What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-03-15 compared with 2022-03-30 · 340 added, 274 removed, 398 unchanged (61% of the section changed)

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Our Class A common stock is listed on the NYSE under the symbol “SPIR”.

and our public warrants are traded on the NYSE under the symbol “SPIR.WS”

and, after resale, our private placement warrants will also trade under the same ticker symbol as the public warrants.

Our Class B common stock is neither listed nor traded.

Our Class B common stock is not listed on any market.

Holders of Record

As of December 31, 2021, there were 253 holders of record of our Class A common stock.

As of February 24, 2023, there were 162 holders of record of our Class A common stock.

The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.

As of December 31, 2021, there were four holders of record of our Class B common stock.

As of February 24, 2023, there were four holders of record of our Class B common stock.

All shares of our Class B common stock are beneficially owned by Peter Platzer, Theresa Condor, Jeroen Cappaert and William Joel Spark, or their affiliates.

As of December 31, 2021, there were three holders of our public warrants.

Dividend Policy

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Any future determination to declare dividends will be made at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements, general business conditions, and other factors that our board of directors may deem relevant.

In addition, the terms of the FP Term Loan contain restrictions on our ability to declare and pay cash dividends on our capital stock.

In addition, the terms of the Blue Torch Financing Agreement contain restrictions on our ability to declare and pay cash dividends on our capital stock.

Repurchases of Securities

In November 2022, we commenced a warrant exchange, and on December 19, 2022, 9,956,489 publicly-traded warrants (“Public Warrants”) and 6,600,000 private placement warrants were each exchanged for 0.2 shares of our Class A common stock, or an aggregate 3,311,286 shares of Class A common stock.

On December 19, 2022, we also entered into an amendment to the warrant agreement that provided us with the right to require the exchange of the remaining outstanding Public Warrants for Class A common stock at an exchange ratio of 0.18 shares for each Public Warrant.

We exercised this exchange right on December 19, 2022, and the remaining 1,543,493 of Public Warrants were exchanged on January 4, 2023 for 277,828 shares of the Company's Class A common stock.

Unregistered Sales of Equity Securities and Use of Proceeds

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We own and operate one of the world’s largest multi-purpose satellite constellations in low earth orbit.

Our fully deployed constellation consists of over 100 satellites and we believe it is also one of the world’s largest “listening”

Our multi-receiver satellites obtain Automatic Identification Systems ("AIS") data from vessels, Automatic Dependent Surveillance–Broadcast (“ADS–B”) data from aircraft and radio occultation (“RO”) data utilizing GNSS satellites.

Our fully deployed constellation consists of more than 100 satellites, and we believe it is also one of the world’s largest “listening”

constellations, observing the earth utilizing radio frequency sensors.

We enrich this hard-to-acquire, valuable data with analytics and predictive solutions, providing data as a subscription to organizations around the world so that they can improve business operations, decrease their environmental footprint, deploy resources for growth and competitive advantage and mitigate risk.

In December 2021, our satellite constellation covered the earth over 200 times per day on average and our global ground station network performed over 2,300 contacts each day on average, reliably and resiliently collecting data with low latency.

Our cloud-based data infrastructure processed five terabytes of data each day on average in December 2021, in creating our proprietary data analytics solutions.

We provide customers these solutions through an API infrastructure that delivers approximately one terabyte of data each day to our customers, as of December 31, 2021.

The global data we collect includes data that can only be captured from space with no terrestrial alternatives.

In December 2022, our constellation covered the earth more than 200 times per day on average and our global ground station network performed thousands of contacts each day on average, reliably and resiliently collecting data with low latency.

Our cloud-based data infrastructure in aggregate processes three terabytes of data each day on average, in creating our proprietary data analytics solutions.

We provide customers these solutions through an application programming interface (“API”) infrastructure.

The global proprietary data that we collect includes data that can only be

captured from space with no terrestrial alternatives.

We collect this data once and can then sell it an unlimited number of times across a broad and growing set of industries, including weather, aviation and maritime, with global coverage, real-time and near real-time data that can be easily integrated into our customers’

Our Space Services offering enables our customers, commercial and government organizations, to go from idea to orbit simply, reliably, quickly and cost efficiently.

We launch software, payloads and dedicated satellite constellations for our customers that we own and manage on their behalf.

Just like our proprietary data and analytic solutions, our customers subscribe to the data that is collected through an API.

From our founding in 2012, we have set out to leverage data from space to solve problems on Earth.

We aim to help inspire, lead, and innovate the business of space-based data.

Today, our proprietary data and solutions are being used to help commercial and government organizations gain the advantage that they seek to innovate and solve some of the world’s greatest challenges, like climate change and global security.

We have experienced rapid growth in recent periods.

In November 2021, we acquired exactEarth (the "Acquisition"), a leading provider of global maritime vessel data for ship tracking and maritime situational awareness solutions in Canada.

Our platform applies our value-add insights and predictive analytics to this proprietary data to create commercially valuable datasets.

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Highlights from Fiscal Year 2022

On August 16, 2021, we completed the Merger with NavSight and received cash proceeds of $236.6 million and were listed on the NYSE under the ticker symbol “SPIR.”

On November 30, 2021, we completed the acquisition of exactEarth for the purchase price of $129.0 million, consisting of $109.6 million in cash and $22.3 million of shares of our Class A common stock, net of $3.0 million post-combination expense.

Full year 2022 revenue was $80.3 million, an increase of 85% from fiscal year 2021.

Excluding the $1.5 million of revenue recognized from exactEarth during the fourth quarter and fiscal year ended December 31, 2021, full year 2021 revenue was $41.9 million, an increase of 47% from fiscal year 2020.

As of December 31, 2021, annual recurring revenue (“ARR”) was $70.8 million, an increase of approximately 96% from December 31, 2020.

Excluding the $18.5 million of ARR contributed by the acquisition of exactEarth, Spire’s December 31, 2021 ARR was $52.3 million, an increase of 44% from December 31, 2020.

As of December 31, 2022, annual recurring revenue (“ARR”) was nearly $100 million at $99.4 million, an increase of approximately 41% from December 31, 2021.

For the definition of ARR, see the section titled “—

Key Business Metrics .”

We had 255 organic ARR Solution Customers under contract and added 343 from exactEarth, ending the fourth quarter with 598 ARR Solution Customers, a 288% increase year-over-year.

We added 135 net new ARR Solution Customers throughout fiscal year 2022 and ended the year with 733 ARR Solution Customers, a 23% increase over December 31, 2021.

For the definition of ARR Solution Customers, see the section titled “—

Key Business Metrics .”

COVID-19 Impact

In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the United States and the world and has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.

While we are unable to accurately predict the full impact that the COVID-19 pandemic will have on our operating results, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic or any resurgences of the pandemic locally or globally, our compliance with these measures has impacted our day-to-day operations and could continue to disrupt our business and operations, as well as that of certain of our customers whose industries are more severely impacted by these measures, for an indefinite period of time.

Through fiscal year 2021, we have experienced adverse changes in customer buying behavior that began in March 2020 as a result of the impact of the COVID-19 pandemic, including decreased customer engagement, delayed sales cycles, and deterioration in near-term demand.

In 2021, the Delta and Omicron variants of COVID-19 became the dominant strains in numerous countries around the world, including the United States, and are believed to be more contagious than other previously identified COVID-19 strains.

As a result of the impact of the COVID-19 pandemic, we experienced delays and re-work due to third party satellite launch providers schedule shifts, delays and increased expenses in our hiring process, some attrition from adjusting company policies due to the COVID-19 pandemic and additional time and expenses supporting customer contracts.

Despite these headwinds, we experienced an increase in revenue for fiscal year 2021, as compared to fiscal year 2020.

To support the health and well-being of our employees, customers, partners and communities, we have allowed many of our employees to work remotely.

As of December 31, 2021, our employees are permitted to come into the office in accordance with all applicable local, State and Federal guidelines and regulations.

Our offices will only remain open to the extent local, state and federal authorities permit us to do so and our own criteria and conditions to ensure employee

health and safety are satisfied, including social distancing and enhanced cleaning protocols.

While we have developed plans for our employees to begin safely returning to their respective offices, we cannot predict when or how we will be able to completely lift the work from home requirements or other COVID-19 related restrictions for geographic areas that continue to be significantly impacted by the pandemic or certain other actions taken as part of our business continuity plans, including travel restrictions.

We may also have to reinstate work from home requirements in response to further changes in local regulations in connection with developments in the COVID-19 pandemic.

While the adjustments to our operations may result in inefficiencies, delays and additional costs in our solution development, sales, marketing, and customer support efforts, as of the date of this filing, we do not believe our work from home protocol has materially adversely impacted our internal controls, financial reporting systems or our operations.

In response to the ongoing COVID-19 pandemic, we initially implemented plans to manage our costs.

In fiscal year 2020, for part of the year, we temporarily limited the addition of new employees and third-party contracted services, curtailed most travel expenses except where critical to the business, and acted to limit discretionary spending.

As we obtained further visibility on the impact of the COVID-19 pandemic on our business, we lifted some of these limitations to support our growth.

Although we continue to monitor the situation and may adjust our current policies as more information and public health guidance become available, the ongoing effects of the COVID-19 pandemic and/or the precautionary measures that we, our customers and governmental authorities have adopted have resulted in, and could continue to result in, customers not purchasing or renewing our solutions or services, delays or lengthening of our sales cycles, and reductions in average transaction sizes, and could negatively affect our customer success and sales and marketing efforts, or create operational or other challenges, any of which could harm our business and operating results.

Because our solutions have future obligations and a portion of that revenue is recognized over time, the effect of the pandemic may not be fully reflected in our operating results until future periods.

Our competitors could experience similar or different impacts as a result of the COVID-19 pandemic, which could result in changes to our competitive landscape.

While we have developed and continue to develop plans to help mitigate the negative impact of the pandemic on our business, these efforts may not be effective, and any protracted economic downturn could significantly affect our business and operating results.

We will continue to evaluate the nature and extent of the impact of the COVID-19 pandemic to our business.

For additional information regarding the possible impact of the COVID-19 pandemic on our business, see the section titled “

Risk Factors .”

In the first quarter, we announced a space-as-a-service deal with NorthStar to build a constellation of satellites focused on space-situational awareness and debris monitoring.

The first award within the contract is for three satellites, with pre-agreed options for NorthStar to scale the constellation to dozens of satellites as their business operational needs grow.

We were awarded an approximately $10 million contract by the National Oceanic and Atmospheric Administration ("NOAA") to provide six months of radio occultation ("RO") data.

The near-real-time RO data consists of vertical profiles of atmospheric temperature and related quantities for operational weather models and other applications.

The data will be available for NOAA to distribute globally as scientists collaborate to find new and meaningful weather and climate insights.

We were awarded a $4 million contract by NOAA to develop, integrate, test and demonstrate a Hyperspectral Microwave Sensor payload.

Unlike an airborne or balloon-based platform, we are able to provide high-quality commercial data for NOAA’s weather forecast models and to leverage our existing work with RAL Space and the U.K.

Government to develop Hyperspectral Microwave Sensors.

We continued to improve our geolocation capabilities by recently deploying satellites equipped with an antenna and software-defined radio tuned to capture signals from L-Band Satcom.

