(Mark One)
o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(B) OR 12(G) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2021
OR
For the Fiscal Year Ended December 31, 2022 | |||||
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o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 001-41247
British Virgin Islands | Ruta 8 Km 17,500, Edificio 300 Oficina 324 Zonamérica Montevideo, 91600, Uruguay | |||||||||
(Jurisdiction of incorporation or organization) | (Address of principal executive offices) |
Ruta 8 Km 17,500, Edificio 300
Oficina 324 Zonamérica
Montevideo, 91600, Uruguay
00-598-25182302
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Class A Ordinary Shares
| SATL
| The Nasdaq | ||||||||||||
Warrants | SATLW | The Nasdaq |
Large accelerated filer | ||||||||||||||||||||||||||||||||
o | Accelerated filer | o | ||||||||||||||||||||||||||||||
Non-accelerated filer | x | Emerging growth company |
x | International Financial Reporting Standards as issued | ||||||||||||||||||||||
by the International Accounting Standards Board | o | Other | o |
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iii
See “Defined Terms” below for a glossary of terms used in this Annual Report on Form 20-F (“Report”). Other terms used in this Report and not set forth in “Defined Terms” are defined elsewhere in this Report.
Business Combination
On the Closing Date, the Company consummated the Business Combination contemplated by the Merger Agreement. Specifically,
Target Merger Sub merged with and into Nettar, the separate existence of Target Merger Sub ceased and Nettar was the surviving company of such merger and became a direct, wholly-owned subsidiary of the Company (the “Initial Merger”);
immediately following confirmation of the effective filing of the Initial Merger, SPAC Merger Sub merged with and into CF V, the separate existence of SPAC Merger Sub ceased and CF V was the surviving corporation of such merger and became a direct wholly owned subsidiary of the Company (the “CF V Merger”);
the single share of the Company outstanding immediately prior to the Mergers was cancelled for no consideration;
as a result of the Initial Merger, the ordinary shares and preference shares of Nettar that were issued and outstanding immediately prior to the effective time of the Initial Merger (other than (i) any treasury shares or share held by the Company or any of its affiliates and (ii) any dissenting shares) were automatically cancelled and ceased to exist in exchange for (x) in the case of the Company’s Chief Executive Officer, Emiliano Kargieman, newly issued Class B Ordinary Shares of the Company and (y) in all other cases, Class A Ordinary SharesAssociation of the Company, as determined in accordance withamended.
asLoan and Security Agreement, dated March 8, 2021, by and between Columbia River Investment Limited, a result ofBVI company, and us.
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each CF V Warrant outstanding immediately prior to the CF V Merger Effective Time was assumed by the Company and converted into a warrant exercisable for that number of Class A Ordinary Shares as determined in accordance with the Merger Agreement;
all Convertible Notes of Nettar converted into Nettar Preference Shares as determined in accordance with the Merger Agreement;
all Nettar Preference Shares outstanding immediately prior to the effective time of the Initial Merger (other than dissenting shares) were converted into a number of Class A Ordinary Shares as determined in the Merger Agreement;
all options to purchase ordinary shares of Nettar were assumed by the Company and became options to purchase Class A Ordinary Shares (the “Assumed Options”) as determined in accordance with the Merger Agreement; and
the Columbia Warrants outstanding immediately prior to the effective time of the Initial Merger became exercisable for that number of Class A Ordinary Shares as determined in accordance with the Merger Agreement.
PIPE Investment
Contemporaneously with the execution of the Merger Agreement, CF V and the Company entered into separate subscription agreements (the “Subscription Agreements”) with the PIPE Investors (including the Sponsor), pursuant to which the PIPE Investors agreed to subscribe for and purchase, and CF V and the Company agreed to sell to the PIPE Investors, an aggregate of 6,966,770 Class A Ordinary Shares, for a purchase price of $10.00 per share and an aggregate purchase price of $69.7 million, with the Sponsor’s Subscription Agreement accounting for approximately $23.2 million of the aggregate purchase price. Pursuant to the Subscription Agreements, certain PIPE Investors (the “Non-redeeming Holders”) (other than the Sponsor) elected to offset their commitment to purchase Class A Ordinary Shares by the number of shares of CF V Class A Common Stock they then held and, among other things, agreed not to redeem in connection with the Business Combination. The Non-redeeming Holders collectively held 1,150,000 shares of CF V Class A Common Stock which reduced the number of Class A Ordinary Shares issued and sold to the PIPE Investors on the Closing Date to 5,816,770 and the aggregate purchase price paid by the PIPE Investors to the Company to $58.2 million.
On July 5, 2021, the Sponsor, CF V and the Company entered into an amendment and restatement of that certainthe forward purchase contract, dated January 28, 2021, by and between CF V and the Sponsor (the “Amended and Restated Forward Purchase Contract”), pursuant to which the Sponsor agreed to purchase, and the Companywe agreed to issue and sell to the Sponsor, 1,250,000 Class A Ordinary Sharesordinary shares (subject to adjustment), and 333,333 Warrants, which transaction closedwarrants.
At the Closing of the Business Combination,Transactions consummated pursuant to the relevant Subscription Agreement,Merger Agreement.
None of the Subscription Agreements the Amended and Restated Forward Purchase Contract nor any other agreement provides any investor with the right to sell back shares to the Company after the Closing Date.
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Liberty Subscription Agreement
On January 18, 2022, the Company and CF V entered into the Liberty Subscription Agreement with the Liberty Investor, pursuant to which the Liberty Investor agreed to purchase, and the Company agreed to issue and sell to the Liberty Investor certain securities of the Company, including (i) 20,000,000 Class A Ordinary Shares (the “Liberty Shares”), (ii) 5,000,000 warrants, each warrant providing the holder thereof the right to purchase one (1) Class A Ordinary Share at an exercise price of $10.00 per share (the “$10.00 Liberty Share Warrants”), and (iii)15,000,000 warrants, each warrant providing the holder thereof the right to purchase one (1) Class A Ordinary Share at an exercise price of $15.00 per share (the “$15.00 Liberty Warrants” and, together with the $10.00 Liberty Share Warrants, the “Liberty Share Warrants”), in a private placement for an aggregate purchase price of $150.0 million. The Liberty Closing took place on February 10, 2022. The Liberty Shares, the Liberty Share Warrants, and the Class A Ordinary Shares issuable upon exercise of the Liberty Share Warrants are referred to herein as the “Liberty Securities”. The Liberty Share Warrants are exercisable as and from the Liberty Closing, will expire on the fifth anniversary of the Liberty Closing (February 10, 2027) and are subject to the terms and conditions set out in the Liberty Warrant Agreement.
In connection with the Liberty Investment the Company has agreed to provide the Liberty Investor with the same registration rights with respect to the Liberty Securities as the Company provided to the PIPE Investors in the PIPE Subscription Agreements, including “demand” registration rights that require the Company to register under the Securities Act the Class A Ordinary Shares and Liberty Share Warrants held or acquired by Liberty.
The Liberty Investor has agreed to subject the Liberty Securities (other than the $10.00 Liberty Advisory Fee Warrants or any shares issuable in respect thereof) to transfer restrictions until January 25, 2023.
Liberty Letter Agreement
Contemporaneouslyoccurred concurrently with the closing of the Liberty Investment, the Company, Liberty and Sponsor entered into the Liberty Restated Letter Agreement. The parties to the Liberty Restated Letter Agreement agreedMerger.
the Liberty Investor has the right to nominate two directors (including any successors) for election to the Board by the Company’s shareholders (the “Liberty Directors”), which director nominees must be reasonably acceptable to the Company. In this regard, the parties have further agreed that:
The Sponsor and Mr. Kargieman will vote their Class A Ordinary Shares and Class B Ordinary Shares, (and those held by any persons over which they have voting control), in favor of the election of the Liberty Director nominees.
Secretary Steven Terner Mnuchin will be nominated for election as non-executive Chairman to the Board to serve as one of the Liberty Directors. For so long as Secretary Mnuchin is a Liberty Director, he shall be the non-executive Chairman of the Board, and the Sponsor and Mr. Kargieman shall not be required to vote for any person designated by the Liberty Investor to replace Secretary Mnuchin unless such party consents in writing to such replacement, such consent not to be unreasonably withheld.
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Mr. Kargieman will cause any transferee of any Class B Ordinary Shares held by him to agree, as a condition to such transfer, to all of his obligations under the Liberty Letter Agreement (other than in the case of a transfer to a transferee that would result in automatic conversion of such Class B Ordinary Shares into Class A Ordinary Shares in accordance with the Company’s Governing Documents).
The Liberty Investor’s right to nominate the Liberty Directors will cease immediately following the occurrence of a Cessation Event, and the terms of any then-serving Liberty Directors will expire at the next election of directors (but in no event more than one year after the Cessation Event).
The Company will (a) take all necessary action to cause the Liberty Directors to be elected to the Board; (b) maintain in effect at all times directors and officers indemnity insurance coverage reasonably satisfactory to the Liberty Investor; (c) provide for indemnification, exculpation and advancement of expenses to the fullest extent permitted under applicable law in the Company’s Governing Documents; (d) not increase or decrease the maximum number of directors permitted to serve on the Board without the prior written consent of the Liberty Investor; and (e) not take any action, including making or recommending any amendment to the Company Governing Documents that could reasonably be expected to adversely affect the Liberty Investor’s rights under the Liberty Restated Letter Agreement; in addition to Secretary Mnuchin, the Liberty Investor nominated General Joseph F. Dunford Jr. to the Board;
in addition to the Liberty Directors, the Board initially included Ted Wang, Brad Halverson, and another person designated by Mr. Kargieman who is reasonably acceptable to the Liberty Investor, and in compliance with NASDAQ listing requirements; such person designated by Mr. Kargieman is Marcos Galperin;
the Liberty Investor has the right to nominate one Liberty Director to serve on each committee of the Board, subject to certain conditions;
for so long as Mr. Kargieman and his affiliates beneficially own at least one-third of the number of shares of the Company owned by him on the Closing Date (subject to customary adjustments for corporate events), Mr. Kargieman has the right to designate two directors for election to the Board by the Company’s shareholders, one of whom will be Mr. Kargieman and the other shall be reasonably acceptable to the Liberty Investor and the Sponsor, initially Marcos Galperin, and the Sponsor and the Liberty Investor will vote any shares held by them in favor of the election of such persons; and
for so long as the Sponsor and its affiliates beneficially own at least one-third of the number of shares of the Company owned by them on the Closing Date (subject to customary adjustments for corporate events), Howard Lutnick will be designated for election by the Board to the Company’s shareholders and Mr. Kargieman and the Liberty Investor will vote any shares held by them in favor of the election of Mr. Lutnick.
In addition, so long as Class B Ordinary Shares are outstanding, the Company will be required to obtain the written consent of the Liberty Investor if it were to issue in a transaction, or series of transactions, a number of shares that equals or exceeds 20% of its then-outstanding Ordinary Shares on a fully diluted basis (assuming exercise of all options and warrants of the Company); provided that no such consent shall be required if such issuance of shares is made in connection with:
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any acquisition by the Company of any equity interests, assets, properties, or business of any person;
any merger, consolidation, or other business combination involving the Company;
any transaction or series of related transactions involving a change of control (as defined in the Liberty Restated Letter Agreement); or
any equity split, payment of distributions, or any similar recapitalization.
An advisory fee is payable by the Company to the Liberty Manager in exchange for advisory services to be provided to the Company by the Liberty Manager (whereby the Liberty Investor will cause the Liberty Manager to be reasonably available to advise the Company from time to time until the occurrence of a Cessation Event). The advisory fee payable for such services includes:
2,500,000 warrants, each providing the right to purchase one (1) Class A Ordinary Share at an exercise price of $10.00 per share (the “$10.00 Liberty Advisory Fee Warrants”), which were issued at the Liberty Closing; and
for so long as a Cessation Event has not occurred, $1.25 million to be paid in cash on the eighteen (18) month anniversary of the Liberty Closing and on the last day (or, if not a business day, the immediately following business day) of each of the following five (5) successive three-month anniversaries of such 18-month anniversary (each, an “Advisory Fee Cash Payment” and, together, the “Advisory Fee Cash Payments”), representing aggregate Advisory Fee Cash Payments of up to $7,500,000. From and after a Cessation Event, no Advisory Fee Cash Payments shall be payable by the Company.
The $10.00 Liberty Advisory Fee Warrants are exercisable as and from the one-year anniversary of, and will expire on the fifth anniversary of, the Liberty Closing (February 10, 2027). The $10.00 Liberty Advisory Fee Warrants are subject to substantially the same terms as the Liberty Share Warrants and the registration rights as they apply to the Liberty Securities pursuant to the Liberty Subscription Agreement also apply to the shares underlying the $10.00 Liberty Advisory Fee Warrants. For so long as the Liberty Investor or its permitted transferees hold Liberty Share Warrants or $10.00 Liberty Advisory Fee Warrants, such warrants will not be redeemable by the Company.
In connection with the Liberty Restated Letter Agreement, the Company amended the Company Governing Documents to, among other things, modify the voting rights of the holders of Class B Ordinary Shares from ten votes per share to a number of votes per share such that,Agreements, dated as of the Liberty Closing, the aggregate number of votes attributable to the Class B Ordinary Shares was equal to the aggregate number of votes attributable to Class A Ordinary Shares heldJuly 5, 2021, by the Liberty Investor (subject to certain adjustments).
The Company reimbursed the Liberty Investor in the amount of $250,000 in respect of reasonable and documented out-of-pocket expenses incurred by it in connection with the transactions contemplated by the Liberty Letter Agreement and the Liberty Subscription Agreement.
In connection with the Liberty Restated Letter Agreement, the Company, Mr. Kargieman, Liberty and Sponsor agreed to take action to further modify the rights of the holders of Class B Ordinary Shares such that the number of votes attributable to each Class B Ordinary Share after giving effect to any forfeitures of Class B Ordinary Shares pursuant to Section 2.10 of the Merger Agreement equals (x) 20,000,000, divided by (y) (i) 13,662,658, minus (ii) the number of such forfeited Class B Ordinary Shares (in no event shall such forfeited shares be more than 651,596 Class B Ordinary Shares), but taking into account any adjustment that may have occurred theretofore pursuant to clause 7.2 of the Company’s
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Memorandum of Association. In the event that any earnout shares are issued to Mr. Kargieman pursuant to Section 2.11 of the Merger Agreement, the Company, Mr. Kargieman, Liberty and Sponsor agreed to take action to further modify the rights of the holders of Class B Ordinary Shares such that the number of votes attributable to each Class B Ordinary Share shall be adjusted such that the number of votes attributable to each Class B Ordinary Share is reduced in a manner that results in a vote per share as if a number of shares equal to such earnout shares had not been forfeited pursuant to Section 2.10 of the Merger Agreement.
