hercules Capital, Inc.

(the “Hercules Capital Secured Term Loan”) and borrowed the full amount under the secured term loan agreement.

The term loan has a maturity date of June 1, 2024 and is secured by substantially all of the assets of the Company.

Payments due for the term loan are interest-only until the maturity date with interest payable monthly in arrears.

The outstanding principal bears (i) cash interest at the greater of (a) 8.15% or (b) 8.15% plus the prime rate minus 3.25% and (ii) payment-in-kind interest

of 1.25% which is accrued and added to the outstanding principal balance.

Prepayment of the outstanding principal is permitted under the loan agreement and subject to certain prepayment fees.

In connection with the secured term loan, the Company paid an initial facility charge of $1 million and the Company will be required to pay an end of term charge of $3.25 million upon repayment of the loan.

The secured term loan agreement contains customary representations, warranties, non-financial covenants,

and events of default.

The Company is in compliance with all debt covenants related to its long-term borrowings as of September 30, 2021.

As of September 30, 2021, there was $99.4 million outstanding under the Hercules Capital Secured Term Loan, of which $2.8 million was classified as current in the Company’s condensed consolidated balance sheets, with the remainder classified as a long-term borrowing.

As of September 30, 2021, the Company had no availability under the Hercules Capital Secured Term Loan.

In connection with the $100 million Hercules Capital Secured Term Loan, the Company repaid the $15 million advance under the SVB Revolving Line and Term Loan Line and terminated the Loan and Security Agreement (see below).

Revolving Line and Term Loan Line

On December 23, 2020, the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Silicon Valley Bank for a maximum of $35 million in financing which included a warrant to purchase 121,689 shares of common stock at a price of $1.28 per share (after giving effect to the exchange ratio in the Business Combination) (see Note 11 to our condensed consolidated financial statements contained elsewhere in this report).

The $35 million may be drawn upon utilizing the Revolving Line and Term Loan Line (the “Revolving Line and Term Loan Line”) subject to certain terms and conditions.

On May 13, 2021, the Company borrowed $15 million as a Term Loan advance under its Loan and Security Agreement.

On June 10, 2021, the Company repaid the $15 million as a Term Loan advance under its Loan and Security Agreement upon funding of the Hercules Capital Secured Term Loan and the Revolving Line was closed.

The following table summarizes our cash flows for the periods presented:

(in thousands)

Nine months ended

September 30, 2021

Nine months ended

September 30, 2020

Net cash provided by (used in):

Operating activities

Investing activities

Financing activities

Effect of exchange rate changes

Net decrease in cash, cash equivalents, and restricted cash

Cash Flows from Operating Activities

Net cash used for operating activities was $49.9 million for the nine months ended September 30, 2021 consisted of $120.5 million in operating loss, $70.2 million in non-cash

expense and $0.5 million in cash from operating assets and liabilities.

Included in the non-cash

expense are $39.4 million in liability-classified warrant expense, $24.2 million in stock-based compensation expense and $7.4 million in depreciation and amortization.

Included in the cash generation from operating assets and liabilities are $25.0 million increase in deferred revenue offset by a $12.2 million increase in inventory and a $10.6 million increase in accounts receivable.

Cash Flows from Investing Activities

Cash used in investing activities for the nine months ended September 30, 2021 of $11.4 million was primarily driven by lab investments in Long Beach, California, which will be used to support classified government programs, Launch Complex 1 in Mahia, New Zealand, where we are nearing completion on our second launch pad and adding additional support facilities to support launch operations and safety, and our propulsion development and test facility near Auckland, New Zealand, which consolidates and supports all Curie engine development and hot fire testing.

Cash Flows from Financing Activities

Cash provided by financing activities for the nine months ended September 30, 2021 of $801.8 million was primarily related to the closing of our Business Combination with VACQ and PIPE proceeds of $730.5 million, $98.9 million in a long-term secured term loan, $2.8 million from the exercise of stock options offset by $30.4 million in the repurchase of shares and options from management.

Critical Accounting Policies and Estimates

There have been no material changes to our critical accounting policies and estimates as disclosed in our audited financial statements included in our

filed with the Securities and Exchange Commission on October 7, 2021, besides the below addition of warrant liability.

Warrant Liability

We account for the warrants assumed in connection with the Business Combination in accordance with the guidance contained in ASC 815-40,

Derivatives and Hedging

, under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities.

1 unchanged sentence

This liability is subject to re-measurement

at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations.

The initial fair value of the warrants were estimated using a Monte Carlo simulation approach.

The subsequent measurement of the Public Warrants are classified as Level 1 due to the use of an observable market quote in an active market and the subsequent measurement of the Private Placement Warrants are classified Level 2 due to the use of observable inputs other than Level 1.

Class A Ordinary Shares Subject to Possible Redemption

We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Class A 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, 32,000,000 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of our condensed 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 Class A redeemable ordinary shares is calculated by dividing the interest income earned on the trust account by the weighted average number of Class A redeemable ordinary shares outstanding since original issuance.

Net loss per ordinary share, basic and diluted for Class B non-redeemable ordinary

shares is calculated by dividing the net income (loss), less income attributable to Class A redeemable ordinary shares, by the weighted average number of Class B non-redeemable ordinary

shares outstanding for the periods presented.

The calculation of diluted loss per ordinary share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) Private Placement Warrants since inclusion of such warrants would be anti-dilutive.

Recent Accounting Standards

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements.

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06,

Debt — Debt with Conversion and Other Options (Subtopic 470-20)

and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40)

(“ASU 2020-06”)

to simplify accounting for certain financial instruments.

eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity’s own equity.

The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity’s own equity.

amends the diluted earnings per share guidance, including the requirement to use the if-converted

method for all convertible instruments.

is effective January 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning on January 1, 2021.

We are currently assessing the impact, if any, that ASU 2020-06

would have on its financial position, results of operations or cash flows.

at each balance sheet date until exercised, and any change in fair value is recognized in our Consolidated Statements of Operations and Comprehensive Loss.

Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance

sheet arrangements, as defined under applicable SEC rules.

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 2. Management’s Discussion and Analysis