The presence of these signals in certain locations and under certain

circumstances is indicative of activities that are of critical importance for some of our government customers to help make the world a safer place.

We unveiled a next generation 16U satellite bus that offers the capabilities of a larger satellite, with up to double the payload capacity of conventional 16Us, while offering all the benefits of a nanosatellite.

The satellite bus is tailored for customers with missions that require larger payloads and more power, volume, and data capabilities than a conventional 16U, such as Earth observation and space domain awareness missions.

We closed a $120 million credit facility with Blue Torch Finance LLC, which highlights the strength of our business, and further improves our balance sheet and liquidity position.

Macroeconomic, Geopolitical and COVID-19 Impact

Over the past two years, we have been impacted by the macroeconomic environment, such as fluctuations in foreign currencies, the COVID-19 pandemic, increasing interest rates and the Russian invasion of Ukraine.

A strong U.S.

dollar relative to our foreign subsidiaries' local functional currency for most of 2022 negatively impacted our revenue, since approximately one-third of our sales are transacted in foreign currencies, though it positively impacted our expenses, since a majority of our employees reside in countries outside of the United States.

The COVID-19 pandemic has caused existing or potential customers to re-evaluate their decision to purchase our offerings, at times resulting in additional customer discounts, extended payment terms, longer sales cycles, and a few contract cancellations.

The pandemic also led to reduced company-wide travel, resulted in a move to a hybrid work model, created a more difficult hiring process and at times resulted in employee attrition.

Increasing interest rates in 2022 resulted in higher interest expenses, as our credit facility is based on a floating interest rate.

The Russian invasion of Ukraine and the continuing conflict created additional global sanctions, which at times caused scheduling shifts or launch cancellations by third-party satellite launch providers, which delayed revenue recognition of certain sales contracts.

If any of these factors continue or worsen, and/or if new macroeconomic or geopolitical issues arise, our results and financial condition could be further negatively impacted.

We cannot predict the timing, strength, or duration of any economic slowdown, downturn, instability, or recovery, generally or within any particular industry or geography.

Any downturn of the general economy or industries in which we operate would adversely affect our business, financial condition, and results of operations.

Key Factors Affecting Our Performance

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business model that focuses on efficiently acquiring new customers (“land”) and then growing our relationships with these customers over time (“expand”).

We have the capability to offer customers additional data sets and a variety of enhanced features that potentially grow the value of the services our customers contract with us.

We have the capability to offer customers additional data sets and a variety of enhanced features that potentially grow the value of the services for which our customers contract with us.

Our future revenue growth and our path to profitability are dependent upon our ability to continue to land new customers and then expand adoption of our solutions within their organizations.

We track our progress landing new customers by measuring the number of ARR Solution Customers we have from one fiscal year to the next.

For instance, we have increased our number of ARR Solution Customers from 154 for fiscal year 2020 to 598 for fiscal year 2021.

For instance, we have increased our number of ARR Solution Customers from 598 as of December 31, 2021 to 733 as of December 31, 2022.

We track our progress in expanding our customer relationships by measuring our ARR Net Retention Rate.

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As our solutions have grown, we continue to focus on further penetration of our initial industries including maritime, aviation, logistics and government (civil and defense/intelligence) among others.

We believe our technology and solutions give us the ability to also expand into additional industries, including energy, financial services, agriculture, transportation, and insurance, and geographies, including Latin America, Africa, and the Middle East.

We believe our technology and solutions give us the ability to also expand into additional industries, including energy, financial services, agriculture, transportation, and insurance, and into additional geographies, including Latin America, Africa, and the Middle East.

Our revenue growth is dependent upon our ability to continue to expand into new industries and geographies.

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Investment in Growth

We continue investing in growing our business and capitalizing on our market opportunity while balancing the uncertainties from the COVID-19 pandemic.

We intend to continue to add headcount to our global sales and marketing teams to acquire new customers and to increase sales to existing customers and we intend to continue to add headcount to our research and development teams and otherwise invest to improve and innovate our nanosatellite, ground station and data analytics technologies.

For fiscal year 2021, our spending on research and development increased by $10.9 million, or 52%, from fiscal year 2020, which included $0.3 million from the exactEarth acquisition.

For fiscal year 2021, our sales and marketing expenses increased by $10.1 million, or 98%, from fiscal year 2020, which included $0.6 million from the exactEarth acquisition.

Our total headcount across all functions has increased from 251 employees as of December 31, 2020, to 370 employees as of December 31, 2021, which increase includes 33 exactEarth employees.

We believe that these investments will contribute to our long-term growth.

The costs of these investments may adversely affect our operating results.

Our business strategy may include, like our November 2021 acquisition of exactEarth, acquiring other complementary solutions, technologies, or businesses that we believe will allow us to reduce the time or costs required to develop new technologies, incorporate enhanced functionality into and complement our existing solution offerings, augment our engineering workforce, and enhance our technological capabilities.

We continue investing in growing our business and capitalizing on our market opportunities while balancing the uncertainties from the macro-economic environment and geopolitical factors.

We intend to continue to add headcount to our global sales and marketing teams to acquire new customers and to increase sales to existing customers.

We also intend to continue to add headcount as needed to our research and development teams and otherwise invest to improve and innovate our nanosatellite, ground station and data analytics technologies.

For fiscal year 2022, our spending on research and development increased by $3.5 million, or 11%, from fiscal year 2021.

$1.2 million of this increase was due to the Acquisition operating costs.

For fiscal year 2022, our sales and marketing expenses increased by $8.1 million, or 40%, from fiscal year 2021.

$5.2 million of this increase was due to the Acquisition operating costs.

Our total headcount across all functions increased 12% from 370 employees as of December 31, 2021, to

415 employees as of December 31, 2022.

The costs of these investments may adversely affect our result of operations, but we believe that these investments will contribute to our long-term growth.

Our business strategy may include acquiring other complementary solutions, technologies, or businesses, such as the Acquisition, that we believe will allow us to continue on our path to profitability, reduce the time or costs required to develop new technologies, incorporate enhanced functionality into and complement our existing solution offerings, augment our engineering workforce and enhance our technological capabilities.

Impact of Foreign Exchange Rates

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dollars, and the functional currency of our foreign operating subsidiaries is the local currency, including the Euro, the British Pound, the Singapore Dollar and the Canadian Dollar.

Many of these currencies have strengthened significantly against the U.S.

dollar since fiscal year 2020.

dollar has strengthened against many of these currencies since fiscal year 2021.

In fiscal year 2022, approximately 35% of our revenues were generated in non-U.S.

dollar-denominated currencies respectively.

This compares to fiscal year 2020 where approximately 50% of our revenues were generated in non-U.S.

dollar-denominated currencies respectively.

dollar-denominated currencies.

This compares to fiscal year 2021 when approximately 46% of our revenues were generated in non-U.S.

dollar-denominated currencies.

The financial statements of these subsidiaries are translated into U.S.

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Annual Recurring Revenue

We define ARR as our expected annualized revenue from customers that are under contract with us at the end of the reporting period with a binding and renewable agreement for our subscription solutions, or a customer that has a binding multi-year contract that can range from components of our Space Services solution to a project-based customer solution.

Project-based contracts or customers are considered recurring when they have signed a multi-year binding agreement that has a renewable component in the contract or a customer that has multiple contracts that we continue to have under contract over multiple years.

We define ARR as our expected annualized revenue from customers that are under contracts with us at the end of the reporting period with a binding and renewable agreement for our subscription solutions or customers that are under a binding multi-year contract that can range from components of our Space Services solution to a project-based customer solution.

Customers with project-based contracts are considered recurring when there is a multi-year binding agreement that has a renewable component in the contract.

Customers are also considered recurring when they have multiple contracts over multiple years.

Customer contracts for data trials and one-time transactions are excluded from the calculation of ARR.

Our ARR growth in the periods presented has been driven by both landing new ARR Customers along with increasing the amount of business with our existing customers.

This is reflected in the increase in the total number of ARR Customers as well as ARR Net Retention Rates that have been over 100% for the periods presented.

Due in part to the timing of some of our project-based contracts, including when engagements start and stop, our ARR has fluctuated from period to period in the past, and we expect our ARR to fluctuate from period to period in the future.

Our ARR growth in 2022 was driven by landing new ARR Customers (as defined below) along with increasing the amount of business with our existing customers.

This is reflected in the increase in the total number of ARR Customers as of December 31, 2022, compared to December 31, 2021, as well as organic ARR Net Retention Rates that were over 100% for each of fiscal year 2022 and fiscal year 2021.

ARR is a leading indicator and accordingly will tend to outpace the revenue impact as we recognize the contract value over time.

The following table summarizes our ARR at each fiscal year end for the periods indicated.

The table includes the Acquisition data as the Acquisition closed prior to fiscal year 2021 year end.

As of December 31,

(dollars in thousands)

2021 to 2020 %

ARR increased by $34.6 million, or 96%, of which $18.5 million was attributable to our acquisition of exactEarth.

Our organic ARR growth was 44%.

Number of ARR Customers and ARR Solution Customers

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As a result, the count of ARR Solution Customers exceeds the count of ARR Customers in each year as some customers contract with us for multiple solutions.

Our multiple solutions customers are those customers that are under contract for at least two of our solutions:

Our multiple solutions customers are those that are under contract for at least two of our solutions:

Maritime, Aviation, Weather, and Space Services.

All entities that have contracts for data trials and one-time transactions are excluded from the calculation of ARR Solution Customers.

Our ARR Customer and ARR Solution Customer growth in the periods presented have been driven by landing new ARR Customers across our four solutions (Maritime, Aviation, Weather and Space Services) and expanding our geographical footprint, along with having a low number of customers who have chosen not to renew their contracts with us.

The growth in each of our ARR Customers and ARR Solution Customers in 2022 was driven by landing new ARR Customers across our four solutions (Maritime, Aviation, Weather and Space Services), expanding our industry and geographical footprints, and having a low number of customers who have not renewed their contracts with us.

We believe that our ability to expand our customer base is a key indicator of our market penetration, the growth of our business, and our future potential business opportunities.

The following table summarizes the number of our ARR Customers and ARR Solution Customers at each fiscal year end for the periods indicated:

2021 to 2020 %

The following table summarizes the number of our ARR Customers and ARR Solution Customers at the end of fiscal years 2022 and 2021.

The table includes the Acquisition data as the Acquisition closed prior to the end of fiscal year 2021.

As of December 31,

ARR Customers

ARR Solution Customers

ARR Customers grew by 431, or 299%.

The addition of exactEarth added 343 ARR Customers.

Our organic ARR Customer growth was 61%.

ARR Solution Customers grew by 444.

The addition of exactEarth added 343 ARR Solution Customers.

Our organic ARR Solution Customer growth was 66%.

ARR Net Retention Rate

We calculate our ARR Net Retention Rate for a particular fiscal period end by dividing (i) our ARR from those ARR Customers that were also customers as of the last day of the prior fiscal period end by (ii) the ARR from all customers as of the last day of the prior fiscal period.

This calculation measures the overall impact from increases in customer contract value (upsells), the decreases in customer contract value (downsells), and the decreases in customer value resulting from customers that have chosen not to renew their contracts with us.