Cantor Fees and Loan
On January 18, 2022,among CF V, the Company and CF&Co. entered into the CF Fee Letter pursuant to which they agreed that of the CF V Transaction Expenses payable to CF&Co., which in aggregate totaled approximately $21.94 million (comprised of $5.0 million of M&A advisory fees, $8.75 million of business combination marketing fees, and approximately $8.19 million of placement agent fees), only the M&A advisory fees would be paid in cash while the remainder would be paid by delivery of an aggregate of 2,058,229 newly-issued Class A Ordinary Shares issued on the Closing Date, consisting in part of 600,000 Class A Ordinary Shares issued in connection with the placement fee due on the Liberty Investment and subject to adjustment (the “Liberty Placement Shares”). Such payments were made on the Closing Date. In the event the Adjustment Period VWAP is less than $10.00 per Class A Ordinary Share, CF&Co. will be entitled to receive a certain number of additional Class A Ordinary Shares calculated in a similar manner as the PIPE Additional Shares and FPC Additional Shares (up to a maximum of 150,000 additional Class A Ordinary Shares, if the Adjustment Period VWAP is less than or equal to $8.00 per share, in connection with which issuance an equal number of Ordinary Shares held by the Sponsor, the Nettar Shareholders and holders of Convertible Notes would be forfeited and cancelled).
The Company and CF Securities entered into a Secured Promissory Note, dated December 23, 2021 (as modified byInvestors.
On January 18, 2022, CF Securities,between the Company and Nettar entered into the Promissory Note Waiver Letter pursuant to which the Company and CF Securities agreed that the Company would repay the Initial Loan, including all principal and interest by the issuance of 788,021 Class A Ordinary Shares. Such repayment occurred on the Closing Date.
Pursuant to the Promissory Note Waiver Letter, in the event the Adjustment Period VWAP is less than $10.00 per Class A Ordinary Share, CF&Co. will be entitled to receive a certain number of additional Class A Ordinary Shares calculated in a similar manner as the PIPE Additional Shares and FPC Additional Shares (up to a maximum of 197,005 additional Class A Ordinary Shares, if the Adjustment Period VWAP is less than or equal to $8.00 per share).
However, to the extent Ordinary Shares are forfeited as described above and, at any time during the five year period following the Closing Date, the closing price of Class A Ordinary Shares is at or above $15.00 for ten (10) Trading Days (which need not be consecutive) over a twenty (20) Trading Day period, certain of our shareholders will then receive a number of newly issued Ordinary Shares equal to the number of shares that they had previously forfeited (such issuance of newly issued Ordinary Shares the “Forfeited Share Re-issuance”).
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Adjustment of Warrant Price and Warrant Redemption Price
On April 1, 2022, the Company informed Continental Stock Transfer & Trust Company that, pursuant to Section 4.3.2 of the Public Warrant Agreement, as modified and assumed by the Assignment and Assumption Agreement, the Warrant Price (as defined in the Warrant Agreement) with respect to the $8.63 Warrants issued and outstanding under the Public Warrant Agreement will be adjusted from $11.50 to $8.63 and the Redemption Price (as defined in the Warrant Agreement) of the $8.63 Warrants will be adjusted from $18.00 to $13.50.
Status of Registration Statement
As noted above, pursuant to the registration provisions ofgoverning the PIPE Subscription Agreements,Warrant.
Certain Agreements Related to the Business Combination
Lock-up Agreement
In connection with the Closing of the Business Combination, holders (the “Lock-Up Company Securityholders”) of at least 85% of Nettar Shares immediately prior to the consummation of the Business Combination on a fully-diluted basis entered into Lock-Up Agreements. The Lock-up Securities will be locked-up until the earliest of: (i) the one (1) year anniversary of the date of the Closing, (ii) the date on which the closing price of the Ordinary Shares equals or exceeds $20.00 per share (adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), for any 20 Trading Days within any 30-Trading Day period commencing at least 180 days after the Closing Date, (iii) with respect to 25% of the Lock-Up Securities owned by such Lock-Up Company Securityholders, the date on which the closing price of the Ordinary Shares equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 Trading Days within any 30-Trading Day period commencing at least 180 days after the Closing Date, and (iv) subsequent to the Closing, the date on which the Company consummates a liquidation, merger, capital stock exchange, reorganization, or other similar transaction which results in all of the Company’s shareholders having the right to exchange their Ordinary Shares for cash, securities or other property.
Lock-up Addendum
In connection with the PIPE Subscription Agreements, the PIPE Investors had the option to become party to the Lock-Up Addendum, and one PIPE Investor elected to become party to the Lock-Up Addendum. The Lock-Up Addendum locks up the Lock-Up PIPE Investor’s 2,500,000 PIPE Shares for a period of two years from the Closing Date. In exchange for consenting to such lock-up period, at Closing the Lock-Up PIPE Investor received PIPE Warrants at an exercisepurchase price of $20.00 per share in equal number to the Lock-Up PIPE Investor’s 2,500,000 PIPE Shares subject to the lock-up.
Insidershare.
Pursuant to the Insider Letter, the Sponsor and the Insiders agreed to not transfer any Founder Shares and 250,000 Class A Ordinary Shares issuable to Sponsor under the Forward Purchase Contract until the earlier of (i) one year after the Closing Date and (ii) subsequent to the Closing Date, (x) if the last reported sale price of Class A Ordinary Shares equals or exceeds $12.00 per share for any 20 Trading Days within any 30-Trading Days period commencing at least 150 days after the Closing Date or (y) the date on which the Company completes a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of the Company’s shareholders having the right to exchange their Class A Ordinary Shares for cash, securities or other property.
Sponsor Support Agreement
Pursuant to the Sponsor Support Agreement, the Sponsor subjected the Sponsor Earn-Out Shares to vesting and potential forfeiture (and related transfer restrictions) after the Closing based on a five year-post-Closing earnout, with (i) one-third of the Sponsor Earn-Out Shares being released if the closing price of Class A Ordinary Shares exceeds $12.50 for 10 out of any 20 Trading Days, (ii) one-third of the Sponsor Earn-Out Shares being released if the stock price of Class A Ordinary Shares exceeds $15.00 for 10 out of any 20 Trading Days and (iii) one-third of the Sponsor Earn-Out Shares being released if the stock price of Class A Ordinary Shares exceeds $20.00 for 10 out of any 20 Trading Days, in each case, subject to early release for release events including a sale, change of control, going private transaction or delisting after the Closing.
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Registration Rights Agreements
Pursuant to the Registration Rights Agreements, dated as of January 25,18, 2022, by and amongbetween the Company and each of Emiliano KargiemanCF Securities.
Additional Shares
Pursuant toUnited States Dollar.
Pursuant to the Amended and Restated Forward Purchase Contract, the Sponsor is entitled to receive the FPC Additional Shares if the Adjustment Period VWAP is less than $10.00 per share (up to a maximum of 250,000 FPC Additional Shares, if the Adjustment Period VWAP is less than or equal to $8.00 per share, in connection with which an equal number of Ordinary Shares held by the Sponsor, the Nettar Shareholders and holders of Convertible Notes would be forfeited and cancelled).
Pursuant to the CF Fee Letter, in the event the Adjustment Period VWAP is less than $10.00 per Class A Ordinary Share, each Nettar Series X Shareholder will be entitled to receive a certain number of additional Class A Ordinary Shares calculated in a similar manner as the PIPE Additional Shares and FPC Additional Shares (up to a maximum of 535,085 additional Class A Ordinary Shares, if the Adjustment Period VWAP is less than or equal to $8.00 per share.
The determination of the Adjustment Period VWAP for all issuances of Additional Shares will be made on the date on which the F-1 Registration Statement is declared effective. Following effectiveness, we will communicate with those investors eligible to receive Additional Shares to confirm in writing the amount of Additional Shares such investor is eligible to receive.
Certain amounts that appear in this Report may not sum due to rounding.
References to “Nettar” contained herein refer to Nettar Group Inc. prior to the Mergers. References to “the Company” or “Satellogic” refer to Satellogic Inc. prior to the Mergers and to the combined company following the Mergers.
Contents
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business strategies, events or results of operations, are forward-looking statements.U.S. federal securities laws. The words “anticipates,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predicts,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us and include statements concerning, among other things, our plans, strategies and prospects, both business and financial. Although we believe our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot give any assurance that we either will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. Forward-looking statements in this Report include, but are not limited to, statements about:
the benefits from the Business Combination;
the Company’s ability to maintain the listing of the Class A Ordinary Shares or Public Warrants on Nasdaq;
the Company’s•our future financial performance, including anyfunding expansion plans and opportunities;
the Company’s
the Company’s
the Company’s
the Company’s
the Company’s expectations surrounding the insurance it will maintain going forward;
the Company’s•our ability to conduct remaps of the planet with increasing regularity or frequency as it increases itswe increase the number of our satellites;
the Company’s
the Company’s
the Company’s
These forward-looking statements
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In addition, statements that the Company “believes” and similar statements reflect the Company’s beliefs and opinions on the relevant subject. These statements are based upon information available to the Company as of the date of this Report, and while the Company believes such information forms a reasonable basis for such statements, such information may be limited or incomplete, and these statements should not be read to indicate that the Company has conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.
Readers should not place undue reliance on these forward-looking statements that speak only as of the date hereof. As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. SomeCompany. Many factors that could cause actual future results to differ include:
materially from the forward-looking statements in this Report, including but not limited to:
the possibility the Company may be adversely impacted by other economic, business, and/or competitive factors;
future exchange and interest rates;
the Company is highly dependent on the services of its executive officers;
the Company may experience difficulties in managing its growth and expanding its operations;
the success of the Company’s business will be highly dependent on its•our ability to effectively market and sell its Earth Observation (“EO”)our EO services including to commercial customers, and to convert contracted revenues and itsour pipeline of potential contracts into actual revenues, which can be a costly process;
if the Company is unable
the Company is dependent
the market may not accept the Company’s
the Company’s ability
the market for geospatial intelligence, imagery and related data analytics has not been established with precision, is still emerging and may notto achieve the growth potential we expect;
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if the Company’sfailure of our satellites fail to operate as intended, it could have a material adverse effect on its business, financial condition, and results of operations;
satellites are subject to
other
The risk factorsimpact of natural disasters, unusual or prolonged unfavorable weather conditions, epidemic outbreaks, terrorist acts and cautionary language referred to in this Report provide examples of risks,political events on our business and satellite launch schedules.
Unless defined elsewhere in this Report, this Report:
“$8.63 Warrants” means warrants to purchase our Class A Ordinary Shares at an exercise price of $8.63 per share which warrants, when issued, had an exercise price of $11.50 which was reduced pursuant to the terms of the warrants consisting, as of the date hereof, of (a) 8,333,333 Public Warrants, (b) 333,333 warrants issued to Sponsor in exchange for CF V warrants purchased by Sponsor pursuant to the Forward Purchase Contract and (c) 200,000 warrants issued to Sponsor in exchange for warrants purchased by Sponsor in a private placement in connection with the SPAC IPO.
“$10.00 Liberty Warrants” means the $10.00 Liberty Share Warrants and the $10.00 Liberty Advisory Fee Warrants.
“$11.50 Warrants” means warrants to purchase Class A Ordinary Shares at an exercise price of $11.50 per share.
“2018 NPA” means the Note Purchase Agreement, dated as of April 6, 2018, as amended and restated in the 2019 NPA.
“2019 NPA” means the Amended and Restated Note Purchase Agreement, dated as of September 9, 2019, as amended from time to time.
“2020 NPA” means the Note Purchase Agreement, dated as of September 25, 2020, as amended from time to time.
“Additional Shares” means the Series X Additional Shares, the PIPE Additional Shares, the FPC Additional Shares, the CF Fee Letter Additional Shares and the Promissory Note Waiver Letter Additional Shares, collectively.
“Adjustment Period” means the 30-calendar day period ending on (and including) the date that the Company’s registration statement on Form F-1 (Registration No. 333-262699) (the “F-1 Registration Statement”) is declared effective.
“Adjustment Period VWAP” means the volume weighted average price of a Class A Ordinary Share, as reported on the Nasdaq, determined for the Trading Days that occur during the Adjustment Period (as reported on Bloomberg).
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“Advisory Fee Warrant Agreement” means that certain Warrant Agreement, dated February 10, 2022, by and between Satellogic Inc. and Continental Stock Transfer & Trust Company governing the warrants issued pursuant to the Liberty Letter Agreement as modified by the Liberty Restated Letter Agreement.
“Assignment and Assumption Agreement” means that certain Assignment, Assumption and Amendment Agreement, dated as January 25, 2022, by and among CF V, the Company and Continental Stock Transfer & Trust Company.
“Assumed Options” means Nettar Options that have been assumed by the Company and converted into options to purchase Class A Ordinary Shares.
“Board” means the board of directors of Satellogic.
“Business Combination” means the Mergers and the other Transactions consummated pursuant to the Merger Agreement.
“BVI” means the British Virgin Islands.
“BVI Act” means the BVI Business Companies Act, (As Revised).
“Cantor” means Cantor Fitzgerald L.P., a Delaware limited partnership and an affiliate of the Sponsor, CF&Co. and, prior to the consummation of the Business Combination, CF V.
“Cantor Fee Letters” means the Promissory Note Waiver Letter and the CF Fee Letter.
“CF&Co.” means Cantor Fitzgerald & Co., a New York general partnership and an affiliate of the Sponsor.
“CF Fee Letter” means that certain fee letter dated as of January 18, 2022 by and among CF V, the Company and CF&Co.
“CF Fee Letter Additional Shares” means the Class A Ordinary Shares CF&Co. will be entitled to receive if the Adjustment Period VWAP is less than $10.00 per Class A Ordinary Share. In the event the Adjustment Period VWAP is less than $8.00, the Adjustment Period VWAP for purposes of this calculation will be deemed to be $8.00 pursuant to the CF Fee Letter.
“CF Securities” means Cantor Fitzgerald Securities, a New York general partnership and an affiliate of the Sponsor.
“CF V Board” means the board of directors of CF V.
“CF V Class A Common Stock” means Class A common stock of CF V, par value $0.0001 per share.
“CF V Class B Common Stock” means Class B common stock of CF V, par value $0.0001 per share.
“CF V Common Stock” means, collectively, the CF V Class A Common Stock and the CF V Class B Common Stock.
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“CF V Transaction Expenses” means any out-of-pocket fees and expenses paid or payable by CF V or Sponsor (whether or not billed or accrued for) as a result of or in connection with the negotiation, documentation and consummation of the Transactions, including (A) all fees, costs, expenses, brokerage fees, commissions, finders’ fees and disbursements of financial advisors, investment banks, data room administrators, attorneys, accountants and other advisors and service providers, (B) transfer taxes, and (C) filing fees paid to governmental authorities in connection with the Transactions in accordance with the Merger Agreement.