The following table summarizes our ARR Net Retention Rate at each fiscal year end for the periods indicated (excludes exactEarth):

2021 to 2020 %

The ARR Net Retention Rate measures the overall impact from increases in customer contract value (upsells), the decreases in customer contract value (downsells), and the decreases in customer value resulting from customers that have not renewed their contracts with us (lost customers).

For the full year fiscal period, we calculate this by dividing the aggregate amount of upsells, downsells and lost customer ARR by the aggregate amount of customer ARR that was up for renewal during that same full year fiscal period.

The following table summarizes our ARR Net Retention Rate for each of fiscal years 2022 and 2021.

The table excludes the Acquisition data for fiscal year 2021 due to the Acquisition only impacting the month of December 2021.

ARR Net Retention Rate

Our ARR Net Retention Rate can be impacted from period to period by large increases or decreases in customer contract value and large decreases in contract value from customers that have chosen not to renew their contracts with us.

An ARR Net Retention Rate greater than 100% is an indication that we are growing the value of the solutions our customers are purchasing from us from a fiscal period end versus the prior fiscal period end.

An ARR Net Retention Rate less than 100% is an indication that we are reducing the value of the solutions our customers are purchasing from us from a fiscal period end versus the prior fiscal period end.

For fiscal year 2021, our ARR Net Retention Rate decreased 29% from fiscal year 2020.

This decrease was driven by the growth in our ARR renewable base, a higher concentration of new customer ARR versus upsell, and delays in certain Space Services contracts that caused the contract value to spread over a longer period.

For fiscal year 2022, our ARR Net Retention Rate increased 7% from fiscal year 2021.

This increase reflects our success in our "land and expand" strategy of providing existing customers with additional coverage, data sets, a variety of enhanced features and services to our customer's contracts, such as the incremental NOAA Weather contracts signed during fiscal year 2022.

Components of Results of Operations

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Cost of Revenue

Cost of revenue consists primarily of personnel costs, depreciation, hosted infrastructure and high-power computing costs, third-party operating and royalty costs associated with delivering our data and services to our customers, and amortization of purchased intangibles associated with the exactEarth acquisition.

Cost of revenue consists primarily of personnel costs, depreciation, hosted infrastructure and high-power computing costs, third-party operating and royalty costs associated with delivering our data and services to our customers and amortization of purchased intangibles associated with the Acquisition.

Personnel costs are primarily related to the cost of our employees supporting and managing our constellation operations including satellite operations, ground station control and launch management.

Costs associated with the manufacture and launch of our satellites, including personnel costs, are capitalized and depreciated upon placement in service, typically over a three-year expected useful life.

As satellites reach their expected end of useful life, they are generally replaced with replenishment satellites to maintain our constellation at optimal performance.

Costs associated with the acquisition and development of new ground stations, including the bill of materials and labor to install the ground station, are capitalized and depreciated upon placement in service typically over a four-year expected useful life.

We anticipate ongoing capital spending to repair and replenish ground stations as they reach their end of useful life to keep our ground station network at optimal performance.

As satellites reach the end of their expected useful life, they are generally replaced with replenishment satellites to maintain our constellation at optimal performance.

We anticipate ongoing capital spending to repair and replenish ground stations as they reach the end of their expected useful life to keep our ground station network at optimal performance.

Our proprietary ground station network is primarily located in third-party locations where we incur lease and other operational charges.

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Sales and Marketing .

Sales and marketing expenses consist primarily of employee-related expenses, sales commissions, marketing and advertising costs, costs incurred in the development of customer relationships, brand development costs, travel-related expenses and amortization of purchased intangible backlog associated with the exactEarth acquisition.

Commission costs on new customer contract bookings are considered costs of obtaining customer contracts.

Commission costs for multi-year deals are considered contract acquisition costs and are deferred and then amortized over the period of the contract excluding the last 12 months, which are expensed at the beginning of that final period.

Commission costs for new customer contract bookings are considered costs of obtaining customer

Commission costs for multi-year deals are considered contract acquisition costs and are deferred and then amortized over the period of the contract excluding the last twelve months, which are expensed at the beginning of the final twelve-month period.

Commission costs on contracts completed with a term of twelve months or less are expensed in the period incurred.

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General and administrative expenses consist of employee-related expenses for personnel in our executive, finance and accounting, facilities, legal, human resources, global supply chain, and management information systems functions, as well as other administrative employees.

In addition, general and administrative expenses include fees related to third-party legal counsel, fees related to accounting, tax and audit costs, office facilities costs, software subscription costs, and other corporate costs.

Loss on Satellite Deorbit and Launch Failure .

Loss on Satellite Deorbit and Launch Failure consists of the write-off of the remaining capitalized costs associated with the manufacture and launch of our satellites prior to the end of the satellite’s useful life.

We contract with third-party companies to launch, carry, and deploy our LEMUR satellites into space.

A loss could result from a third-party launch or deployer failure, a technical failure of the satellite, or the deorbit of a satellite before the end of the satellite’s useful life.

A technical failure could include a satellite that is not able to communicate with our network of

ground stations or fulfill its intended technical mission for a duration greater than one month.

The loss amount is presented net of any insurance claims received.

We did not incur any of these expenses in fiscal year 2021.

We incurred $0.7 million in expenses in fiscal year 2020.

In addition, general and administrative expenses include fees related to third-party legal counsel, corporate insurance, fees related to accounting, tax and audit costs, office facilities costs, software subscription costs and other corporate costs.

Loss on Decommissioned Satellites.

Loss on decommissioned satellites consist of the write-off of the remaining capitalized costs associated with the manufacture and launch of our satellites prior to the end of the satellite’s useful life.

We contract with third-party companies to launch, carry and deploy our satellites into space.

A loss could result from a third-party launch or deployer failure, a technical failure of the satellite, or the deorbit or decommissioning of a satellite before the end of the satellite’s useful life.

A technical failure could include a satellite that is not able to communicate with our network of ground stations or fulfill its intended technical mission for a duration greater than one month.

The loss amount is presented net of any insurance proceeds received.

Due to the nature of these events, we cannot predict the magnitude or frequency of future satellite deorbit and launch failure losses.

While we sometimes purchase launch insurance when financially practical, the proceeds from these policies will typically only cover a portion of our loss in the event of an unplanned satellite deorbit or launch failure.

We incurred a $0.5 million loss on decommissioned satellites in fiscal year 2022.

We did not incur any such loss in fiscal year 2021.

Other Income (Expense)

Interest Income .

Interest Income includes interest earned on our cash balances.

Interest income includes interest earned on our cash balances and short-term marketable securities.

Interest Expense .

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Change in Fair Value of Contingent Earnout Liability.

Change in Fair Value of Contingent Earnout Liability includes mark-to-market adjustments to reflect changes in fair value of the contingent earnout liability.

Change in fair value of contingent earnout liability includes mark-to-market adjustments to reflect changes in the fair value of the contingent earnout liability.

Change in Fair Value of Warrant Liabilities .

Change in Fair Value of Warrant Liabilities includes mark-to-market adjustments to reflect changes in fair value of warrant liabilities.

Other (Expense) Income, Net.

Other (Expense) Income, Net consists primarily of tax credits, grant income, the impact of foreign exchange gains and losses, benefit from loan forgiveness, loss on debt extinguishment, and sales and local taxes.

We use the local currency as our functional currency for Luxembourg, United Kingdom, Singapore and Canada.

Change in fair value of warrant liabilities includes mark-to-market adjustments to reflect changes in the fair value of warrant liabilities and the exchange of warrants for common stock.

Loss on Extinguishment of Debt .

Loss on extinguishment of debt includes accelerated debt issuance expenses, legal and other fees associated with the payoff or refinancing of existing debt.

Other Income (Expense), Net.

Other income (expense), net consists primarily of tax credits, grant income, the impact of foreign exchange gains and losses, benefit from loan forgiveness, loss on debt extinguishment, all transaction costs and other administrative fees associated with the warrant exchange, and sales and local taxes.

We use the local currency as our functional currency for our subsidiaries in Luxembourg, United Kingdom, Singapore and Canada.

Income Tax Provision

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Fiscal Year 2022 Compared to Fiscal Year 2021

The following tables set forth selected Consolidated Statements of Operations data and such data as a percentage of total revenues for each of the periods indicated:

The following tables set forth selected consolidated statements of operations data for each of the periods indicated:

Years Ended December 31,

(in thousands)

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General and administrative

Loss on satellite deorbit and launch failure

Loss on decommissioned satellites

Total operating expenses

Loss from operations

Other (expense) income:

Other income (expense):

Interest income

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Change in fair value of warrant liabilities

Other (expense) income, net

Total other income (expense), net

Loss on extinguishment of debt

Other expense, net

Total other expense, net

Loss before income taxes

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(1) Includes stock-based compensation as follows:

Years Ended December 31,

(in thousands)

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Total stock-based compensation

Years Ended December 31,

(in thousands)

2021 to 2020 %

Total revenue increased $36.9 million, or 85%, driven primarily by the growth in the number of ARR Customers combined with our ARR Net Retention Rate greater than 100%.

The exactEarth acquisition added $1.5 million of revenue in fiscal year 2021.

Our organic ARR Customers increased 61%, from 144 as of fiscal year 2020 to 232 as of fiscal year 2021, which contributed to an increase in revenue from new customers.

Our organic ARR Net Retention Rate was 110% during fiscal year 2021, which contributed to an increase in revenue from our existing customer base.

For fiscal year 2021, we derived 48% of our revenue from Europe, Middle East, Africa (“EMEA”), 36% of our revenue from the Americas and 16% of our revenue from Asia Pacific (“APAC”).

For fiscal year 2020, we derived 50% of our revenue from EMEA, 38% of our revenue from the Americas, and 12% of our revenue from APAC.

The Acquisition drove $17.1 million of this increase, with $18.6 million of revenue in fiscal year 2022 compared to $1.5 million in fiscal year 2021 due to the Acquisition only impacting the month of December in 2021.

Our ARR Customers increased 23%, from 575 as of December 31, 2021 to 709 as of December 31, 2022, which contributed to an increase in revenue from new customers.

Our ARR Net Retention Rate was 117% during fiscal year 2022, which contributed to an increase in revenue from our existing customer base.

For fiscal year 2022, we derived 46% of our revenue from the Americas, 40% of our revenue from Europe, the Middle East and Africa (“EMEA”), and 14% of our revenue from Asia Pacific (“APAC”).

For fiscal year 2021, we derived 36% of our revenue from the Americas, 48% of our revenue from EMEA, and 16% of our revenue from APAC.

For fiscal year 2022, we derived 71% of our revenue from subscription arrangements, compared to 49% for fiscal year 2021.

This percentage mix can fluctuate significantly from period to period driven primarily by the timing of the non-subscription revenue recognition in our contracts.

For fiscal year 2021, our increase in the number of ARR Customers and our ARR Net Retention Rate greater than 100% was driven by our increased spending on sales and marketing activities, the geographical expansion of our sales efforts into new countries and/or regions and the development and rollout of new data solutions.

Over time, we expect the mix of our total revenues in the Americas and APAC to continue to increase with additional sales and marketing focus in those regions.

This percentage mix can fluctuate significantly from period to period driven primarily by the timing of non-subscription revenue recognition in our contracts.