“CF V Units” means units of CF V, each unit comprising one share of CF V Class A Common Stock and one-third of one CF V Warrant.
“CF V Warrants” means warrants to purchase shares of CF V Class A Common Stock.
“Class A Ordinary Shares” means the class A ordinary shares of the Company, par value $0.0001 per share.
“Class B Ordinary Shares” means the class B ordinary shares of the Company, par value $0.0001 per share.
“Closing” means the closing of the Business Combination.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company” means Satellogic Inc. following the Closing.
“Company Governing Documents” means the Memorandum and Articles of Association of Satellogic.
“Columbia Loan” means the Loan and Security Agreement, dated March 8, 2021, by and between Columbia River Investment Limited, a BVI company, and the Company.
“Columbia Warrants” means the Warrant issued to Columbia River Investment Limited pursuant to the Columbia Loan.
“Convertible Notes” means the convertible notes Satellogic issued pursuant to the 2018 NPA, the 2019 NPA and 2020 NPA.
“Convertible Notes Conversion” means the conversion of the Convertible Notes into Nettar Preferred Shares immediately prior to the Initial Merger Effective Time in accordance with the Merger Agreement, the Convertible Notes, the Stockholder Support Agreement and the Nettar Governing Documents.
“CRIL” means Columbia River Investment Limited.
“Debt and Share Exchange” means that certain exchange transaction entered into between CRIL and Nettar on March 8, 2021.
“Forward Purchase Contract” means that certain amendment and restatement of the forward purchase contract, dated January 28, 2021, by and between CF V and the Sponsor pursuant to which the Sponsor agreed to purchase, and the Company agreed to issue and sell to the Sponsor, 1,250,000 Class A Ordinary Shares (subject to adjustment) and 333,333 warrants.
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“Forward Purchase Securities” means 1,250,000 Class A Ordinary Shares and 333,333 warrants to purchase Class A Ordinary Shares.
“Founder Shares” means 6,250,000 shares of CF V Class B Common Stock owned by Sponsor and the independent directors of CF V (including any shares of CF V Class A Common Stock issued upon conversion of such shares of CF V Class B Common Stock and the Class A Ordinary Shares issued in exchange therefor pursuant to the CF V Merger).
“FPC Additional Shares” means the Class A Ordinary Shares the Sponsor will be entitled to receive if the Adjustment Period VWAP is less than $10.00 per Class A Ordinary Share. In the event the Adjustment Period VWAP is less than $8.00, the Adjustment Period VWAP for purposes of this calculation will be deemed to be $8.00.
“IFRS” means the International Financial Reporting Standards.
“Initial Merger Effective Time” means the date and time that the Initial Merger became effective in accordance with the Merger Agreement.
“Insider Letter” means the letter agreement, dated as of January 28, 2021, as amended as of the date of the Merger Agreement, by and among CF V, Sponsor and certain Insiders, pursuant to which Sponsor and the Insiders agreed to certain voting requirements, transfer restrictions and waiver of redemption rights with respect to the CF V securities (and as of the Closing, Company securities) owned by them.
“Insiders” means the former officers and directors of CF V.
“Liberty” means the Liberty Investor together with the Liberty Manager.
“Liberty Closing” means the date on which the Liberty Investment was consummated, being February 10, 2022.
“Liberty Investor” means Liberty Strategic Capital (SATL) Holdings, LLC, a Cayman Islands limited liability company and an investment vehicle managed by the Liberty Manager.
“Liberty Investment” means the investment made by the Liberty Investor pursuant to which it agreed to purchase, and the Company agreed to issue and sell to the Liberty Investor, (i) 20,000,000 Class A Ordinary Shares (the “Liberty Shares”), (ii) 5,000,000 $10.00 Liberty Share Warrants, and (iii) 15,000,000 $15.00 Liberty Warrants, in a private placement for an aggregate purchase price of $150.0 million.
“Liberty Letter Agreement” means that certain Letter Agreement dated as of January 18, 2022, by and among the Company, the Sponsor and the Liberty Investor, and, with respect to certain provisions therein, Emiliano Kargieman.
“Liberty Manager” means Liberty 77 Capital L.P., the investment manager of the Liberty Investor.
“Liberty Restated Letter Agreement” means that certain Amended and Restated Letter Agreement, dated as of February 10, 2022, by and among the Company, Emiliano Kargieman, the Sponsor and the Liberty Investor, which amended and restated the Liberty Letter Agreement.
“Liberty Subscription Agreement” means that certain subscription agreement dated as of January 18, 2022 by and among the Company, Liberty and CF V, pursuant to which the Liberty Investment was made.
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“Liberty Warrant Agreement” means that certain Warrant Agreement dated February 10, 2022, by and between Satellogic Inc. and Continental Stock Transfer & Trust Company governing the warrants issued pursuant to the Liberty Subscription Agreement.
“Lock-Up Addendum” means the addendum to the PIPE Subscription Agreement which, upon execution by a PIPE Investor, (i) subjected the PIPE Investor to a lock-up period of two years from the Closing with respect to the Class A Ordinary Shares held by such PIPE Investor and subjected to such lock-up and (ii) entitled the PIPE Investor to be issued that number of PIPE Warrants equal to the number of PIPE Shares subjected to such lock-up.
“Lock-Up Agreements” means the separate lock-up agreements entered into concurrently with the execution of the Merger Agreement among CF V, the Company and a number of Nettar Shareholders and holders of Convertible Notes, pursuant to which the Ordinary Shares received by such Nettar Shareholders and holders of Convertible Notes were locked-up and subject to transfer restrictions for a period of time following the Closing.
“Lock-Up Company Securityholder” means a Nettar Shareholder and/or holder of Convertible Notes that was subject to a Lock-Up Agreement upon the Closing.
“Lock-Up PIPE Investor” means the PIPE Investor that elected to be subject to the Lock-Up Addendum upon the Closing.
“Lock-Up Securities” means the Ordinary Shares and/or Assumed Options received by a Lock-Up Company Securityholder that are subject to the Lock-Up Agreement upon consummation of the Business Combination, including any Ordinary Shares underlying the Assumed Options held by such Lock-Up Company Securityholder, and further including any other securities held by such Lock-Up Company Securityholder immediately following the Business Combination which are convertible into, or exercisable, or exchangeable for, Ordinary Shares (together with any securities paid as dividends or distributions with respect to such securities or into which such securities are exchanged or converted, but not including any shares issued in connection with the PIPE Subscription Agreements or shares issued in connection with the conversion of Nettar Series X Preferred Shares).
“Mergers” means the CF V Merger together with the Initial Merger.
“Nasdaq” means The Nasdaq Stock Market LLC.
“Nettar Governing Documents” means collectively, the Amended and Restated Memorandum of Association dated April 23, 2021 of Nettar and the Amended and Restated Articles of Association of Nettar dated April 23, 2021
“Nettar Ordinary Shares” means the ordinary shares of Nettar, par value $0.00001 per share.
“Nettar Preference Shares” means, collectively, (i) the Series A preference shares of Nettar, par value $0.00001 per share, (ii) the Series B preference shares of Nettar, par value $0.00001 per share, (iii) the Series B-1 preference shares of Nettar, par value $0.00001 per share and (iv) the Nettar Series X Preferred Shares, par value $0.00001 per share.
“Nettar Series X Preferred Shares” means the series X Preferred Shares of Nettar, par value $0.00001 per share.
“Nettar Series X Shareholders” means the holders of Nettar Series X Preferred Shares outstanding immediately prior to the consummation of the Business Combination.
“Nettar Shares” means, collectively, the Nettar Ordinary Shares together with the Nettar Preference Shares.
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“Nettar Shareholders” means, collectively, holders of Nettar Shares immediately prior to the consummation of the Business Combination.
“Ordinary Shares” means, collectively, the Class A Ordinary Shares and the Class B Ordinary Shares.
“Person” means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, trust, estate, joint venture, joint stock company, governmental authority or instrumentality or other entity of any kind.
“PIPE Additional Shares” means the Class A Ordinary Shares each PIPE Investor will be entitled to receive if the Adjustment Period VWAP is less than $10.00 per Class A Ordinary Share. In the event the Adjustment Period VWAP is less than $8.00, the Adjustment Period VWAP for purposes of this calculation will be deemed to be $8.00.
“PIPE Investment” means the sale of Class A Ordinary Shares pursuant to PIPE Subscription Agreements in a private placement that occurred concurrently with the closing of the Business Combination.
“PIPE Investors” means investors that subscribed for Class A Ordinary Shares in the PIPE Investment including the Non-redeeming Holders.
“PIPE Shares” means such number of Class A Ordinary Shares purchased by the PIPE Investors pursuant to the PIPE Subscription Agreements excluding the shares purchased in the open market by Non-redeeming Holders.
“PIPE Subscription Agreements” mean the Subscription Agreements, dated as of July 5, 2021, by and among CF V, the Company and the PIPE Investors.
“PIPE Warrant Agreement” means that certain Warrant Agreement dated January 25, 2022, by and between the Company and Continental Stock Transfer & Trust Company governing the PIPE Warrants.
“PIPE Warrants” means the warrants to acquire 2,500,000 Class A Ordinary Shares at a purchase price of $20.00 per share issued pursuant to the Lock-Up Addendum, which number of warrants is equal to the 2,500,000 PIPE Shares that the Lock-Up PIPE Investor elected to subject to lock-up pursuant to the Lock-Up Addendum.
“Promissory Note Waiver Letter” means that certain Waiver Letter, dated January 18, 2022, by and between the Company and CF Securities.
“Promissory Note Waiver Letter Additional Shares” means the Class A Ordinary Shares the Sponsor will be entitled to receive if the Adjustment Period VWAP is less than $10.00 per Class A Ordinary Share. In the event the Adjustment Period VWAP is less than $8.00, the Adjustment Period VWAP for purposes of this calculation will be deemed to be $8.00 pursuant to the Promissory Note Waiver Letter.
“Public Warrant Agreement” means that certain Warrant Agreement, dated January 28, 2021, by and between the Company and Continental Stock Transfer & Trust Company governing the $8.63 Warrants.
“Public Warrants” means warrants to purchase Class A Ordinary Shares that are listed to trade publicly on Nasdaq.
“SEC” means the United States Securities and Exchange Commission.
“Securities Act” means the United States Securities Act of 1933, as amended.
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“Series X Additional Shares” means the Class A Ordinary Shares that each Nettar Series X Shareholder will be entitled to receive if the Adjustment Period VWAP is less than $10.00 per Class A Ordinary Share. In the event the Adjustment Period VWAP is less than $8.00, the Adjustment Period VWAP for purposes of this calculation will be deemed to be $8.00.
“SPAC IPO” means CF V’s initial public offering of CF V Units, consummated on February 2, 2021.
“Sponsor” means CFAC Holdings V, LLC, a Delaware limited liability company.
“Sponsor Earn-Out Shares” means the Class A Ordinary Shares that the Sponsor has subjected to forfeiture pursuant to the Sponsor Support Agreement.
“Sponsor Support Agreement” means that certain Sponsor Support Agreement, dated as of July 5, 2021, by and among the Company, the Sponsor and Nettar.
“Trading Day” means any day on which Nasdaq is open for trading.
“Transactions” means, collectively, the Mergers, the Convertible Notes Conversion and each of the other transactions contemplated by the Merger Agreement or any of the ancillary agreements related thereto.
“Trust Account” means the trust account of CF V which was for the benefit of CF V’s public stockholders.
“U.S. dollar”, “$” or “USD” each refers to the United States Dollar.
“U.S. GAAP” means accounting principles generally accepted in the United States of America.
“Warrants” means the $10.00 Liberty Warrants, the $8.63 Warrants, the $15.00 Liberty Warrants, the PIPE Warrants and the Columbia Warrants.
PART 1
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Merger.
The Company is an early stage company that has not demonstrated a sustained ability to generate revenues. •If it doeswe do not generate revenue as expected, itsour financial condition will be materially and adversely affected.
•The success of the Company’sour business will be highly dependent on itsour ability to effectively market and sell its EOour products and services and to convert contracted revenues, and its pipeline of potential contracts into actual revenues, which can be a costly process.
•The Company’sloss of one or more of our largest customers could adversely affect our results of operations.
The Company•We may face risks and uncertainties associated with defense-related contracts, which may have a material adverse effect on itsour business.
•Our pricing structure may not be optimal and may require adjustments over time.
The Company is•Our expansion into new business lines and services may result in unforeseen risks, challenges and uncertainties.
•Although the Company designswe design and build our satellites and many of itsour key satellite components, the Company relieswe also rely on third party vendors and manufacturers to build and provide its satellite components, products or services and the inability of these vendors and manufacturers to meet the Company’sour needs could have a material adverse effect on itsour business.
The Company depends•We depend on ground station and cloud-based computing infrastructure operated by third parties, for value added services, and any errors, disruption, performance problems or failure in their or itsour operational infrastructure could materially and adversely affect the Company’s business, financial condition and results of operations.
The Company’s•Our customer contracts may require itus to meet certain minimum service requirements which can vary significantly from customer to customer.significantly. Any failure to meet itsour service requirements may materially and adversely affect the Company’s business, results of operations and financial condition.
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The market•We may not accept the Company’s geospatial intelligence, imagery and related data analytic products and services, and its business is dependent upon its abilityfail to keep paceforesee challenges with the latest technological changes.
The Company•Our employees may not be able to identify suitable acquisition candidatesengage in misconduct or consummate acquisitions on acceptable terms, or the Company may be unable to successfully integrate acquisitions,other improper activities, which could disrupt it operations and materially and adversely impact its business and operating results.
The Company faces competition for geospatial intelligence, imagery and related data analytic products and services which•Our customers may limit its abilityfail to gain market share.
The Company’s products and services are complex and could have unknown defects or errors, which may increase its costs, harm its reputation with customers, give risepay us, necessitating action by us to costly litigation, or divert its or its customers’ resources from other purposes.
The Company’s business is capital intensive, and it may not be able to raise adequate capital to finance its business strategies, including funding future satellites, or it may be able to do so only on terms that significantly restrict its ability to operate its business.
The market for geospatial intelligence, imagery•Our business involves significant risks and related data analytics has not been established with precision, is still emerging anduncertainties that may not achieve the growth potential the Company expectsbe covered by insurance.
If the Company’s satellitesfailure of our infrastructure could hurt our ability to effectively perform our daily operations and related equipment have shorter useful lives than it anticipates, it may be required to recognize impairment charges.
If the Company’s satellites fail to operate as intended, it could have a material adverse effect on its business, financial conditionprovide and results of operations.
Satellites are subject to productionproduce our products and launch delays, launch failures, damage or destruction during launch, the occurrence ofservices, which could materially and adversely affect the Company’s operations.
The Company typically purchases pre-launch and launch insurance coverage for its satellites to address the risk of potential systemic anomalies, failures, collisions with its satellites or other satellites or debris, or catastrophic events that occur prior to or during launch. However, such insurance•We may be insufficient or unavailable on acceptable cost and terms, if at all.
Coordination results may adversely affect the Company’s ability to use its satellites in certain orbital locations for its proposed service or coverage area or may delay its ability to launch satellites and thereby operate its proposed services.
Prolonged unfavorable weather conditions could negatively impact the Company’s operations.
To date, based on the structure of the Company’s business and operations and informal discussion with regulators, the Company does not believe its satellite operations are subject to U.S. regulation. If it is determined by a U.S. regulatory authority that the Company’s operations are subject to U.S. law, the Company could be subject to penaltiesstringent U.S. export and other adverse consequences as a result of noncompliance.
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If the Company is successful in becoming a U.S. governmental contractor, its business will be subject to significant U.S. regulations, and reductions or changes in U.S. government spending, including the U.S. defense budget, could reduce its revenue and adversely affect its business.
The Company’s business with governmental entities is subject to the policies, priorities, regulations, mandates, and funding levels of such governmental entities and may be negatively impacted by any change thereto.
The Company’s business is subject to a wide variety of additional extensive and evolving governmentimport laws and regulations. FailureUnfavorable changes in, or our failure to comply with, suchthese laws and regulations could have a material adverse effect on the Company’sour business.
The Company is•Increasing regulatory and customer focus on data privacy issues and expanding laws may impact our business.
Data breaches or incidents involving the Company’s technology or products could damage its business, reputation and brand and substantially harm its businessfinancial condition, and results of operations.
The Company’s technologies contain “open source” software, and any failure to comply with the terms of one or more of these open source licenses could negatively affect its business.
The Company relies on the significant experience and specialized expertise of its senior management, engineering, sales and operational staff and must retain and attract qualified and highly skilled personnel in order to grow its business successfully. If the Company is unable to build, expand, and deploy additional members its management, engineering, sales and operational staff in a timely manner, or at all, or to hire, retain, train, and motivate such personnel, its growth and long-term success could be adversely impacted.
The ability of the Company’s management to operate the business successfully is largely dependent upon the efforts of certain key personnel of the Company. The loss of such key personnel could negatively impact the operations and•Our historical financial results may not be indicative of the combined business.
•The dual class structure of the Ordinary Sharesour common stock has the effect of concentrating voting control with certain shareholders of the Companyour stockholders and limiting itsour other shareholders’stockholders’ ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of Class A Ordinary Sharesordinary shares may view as beneficial.
Failure•We do not expect to maintain effective internal controls over financial reportingdeclare any dividends in the foreseeable future.
The Company is•We are an “emerging growth company” and, as a result of the reduced disclosure and governance requirements applicable to emerging growth companies, theour Class A Ordinary Sharesordinary shares may be less attractive to investors.
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The Company is
The Company incurred losses
us.
The Company’s
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dissatisfaction with its geospatial data and analytics platformour Platform and/or its geospatial intelligence, imagery and related data analytic products andour EO services, the frequency and severity of errors or disruptions in its platform,our Platform, reliability of itsour satellites and/or its platform,our Platform, the effects of general economic conditions, competitive offerings or alternatives, reductions in the Company’sour customers’ spending levels, and pricing.
The Company’s
The Company’sunpredictable for many of our portfolio offerings.
The Company
The Company is
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•Changes in government administration and national and international priorities, including developments in the geo-politicalgeopolitical environment, or regulatory requirements, could have a significant impact on national or
The Company•We may compete directly with other suppliers or align with a prime or subcontractor competing for a contract. The CompanyWe may not be awarded the contract if the pricing or product offering is not competitive, either at the Company’sour level or the prime or subcontractor level. In addition, in the event the Company iswe are awarded a contract, it iswe may be subject to protests by losing bidders of contract awards that can result in the reopening of the bidding process and changes in governmental policies or regulations and other political factors. In addition, the Companywe may be subject to multiple rebid requirements over the life of a defense program in order to continue to participate in a program, which can result in the loss of the contract or significantly reduce the Company’sour revenue or margin from the program. The government’s requirements for more frequent technology refreshes on defense programs may lead to increased costs and lower long-term revenues.
•Consolidation among defense industry contractors has resulted in a few large contractors with increased bargaining power relative to the Company.us. The increased bargaining power of these contractors may adversely affect the Company’sour ability to compete for contracts and, as a result, may materially and adversely affect itsour business or results of operations in the future.
The Company’s•Our usage policy currently restricts usage of itsour EO services, data and platformsPlatform for peaceful use only, and that may limit the Company’sour ability to compete for and win certain defense relateddefense-related contracts.
The Company’sthe Company’sour products and services will vary depending on the specific application and customer specifications. Given the complexity in determining pricing structures for its geospatial intelligence, imagery and related data analytic products andour EO services, the Companywe may experience difficulty determining the appropriate price structure for itsour products and services. This may result in missed revenue opportunities and lower than expected margins if the Company prices itswe price our products and services too low, or in the Companyus losing bids if it prices itswe price our products and services too high. In addition, the Company expectswe expect that itwe may need to change itsour pricing model from time to time, including as a result of competition, global economic conditions, reductions in the Company’sour customers’ spending levels generally, changes in product mix, pricing studies or changes in how information technology infrastructure is broadly consumed. Similarly, as the Company introduceswe introduce new products and services, or as a result of the evolution of itsour existing products and services, itwe may have difficulty determining the appropriate price structure for itsour products and services. In addition, as new and existing competitors introduce new products or services that compete with the Company’s,ours, or revise their pricing structures, the Companywe may be unable to attract new customers at the same price or based on the same pricing model as it willwe have used historically. Moreover, customers may demand price concessions. As a result, the Companywe may be required from time to time to revise itsour pricing structure or reduce itsour prices, which could materially and adversely affect itsour business, financial condition, and results of operations.23
If the Company iswe are unable to scale production of itsour satellites as planned, itsour business and results of operations could be materially and adversely affected.
The Company’s
•prepare high throughputand operate high-throughput production factories for production to build a large number of satellites (at least 100 annually);
•acquire sufficient quantities of third-party components and supplies;
•recruit and train new staff while maintaining its desired quality levels;
•implement an effective supplier strategy and supply chain management system; and
•adopt manufacturing and quality control processes, which itwe must successfully introduce and scale for production at any new production facilities.
The Company
The Company is
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Further, in the event that a launch is delayed, the Company’sour timing for recognition of revenue may be impacted depending on the length of the delay and the nature of itsour impacted customer contracts. While such delays are common in the space industry, any delay in a launch could result in a delay in recognizing revenue which could materially and adversely impact the Company’sour financial statements or result in negative impacts to itsour earnings during a specified time period, which could have a material adverse effect on itsour business, financial condition and results of operations.
The Company designs
The Company is
The Company dependsus.
The Company relies
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imagery and related data analytic products andour EO services, itsor our ability to manage itsour operations could be interrupted until equivalent services or technology, if available, are identified, procured, and implemented, all of which may take significant time and resources, increase the Company’sour costs, and could materially and adversely affect itsour business, financial condition and results of operations.
The Company’s
The Company’s
The market
The Company believes
In addition, following the establishment of our Space Systems business line, we are increasingly reliant on our ability to build and launch satellites quickly, in large volumes and at low cost. Our profitability will be dependent on our competitiveness in this area, as our competitors advance their own ability to build and launch satellites, at greater speeds, in greater volumes, and at lower costs.
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gain market acceptance in advance of the Company’sour technologies or develop technologies that better meet the needs of the Company’sour customers. The possibility exists that the Company’sour competitors might develop new technology or offerings that might cause the Company’sour existing technology and offerings to become obsolete. If the Company failswe fail to develop, manufacture, and market innovative technologies that enable the Company’sour products and services to meet customers’ requirements or itsour technologies fail to achieve market acceptance more rapidly as compared to itsour competitors, itsour ability to procure new contracts could be negatively impacted and itsour business may not continue to grow in line with expectations or at all. If the Company iswe are unable to achieve sustained growth, itwe may be unable to execute itsour business strategy, expand itsour business or fund other liquidity needs and itsour business, financial condition and results of operations could be materially and adversely affected.
The Company
The Company intends
the Company•we may not be able to identify suitable acquisition candidates or to consummate acquisitions on acceptable terms;
the Company•we may not be able to obtain the necessary financing, on favorable terms or at all, to finance any or all of itsour potential acquisitions; and
•acquired technologies, products or businesses may not perform as the Company expectswe expect and the Companywe may fail to realize the anticipated benefits from the acquisition.
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The Company operates
The Company plans
The Company
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operations could be materially and adversely affected. In addition, companies competing with the Companyus may have an entirely different pricing or distribution model.model from ours. Increased competition could result in fewer customer contracts, price reductions, reduced margins, and inability to gain market share, any of which could harm the Company’sour business and results of operations.
The Company
The Company’soperations or the regulatory environment in certain markets may unexpectedly change.
The Company’s
The Company employs
The Company’ssubstantial.
The Company is
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The CompanyWe may in the future experience such misconduct, despite itsour various compliance programs. Actual or alleged misconduct or improper actions by the Company’sour employees, agents, subcontractors, suppliers, business partners and/or joint ventures could subject itus to administrative, civil or criminal investigations and enforcement actions; monetary and non-monetary penalties; liabilities; andor the loss of privileges and other sanctions, including suspension and debarment, which could negatively impact itsour reputation and ability to conduct or attract new business and could materially and adversely affect the Company, itsus, our business, financial condition, and results of operations.
The Company’s
The Company
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Our customers may fail to pay us in accordance with the terms of their agreements, necessitating action by us to compel payment.
The Company’s
The Company’s
•timing in finalizing satellite design and specifications;
•performance of satellites meeting design specifications;
•failure of satellites as a result of technological or manufacturing difficulties, design issues or other unforeseen matters;
•increases in costs of materials and supplied components;
•changes in project scope;
its•our ability to obtain additional applicable approvals, licenses or certifications from regulatory agencies, if required, and maintainingto maintain current approvals, licenses or certifications;
•performance of itsour manufacturing facilities despite risks that disrupt productions, such as natural disasters, catastrophic events or labor disputes;
•performance of a limited number of suppliers for certain raw materials and supplied components, the accuracy of supplier representations as to the suitability of such raw materials and supplied components for itsour products, and their willingness to do business with it;
•performance of itsour internal and third-party resources that support its research and developmentour R&D activities;
its•our ability to protect itsour intellectual property critical to the design and function of itsour satellites and its geospatial intelligence, imagery and related data analytic products andour EO services;
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its•our ability to continue funding and maintaining its research and developmentour R&D activities;
•successful completion of demonstration missions; and
•the impact of the public health emergencies, such as COVID-19, pandemic on it, itsus, our customers and suppliers, and the global economy.
If
The Company’s
The Company evaluates itsa material adverse effect on our business, financial condition, and results of operations.
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Long-lived assets are tested periodically for impairment or whenever there is an indication that an asset may be impaired. Disruptions to the Company’sour business, unexpected significant declines in itsour operating results, adverse technological events or changes in the regulatory marketsenvironments in which it operateswe operate may result in impairment charges to its tangible and intangibleour assets. Any future impairment charges could substantially affect the Company’sour reported results.
The Company relies
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The CompanyWe cannot provide assurances that itsour satellites will continue to operate successfully in space throughout their expected operational lives. Even if a satellite is operated properly, technical flaws in that satellite’s sensors or other technical deficiencies or anomalies could significantly hinder its performance, which could materially affect the Company’sour ability to collect imagery and market itsour products and services successfully. While certain software deficiencies may be corrected remotely, most, if not all, of anomalies or debris collision damage cannot be corrected once the satellites are placed in orbit. Further, although the Company haswe have some ability to actively maneuver itsour satellites to avoid potential collisions with space debris or other spacecraft, this ability is limited by, among other factors, uncertainties and inaccuracies in the projected orbit location of and predicted conjunctions with debris objects tracked and cataloged by the U.S. government. Additionally, some space debris is too small to be tracked and therefore its orbital location is completely unknown; nevertheless, this debris is still large enough to potentially cause severe damage or a failure of the Company’sour satellites should a collision occur. Recent years have seen increases in the number of satellites deployed to low earthEarth orbits, and publicly announced plans call for many thousands of additional satellite deployments over the next decade. The proliferation of these low Earth orbit constellations could materially increase the risk of potential collision with space debris or another spacecraft despite the orbital debris
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Launch vehicles may also under-perform,underperform, in which case the satellite may still be placed into service by using its onboard propulsion systems to reach the desired orbital location, resulting in a reduction in its service life. In addition, although the Company intendswe intend to purchase launch insurance on all of itsour launches, if itwe were not able to obtain launch insurance on commercially reasonable terms and a launch failure were to occur, itwe would directly suffer the loss of the cost of the satellite and related costs.
The Company’s
The Company endeavors
The Company doesoperations.
The Company
The Company has
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The price and availability of insurance fluctuatefluctuates significantly. Insurance market conditions or factors outside the Company’sour control at the time it iswe are in the market for the required insurance, such as failure of a satellite using similar components, could cause premiums to be significantly higher than current estimates and could reduce amounts of available coverage. The cost of the Company’sour insurance has been increasing and may continue to increase. Higher premiums on insurance policies will reduce the Company’sour operating income by the amount of such increased premiums.premiums, or we may be forced to purchase lower-cost policies that include terms less favorable to us, such as additional coverage exclusions or higher deductibles. If the terms of insurance policies become less favorable than those currently available, there may be limits on the amount of coverage that the Companywe can obtain, or the Companywe may not be able to obtain insurance at all.
The Company
The Company is
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The occurrence and impact of any of the foregoing could result in lengthy interruptions in the Company’s services and/or damage its reputation, which could have a material adverse effect on its business, financial condition and results of operations.
The occurrence and impact of these factors is difficult to predict, but one or more of them could result in lengthy interruptions in our services and/or damage our reputation, which could have a material adverse effect on the Company’sour business, financial position,condition, results of operations, and/or cash flows.
The Company is
The Company has
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Any changes in the export control regulations or U.S. government licensing policy, such as those necessary to implement U.S. government commitments to multilateral control regimes, may restrict the Company’sour operations. There is no inherent right to perform an export and, given the significant discretion the U.S. government has in adjudicating such authorizations in furtherance of U.S. national security and foreign policy interests, there can be no assurance the Companywe will be successful in itsour current and future efforts to secure and maintain necessary licenses, registrations, or other U.S. government regulatory approvals.