Cost of Revenue

Years Ended December 31,

(in thousands)

2021 to 2020 %

Total cost of revenue

Headcount (at period end)

Cost of revenue increased $8.4 million, or 82%, $1.7 million of this growth was due to the addition of exactEarth operating costs, retention and stock acceleration expenses.

Organic increases were primarily driven by an increase in depreciation expense of $2.2 million, an increase in computing costs of $2.2 million, third party royalty costs increases of $1.0 million, $0.7 million of space services hardware expenses and $0.2 million higher personnel expenses, with the remainder in higher miscellaneous operating expenses.

Depreciation expense increased from the prior period driven by continued additions to our constellation.

The increase in computing costs were driven by higher expenses to support customer growth and some of our weather solutions transitioning from research and development to production.

The increase in third party royalty costs was driven by an increase in sales activity, resulting in higher payments to third-party data set providers as they augment our data solutions.

The increase in space services third-party hardware expenses was in support of a strategic customer commitment.

The increase in personnel expenses was driven by headcount growth.

Headcount (at end of year)

Cost of revenue increased $21.6 million, or 115%.

$15.3 million of this increase was due to the Acquisition operating costs.

Organic increases were primarily driven by an increase in computing costs of $1.6 million, an increase in personnel costs of $1.5 million, an increase in third-party royalty costs of $1.3 million, an increase in depreciation expenses of $0.8 million, an increase in Space Services third-party hardware expenses of $0.3 million, an increase in travel and entertainment expenses of $0.2 million, an increase in ground station expenses of $0.2 million, and an increase in other miscellaneous operating expenses of $0.4 million.

The increase in computing costs was driven primarily by higher expenses to support customer growth and some of our weather solutions transitioning from research and development to production.

The increase in personnel expenses was driven primarily by headcount growth.

The increase in third-party royalty costs was driven primarily by an increase in sales activity, resulting in higher payments to third-party data set providers as they augment our data solutions.

Depreciation expenses increased from the prior year driven primarily by new satellites to replace retired constellation satellites which were fully depreciated and the addition of Space Services solution satellites.

The increase in Space Services third-party hardware expenses was in support of strategic customer commitments.

The increase in travel and entertainment expenses was driven by eased COVID-19 restrictions.

The increase in ground station expenses was driven by higher operating costs on the addition of incremental capacity to improve overall data latency.

Gross margin for fiscal year 2022 and fiscal year 2021 was 50% and 57%, respectively.

The decrease in fiscal year 2021 gross margin compared to fiscal year 2020 was driven primarily by higher depreciation, computing expenses, royalties, and strategic customer expenses as described above.

This metric can fluctuate significantly from period to period driven primarily by the timing of the revenue as well as the timing of our technology investments to support future revenue.

The exactEarth acquisition negatively impacted gross margin by approximately 2%.

Of this reduction, approximately half was driven by purchase accounting adjustments including reduction to exactEarth deferred revenue and amortization of purchased intangibles.

The Acquisition negatively impacted gross margin for fiscal year 2022 by approximately 12% and fiscal year 2021 by approximately 2%.

Of these Acquisition-related gross margin reductions, approximately half was driven by purchase accounting adjustments to reduce the value of deferred revenue and to amortize purchased intangible assets.

This metric can fluctuate significantly from period to period driven by the timing of the revenue as well as the timing of our technology investments to support future revenue.

We expect cost of revenue, including depreciation and amortization expenses, third-party operating costs and royalties, and high-powered computing costs, to increase in absolute dollars as our business grows.

Additionally, we expect the purchase accounting adjustments associated with the exactEarth acquisition, namely higher amortization expenses and lower deferred revenue, to grow in relative terms as we absorb the impact on a full year basis.

These items will likely have a negative impact on gross margin for at least the near term.

Operating Expenses

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Research and Development

Years Ended December 31,

(in thousands)

2021 to 2020 %

Research and development

Percentage of total revenue

Headcount (at end of period)

Headcount (at end of year)

Research and development expenses increased $3.5 million, or 11%.

$0.7 million of this growth was due to the addition of exactEarth operating costs, retention and stock acceleration expenses.

Organic increases were primarily driven by an increase in personnel costs of $7.8 million, an increase in third-party services of $1.2 million, an increase in computing costs of $1.0 million and a $0.1 million increase in other operating expenses.

The increase in personnel costs was driven by growth in headcount during the period.

The increase in computing costs were driven by additional testing, modeling, and storage requirements used to develop new solutions.

The increase in third-party services was driven by external technical resources required to support new development processes and capabilities.

$0.9 million of this growth was due to the Acquisition operating costs.

Organic increases were primarily driven by an increase in personnel costs of $3.1 million, and an increase in travel and entertainment expenses of $0.3 million, partially offset by a decrease in consulting expenses of $0.7 million and a decrease in other miscellaneous operating expenses of $0.1 million.

The increase in personnel costs was driven by growth in headcount and salary adjustments during the year.

The increase in travel and entertainment expenses was driven by eased COVID-19 restrictions.

The decrease in consulting expenses was driven by a reduction of external technical resources, and a shift to internal resources, to support new development processes and capabilities.

While we expect research and development expenses to increase in absolute dollars in future periods primarily due to higher headcount as we continue to invest in the development of our solutions offerings and new technologies, we expect research and development expenses to decrease as a percentage of revenue in future periods as our revenue growth exceeds our growth in research and development spend.

Sales and Marketing

Years Ended December 31,

(in thousands)

2021 to 2020 %

Sales and marketing

Percentage of total revenue

Headcount (at end of period)

Headcount (at end of year)

Sales and marketing expenses increased $8.1 million, or 40%.

$1.2 million of this growth was due to the addition of exactEarth operating costs, retention and stock acceleration expenses.

Organic increases were primarily due to an increase in personnel costs of $7.0 million, an increase in marketing and professional services costs of $1.4 million, an increase of $0.3 million in travel expenses and $0.2 million increase in other operating expenses.

The increase in personnel costs was driven by growth in our headcount involved in selling activities.

The increase in marketing and professional services costs was driven by growth in our expenditures for demand generation, brand awareness and public relations.

The increase in travel expense was due to improved travel conditions following the COVID-19 pandemic.

$4.8 million of this growth was due to the Acquisition operating costs.

Organic increases were primarily driven by an increase in contractor labor expenses of $1.5 million, an increase in personnel costs of $0.9 million, an increase in travel and entertainment expenses of $0.5 million, an increase in marketing expenses of $0.2 million, and an increase in software expenses of $0.2 million.

The increase in contractor labor expenses was due to an increase in sales resources involved in selling activities.

The increase in personnel costs was driven by higher non-wage compensation including commissions, stock-based compensation and bonus payments.

The increase in travel and entertainment expenses was driven by eased COVID-19 restrictions.

The increase in marketing expenses was driven by growth in our expenditures for demand generation, brand awareness and public relations.

The increase in software expenses was driven by scaling to support overall company headcount growth.

While we expect sales and marketing expenses to continue to grow in absolute dollars in the future, primarily due to increased employee-related expenses as we grow our headcount, to support our sales and marketing efforts and our continued expansion of our sales capacity across our solutions, we expect sales and marketing expenses as a percentage of revenue to decrease in future periods as our revenue growth exceeds our growth in sales and marketing spend.

General and Administrative

Years Ended December 31,

(in thousands)

2021 to 2020 %

General and administrative

Percentage of total revenues

Headcount (at end of period)

Headcount (at end of year)

General and administrative expenses increased $4.4 million, or 11%.

$2.2 million of this growth was due to the addition of exactEarth operating costs, retention and stock acceleration expenses.

Organic increases were primarily driven by an increase in professional and consulting fees of $14.3 million, an increase in personnel costs of $7.1 million, an increase in business insurance of $2.7 million, an increase in facilities expenses of $0.8 million, an increase of $0.5 million in software expenses, and other miscellaneous operating expenses of $0.4 million.

The increase in professional and consulting fees was primarily driven by accounting, legal and other consulting services associated with the Merger, company readiness for going public and the exactEarth acquisition.

The increase in personnel costs was driven by stock-based compensation expense associated with a performance-based equity incentive program as well as overall headcount growth.

$3.4 million of this growth was due to the Acquisition operating costs.

Organic increases were primarily driven by an increase in business insurance of $3.2 million, an increase in personnel costs of $2.6 million, an increase in software expenses of $0.9 million, an increase in facilities expenses of $0.8 million, and an increase in travel and entertainment expenses of $0.5 million, and an increase in other miscellaneous operating expenses of $0.1 million, partially offset by a decrease in professional services fees of $7.1 million.

The increase in business insurance was driven by incremental exposure associated with being a public company.

The increase in facilities expenses was driven by an increase in office rent driven by expansion into new office space to accommodate our headcount growth.

The increase in software expenses was driven by scaling to support overall company headcount growth.

The increase in personnel costs was driven by overall headcount growth, the full year impact of fiscal year 2021 hiring and fiscal year 2022 salary adjustments, offset by lower non-salary compensation.

The increase in software expenses was driven by headcount growth and scaling of operations.

The increase in facilities expenses was driven by overall headcount growth.

The increase in travel and entertainment expenses was driven by eased COVID-19 restrictions.

The decrease in professional services fees was driven by lower third-party accounting, legal and other consulting services associated with the Merger, the Acquisition and company readiness for going public.

While we expect our general and administrative expenses to continue to grow in absolute dollars in future periods as our employee-related expenses increase to support our revenue growth and we have increased expenses from being a public company, we expect our general and administrative expenses as a percentage of revenue to decrease as revenue growth exceeds our growth in general and administrative spend.

Loss on Satellite Deorbit and Launch Failure

Loss on Decommissioned Satellites

Years Ended December 31,

(in thousands)

2021 to 2020 %

Loss on satellite deorbit and launch failure

Loss on decommissioned satellites

Percentage of total revenues

In fiscal year 2021, we incurred no expense in this category compared to fiscal year 2020, where we experienced the loss of two satellites due to a third-party deployment issue associated with a single launch.

Due to the nature of these events, we cannot predict the magnitude or frequency of future satellite deorbit and launch failure losses.

In fiscal year 2022, we recognized a non-cash expense of $0.5 million on decommissioned satellites as part of a routine assessment of satellites for potential impairment.

There were no satellites decommissioned or impaired in fiscal year 2021.

Due to the nature of these events, we cannot predict the magnitude or frequency of future decommissioning losses.

Other Income (Expense)

Years Ended December 31,

(in thousands)

2021 to 2020 %

Interest income

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Change in fair value of warrant liabilities

Other (expense) income, net

Interest income was immaterial.

Interest expense increased $4.6 million, or 69%, primarily as a result of incurring higher interest charges associated with our EIB, Eastward and FP loan facilities as discussed below.

Change in fair value of contingent earnout liability was $67.0 million, driven by the mark-to-market adjustment to reflect the fair market valuation of the underlying stock price.

In connection with the Merger, eligible Spire equity holders are entitled to receive additional shares of our common stock upon our achievement of certain Earnout Triggering Events which are treated as liabilities and required to be marked to market each reporting period.

Changes in valuation are recorded against the Contingent earnout liability account with the offsetting gain or loss recorded in Other Income (expense).

Loss on extinguishment of debt

Other expense, net

* Not meaningful

Interest income increased by $0.9 million as we shifted more liquid assets into short-term marketable securities that carried higher overall interest rates.