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The Company’s•Our potential future contracts with U.S. and international defense contractors or directly with the U.S. government may be on a commercial item basis, eliminating the requirement to disclose and certify cost data. To the extent that there are interpretations or changes in the Federal Acquisition Regulations (“FAR”) regarding the qualifications necessary to sell commercial items, there could be a material impact on the Company’sour business and operating results. For example, there have been legislative proposals to narrow the definition of a “commercial item” (as defined in the FAR) or to require cost and pricing data on commercial items that could limit or adversely impact the Company’sour ability to contract under commercial item terms. Changes in regulatory application to our business could be accelerated due to changes in the Company’sour mix of business, in federal regulations, or in the interpretation of federal regulations, which may subject the Companyus to increased oversight by the Defense Contract Audit Agency (“DCAA”) for certain of the Company’sour products or services. Such changes could also trigger contract coverage under the Cost Accounting Standards (“CAS”), applicable to certain U.S. government
The Company•We would be subject to the Defense Federal Acquisition Regulation Supplement (“DFARS”) and the Department of Defense (“DoD”) and federal cybersecurity requirements, in connection with any defense work the Company performswe perform in the future for the U.S. government and defense prime contractors. Amendments to DoD cybersecurity requirements, such as through amendments to the FAR or DFARS, may increase the Company’sour costs or delay the award of contracts if it iswe are unable to certify that it satisfieswe satisfy such cybersecurity requirements.
•The U.S. government or a defense prime contractor customer could require the Companyus to relinquish data rights to a product in connection with performing work on a defense contract, which could lead to a losssurrender of valuable technology and intellectual property in order to participate in a government program.
The Company•We may enter into cost reimbursable contracts with the U.S. government or a defense prime contractor customer that could offset the Company’sour cost efficiency initiatives.
The Company would•We may be subject to various U.S. federal export-control statutes and regulations, which may affect itsour business with, among others, international defense customers. In certain cases, the export of the Company’sour products and technical data to foreign persons, and the provision of technical services to foreign persons related to such products and technical data, may require licenses from the U.S. Department of Commerce or the U.S. Department of State. The time required to obtain these licenses, and the restrictions that may be contained in these licenses, may result in the Companyus being at a competitive disadvantage with international suppliers who are not subject to U.S. federal export control statutes and regulations. In addition, violations of these statutes and regulations can result in civil and, under certain circumstances, criminal liability as well as administrative penalties which could have a material adverse effect on the Company’sour business, financial condition, and results of operations.
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•Sales to U.S. prime defense contractor customers as part of foreign military sales (“FMS”) programs combine several of the different types of risks and uncertainties highlighted above, including risks related to government contracts, risks related to defense contracts, timing and budgeting of foreign governments, and approval from the U.S. and foreign governments related to the programs, all of which may be impacted by macroeconomic and geopolitical factors outside of the Company’sour control.
The Company•We may in the future derive a portion of itsour revenue from programs with governments and government agencies that are subject to security restrictions (e.g.(e.g., contracts involving classified information, classified contracts, and classified programs), which preclude the dissemination of information and technology that is classified for national security purposes under applicable law and regulation.regulations. In general, access to classified information, technology, facilities, or programs requires appropriate personnel security clearances, is subject to additional contract oversight and potential liability, and may also require appropriate facility clearances and other specialized infrastructure. Therefore, certain of the Company’s employees with appropriate security clearances may requireour access to classified information in connection with the performance of a U.S. government contract. The Companycontract may be limited to certain of our employees with appropriate security clearances. When accessing sensitive information, we must comply with security requirements pursuant to the National Industrial Security Program Operating Manual (“NISPOM”), administered by the Defense Counterintelligence and Security Agency (“DCSA”), and other U.S. government security protocols when accessing sensitive information.protocols. Failure to comply with the NISPOM or other security requirements may subject the Companyus to civil or criminal penalties, loss of access to sensitive information, loss of a U.S. government contract, or potentially debarment as a government contractor. Further, the DCSA has transitioned its review of a contractor’s security program to focus on the protection of controlled unclassified information and assets. Failure to meet DCSA’s new, broader requirements could adversely impact the ability to winobtain new business as a government contractor.
The Company•We may need to invest additional capital to build out higher level security infrastructure at certain of itsour facilities to be awarded contracts related to defense programs with higher level security requirements. Failure to invest in such infrastructure may limit the Company’sour ability to obtain new contracts with defense programs.
The Company•We may be required to havepurchase certain products that it purchasesare manufactured in the United States and other relatively high-cost manufacturing locations under the Buy American Act or other regulations, and the Companywe may not manufacture or source all products in locations that meet these requirements, which may preclude the Company’sour ability to sell some products or services.
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In addition, spending authorizations for defense-related and other programs by the U.S. government have historically fluctuated, in the past, and future levels of expenditures and authorizations for these programs may decrease, remain constant or shift to programs in areas where the Company doeswe do not expect to provide services. Any contract the Companywe may enter into with the U.S. government and its agencies will generally be conditioned upon the continuing availability of Congressional appropriations. Congress usually appropriates funds on a fiscal year basis, even though contract performance may extend over many years. In recent years, there has been a pattern of delays in the finalization and approval of the U.S. government budget, which can create uncertainty over the extent of future U.S. government demand for the Company’sour services.
The Company’s
The Company’s
The Company has
Terminate•terminate existing contracts for convenience with short notice;
Reduce•reduce orders under or otherwise unilaterally modify contracts;
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For
For•for some contracts, (i) demand a refund, make a forward price adjustment, or terminate a contract for default if a contractorwe provided inaccurate or incomplete data during the contract negotiation process and (ii) reduce the contract price under triggering circumstances, including the revision of price lists or other documents upon which the contract award was predicated;
Cancel•cancel multi-year contracts and related orders if funds for contract performance for any subsequent year become unavailable;
Decline to exercise an option to renew a multi-year contract;
Claim•claim rights in solutions, systems, or technology produced by us, appropriate such work-product for their continued use without continuing to contract for our services, and disclose such work-product to third parties, including other government agencies and our competitors, which could harm our competitive position;
Prohibit•prohibit future procurement awards with a particular agency due to a finding of organizational conflicts of interest based upon prior related work performed for the agency that would give a contractorus an unfair advantage over competing contractors, or the existence of conflicting roles that might bias a contractor’sour judgment;
Subject•subject the award of contracts to protest by competitors, which may require the contracting federal agency or department to suspend our performance pending the outcome of the protest and may also result in a requirement to resubmit offers for the contract or in the termination, reduction, or modification of the awarded contract;
Suspend•suspend or debar the Companyus from doing business with the applicable government; and
Control•control or prohibit the export of itsour services.
Specialized•retainage or contract insurance guarantee requirements under which we are obligated to provide a deposit equal to a percentage of the relevant contract value, which deposit is retained by the customer to cover any loss incurred due to our failure to perform and returned only upon satisfactory completion of the contract;
Financial•financial and compliance audits that may result in potential liability for price adjustments, recoupment of government funds after such funds have been spent, civil and criminal penalties, or administrative sanctions such as suspension or debarment from doing business with the U.S. government;
Public•public disclosures of certain contract and company information;
Mandatory•mandatory socioeconomic compliance requirements, including labor requirements, non-discrimination and affirmative action programs and environmental compliance requirements; and
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Requirements•requirements to procure certain materials, components and parts from supply sources approved by the customer.
The Company’s
The Company is
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Additionally, regulation of the Company’sour industry is still evolving, and new or different laws or regulations could affect the Company’sour operations, increase our direct compliance costs for the Company or cause anyour third-party suppliers or contractors to raise the prices they charge the Companyfor us because of increased compliance costs. For example, the Federal Communications Commission has an open notice of proposed rulemaking relating to mitigation of orbital debris, which could affect the Companyus and itsour operations. The adoption of a multi-layered regulatory approach to any one of the laws or regulationsrequirements to which the Companywe are or may become subject, particularly where the layers are in conflict, could require alteration of the Company’sour manufacturing processes or operational parameters, which may adversely impact itsour business. The CompanyFurther, due to the evolving nature of these requirements, we may not be in compliance with all such requirements at all times and, even when it believes it iswe believe we are in compliance, a regulatory agency may determine that it iswe are not.
The Company is
countries and elsewhere.
The Company collects
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The Company expectsWe expect that new industry standards, laws and regulations will continue to be proposed regarding privacy, data protection and information security in many jurisdictions, including the European e-Privacy Regulation, which is currently in draft form. The CompanyWe cannot yet determine the impact such future laws, regulations and standards may have on itsour business. Complying with these evolving obligations is costly. For instance, expanding definitions and interpretations of what constitutes “personal data” (or the equivalent) within the United States, the European Economic Area (the “EEA”) and elsewhere may increase the Company’sour compliance costs and legal liability.
The Company is
Satellogic isobligations and impose other costs that have increased and are likely to further increase over time.
Satellogic is
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Although Satellogic maintainswe maintain anti-corruption policies and procedures designed to address the risk of bribery, corruption and related misconduct, certain of itsour activities and operations present risk from an anti-corruption perspective. Satellogic hasWe have an extensive current or projected geographic scope of operations (current and isprojected) and are active or pursuing business in countries that can present heightened anti-corruption compliance risks. Satellogic’sOur target customer base also includes governments and government instrumentalities. Contractinginstrumentalities, and contracting with such entities can increase a company’s compliance risk exposure since, among other things, the representatives of such entities are typically considered to be “foreign officials” under the FCPA and may be similarly characterized under other relevant anti-corruption laws. SatellogicIn certain countries, we also workswork with third parties, includingsuch as business development agents, distributors, and resellers, in certain countries, including to interact with public officials on Satellogic’sour behalf. As Satellogic’sour operations and sales activities continue to expand, Satellogic’sour policies and procedures will similarly have to expand to adequately address the risks presented by its activities. Satellogicour activities, and we may fail to adequately expand itsour policies and procedures to address these increased risks.
risks, which could adversely affect our business, results of operations, financial condition and reputation.
The Company
The Company attempts
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The CompanyWe also triestry to protect itsour intellectual property by filing patent applications related to itsour technology, inventions and improvements whichthat are important to the development of itsour business. The steps the Company takeswe take to protect itsour intellectual property may be inadequate. The CompanyWe currently has 19have 26 issued patents, 2two issued utility models and 46 patents47 patent applications pending in 10nine jurisdictions. The Company’sOur pending patent applications may not result in patents being issued, which may have a material adverse effect on itsour ability to prevent others from commercially exploiting products similar to those of the Company. The Companyours. We cannot be certain that it iswe are the first inventor of the subject matter to which it haswe have filed a particular patent application, or if it iswe are the first party to file such a patent application. If another party has filed a patent application concerning the same subject matter as the Company has, the Companywe have, we may not be entitled to the protection sought by the patent application. The CompanyWe also cannot be certain whether the claims included in a patent application will ultimately be allowed in the applicable issued patent. As a result, the Companywe cannot be certain that the patent applications that it fileswe file will be granted. Further, the scope of protection of issued patent claims is often difficult to determine.
The Company’s
The Company’s
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events. In the event that the Company’sour or any third-party provider’s systems or service abilities are hindered by any of the events discussed above, the Company’sour ability to operate may be impaired and itsour business could be adversely affected. A decision to close facilities without adequate notice or other unanticipated problems could adversely impact the Company’sour operations. Any of the aforementioned risks may be augmented if the Company’sour or any third-party provider’s business continuity and disaster recovery plans prove to be inadequate. The Company’sOur data center, third-party cloud, and managed service provider infrastructure also could be subject to break-ins, cyber attacks, cyberattacks, sabotage, intentional acts of vandalism and other misconduct from a spectrum of actors ranging in sophistication from threats common to most industries to more advanced and persistent, highly organized adversaries. Any security breach, including personal data breaches, or incident, including cybersecurity incidents, that the Company experienceswe experience could result in unauthorized access to, misuse of or unauthorized acquisition of itsour internal sensitive corporate data, such as financial data, intellectual property, or data related to contracts with commercial or government customers or partners. Such unauthorized access, misuse, acquisition, or modification of sensitive data may result in data loss, corruption or alteration, interruptions in the Company’sour operations or damage to the Company’sour computer hardware or systems or those of its employees andour customers. Moreover, negative publicity arising from these types of disruptions could damage our reputation. Furthermore, a security event that involves classified or other sensitive government information or certain controlled technical information, could subject us to civil or criminal penalties and could result in loss of government security clearances and other accreditations, loss of our government contracts, loss of access to classified information, loss of export privileges or debarment as a government contractor. The risk that these types of events could seriously harm our business is likely to increase as we expand the Company’s reputation.
The Company hasnumber of services we offer as well as increase the number of customers and the countries within which we do business.
Over
The
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SignificantRecurrent or prolonged unavailability of the Company’sour services due to attacks could cause users to cease using the Company’sour services and materially adversely affect the Company’sour business, prospects, financial condition and results of operations. The Company usesWe use software which it haswe have developed, which the Company seekswe seek to continually update and improve. Replacing such systems is often time-consuming and expensive and can also be intrusive to daily business operations. Further, the Companywe may not always be successful in executing these upgrades and improvements, which may occasionally result in a failure of itsour systems. The CompanyWe may experience periodic system interruptions from time to time. Any slowdown or failure of the Company’sour underlying technology infrastructure could harm itsour business, reputation and ability to execute on itsour business plan, which could materially adversely affect itsour results of operations. The Company’sOur disaster recovery plan or those of itsour third-party providers may be inadequate.
The Company’s
The Company utilizes
operations, and the full extent to which a resurgence of COVID-19 or spread of new infectious diseases will affect us will depend on future developments that are highly uncertain and cannot be accurately predicted.
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The Company relies
The Company’s
The Company’s
us.
Changes in accounting standards or inaccurate estimates or assumptions in the application of accounting policies could adversely affect the Company’s financial condition and results of operations.
The Company’s accounting policies and methods are fundamental to how it records and reports its financial condition and results of operations. Future changes in accounting standards, pronouncements or interpretations could require the Company to change its policies and procedures. The materiality of such changes is difficult to predict, and such changes could materially impact how the Company records and reports its financial condition and results of operations. In addition, some accounting policies require the use
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of estimates and assumptions that may affect the reported value of the Company’s assets or liabilities and results of operations and are critical because they require management to make difficult, subjective and complex judgments about matters that are inherently uncertain. If those estimates, assumptions or judgments were incorrectly made, we could be required to correct and restate prior period financial statements, and there can be no assurances that we will make the correct judgments in the future, should any new standards be issued. Accounting standard-setters and those who interpret the accounting standards may also amend or even reverse their previous interpretations or positions on how various standards should be applied. Any of these changes are difficult to predict and can materially impact how the Company records and reports its financial condition and results of operations, which could have a significant impact on its future financial statements.
Risk Related to being a Public Company
The Company has
The Company faces
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TheOur historical financial results of the Company may not be indicative of what the Company’sour actual financial position or results of operations would have been if itwe were a public company.
Thecompany during all periods presented.
results.
Hannover Holdings S.A. has provided notice that it may assert claims in connection with the Business Combination.
Hannover Holdings S.A. (“Hannover”) holds Class A Ordinary Shares which amount to approximately 8.3% of the issued and outstanding Ordinary Shares as of April 6, 2022. Hannover sought appraisal, entitling it to be paid the “fair value” for its shares in cash, with respect to all of its holdings in Nettar in connection with the Initial Merger which formed part of the Business Combination and may bring other claims arising from the Business Combination. Although Hannover asserted that it is entitled to
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dissenters rights on any Ordinary Shares issuable upon conversion of its Convertible Notes (“Conversion Shares”), at a hearing held on November 8, 2021, a BVI court ruled that Hannover is not entitled to dissenters rights with respect to the shares issuable upon conversion of its Convertible Notes upon the Closing. The order reflecting the court’s ruling was issued on January 21, 2022, and the statutory time for appeal of such order in the BVI has passed without Hannover exercising its right to appeal. On April 6, 2022, a statutory appraisal process conducted pursuant to the laws of the BVI, to determine the “fair value” with respect to a total of 51,700 ordinary shares, 134,735 Series A preference shares, and 15,082 Series B-1 preference shares, in each case of Nettar held by Hannover prior to the consummation of the Business Combination (the “Appraisal Process”), resulted in a determination that the fair value of such shares, as of the relevant date of November 14, 2021 (which date preceded the consummation of the Business Combination), was $5.9 million. Hannover was paid such $5.9 million for the shares which were the subject of the Appraisal Process.
Any litigation brought by Hannover in connection with the Business Combination or the Conversion Shares could have a material adverse effect on the Company, including its liquidity.
Risks Related to Satellogic
Our Common Stock and Warrants
This amendment had the impact of reinforcing the voting power and control of Mr. Kargieman, and may result in the continuation of the aforementioned risks to stockholders.
Satellogic doesordinary shares.
The Company does
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If securities or industry analysts do not publish or cease publishing research or reports about the Company,us, our business, or our market, or if they adversely change their recommendations regarding the Company’sour securities, adversely, the price and trading volume of Satellogic’sour securities could decline.
Certain
Certain
Substantial future sales of shares of our Class A Ordinary Shares could cause the market price of our Class A Ordinary Shares to decline.
We agreed, at our expense, to prepare and file a registration statement with the SEC for certain holders of the Company’s securities (the “Selling Securityholders”) registering the resale of (a) up to 94,739,154 Class A Ordinary Shares of the Company, which include (i) up to 7,533,463 Class A Ordinary Shares beneficially held by a limited number of qualified institutional buyers and institutional and individual accredited investors which were purchased by such investors upon the closing of the Business Combination in a private placement at an effective price of $8.00 per share (assuming the maximum number of Additional Shares, as described herein, are issued), (ii) up to 1,500,000 Class A Ordinary Shares issued to the Sponsor pursuant to the Forward Purchase Contract at an effective price of $8.00 per share (assuming the maximum number of Additional Shares, as described herein, are issued), (iii) up to 535,085 Class A Ordinary Shares issuable to certain former holders of Nettar Series X Preferred Shares at an effective price of $8.00 per share (assuming the maximum number of Additional Shares, as described herein, are issued), (iv) 6,250,000 Class A Ordinary Shares issued to the Sponsor and the former independent directors of CF V in exchange for the Sponsor’s and such directors’ CF V Class B Common Stock acquired in connection with the formation of CF V at a price of $0.003 per share, (v) 600,000 Class A Ordinary Shares issued to the Sponsor in exchange for the Sponsor’s Class A Common Stock acquired in connection with the CF V Private Placement at a price of $10.00 per share, (vi) up to 2,208,229 Class A Ordinary Shares issued to an affiliate of the Sponsor in lieu of advisory and other fees owed to them at an effective price of $8.00 per share (assuming the maximum number of Additional Shares, as described herein are issued), (vii) up to 985,026 Class A Ordinary Shares issued to an affiliate of Sponsor in satisfaction of debt owed to them at an effective
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price of $8.00 per share (assuming the maximum number of Additional Shares, as described herein, are issued), (viii) the Liberty Shares (comprising 20,000,000 Class A Ordinary Shares) issued pursuant to the Liberty Subscription Agreement at a price of $7.50 per share, (ix) 13,662,658 Class A Ordinary Shares issuable upon conversion of our Class B Ordinary Shares for no additional consideration, (x) 533,333 Class A Ordinary Shares issuable upon exercise of the $8.63 Warrants, (xi) 7,500,000 Class A Ordinary Shares issuable upon exercise of the $10.00 Liberty Warrants, (xii) 15,000,000 Class A Ordinary Shares issuable upon exercise of the $15.00 Liberty Warrants, (xiii) 2,500,000 Class A Ordinary Shares issuable upon exercise of the PIPE Warrants and (xiv) 15,931,360 Class A Ordinary Shares issuable upon exercise of the Columbia Warrants and (b) 41,464,693 Warrants to purchase Class A Ordinary Shares which include (i) 533,333 $8.63 Warrants, (ii) 7,500,000 $10.00 Liberty Warrants, (iii) 15,000,000 $15.00 Liberty Warrants, (iv) 2,500,000 PIPE Warrants and (v) 15,931,360 Columbia Warrants (the “Resale Registration Statement”). The shares registered pursuant to the Resale Registration Statement represent 71.7% of our total Ordinary Shares outstanding, including those issuable upon exercise of the various warrants. After it is effective and until such time that it is no longer effective, the Resale Registration Statement will permit the resale of these shares. The resale, or expected or potential resale, of a substantial number of our Class A Ordinary Shares in the public market could adversely affect the market price for our Class A Ordinary Shares and make it more difficult for a shareholder to sell its Class A Ordinary Shares at times and prices that it feels are appropriate. Furthermore, we expect that, because there will be a large a number of shares registered pursuant to the Resale Registration Statement, Selling Securityholders will continue to offer the securities covered by the Resale Registration Statement for a significant period of time, the precise duration of which cannot be predicted. Accordingly, the adverse market and price pressures resulting from an offering pursuant to the Resale Registration Statement may continue for an extended period of time.
Further, the Selling Securityholders acquired their Class A Ordinary Shares on or subsequent to the closing of the Business Combination at prices ranging from no consideration to $8.00 (assuming the maximum number of Additional Shares are issued). Therefore, they may realize a positive rate of return on their investment even if the Class A Ordinary Shares are trading below $10.00 per share. If the Selling Securityholders decided to sell their shares to realize this return, it could have a material adverse effect on the price of our Class A Ordinary Shares.
Additionally, certain Selling Securityholders who are subject to lock-up restrictions may choose to sell their shares in accordance with the restrictions. Such sales could have a material adverse effect on the price of our Class A Ordinary Shares.
The Selling Securityholders can earn a positive rate of return on their investment, even if other shareholders experience a negative rate of return in the post- business-combination company.
The Selling Securityholders acquired their Class A Ordinary Shares on or subsequent to the closing of the Business Combination at prices ranging from $7.50 to $8.00 (assuming the maximum number of Additional Shares are issued). The public offering price in the SPAC IPO was $10.00 per unit, which consisted of one share and one-third of one warrant. Consequently, the Selling Security holders may realize a positive rate of return on the sale of their Class A Ordinary Shares even if the market price per Class A Ordinary Share is below $10.00 per share, in which case the public shareholders may experience a negative rate of return on their investment. In addition, because the current market price of the Class A Ordinary Shares is higher than the price certain Selling Securityholders paid for their Class A Ordinary Shares or the exercise price of certain Warrants, there is more likelihood that Selling Securityholders holding Class A Ordinary Shares or in-the-money Warrants that are not subject to lock-up restrictions, which represent 16.3% of the outstanding Class A Ordinary Shares, will sell their Class A Ordinary Shares as soon as the registration statement is declared effective. In addition, the holders of the Columbia Warrants are subject to lock-up restrictions which expire on July 24, 2022. The exercise price of the $8.63 Warrants is $8.63 and the exercise price of the Columbia Warrants is $2.51635975 per share each of which is below the current trading price of our Class A Ordinary Shares, which as of April 4, 2022 was $9.25 per share. Consequently, it is possible that when the lock-up restrictions expire, the holders of $8.63 Warrants and the Columbia Warrants holders will exercise their warrants and earn a positive rate of return while the public stockholders do not.
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There can be no assurance that theour Class A Ordinary Sharesordinary shares or the Warrants will remain listed on Nasdaq, or that Satellogicwe will be able to comply with the continued listing standards of Nasdaq.
•a limited availability of market quotations for itsour securities;
•reduced liquidity for itsour securities;
•a determination that our Class A Ordinary Sharesordinary shares are a “penny stock”, which will require brokers trading in theour Class A Ordinary Sharesordinary shares to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for itsour securities;
•a limited amount or absence of news and analyst coverage; and
•a decreased ability to issue additional securities or obtain additional financing in the future.
The National Securities Markets Improvement Act of 1996, a U.S. federal statute, prevents or preempts U.S. states from regulating the sale of certain securities, which are referred to as “covered securities.” The Class A Ordinary Shares and Warrants are listed on Nasdaq and are therefore covered securities. Although the states are preempted from regulating the sale of Satellogic’s securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case. While Satellogic is not aware of a state, other than the State of Idaho, having used these powers to prohibit or restrict the sale of securities issued by blank check companies, certain state securities regulators view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the sale of securities of blank check companies in their states. Further, if Satellogic was not listed on Nasdaq, its securities would not be covered securities and it would be subject to regulation in each state in which it offers its securities.
A market for Satellogic’s securities may not continue, which would adversely affect the liquidity and price of Satellogic’s securities.
The price of Satellogic’s securities may fluctuate significantly due to the market’s reaction to the Business Combination and general market and economic conditions. An active trading market for Satellogic’s securities may never develop or, if developed, it may not be sustained. In addition, the price of Satellogic’s securities can vary due to general economic conditions and forecasts, Satellogic’s general business condition and the release of Satellogic’s financial reports. Additionally, if its securities are not listed on, or become delisted from, Nasdaq for any reason, and are quoted on the OTC Bulletin Board, an inter-dealer automated quotation system for equity securities that is not a national securities exchange, the liquidity and price of its securities may be more limited than if it were quoted or listed on Nasdaq or another national securities exchange. Shareholders may be unable to sell their securities unless a market can be established or sustained.
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Risks for any holders of the Public Warrants.
Satellogic may redeem the Public Warrants prior to their exercise at a time that is disadvantageous to a holder thereof, thereby significantly impairing the value of such warrants. Satellogic will have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of the Class A Ordinary Shares equals or exceeds $13.50 per share (as adjusted for share sub-divisions, share capitalizations, reorganizations, recapitalizations and the like) for any 20 Trading Days within a 30 Trading Day period ending on the third Trading Day prior to the date on which a notice of redemption is sent to the warrant holders. Satellogic will not redeem the warrants as described above unless a registration statement under the Securities Act covering the Class A Ordinary Shares issuable upon exercise of such warrants is effective and a current registration statement relating to those Class A Ordinary Shares is available throughout the 30-day redemption period. If and when the Public Warrants become redeemable by Satellogic, if Satellogic has elected to require the exercise of Public Warrants on a cashless basis, Satellogic will not redeem the warrants as described above if the issuance of Class A Ordinary Shares upon exercise of Public Warrants is not exempt from registration or qualification under applicable state securities laws or Satellogic is unable to effect such registration or qualification. Redemption of the outstanding Public Warrants could force a holder (i) to exercise its Public Warrants and pay the exercise price therefor at a time when it may be disadvantageous for such holder to do so, (ii) to sell its Public Warrants at the then-current market price when the holder might otherwise wish to hold its Public Warrants, or (iii) to accept the nominal redemption price which, at the time the outstanding Public Warrants are called for redemption, is likely to be substantially less than the market value of the Public Warrants. The closing price for the Class A Ordinary Shares as of April 4, 2022 was $9.25 and has never exceeded the $13.50 threshold that would trigger the right to redeem the Public Warrants.
The market price of the Company’s securities may decline.
Fluctuations in the price of the Company’s securities could contribute to the loss of all or part of a shareholder’s investment. Currently, the public market for the Company’s securities is nascent. As an active market for the Company’s securities develops, the trading price of the Company’s securities could be volatile and subject to wide fluctuations in response to various factors, some of which are beyond the Company’s control. Any of the factors listed below could have a material adverse effect on an investment in the Company’s securities and the Company’s securities may trade at prices significantly below the price paid for them. In such circumstances, the trading price of the Company’s securities may not recover and may experience a further decline.
Factors affecting the trading price of the Company’s securities may include:
actual or anticipated fluctuations in the Company’s quarterly financial results or the quarterly financial results of companies perceived to be similar to it;
changes in the market’s expectations about the Company’s operating results;
success of competitors;
the Company’s operating results failing to meet the expectation of securities analysts or investors in a particular period;
changes in financial estimates and recommendations by securities analysts concerning the Company or the industries in which the Company operates;
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operating and share price performance of other companies that investors deem comparable to the Company;
the Company’s ability to market new and enhanced products and technologies on a timely basis;
changes in laws and regulations affecting the Company’s business;
the Company’s ability to meet compliance requirements;
commencement of, or involvement in, litigation involving the Company;
changes in the Company’s capital structure, such as future issuances of securities or the incurrence of additional debt;
the volume of Class A Ordinary Shares available for public sale;
any major change in the Board or management;
sales of substantial amounts of Ordinary Shares by the Company’s directors, executive officers or significant shareholders or the perception that such sales could occur; and
general economic and political conditions such as recessions, interest rates, international currency fluctuations and acts of war or terrorism.
Broad market and industry factors may materially harm the market price of the Company’s securities irrespective of the Company’s operating performance. The stock market in general, and Nasdaq in particular, have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of the Company’s securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to the Company could depress the Company’s share price regardless of the Company’s business, prospects, financial conditions or results of operations. A decline in the market price of the Company’s securities also could adversely affect the Company’s ability to issue additional securities and the Company’s ability to obtain additional financing in the future.
Failure to maintain effective internal controls over financial reporting could have a material adverse effect on Satellogic’sour business, operating results and stock price.
Satellogic’sordinary shares.