Interest expense increased $2.5 million, or 22%, primarily as a result of incurring higher interest and amortized debt issuance costs associated with the Blue Torch term loan.

Change in fair value of contingent earnout liability decreased by $38.6 million, or 80% driven by the mark-to-market adjustment to reflect the fair market valuation of the underlying stock price.

For additional information, see Notes 2, 3 and 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Change in fair value of warrant liabilities increased by $1.4 million, driven by the mark-to-market adjustment to reflect the fair market valuation of our public and private warrants.

Change in fair value of warrant liabilities was a gain of $8.8 million in fiscal year 2022 compared to a loss of $1.6 million in fiscal year 2021, a 647% difference.

The $8.8 million gain in fiscal year 2022 was driven by mark-to-market adjustments and the gain on the exchange of warrants for common stock.

For additional information, see Notes 2, 10 and 13 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Other (expense) income, net increased $5.8 million, or 709%, primarily driven by $5.0 million in debt extinguishment expenses resulting from paying off the EIB Loan and the Eastward Loan Facilities, and an increase in realized and unrealized foreign exchange expense of $1.9 million, and $0.3 million of miscellaneous other expenses, offset by an increase of $1.7 million in grant income driven by the extinguishment of debt resulting from the U.S.

government’s forgiveness of our loan under the Paycheck Protection Program (“PPP”) established as part of the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act.

We continue to experience foreign currency fluctuations as we re-measure foreign currency denominated transactions and balances into the functional currency of the entities in which they are recorded.

Our results of operations are subject to fluctuations due to changes in the Euro, British Pound, Singapore Dollar and Canadian Dollar.

We may continue to experience favorable or adverse foreign currency exchange impacts due to volatility in these currencies relative to their respective functional currencies.

Loss on extinguishment of debt increased $19.3 million, or 592%, driven by the acceleration of unamortized debt issuance costs and other administrative expenses associated with the payoff of the FP loan.

Other expense, net increased by $1.1 million, or 65%, primarily driven by $1.1 million in administrative expenses associated with the warrant exchange, a $0.8 million higher loss associated with the Acquisition investment in Myriota and $0.2 million in lower tax credits and miscellaneous income, partially offset by a $1.0 million reduction in realized and unrealized foreign exchange expense.

Years Ended December 31,

(in thousands)

2021 to 2020 %

Income tax increased $0.1 million, or 24%, primarily driven by higher income tax in our United Kingdom subsidiary.

Income tax provision

Income tax provision decreased $0.2 million, or 35%, primarily driven by the impact of higher tax credits.

Non-GAAP Financial Measures

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For the reasons set forth below, we believe that excluding the following items provides information that is helpful in understanding our results of operations, evaluating our future prospects, comparing our financial results across accounting periods, and comparing our financial results to our peers, many of which provide similar non-GAAP financial measures.

Loss on satellite deorbit and launch failure.

We exclude loss on satellite deorbit and launch failure because if there was no loss, the expense would be accounted for as depreciation and would also be excluded as part of our EBITDA calculation.

Loss on satellite deorbit, launch failure and decommissioning.

We exclude loss on satellite deorbit, launch failure and decommissioning because if there was no loss, the expense would be accounted for as depreciation and would also be excluded as part of our EBITDA calculation.

Other (expense) income, net.

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We also find it useful to exclude these expenses when we assess the appropriate level of various operating expenses and resource allocations when budgeting, planning, and forecasting future periods.

Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under FASB ASC Topic 718, Stock Compensation (“ASC 718”), we believe excluding stock-based compensation expenses allows investors to make meaningful comparisons between our recurring core business results of operations and those of other companies.

Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use under Financial Accounting Standards Board ("FASB") ASC Topic 718, Stock Compensation (“ASC 718”), we believe excluding stock-based compensation expenses allows investors to make meaningful comparisons between our recurring core business results of operations and those of other companies.

Change in fair value of warrant liabilities and contingent earnout liabilities.

Spire excludes this as it does not reflect the underlying cash flows or operational results of the business.

Loss on extinguishment of debt:

We exclude this as it does not reflect the underlying cash flows or operational results of the business.

Foreign exchange loss:

We are exposed to foreign currency gains or losses on outstanding foreign currency denominated receivables and payables related to certain customer sales agreements, product costs and other operating expenses.

As we do not actively hedge these currency exposures, changes in the underlying currency rates relative to the U.S.

Dollar may result in realized and unrealized foreign currency gains and losses between the time these receivables and payables arise and the time that they are settled in cash.

Since such realized and unrealized foreign currency gains and losses are the result of macro-economic factors and can vary significantly from one

period to the next, we believe that exclusion of such realized and unrealized gains and losses is useful to management and investors in evaluating the performance of our ongoing operations on a period-to-period basis.

Amortization of purchased intangibles.

Spire incurs amortization expense for purchased intangible assets in connection with acquisitions of certain businesses and technologies.

We incur amortization expense for purchased intangible assets in connection with acquisitions of certain businesses and technologies.

Amortization of intangible assets is a non-cash expense and is inconsistent in amount and frequency because it is significantly affected by the timing, size of acquisitions and the inherent subjective nature of purchase price allocations.

Because these costs have already been incurred and cannot be recovered, and are non-cash expenses, Spire excludes these expenses for its internal management reporting processes.

Spire's management also finds it useful to exclude these charges when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods.

Investors should note that the use of intangible assets contributed to Spire's revenues earned during the periods presented and will contribute to Spire's future period revenues as well.

Because these costs have already been incurred and cannot be recovered, and are non-cash expenses, we exclude these expenses for our internal management reporting processes.

Our management also finds it useful to exclude these charges when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods.

Other acquisition accounting amortization.

Spire incurs amortization expense for purchased data rights in connection with the acquisition of exactEarth and certain technologies.

We incur amortization expense for purchased data rights in connection with the acquisition of exactEarth and certain technologies.

Amortization of this asset is a non-cash expense that can be significantly affected by the inherent subjective nature of the assigned value and useful life.

Because this cost has already been incurred and cannot be recovered, and is a non-cash expense, Spire excludes this expense for its internal management reporting processes.

Spire's management also finds it useful to exclude this charge when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods.

Because this cost has already been incurred and cannot be recovered, and is a non-cash expense, we exclude this expense for its internal management reporting processes.

Our management also finds it useful to exclude this charge when assessing the appropriate level of various operating expenses and resource allocations when budgeting, planning and forecasting future periods.

Mergers and acquisition related expenses:

Spire excludes these expenses as these are associated with transaction costs that are generally one time in nature and not reflective of the underlying operational results of its business.

We define EBITDA as net income (loss), plus depreciation and amortization expense, plus interest expense, and plus the provision for (or minus benefit from) income taxes.

We exclude these expenses as they are transaction costs and expenses associated with the transaction that are generally one time in nature and not reflective of the underlying operational results of our business.

Examples of these types of expenses include legal, accounting, regulatory, other consulting services, severance, and other employee costs.

Other unusual one-time costs.

We exclude these as they are unusual items that do not reflect the ongoing operational

results of our business.

We exclude these as they are unusual items that do not reflect the ongoing operational results of our business.

Examples of these types of expenses include accounting, legal and other professional fees associated with the preparation and filing of our September 2022 Form S-3 shelf registration statement and “at-the-market”

(“ATM”) offering prospectus supplement, and the December 2022 warrant exchange.

We define EBITDA as net income (loss), plus depreciation and amortization expense, plus interest expense, and plus the provision for (or minus benefit from) income taxes.

Adjusted EBITDA:

We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, further adjusted for loss on satellite deorbit and launch failure, change in fair value of warrant liabilities, change in value of contingent earnout liability, other (expense) income, net, stock-based compensation, other acquisition accounting amortization, mergers and acquisition related costs and expenses, and other unusual one-time costs.

We believe Adjusted EBITDA can be useful in providing an understanding of the underlying operating results and trends and an enhanced overall understanding of our financial performance and prospects for the future.

We define Adjusted EBITDA as earnings before interest, taxes, depreciation and amortization, further adjusted for any loss on satellite deorbit, launch failure and decommissioning, change in fair value of warrant liabilities, change in fair value of contingent earnout liability, other (expense) income, net, stock-based compensation, loss on extinguishment of debt, foreign exchange loss, other acquisition accounting amortization, mergers and acquisition related expenses, and other unusual one-time costs.

We believe Adjusted EBITDA can be useful in providing an understanding of the underlying results of operations and trends, an enhanced overall understanding of our financial performance and prospects for the future.

While Adjusted EBITDA is not a recognized measure under GAAP, management uses this financial measure to evaluate and forecast business performance.

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The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

Investors should note that the excluded items may have had, and may in the future have, a material impact on our reported financial results.

Investors should read this discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and the related notes thereto also included within.

The following table outlines the reconciliation from net loss to Adjusted EBITDA for the periods indicated:

Years Ended December 31,

(in thousands)

Depreciation & amortization

Loss on satellite deorbit and launch failure

Interest, net

Change in fair value of contingent earnout liability

Change in fair value of warrant liabilities

Other income (expense), net

Loss on extinguishment of debt

Other expense, net

Stock-based compensation

1 unchanged sentence

Other unusual one-time costs

Loss on decommissioned satellites

Other acquisition accounting amortization

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Adjusted EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

Adjusted EBITDA do not reflect income tax payments that may represent a reduction in cash available to us;

Adjusted EBITDA does not reflect the loss on satellite deorbit and launch failure and does not reflect the cash capital expenditure requirements for the replacements of lost satellites.

Adjusted EBITDA does not reflect income tax payments that may represent a reduction in cash available to us;

Adjusted EBITDA does not reflect the loss on decommissioned satellites and does not reflect the cash capital expenditure requirements for the replacements of lost satellites.

While these expenses could occur in a given year, the existence and magnitude of these costs could vary greatly and is unpredictable.

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Liquidity and Capital Resources

Our principal sources of liquidity to fund our operations are from cash and cash equivalents, which totaled $109.3 million as of December 31, 2021, mainly from net proceeds from the Merger, borrowings available under the FP Term Loan (as defined below) and the issuance of convertible notes.

Of this $109.3 million, approximately $11.6 million was held outside of the United States.

Our principal sources of liquidity to fund our operations are from cash and cash equivalents, and marketable securities which totaled $70.3 million as of December 31, 2022, mainly from net proceeds from the Merger (as defined below), borrowings under the Blue Torch Credit Facility (as defined below) and the issuance of convertible notes.

Of the $70.3 million total, $47.2 million was in cash and cash equivalents of which approximately $18.8 million was held outside of the United States.

The remaining $23.1 million was held in short-term marketable securities, all of which was held in the United States and which can be converted to cash with minimal transaction costs.

These amounts compare to cash and cash equivalents of $109.3 million as of December 31, 2021, of which $11.6 million was held outside of the United States.

These amounts are exclusive of restricted cash which totaled $0.4 million as of December 31, 2021, and $0.4 million as of December 31, 2020.

We had no investments in short-term marketable securities as of December 31, 2021.

The cash and cash equivalent amounts are exclusive of restricted cash which totaled $0.4 million as of each of December 31, 2022 and 2021.

Since our inception, we have been in an operating cash flow deficit as we have made significant investments in our technology infrastructure, built out our research and development foundation, grown sales and marketing resources to drive revenue, and scaled general and administrative functions to enable operating effectiveness.

During fiscal year 2021, we issued additional convertible notes with a cumulative principal amount of $20.0 million, with maturities of January and February 2025, respectively, which converted into our Class A common stock at the Closing.

In April 2021, we entered into the FP Credit Agreement (as defined and further described below), utilizing a portion of those funds to pay-off our existing credit arrangements with EIB and Eastward.

In November 2021, we closed our acquisition of exactEarth for the purchase price of $129.0 million, consisting of $109.6 million in cash and $22.3 million of common stock, net of $3.0 million post-combination expense.

We expect that our principal sources of liquidity will be the proceeds received from the Merger, the additional convertible notes issued and the FP Term Loan (as defined below).

On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver.

On March 13, 2023, the FDIC announced that it had transferred all deposits –

both insured and uninsured –

and substantially all assets of the former SVB to a newly created, full-service FDIC-operated “bridge bank”

called Silicon Valley Bank, N.A.

As of the close of business on March 14, 2023, we had approximately $31.2 million in cash and cash equivalents at Silicon Valley Bank, N.A., of which approximately $30.8 million was invested in BlackRock money market mutual funds.

We are in the process of transferring substantially all of our cash and cash equivalents out of Silicon Valley Bank, N.A.

During fiscal year 2021, we issued additional convertible notes with a cumulative principal amount of $20.0 million, with maturities of January and February 2025, which converted into our Class A common stock at the Closing.

In April 2021, we entered into the FP Credit Agreement (as defined and further described below), utilizing a portion of those funds to pay-off our existing credit arrangements with European Investment Bank ("EIB")

and Eastward Fund Management, LLC ("Eastward").

In November 2021, we closed our acquisition of exactEarth for the purchase price of $129.0 million, consisting of $109.6 million in cash and $22.3 million of Class A common stock, net of $3.0 million post-combination expense.

In June 2022, we entered into the Blue Torch Financing Agreement (as defined and further described below), utilizing a portion of the proceeds of the term loan to pay-off the outstanding principal and interest under the FP Credit Agreement.

On September 14, 2022, we entered into an Equity Distribution Agreement (the “Equity Distribution Agreement”) with Canaccord Genuity LLC, as sales agent.

In accordance with the terms of the Equity Distribution Agreement, we may offer and sell our Class A common stock having an aggregate offering price of up to $85.0 million from time to time through the agent pursuant to a registration statement on Form S-3, which became effective on September 26, 2022.

There had been no sales under the Equity Distribution Agreement as of December 31, 2022.

We expect that our principal source of liquidity is our cash and cash equivalents balance which includes the proceeds received from the Merger, the additional convertible notes issued and the Blue Torch Credit Facility (as defined below).

We believe this will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months.

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If we are unable to raise additional capital when desired, our business, financial condition, and results of operations could be adversely affected.

Blue Torch Credit Agreement

On June 13, 2022, we, as borrower, and certain of our subsidiaries, as guarantors, entered into a financing agreement (the “Blue Torch Financing Agreement”) with Blue Torch Finance LLC, a Delaware limited liability company (“Blue Torch”), as administrative agent and collateral agent, and certain lenders (the “Lenders”).

The Blue Torch Financing Agreement provides for, among other things, a term loan facility in an aggregate principal amount of up to $120.0 million (the “Blue Torch Credit Facility”).

A portion of the proceeds of the term loan was used to repay our then-existing $70.0 million credit facility with FP Credit Partners, L.P., and the remainder of the proceeds of the term loan may be used for general corporate purposes.

The Blue Torch Credit Facility is scheduled to mature on June 13, 2026, upon which we must repay the outstanding principal amount of any outstanding loans thereunder, together with all accrued but unpaid interest, fees and other obligations owing under the Blue Torch Credit Facility.

Subject to certain exceptions, prepayments of the Blue Torch Credit Facility will be subject to early termination fees in an amount equal to 3.0% of the principal prepaid if prepayment occurs on or prior to the first anniversary of the closing date, 2.0% of principal prepaid if prepayment occurs after the first anniversary of the closing date but on or prior to the second anniversary of the closing date and 1.0% of principal prepaid if prepayment occurs after the second anniversary of the closing date but on or prior to the third anniversary of the closing date, plus if prepayment occurs on or prior to the first anniversary of the closing date, a make-whole amount equal to the amount of interest that would have otherwise been payable through the maturity date of the Blue Torch Credit Facility.

The $120.0 million term loan was available and drawn at closing, of which $19.7 million was placed in an escrow account by Blue Torch with such amount to be released upon our achieving certain metrics related to annualized recurring revenue and a total annualized recurring revenue leverage ratio.

These metrics were achieved and the $19.7 million was released from the escrow account and delivered to us in February 2023.

The term loan accrues interest at a floating rate, to be based, at our election, on either a reference rate or a 3-month Term Secured Overnight Financing Rate ("SOFR") rate (subject to a 1.0% floor), plus an interest rate margin of 7.0% for reference rate borrowings and 8.0% for 3-month Term SOFR borrowings, plus an incremental Term SOFR margin of 0.26161%.

We elected the Term SOFR rate which was 12.75713% as of December 31, 2022.

Principal on the term loan is only payable at maturity and interest on the term loan is due and payable monthly for reference rate borrowings and quarterly for Term SOFR borrowings.

We are also required to pay other customary fees and costs in connection with the Blue Torch Credit Facility, including a commitment fee in an amount equal to $2.4 million on the closing date, a $0.3 million agency fee annually and an exit fee in an amount equal to $1.8 million upon termination of the Blue Torch Financing Agreement.

Our obligations under the Blue Torch Financing Agreement are or will be guaranteed by certain of our domestic and foreign subsidiaries meeting materiality thresholds set forth in the Blue Torch Financing Agreement.

Such obligations, including the guarantees, are secured by substantially all of our personal property and that of our subsidiary guarantors, including pursuant to a Security Agreement entered into on June 13, 2022, among us, Spire Global Subsidiary, Inc., Austin Satellite Design, LLC and Blue Torch.

As of the closing date, such subsidiary guarantors were Spire Global Subsidiary, Inc., Austin Satellite Design, LLC, Spire Global Canada Subsidiary Corp.

and exactEarth Ltd.

The Blue Torch Financing Agreement contains customary affirmative covenants and customary negative covenants limiting our ability and the ability of our subsidiaries, to, among other things, dispose of assets, undergo a change in control, merge or consolidate, make acquisitions, incur debt, incur liens, pay dividends, repurchase stock and make investments, in each case subject to certain exceptions.

We must also comply with a maximum debt to annualized recurring revenue leverage ratio financial covenant tested monthly during the first two years of the Blue Torch Financing Agreement, a maximum debt to EBITDA leverage ratio financial covenant tested monthly during the third and fourth years of the Blue Torch Financing Agreement and a minimum liquidity financial covenant tested at all times.

The Blue Torch Financing Agreement also contains customary events of default that include, among other things, certain payment defaults, cross defaults to other indebtedness, inaccuracy of representations and warranties, covenant defaults, change of control defaults, judgment defaults, and bankruptcy and insolvency defaults.

If an event of default exists, Blue Torch as agent on behalf of the Lenders may require immediate payment of all obligations under the Blue Torch Financing Agreement and may exercise certain other rights and remedies provided for under the Blue Torch Financing Agreement, the other loan documents and applicable law.

Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the Blue Torch Financing Agreement at a per annum rate equal to 2.00% above the applicable interest rate.

On June 13, 2022, in connection with the Blue Torch Financing Agreement, we granted warrants to affiliates of the Lenders to purchase fully paid and non-assessable shares of Class A common stock (the “Blue Torch Warrants”), which are exercisable for an aggregate of 3,496,205 shares of our Class A common stock with a per share exercise price of $2.01.

In addition, on June 13, 2022, in connection with the closing of the financing, we paid Urgent Capital LLC, a Delaware limited liability company, a fee for introducing us to the Lenders, for the purpose of loan financing, in the amount equal to $0.6 million in cash and a warrant to purchase fully paid and non-assessable shares of Class A common stock (the “GPO Warrant”

and, collectively with the Blue Torch Warrants, the “Credit Agreement Warrants”), which is exercisable for an aggregate of 198,675 shares of our Class A common stock with a per share exercise price of $2.01.

The Credit Agreement Warrants may be exercised on a cashless basis.

The Credit Agreement Warrants are exercisable for a term beginning on the date of issuance and ending on the earlier to occur of ten years from the date of issuance or the consummation of certain of our acquisitions as set forth in the Credit Agreement Warrants.

The number of shares for which the Credit Agreement Warrants are exercisable and the associated exercise price are subject to certain proportional adjustments as set forth in the Credit Agreement Warrants.

NavSight Merger

On August 16, 2021, we announced that we had closed our Merger with NavSight.

On August 16, 2021, we announced that we had closed our merger with NavSight (the "Merger").

As a result, we became a wholly owned subsidiary of NavSight, and NavSight changed its name to “Spire Global, Inc.”

In connection with the Merger, we raised $264.8 million of proceeds including the contribution of $230.0 million of cash held in NavSight’s trust account from its initial public offering, net of redemptions of NavSight public stockholders of $210.2 million, and $245.0 million of cash in connection with the PIPE Investment.

We incurred $38.7 million of merger and acquisitions costs, consisting of banking, legal, and other professional fees, of which $32.1 million was recorded as a reduction to additional paid-in capital, and the remaining $6.6 million was expensed to general and administrative expenses in the Consolidated Statements of Operations.

For more details on the Merger, including all equity conversions, please see Note 3 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

For more details on the Merger, including all equity conversions, please see Note 3 to our consolidated financial statements included in our Annual Report on Form 10-K/A for the year ended December 31, 2021.

FP Credit Agreement

On April 15, 2021, we entered into a credit agreement with FP Credit Partners, L.P., as agent for several lenders (the “FP Lenders”) (as amended on May 17, 2021, the “FP Credit Agreement”), for a $70.0 million term loan facility (the “FP Term Loan”).

Upon funding in May 2021, the FP Term Loan was used (i) to pay off our existing credit facilities with Eastward Fund Management, LLC (the “Eastward Loan Facility”) and European Investment Bank (the “EIB Loan Facility”), and (ii) to fund working capital and for general corporate purposes.

Upon funding in May 2021, the FP Term Loan was used (i) to pay off our existing credit facilities with Eastward and EIB and (ii) to fund working capital and for general corporate purposes.

We incurred $12.3 million of debt issuance costs relating to the FP Term Loan.

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Since the FP Lenders elected to exercise their conversion right in connection with the Merger, and we chose not to prepay the remaining, non-converted outstanding principal amount of the FP Term Loan at the closing of such transaction, our interest rate under the FP Term Loan increased to 9.0% per annum.

Interest on the FP Term Loan is payable quarterly in arrears.

The total outstanding principal amount of the FP Term Loan will be due and payable at maturity on April 15, 2026.

We may prepay the outstanding principal amount of the FP Term Loan at any time, in full but not in part.

In addition, since the FP Lenders elected to exercise their conversion right in connection with the Merger, there is no premium or other contractual return in a prepayment.