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equity securities pursuant to an effective registration statement. If such an evaluation were performed, control deficiencies could be identified by Satellogic’sour management, and those control deficiencies could also represent one or more material weaknesses. In addition, Satellogicwe cannot predict the outcome of this determination and whether Satellogicwe will need to implement remedial actions in order to implement effective control over financial reporting. If in subsequent years Satellogic iswe are unable to assert that Satellogic’sour internal control over financial reporting is effective, or if Satellogic’sour auditors express an opinion that Satellogic’sour internal control over financial reporting is ineffective, Satellogicwe may fail to meet the future reporting obligations in a timely and reliable manner and itsour financial statements may contain material misstatements. Any such failure could also adversely cause Satellogic’sour investors to have lesslose confidence in the accuracy and completeness of itsour financial reports, which could have a materialmaterially adverse effect on the price of Satellogic’sour securities.
Satellogic is
Satellogic is
Satellogic
Satellogic
Satellogic is
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Satellogic’sOur corporate affairs are to a large extent governed by itsour Memorandum and Articles of Association, the BVI Act, and the common law of the BVI. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of Satellogic’sour directors to itus under BVI law are to a large extent governed by the BVI Act and the common law of the BVI. The common law of the BVI is derived from English common law, and the
•the U.S. court issuing the judgment had jurisdiction in the matter and Satellogicwe either submitted to such jurisdiction or was resident or carrying on business within such jurisdiction and was duly served with process;
•the judgment given by the U.S. court was not in respect of penalties, taxes, fines or similar fiscal or revenue obligations of Satellogic;
•in obtaining judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of the U.S. court;
•recognition or enforcement of the judgment in the BVI would not be contrary to public policy; and
•the proceedings pursuant to which the judgment was obtained were not contrary to natural justice.
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BVI courts are also unlikely:
to •recognize or enforce judgments against Satellogicus of U.S. courts of the United States based on certain civil liability provisions of U.S. securities laws; and
to •impose liabilities against Satellogicus in original actions brought in the BVI, based on certain civil liability provisions of U.S. securities laws that are penal in nature.
company.
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As a foreign private issuer, Satellogic iswe are exempt from a number of U.S. securities laws and rules promulgated thereunder and isare permitted to publicly disclose less information than U.S. public companies must. This may limit the information available to holders of theour Class A Ordinary Shares.
Satellogic qualifiesordinary shares.
Satellogic may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses. This would subject Satellogic to U.S. GAAP reporting requirements which may be difficult for it to comply with.
As a “foreign private issuer,” Satellogic is not be required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. Under those rules, the The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter, and, accordingly, the next determination will be made with respect to Satellogicour foreign private issuer status on June 30, 2022.
2023.
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directors, it willwe are not be required to have a compensation committee, it willwe are not be required to have a nominating and corporate governance committee composed entirely of independent directors and it iswe are not required to obtain shareholderstockholder approval of equity incentive plans. To the extent Satellogic elects toSo long as we take advantage of these foreign private issuer exemptions, shareholdersour stockholders will not have the same protections afforded to shareholdersstockholders of companies that are subject to all the Nasdaq corporate governance standards. Also, Satellogic would be required to change its basis of accounting from IFRS as issued by the IASB to U.S. GAAP, which may be difficult and costly for it to comply with. If Satellogic loses itswe lose our foreign private issuer status and failsfail to comply with U.S. securities laws applicable to U.S. domestic issuers, Satellogicwe may have to de-listdelist from Nasdaq and could be subject to investigation by the SEC, Nasdaq and other regulators, among other materially adverse consequences.
If Satellogic elects to take advantage of these exemptions, shareholders will not have the same protections afforded to shareholders of companies that are subject to all the Nasdaq corporate governance standards.
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If the Company iswe are treated as a PFIC in any taxable year in which a U.S. holder holds our Class A Ordinary Sharesordinary shares or Warrants to acquire our Class A Ordinary Shares,ordinary shares, the U.S. holder may be subject to adverse U.S. federal income tax consequences, such as taxation at the highest marginal ordinary income tax rates on capital gains and on certain actual or deemed distributions, interest charges on certain taxes treated as deferred, and additional reporting requirements. See “Material Tax Considerations—Item 10. Additional Information—E. Taxation—U.S. Federal Income Tax Considerations—Taxation—U.S. Holders—Passive Foreign Investment Company Rules.” U.S. holders of our Class A Ordinary Sharesordinary shares and Warrants to acquire our Class A Ordinary Sharesordinary shares should consult with their tax advisors regarding the potential application of these rules.
If a United States person is treated as owning at least 10%
If a United States person (as defined in the Code) is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of the Company’s shares, such person may be treated as a “United States shareholder” with respect to the Company. If United States shareholders own more than 50% of the value or voting power of the Company’s shares, then the Company will be considered a controlled foreign corporation. Additionally, as a result of complex attribution rules, a direct or indirect subsidiary of the Company may be considered a “controlled foreign corporation” and a United States shareholder of the Company may be subject to the controlled foreign corporation rules with respect to such the Company subsidiary even if the Company itself is not a controlled foreign corporation.
A United States shareholder of a controlled foreign corporation may be required to report annually and include in its U.S. taxable income its pro rata share of the controlled foreign corporation’s “Subpart F income” and (in computing its “global intangible low-taxed income”) “tested income” and a pro rata share of the amount of U.S. property (including certain stock in U.S. corporations and certain tangible assets located in the United States) held by the controlled foreign corporation regardless of whether such controlled foreign corporation makes any distributions. Failure to comply with these reporting obligations (or related tax payment obligations) may subject such United States shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such United States shareholder’s U.S. federal income tax return for the year for which reporting (or payment of tax) was due from starting. An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation.
The Company cannot provide any assurances that it will assist holders in determining whether it, or any of its non-U.S. subsidiaries, are treated as a controlled foreign corporation or whether any holder is treated as a United States shareholder with respect to any of such controlled foreign corporations or furnish to any holder information that may be necessary to comply with reporting and tax paying obligations.
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The Company was
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Nettar is the holding company of the Satellogic Group prior to the Merger and was incorporated on October 7, 2014, under the laws of the BVI as an International Business Company.
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Prior to
References in this section to “we”, “our”, “us”,our warrants began trading on Nasdaq under the “Company”, or “Satellogic” generally refer to Nettar Group Inc. (d/b/a Satellogic) before consummation of the ticker symbol "SATLW".
Overview
The Company’s
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We have created a highly scalable, vertically integrated and competitive operating model. We design the core components that go into creatingdeveloping and manufacturing our satellites to be mission specific. We manufacture many of our components, but we also partner with third parties to manufacture certain other components to our design specifications. We then assemble, integrate and test the components and satellites in our facilities. This vertical integration provides a significant cost advantage, enabling us to produce and launch satellites for less than one-tenth the cost of our competitors on average. Additionally, we own all our key intellectual property, and our patented technology allows us to capture approximately 10 times10x more imagery than our competitors on average. Taken together, we are achieving over 60 times60x better unit economics than our closest peers in the NewSpace sector and more than 100 times100x better unit economics than legacy competitors. We believe that our unit economics will unlock an estimated $140 billion total addressable market (“TAM”) opportunity for EO commercial applications that we are positioned to serve. Additionally, we are well-positioned to compete effectively compete in the existing EO market that is currently supply-constrained and consists primarily of government and defense and intelligenceD&I customers.
With more than a decade of experience, At December 31, 2022, we have a proven technology and a track record of delivering satellites to orbit. Currently, we have 22had 26 commercial satellites in orbit, 17which has increased to 34 as of whichthe date of this report as a result of the successful launches of four additional satellites on January 2, 2023 and April 14, 2023, respectively. Of our 34 satellites in orbit as of the date of this report, 29 are presently delivering high- resolution datamultispectral imagery and/or hyperspectral imagery, four are in the process of being commissioned and one is used for testing. Over the near term, we will take a measured approach to our customers. We plan to expandexpanding our constellation, with our long term vision to reach a constellation size of approximately 200 satellites and to 202 by 2025have the capability to conduct daily remaps of the entire planet.
geography is as follows:
Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenue by geography (1) | |||||||||||
Asia Pacific | $ | 1,531 | $ | 3,988 | |||||||
North America | 3,438 | 201 | |||||||||
Other | 1,043 | 58 | |||||||||
Total revenue | $ | 6,012 | $ | 4,247 |
The Company plans
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•Leverage the existingexpertise in low-cost manufacturing of EO satellites for sale into high-growth government markets across Asia, Africa, Middle East and defense and intelligence market to help finance the constellation build-out.
•Expand the high resolution EO market and democratize access to data for the commercial market.
•Continue investment in R&D to innovate product offerings and satellite re-design.
•Leverage our modular satellite design, multiple-payload systems, scaled manufacturing and satellite operations to deliver novel data streams and services from orbit.
•Execute strategic acquisitions and partnerships related to new, complimentary or adjacent technologies as well as continued vertical integration within our existing supply chain.
For additional detail, see Item 4.A “Commercial Platforms”.
AcquiringD&I)
The Company is
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Space Systems, our new line of business which we believe presents a substantial growth opportunity, is designed to enable us to sell our satellites directly to select customers to whom satellite ownership is important. We believe our strong intellectual property and technology portfolio, fast build-to-launch cycles, and lower cost of ownership, provides an attractive offer for our customers looking to increase their in-orbit capacity quickly, or for customers looking to build an inventory of assets to lower response times in the face of an emergency. Although this new line of business has inherent risks as discussed in Item 3.D “Risk Factors,” we believe that Space Systems will enhance our ability to effectively compete in the existing EO market.
The Company haslong-term.
•Monitoring hydroelectric plants in high frequency to build predictive models of energy output as well as drainage in the reservoir from the surrounding basin
•Oil field and pipeline monitoring
•Precision agriculture
•Supply chain management (agriculture)
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•Tree counting (forestry)
•Crop management (agriculture & forestry)
•Planning for renewable energy projects
•Precise estimation of commodities output
•Yield prediction and harvesting (agriculture & forestry)
•Energy output
•Geospatial risk modeling (e.g., flood, drought, fire, environmental)
•Real time impact assessment, disaster management and claims estimation (e.g., storm damage, earthquakes, forest fires, oil spills, etc.)
•Real time planetary health
•Sea level, temperature and acidity
•Fractures in polar ice caps
•Global temperature
•Water distribution
Illegal•Monitoring illegal activities (e.g., deforestation, mining, poaching, smuggling, etc.)
The $140 billion TAM that we have identified is comprised of the following:
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We plan to deliver our commercial data through our self-service platform throughand other third-party platforms via a subscription that reflects the end use of the data (vertical) and intrinsic value (geography, freshness) of the geographic location,data, bundling analytics-ready data with vertical-specific semantic layers to enable quick integration of the data into our customers’ and partners’ processes, thereby enabling fastfaster adoption. We believe this strategy will allow customers to quickly advance their own geospatial analytics capacity by leveraging a productized version of our data layers and data platform. Beyond raw imagery data and other sources of data that we can collect from our satellites, we are building a catalog of geospatial layers from other sources, and processing and augmenting all of these to produce a growing set of derived layers, with increasing complexity and value-add, that are made available as data-services to our customers. We have developed our own internal data analytics platform which allowsOur approach will allow us, our partners and customers to prototype and iterate on geospatial AI/Machine Learning models trained on our unique datasets, and then quickly roll out results into production systems. We intend to productizecommercialize this platform and allow clients to use it to address their needs on their own.
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•Owning the design to manufacturing helps eliminate third-party cost
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•In-orbit operations
•Utilize third-party ground station infrastructure to reduce costs
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•Imagery and Solutions commercialization
•Use internal data science capabilities to transform images into insights
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among these agencies.
As our capacity in orbit increases, we plan to launch a full self-serve platform and start complementing our direct and partner sales with SaaS growth strategies, generating and driving customer leads directly to the platform and launching our subscription business.
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In November 2021, we entered into a 5-yearfive-year noncancellable agreement with a technology company that requires the customer to purchase a minimum of $4.0 million of multispectral, hyperspectral, full-motion video and private delivery uplift products each year. The customer pays us in non-cash consideration in the form of a license to a proprietary
service.
United States. Certain aspects of our manufacturing activities require relatively scarce raw materials or specialty component parts; occasionally, we have experienced difficulty in our ability to procure raw materials, components, sub-assemblies and other supplies required in our manufacturing processes. We bear some risk of supply chain delivery issues and price increases on account of the structure of our vendor contracts.
schedule upcoming satellite launches.
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Our success depends in part upon our ability to protect our core technology and intellectual property. To protect our proprietary rights and technology, we rely on a combination of different types of intellectual property rights including patents, trademarks and trade secret laws,secrets, and confidentiality agreements and license agreements with consultants, vendors and customers. As of the date of this Report, we have 1926 issued patents, issued, 2two utility models and 46 patents43 pending patent applications in 10nine jurisdictions. We continue to invest in R&Dresearch and development to design, manufacture and fly new technology to orbit in every new satellite we launch, and we complete every new satellite design on a full design cycle of nine months. We drive technology R&D with the goal of maintaining our high-resolution imaging satellites in a Moore’s law equivalent curve: roughly doubling capacity every 18 months at the same price point.
approximately 200.