The aggregate amount required to be repaid in a prepayment to the FP Lenders would only be the outstanding principal amount of the FP Term Loan and any accrued and unpaid interest thereon.

Our obligations under the FP Credit Agreement are guaranteed by our material subsidiaries, as determined in accordance with the FP Credit Agreement, and secured by substantially all of our assets and the assets of the subsidiary guarantors.

The FP Credit Agreement contains customary affirmative and negative covenants, including covenants that limit our and our subsidiaries’

Interest on the FP Term Loan was payable quarterly in arrears.

The total outstanding principal amount of the FP Term Loan was due and payable at maturity on April 15, 2026.

We had the right to prepay the outstanding principal amount of the FP Term Loan at any time, in full but not in part.

In addition, since the FP Lenders elected to exercise their conversion right in connection with the Merger, there was no premium or other contractual return in a prepayment.

The aggregate amount required to be repaid in a prepayment to the FP Lenders would only have been the outstanding principal amount of the FP Term Loan and any accrued and unpaid interest thereon.

Our obligations under the FP Credit Agreement were guaranteed by our material subsidiaries, as determined in accordance with the FP Credit Agreement, and secured by substantially all of our assets and the assets of the subsidiary guarantors.

The FP Credit Agreement contained customary affirmative and negative covenants, including covenants that limited our ability and our subsidiaries’

ability to, among other things, incur additional indebtedness, grant liens, make investments, pay dividends or other distributions on our capital stock, dispose of assets, consummate mergers or acquisitions and enter into transactions with affiliates, subject in each case to customary exceptions and qualifications.

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Since the Merger occurred, we are no longer required to maintain this financial covenant per the terms of the FP Credit Agreement.

The FP Credit Agreement includes customary events of default, including, among other things, payment defaults, breaches of covenants or representations and warranties, cross-defaults with certain other indebtedness, bankruptcy and insolvency events and judgment defaults, subject to grace periods in certain instances.

Upon the occurrence and during the continuance of an event of default, the FP Lenders may declare all or a portion of the outstanding obligations payable by us to be immediately due and payable and exercise other rights and remedies provided for under the FP Credit Agreement.

Under certain circumstances, a default interest rate will apply on all obligations during the existence of an event of default under the FP Credit Agreement at a per annum rate equal to 2% above the otherwise applicable interest rate.

During fiscal year 2021, we recognized within Other (expense) income, net on the Consolidated Statement of Operations, $5.0 million as a loss on extinguishment of debt, resulting from paying off the EIB Loan and the Eastward Loan Facilities.

The FP Credit Agreement included customary events of default, including, among other things, payment defaults, breaches of covenants or representations and warranties, cross-defaults with certain other indebtedness, bankruptcy and insolvency events and judgment defaults, subject to grace periods in certain instances.

Upon the occurrence and during the continuance of an event of default, the FP Lenders could declare all or a portion of the outstanding obligations payable by us to be immediately due and payable, and exercise other rights and remedies provided for under the FP Credit Agreement.

Under certain circumstances, a default interest rate would apply on all obligations during the existence of an event of default under the FP Credit Agreement at a per annum rate equal to 2% above the otherwise applicable interest rate.

During fiscal year 2021, we recognized within Other (expense) income, net on the consolidated statement of operations, $5.0 million as a loss on extinguishment of debt, resulting from paying off the EIB Loan and the Eastward Loan Facilities (as defined below).

On June 13, 2022, we repaid in full all obligations and all amounts borrowed, and all obligations have terminated, under the FP Credit Agreement, which was replaced by the Blue Torch Financing Agreement.

The outstanding principal and interest under the FP Credit Agreement in an aggregate amount equal to approximately $72.8 million was repaid with proceeds of the term loan under the Blue Torch Credit Facility.

We incurred no early termination penalties in connection with the termination of the FP Credit Agreement.

Eastward Loan Facility

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The finance contract provided for a term loan facility (the “EIB Loan Facility”) in an aggregate principal amount of up to EUR 20.0 million, available in three tranches, of which we borrowed EUR 12.0 million.

The proceeds of the term loans were required to be used for our innovation and expansion activities in Luxembourg and potentially other EU countries.

The proceeds of the term loans were required to be used for our innovation and expansion activities in Luxembourg and potentially other European Union ("EU") countries.

In connection with funding the term loan under the FP Credit Agreement, we repaid the outstanding obligations under the EIB Loan Facility, including a prepayment premium of EUR 0.2 million.

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Our obligations under the finance contract were guaranteed by our material subsidiaries, as determined in accordance with the finance contract, and were secured by substantially all of our assets and the assets of the borrower.

The finance contract contained customary affirmative and negative covenants, including covenants that limited our and our subsidiaries’

The finance contract contained customary affirmative and negative covenants, including covenants that limited our ability and our subsidiaries’

ability to, among other things, dispose of assets, consummate mergers or acquisitions, make investments, incur additional indebtedness, grant liens or pay dividends, or other distributions on our capital stock, subject in each case to customary exceptions and qualifications.

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Under certain circumstances, a default interest rate would have applied on all obligations during the existence of an event of default under the finance contract at a per annum rate equal to 2% above the otherwise applicable interest rate.

Under the terms of the EIB finance contract, on August 20, 2020, we issued to EIB a warrant exercisable for 454,899 shares (Tranche A) of Old Spire Common Stock at a price of $0.0001 per share.

Under the terms of the EIB finance contract, on August 20, 2020, we issued to EIB a warrant exercisable for 454,899 shares (Tranche A) of Legacy Spire Common Stock at a price of $0.0001 per share.

Upon completion of the Merger, the exercisable share count converted to 775,966.

On October 29, 2020, we issued to EIB an additional warrant exercisable for 454,899 shares (Tranche B) of Old Spire Common Stock at a price of $0.0001 per share.

On October 29, 2020, we issued to EIB an additional warrant exercisable for 454,899 shares (Tranche B) of Legacy Spire Common Stock at a price of $0.0001 per share.

Upon completion of the Merger, the exercisable share count converted to 775,966.

Each such warrant included a put option, whereby EIB had the right to have us repurchase the warrants by paying EIB an amount equal to the then-current fair market value of the shares of Old Spire Common Stock for which the warrants were exercisable.

Each such warrant included a put option, whereby EIB had the right to have us repurchase the warrants by paying EIB an amount equal to the then-current fair market value of the shares of Legacy Spire Common Stock for which the warrants were exercisable.

The amount that we were required to pay upon the exercise of the put option was subject to a purchase price cap of EUR 10.0 million for each warrant.

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Acquisition of exactEarth

The acquisition of exactEarth accelerates growth of our existing maritime business with additional data solutions, cross-selling opportunities, and expansion of our geographic footprint.

In November 2021, we closed the Acquisition for the purchase price of $129.0 million, consisting of $109.6 million in cash and $22.3 million of Class A common stock, net of $3.0 million post-combination expense.

The Acquisition accelerates growth of our existing maritime business with additional data solutions, cross-selling opportunities, and expansion of our geographic footprint.

exactEarth is now a fully-owned subsidiary of Spire Global, Inc.

and will continue to conduct operations from Cambridge, Ontario, Canada.

For additional detail regarding the terms associated with the exactEarth acquisition, see Note 4 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

and continues to conduct operations from Cambridge, Ontario, Canada.

For additional detail regarding the terms associated with the Acquisition, see Note 4 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Government Loan

As part of our acquisition of exactEarth in November 2021, we assumed a loan agreement with the Strategic Innovation Fund ("SIF") which was recorded at fair value of the debt.

As of December 31, 2021, $4.5 million was included in Long-term debt, non-current on our Consolidated Balance Sheets.

As part of the Acquisition in November 2021, we assumed a loan agreement with the Strategic Innovation Fund ("SIF") which was recorded at fair value of the debt.

As of December 31, 2022, $3.3 million was included in long-term debt, non-current on our consolidated balance sheets related to the SIF loan agreement.

Under this agreement and subsequent amendment, we are eligible to receive funding for certain expenditures incurred from February 13, 2018 to May 12, 2023, up to a maximum of $5.7 million.

The loan is repayable in 15 annual payments beginning February 28, 2026 and has a stated interest rate of zero.

For additional detail regarding the terms associated with our financing arrangements, see Notes 8 and 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

For additional detail regarding the terms associated with our financing arrangements, see Note 8 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Convertible Notes

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From January 2021 through February 2021, we issued and sold subordinated convertible promissory notes in the aggregate principal amount of $20.0 million, which mature four years from the date of issuance (the “2021 Spire Notes”).

The 2019 Spire Notes and the 2021 Spire Notes accrued interest at a rate of 8.0% per annum and converted into shares of our common stock in connection with the Closing, so they are no longer outstanding.

The 2019 Spire Notes and the 2021 Spire Notes accrued interest at a rate of 8.0% per annum and converted into shares of our Class A common stock in connection with the Closing, so they are no longer outstanding.

The following table summarizes our net cash used in operating activities, net cash used in investing activities, and net cash provided by financing activities for the periods indicated:

Years Ended December 31,

(in thousands)

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Our largest source of operating cash inflows is cash collections from our customers.

Our primary uses of cash from operating activities are for employee-related expenditures, expenses related to our technology infrastructure, expenses related to our computing infrastructure (including compute power, database storage and content delivery costs), building infrastructure costs (including leases for office space), fees for third-party services, and marketing program costs.

Net cash used in operating activities in fiscal year 2021 was $58.0 million.

Our primary uses of cash for operating activities are for employee-related expenditures, expenses related to our technology infrastructure, expenses related to our computing infrastructure (including computing power, database storage and content delivery costs), building infrastructure costs (including office leases), fees for third-party services, and marketing program costs.

Net cash used in operating activities in the fiscal year 2022 was $47.8 million.

This reflected our net loss of $89.4 million, adjustments for non-cash items of $40.6 million and a net increase of $1.0 million in operating assets and liabilities.

Non-cash items primarily consisted of a $22.3 million loss on extinguishment of debt, $18.3 million of depreciation and amortization expense, $11.5 million of stock-based compensation expense, $3.8 million of debt issuance amortization costs, $2.3 million of amortization of operating lease assets, and a $0.8 million loss on impairment of assets, partially offset by a $9.7 million gain on change in fair value of contingent earnout liability and an $8.8 million gain on change in fair value of warrant liabilities.

Changes in operating assets and liabilities primarily included a $4.2 million increase in accounts receivable, net, a $1.6 million decrease in operating lease liabilities, a $1.8 million decrease in accounts payable, a $1.4 million increase in contract assets, and a $0.9 million decrease in accrued wages and benefits.

This was partially offset by a $7.8 million increase in contract liabilities, a $1.9 million decrease in other long-term assets, a $1.0 million increase in other accrued expenses, and a $0.3 million decrease in other current assets.

Net cash used in operating activities in the fiscal year 2021 was $58.0 million.

This reflected our net loss of $38.1 million, adjustments for non-cash items of $17.7 million, and a net decrease in our operating assets and liabilities of $2.2 million.

Non-cash items primarily included $11.6 million of stock-based compensation,

$8.5 million of depreciation and amortization expense, $6.0 million of non-cash interest and debt issuance amortization expense, $2.3 million on debt extinguishment expense, $1.6 million on warrant liability revaluation, and $0.5 million of other non-cash expenses offset by $67.0 million non-cash gain on the contingent earnout liability revaluation.

Non-cash items primarily consisted of $11.6 million of stock-based compensation, $8.5 million of depreciation and amortization expense, $6.0 million of non-cash interest and debt issuance amortization expense, $2.3 million of debt extinguishment expense, $1.6 million of warrant liability revaluation, and $0.5 million of other noncash expenses, partially offset by a $48.2 million non-cash gain on the contingent earnout liability revaluation.

The net decrease in operating assets and liabilities primarily included an increase of $6.7 million in other current assets combined with a $5.0 million increase in accounts receivable.

This was offset by an increase of $4.7 million in accrued wages and other expenses, a $2.3 million increase in accounts payable, a $2.2 million increase in other long-term liabilities, and a $0.3 million increase in other non-cash assets and liabilities.

Net cash used in operating activities in fiscal year 2020 was $14.8 million.

This reflected our net loss of $32.5 million, adjustments for non-cash items of $13.7 million, and a net decrease in our operating assets and liabilities of $4.0 million.

Non-cash items primarily included $5.0 million of non-cash interest and financing related costs, $5.5 million of depreciation and amortization expense, $2.2 million of stock-based compensation expense, $0.7 million for loss on satellite deorbit and launch failure and $0.3 million of other miscellaneous items.

The net decrease in operating assets and liabilities primarily included an increase of $1.1 million in contract assets and deferred contract costs, a decrease of $0.5 million in other long-term liabilities, and an increase of $0.4 million in accounts receivable.

This was offset by an increase of $3.2 million in contract liabilities and an increase of $2.6 million in accounts payable and other accrued expenses.

Cash Flows from Investing Activities

The cash flows from investing activities primarily relate to cash used for business acquisitions, the procurement, development, and deployment of capital assets, including satellites, ground stations, machinery and equipment, furniture, computer equipment and software, and leasehold improvements.

Net cash used in investing activities in fiscal year 2021 was $120.8 million.

This was driven by net $103.9 million of cash used in the exactEarth acquisition, $10.7 million of investment in our technology infrastructure and $4.7 million of investment in leasehold improvements, furniture, computer equipment, and machinery equipment.

Net cash used in investing activities in fiscal year 2020 was $10.4 million.

This was primarily driven by $9.6 million of investment in our technology infrastructure and $0.7 million of investment in leasehold improvements, furniture, computer equipment, and machinery equipment.

Cash flows from investing activities primarily relate to cash used for business acquisitions, the procurement, development, and deployment of capital assets, including satellites, ground stations, machinery and equipment, furniture, computer equipment and software, and leasehold improvements.

Net cash used in investing activities in the fiscal year 2022 was $41.8 million.

This was driven by purchases of $40.2 million in short-term investments and $18.9 million of investment in property and equipment, partially offset by $17.3 million in maturities of short-term investments.

Net cash used in investing activities in the fiscal year 2021 was $119.5 million.

This was driven by net $103.9 million of cash used in the exactEarth acquisition, $15.4 million investment in property and equipment and $0.2 million investment in intangible assets.

Cash Flows from Financing Activities

The cash flows from financing activities relate primarily to the Merger, debt, warrants and convertible note financings.

Net cash provided by financing activities in fiscal year 2021 was $270.5 million.

This was primarily driven by $264.8 million of proceeds from the Merger, $70.5 million of proceeds from the FP and SIF loan transactions, $20.0 million of proceeds from the issuance of convertible notes, and $1.3 million of proceeds from the exercise of stock options, offset by payments of $31.8 million for merger and acquisitions costs related to the reverse recapitalization, repayments of $29.6 million to EIB and Eastward Capital, $19.9 million to settle the EIB warrants, and payments of $4.7 million for debt issuance costs related to the FP loan.

Net cash provided by financing activities in fiscal year 2020 was $16.6 million.

This was primarily driven by $30.1 million of new loan proceeds net of issuance costs and $0.6 million of proceeds from convertible notes, offset by $14.1 million of re-payment on our existing loan facility.

For additional information regarding the terms of our credit facilities and notes, see Notes 8 and 9 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Cash flows from financing activities relate primarily to the Merger, debt, warrants and convertible note financings.

Net cash provided by financing activities in the fiscal year 2022 was $26.4 million.

This was driven by $101.0 million of proceeds from long-term debt, $0.8 million of proceeds from stock option exercises and $0.6 million of proceeds from the employee stock purchase plan, partially offset by $71.5 million of payments on long-term debt, and $4.5 million of payments of debt issuance costs.

The long-term debt and debt issuance cost items were driven by the Blue Torch loan transaction.

Net cash provided by financing activities in the fiscal year 2021 was $270.5 million.

This was primarily driven by $264.8 million of proceeds from the Merger, $70.5 million of proceeds from the FP and SIF loan transactions, $20.0 million of proceeds from the issuance of convertible notes, and $1.3 million of proceeds from stock option exercises, offset by payments of $31.8 million for merger and acquisitions costs related to the reverse recapitalization, repayments of $29.6 million to EIB and Eastward Capital, $19.9 million to settle the EIB warrants, and payments of $4.7 million for debt issuance costs related to the FP loan.

For additional information regarding the terms of our credit facilities and notes, see Note 8 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Critical Accounting Policies and Estimates

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Goodwill represents the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recorded.

The Company estimates the fair value of its one reporting unit based on its consolidated market capitalization using the 30-day trading volume-weighted average price (“VWAP”) and the stock price on the date of valuation as two independent data points.

The results of the annual impairment test performed in the fourth quarter of fiscal year 2022 indicated that the estimated fair value of the Company's reporting unit exceeded its carrying value by more than 80% based on the 30-day trading VWAP and by more than 70% based on the stock price on the date of valuation.

Therefore, the Company concluded there was no impairment of goodwill during the fourth quarter of 2022.

There also was no goodwill impairment recorded during the year ended December 31, 2021.

While the Company’s market capitalization has declined subsequent to December 31, 2022, the estimated fair value of its reporting unit still exceeds its carrying value on March 14, 2023 by more than 46% based on the 30-day trading VWAP and by approximately 15% based on the March 14, 2023 stock price.

If the Company’s market capitalization continues to decline, and if macroeconomic conditions worsen, the Company’s reporting unit may be at risk for future goodwill impairments.

The Company continues to monitor for potential impairment should impairment indicators arise.

Contingent Earnout Liability

In connection with the Reverse Recapitalization and pursuant to the Merger Agreement, eligible Spire equity holders are entitled to receive additional shares of our Common Stock upon the achievement of certain Earnout Triggering Events.

In accordance with ASC 815-40, the earnout shares are not indexed to the Common Stock and therefore are accounted for as a liability and an offset to Additional paid-in capital on the Consolidated Balance Sheets at the reverse recapitalization date and subsequently remeasured at each reporting date with changes in fair value recorded as a component of Other income (expense), net in the Consolidated Statements of Operations.

In accordance with ASC 815-40, the earnout shares are not indexed to the Common Stock and therefore are accounted for as a liability and an offset to additional paid-in capital on the consolidated balance sheets at the reverse recapitalization date and subsequently remeasured at each reporting date with changes in fair value recorded as a component of Other income (expense) in the consolidated statements of operations.

The contingent earnout liability is categorized as a Level 3 fair value measurement using the Monte Carlo model because the Company estimates projections during the Earnout Period utilizing unobservable inputs.

Contingent earnout payments involve certain assumptions requiring significant judgment and actual results may differ from assumed and estimated amounts.

The assumptions utilized in the calculation are based on the achievement of certain stock price milestones, including the current price of our common stock, expected volatility, risk-free rate, expected term and dividend rate.

Warrant Liability

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Common Stock Valuation—Prior to our Closing Date of the Merger, determining the fair value of the shares of common stock underlying our stock-based awards, which were not publicly traded, involved significant judgment and had historically been determined with the help of an independent third-party valuation firm.

For awards granted subsequent to the Closing Date, the fair value of our common stock is based on the closing price of our common stock, as reported on the NYSE, on the date of grant.

Expected Term—We use the weighted average period that the stock options are expected to remain outstanding based on historical experience.

Expected Volatility—As our stock was not publicly traded prior to the Closing, the volatility is based on a benchmark analysis of reported data for a peer group of companies.

Expected Dividend Yield—The dividend rate used is zero as we have never paid any cash dividends on our common stock and does not anticipate doing so in the foreseeable future.

For awards granted subsequent to the Closing Date, the fair value of our common stock is based on the closing price of our common stock, as reported on the NYSE, on the date of grant of the related stock-based award.

Expected Term—Because of the lack of sufficient historical data, we use the simple average of the vesting period and the contractual term to estimate the period the stock options are expected to be outstanding.

Expected Volatility—We determine the expected stock price volatility based on the historical volatility of our Class A common stock and the historical volatilities of an industry peer group.

Expected Dividend Yield—The dividend rate used is zero as we have never paid any cash dividends on our common stock and do not anticipate doing so in the foreseeable future.

Risk-Free Interest Rate—The interest rates used are based on the implied yield available on U.S.

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Historically, for all periods prior to the Merger, since there has been no public market of our common stock, the fair value of the shares of common stock underlying our share-based awards was estimated on each grant date by our board of directors.

To determine the fair value of our common stock underlying option grants, our board of directors considered, among other things, input from management, valuations of our common stock prepared by unrelated third-party valuation firms in accordance with the guidance provided by the American Institute of Certified Public Accountants 2013 Practice Aid, Valuation of

Privately-Held-Company Equity Securities Issued as Compensation, and our board of directors’

assessment of additional objective and subjective factors that it believed were relevant, and factors that may have changed from the date of the most recent valuation through the date of the grant.

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trends and developments in our industry, including the impact of the COVID-19 pandemic.

For valuations performed prior to December 31, 2020, we used the option pricing method, (“OPM”), back-solve method.

In an OPM framework, the backsolve method for inferring the equity value implied by a recent financing transaction involves making assumptions for the expected time to liquidity, volatility and risk-free rate and then solving for the value of equity such that value for the most recent financing equals the amount paid.

This method was selected due to our stage and uncertainty regarding the timing and probability of possible future exit scenarios.

For valuations performed from January 1, 2021 to the Merger, we used a hybrid method of the OPM and the Probability-Weighted Expected Return Method (“PWERM”).

For valuations performed from January 1, 2021 to the Merger, we used a hybrid method of the Option Pricing Model ("OPM") and the Probability-Weighted Expected Return Method (“PWERM”).

PWERM considers various potential liquidity outcomes.

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We are an “emerging growth company,”

as defined in the JOBS Act.

as defined in Section 2(a)(19) of the Securities Act, as modified by the Jumpstart our Business Startups Act (the "JOBS Act").

Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies.

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Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements.

We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates exceeds $250 million as

of the prior June 30, or (ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock

held by non-affiliates exceeds $700 million as of the prior June 30.

Internal Control Over Financial Reporting

In connection with the preparation of our consolidated financial statements for fiscal year 2021 and fiscal year 2020, we identified material weaknesses in our internal control over financial reporting.

For additional information, see the sections titled “

Risk Factors ”

Controls and Procedures .”

We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30, or (ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30.

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-K

Item 5. Market for Registrant’s Common Equity