SATELLITE NAME | SATELLITE GENERATION | LAUNCH DATE | PAYLOADS* | STATUS | ||||||||||||||||||||||||||||||||||
NewSat-6 | Mark IV-a | Sep 2, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-7 | Mark IV-a | Jan 15, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-8 | Mark IV-b | Jan 15, 2020 | MS, HS, IoT | Operative | ||||||||||||||||||||||||||||||||||
NewSat-9 | Mark IV-b | Nov 6, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-10 | Mark IV-b | Nov 6, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-11 | Mark IV-b | Nov 6, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-12 | Mark IV-c | Nov 6, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-13 | Mark IV-c | Nov 6, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-14 | Mark IV-c | Nov 6, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-15 | Mark IV-c | Nov 6, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-16 | Mark IV-c | Nov 6, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-17 | Mark IV-c | Nov 6, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-18 | Mark IV-c | Nov 6, 2020 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-19 | Mark IV-e | Jun 30, 2021 | MS, HS | Testing | ||||||||||||||||||||||||||||||||||
NewSat-20 | Mark IV-e | Jun 30, 2021 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-21 | Mark IV-e | Jun 30, 2021 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-22 | Mark IV-e | Jun 30, 2021 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-23 | Mark IV-g | Apr 1, 2022 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-24 | Mark IV-g | Apr 1, 2022 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-25 | Mark IV-g | Apr 1, 2022 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-26 | Mark V-a | Apr 1, 2022 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-27 | Mark IV-g | Apr 1, 2022 | MS, HS, HP | Operative | ||||||||||||||||||||||||||||||||||
NewSat-28 | May 25, 2022 | MS, HS | Operative | |||||||||||||||||||||||||||||||||||
NewSat-29 | Mark IV-g | May 25, 2022 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-30 | Mark IV-g | May 25, 2022 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-31 | Mark IV-g | May 25, 2022 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-32 | Mark IV-g | Jan 3, | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-33 | Mark IV-g | Jan 3, 2023 | MS, HS, HP | Operative | ||||||||||||||||||||||||||||||||||
NewSat-34 | Mark IV-g | Jan 3, 2023 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-35 | Mark V-b | Jan 3, 2023 | MS, HS | Operative | ||||||||||||||||||||||||||||||||||
NewSat-36 | Mark IV-h | Apr 14, 2023 | MS, HS | Commissioning | ||||||||||||||||||||||||||||||||||
NewSat-37 | Mark IV-h | Apr 14, 2023 | MS, HS | Commissioning | ||||||||||||||||||||||||||||||||||
NewSat-38 | Mark IV-h | Apr 14, 2023 | MS, HS | Commissioning | ||||||||||||||||||||||||||||||||||
NewSat-39 | Mark IV-h | Apr 14, 2023 | MS, HS | Commissioning |
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Human Capital
As of December 31, 2021, the Company had 327 full-time employees, distributed across 13 countries. We have always focused on attracting and retaining the best talent, regardless of geography, and with the highest possible cultural alignment. Our geographically distributed nature is a core tenet that reaches back to the earliest days of our company; well in advance of COVID-19 that required many employers to react and respond to remote working environments. Our diverse group of employees earnestly shares these common values:
Get it done. Our relentless commitment to hold ourselves accountable and deliver true value.
Be purpose driven. Our intrinsic motivation to make the impossible possible.
Never stop learning. Being intellectually curious, open-minded, and learning from others.
Push the limits. Challenge the status quo, leave your comfort zone and tackle impossible challenges.
Go beyond ego. Be humble, honest, empathetic and build together for our company, our community and our planet.
At our company, these values precede traditional performance measures when assessing a person’s fit with the company. Our vision inherently challenges conventions, and thus requires a special kind of spirit not only to succeed, but even to take on these challenges in the first place. This approach to human capital has enabled us to grow while keeping our core spirit and sense of purpose throughout the twists and turns of our life cycle.
We are committed to developing all of our people in different dimensions, including programmatic leadership, people leadership, business leadership and technological leadership. We actively promote a trust-based organization and a safe environment for risk taking by providing effective mentorship and expecting people to “disagree and commit”.
During the early years of our company, the founders and the senior leaders were the torchbearers of these values and culture, but our expectation is that every leader, which is to say every employee, subscribes to and lives by these values every day.
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Long Term Growth Opportunities
•Complete, low-cost satellite bus
•Modular satellite architecture
•High-throughput satellite manufacturing
•Satellite operations at scale
•Multi-payload, in-orbit platform
•Inter-satellite laser mesh
•LEO/MEO/GEO complementarity
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The FAA
The Company
licenses.
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Interagency Review
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Name | Principal activities | Country of incorporation | ||||||||||||
Urugus S.A. | Manufacturing, assembly, integration, test and exports | Uruguay | ||||||||||||
Nettar Group | Intermediate holding company | B.V.I. | ||||||||||||
Nettar S.A. | Intermediate holding company | Uruguay | ||||||||||||
Telluric Ltd. | Research and development (image analytics and user interfaces) | Israel | ||||||||||||
Satellogic V. Inc. | Intermediate holding company | United States | ||||||||||||
Satellogic USA, Inc. (1) | Finance, sales and marketing, product strategy and business development | United States | ||||||||||||
Satellogic S.A. (2) | Research and development, administration, back office services (accounting) and prototype-building | Argentina | ||||||||||||
Satellogic Solutions S.L. (2) | Research and development (data science solutions and machine learning over the satellite images) | Spain | ||||||||||||
Satellogic China, LTD (3) | Sales and marketing | China | ||||||||||||
Satellogic China Beijing Branch (4) | Sales and marketing | China | ||||||||||||
Satellogic North America LLC (5) | Sales and marketing | United States | ||||||||||||
Satellogic Netherlands B.V. (6) | High-throughput plant (on hold) | The Netherlands |
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See Note 19 (Subsidiaries Group.
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Not applicable.
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Nettar’sour financial condition and results of operations should be read in conjunction with Nettar’sour financial statements and notes to those statements included in this Registration Statement.Report. This discussion contains forward-looking statements that involve risks and uncertainties. Please see “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in this Registration Statement. Unless otherwise indicated or the context otherwise requires, references in this section to “we,” “our,” “us,” “the Company” and similar terms are to Nettar Group Inc. (d/b/a Satellogic) before the Business Combination.Company OverviewThe Company’s predecessor in interest was founded in 2010 and the Company was founded in 2014, to help solve some of the greatest challenges of our time: resource utilization and distribution. From tradeoffs between food, energy and water supplies, to monitoring the impact of natural disasters, global health and humanitarian crises in the midst of a looming climate emergency, access to a continually refreshed source of global, high-quality data is critical to confronting some of the world’s most crucial issues. We are committed to creating a searchable catalog of everything on earth, and we believe we are uniquely positioned to provide the data that is critical to better inform decision-making aimed at addressing these challenges.We are the first vertically integrated geospatial analytics company, and we are building the first scalable, fully automated earth observation (“EO”) platform with the ability, when scaled, to remap the entire planet at both high-frequency and high-resolution, providing accessible and affordable solutions for our customers. We plan to democratize access to geospatial data by providing planetary insights at what we believe to be the lowest cost in the industry, ultimately driving better decision-making across a broad range of industries including agriculture, forestry, energy, financial services, and cartography.We have created a highly scalable, vertically integrated and competitive operating model. We design the core components that go into creating and manufacturing our satellites to be mission specific. We manufacture many of our components, but we also partner with third parties to manufacture certain other components to our design specifications. Then, we assemble, integrate and test the components and satellites in our facilities. This vertical integration provides a significant cost advantage, enabling us to produce and launch satellites for less than one-tenth the cost of our competitors on average. Additionally, we own all our key intellectual property, and our patented technology allows us to capture approximately 10x more imagery than our competitors on average. Taken together, we are achieving over 60 times better unit economics than our closest peers in the NewSpace sector and more than 100 times better unit economics than legacy competitors. Additionally, we are well-positioned to effectively compete in the existing EO market that is currently supply-constrained and consists primarily of government and defense and intelligence customers.With more than a decade of experience, we are a proven technology and have a track record of delivering satellites to orbit. Currently, we have 22 commercial satellites in orbit, 17 of which are presently delivering high-resolution data to our customers. We plan to expand our constellation of satellites to 202 by 2025 and we anticipate reaching weekly remaps of the planet by 2023 and daily remaps in 2025.Description of Business CombinationOn the Closing Date the Company, consummated the Business Combination contemplated by the Merger Agreement. Specifically,Target Merger Sub merged with and into Nettar, the separate existence of Target Merger Sub ceased and Nettar was the surviving company of such merger and became a direct, wholly-owned subsidiary of the Company;
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immediately following confirmation of the effective filing of the Initial Merger, CF V merged with and into SPAC Merger Sub, the separate existence of SPAC Merger Sub ceased and CF V was the surviving corporation of such merger and became a direct wholly owned subsidiary of the Company;
the single share of the Company outstanding immediately prior to the Mergers was cancelled for no consideration;
as a result of the Initial Merger, the ordinary shares and preference shares of Nettar that were issued and outstanding immediately prior to the effective time of the Initial Merger (other than (i) any treasury shares or share held by the Company or any of its affiliates and (ii) any dissenting shares) were automatically cancelled and ceased to exist in exchange for (x) in the case of the Company’s Chief Executive Officer, Emiliano Kargieman, such number of newly issued Class B Ordinary Shares, of the Company and (y) in all other cases, Class A Ordinary Shares of the Company, as determined in the Merger Agreement;
as a result of the CF V Merger, each CF V Unit issued and outstanding immediately prior to the effective time of the CF V Merger (the “CF V Merger Effective Time”) was automatically separated and the holder thereof was deemed to hold one share of CF V Class A Common Stock and one-third of one CF V Warrant and, immediately following the separation of each CF V Unit, (a) each share of CF V Class B Common Stock automatically converted into one share of CF V Class A Common Stock (the “Initial Conversion”) and (b) immediately following the Initial Conversion, each share of CF V Class A Common Stock that was issued and outstanding immediately prior to the CF V Merger Effective Time (other than any treasury share held by CF V or share held by any subsidiary of CF V), was cancelled and ceased to exist in exchange for the right to receive Class A Ordinary Shares in accordance with the Merger Agreement;
each CF V Warrant outstanding immediately prior to the CF V Merger Effective Time was assumed by the Company and converted into a warrant exercisable for that number of Class A Ordinary Shares as determined in accordance with the Merger Agreement;
all Convertible Notes of Nettar converted into Nettar Preference Shares as determined in accordance with the Merger Agreement;
all Nettar Preference Shares outstanding immediately prior to the effective time of the Initial Merger (other than dissenting shares) were converted into a number of Class A Ordinary Shares as determined in the Merger Agreement;
all options to purchase ordinary shares of Nettar were assumed by the Company and became options to purchase Class A Ordinary Shares as determined in accordance with the Merger Agreement;
the Columbia Warrants outstanding immediately prior to the effective time of the Initial Merger was assigned to Satellogic and became a warrant exercisable for that number of Class A Ordinary Shares as determined in accordance with the Merger Agreement;
All Class A Ordinary Shares purchased by the PIPE Subscribers pursuant to the PIPE Subscription Agreements (except those 1,150,000 Class A Ordinary Shares which certain PIPE Subscribers elected to offset their subscription requirements with CF V Class A Common Stock) were issued to the PIPE Subscribers; and
2,500,000 PIPE Warrants were issued to a certain PIPE Subscriber.
Prior to the Closing, in connection with the expected vote to approve the Business Combination Proposal at CF V’s Special Meeting, certain shareholders of CF V exercised their right to redeem 23,143,646 shares of CF V Class A Common Stock for cash at a redemption price of approximately $10.00 per share, for an aggregate redemption amount of approximately $231.4 million (the “Redemption Amount”). After payment of the Redemption Amount, approximately $18.6 million remained in the Trust Account for distribution to the Company at Closing. Given the Redemption Amount, the Company entered into the Liberty Investment as described below which resulted in additional proceeds of $150 million to the Company.
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Contemporaneously with the execution of the Merger Agreement, CF V and the Company entered into Subscription Agreements with the PIPE Investors (including the Sponsor), pursuant to which the PIPE Investors agreed to subscribe for and purchase, and CF V and the Company agreed to sell to the PIPE Investors, an aggregate of 6,966,770 Class A Ordinary Shares, for a purchase price of $10.00 per share and an aggregate purchase price of $69.7 million, with the Sponsor’s Subscription Agreement accounting for approximately $23.2 million of the purchase price. Pursuant to the Subscription Agreements, the Non-redeeming Subscribers (other than the Sponsor) elected to offset their commitment to purchase Class A Ordinary Shares by the number of shares of CF V Class A Common Stock they then held and, among other things, agreed not to redeem. The Non-redeeming Subscribers collectively held 1,150,000 shares of CF V Class A Common Stock which reduced the number of Class A Ordinary Shares issued and sold to the PIPE Investors on the Closing Date to 5,816,770 and the aggregate proceeds to the Company from the PIPE Investment to $58.2 million.
Sponsor, CF V and the Company entered into the Amended and Restated Forward Purchase Contract, pursuant to which the Sponsor agreed to purchase, and the Company agreed to issue and sell to the Sponsor, 1,250,000 Class A Ordinary Shares (subject to adjustment), and 333,333 Warrants, which transaction closed on the Closing Date.
At the Closing, pursuant to the relevant Subscription Agreement, the Company issued a non-redeemable warrant to purchase 2,500,000 Class A Ordinary Shares to a PIPE Investor at an exercise price of $20.00 per shares. In exchange, the PIPE Investor agreed to a two-year lock-up with respect to all of its Class A Ordinary Shares issued pursuant to the PIPE. Like the Warrants, the PIPE Warrant became exercisable 30 days after the Closing Date or February 25, 2022 and will expire 5 years after the Closing Date (January 25, 2027), or earlier upon redemption or liquidation.
None of the Subscription Agreements, Amended and Restated Forward Purchase Contract nor any other agreement provides any investor with the right to sell back shares to the Company after the Closing Date.
Description of Liberty Investment
On January 18, 2022, the Company and CF V entered into the Liberty Subscription Agreement with the Liberty Investor, pursuant to which the Liberty Investor agreed to purchase, and the Company agreed to issue and sell to the Liberty Investor, following satisfaction or waiver of the conditions in the Liberty Subscription Agreement, certain securities of the Company, including (i) 20,000,000 Liberty Shares, (ii) 5,000,000 $10.00 Liberty Share Warrants, and (iii) 15,000,000 $15.00 Liberty Warrants in a private placement for an aggregate purchase price of $150.0 million. The Liberty Share Warrants are exercisable as and from the Liberty Closing, will expire on the fifth anniversary of the Liberty Closing (February 10, 2027) and are subject to the terms and conditions set out in the Liberty Warrant Agreement attached as Exhibit 10.18 hereto.
The Liberty Closing occurred on February 10, 2022.
In connection with the Liberty Investment the Company has agreed to provide the Liberty Investor with the same registration rights with respect to the Liberty Securities (as defined below) as the Company provided to the PIPE Investors in the PIPE Subscription Agreements, including “demand” registration rights that require the Company to register under the Securities Act the Class A Ordinary Shares and Liberty Share Warrants held or acquired by Liberty. The “Liberty Securities” means the Liberty Shares, the Liberty Share Warrants, and the Class A Ordinary Shares issuable upon exercise of the Liberty Share Warrants.
The Liberty Investor has agreed to subject the Liberty Securities (other than the Liberty Advisory Fee Warrants or any shares issuable in respect thereof) to transfer restrictions until January 25, 2023.
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Liberty Letter Agreement
Contemporaneously with the closing of the Liberty Investment, the Company, Liberty and the Sponsor entered into the Liberty Restated Letter Agreement. The parties to the Liberty Restated Letter Agreement have agreed that for so long as a Cessation Event (as defined in the Liberty Restated Letter Agreement, i.e., if the Liberty Investor (or affiliates managed by the Liberty Manager or its affiliates) cease to hold, in the aggregate, at least 6,666,666 Class A Ordinary Shares) has not occurred, among other things:
the Liberty Investor has the right to nominate two Liberty Directors (including any successors) for election to the Board by the Company’s shareholders, which director nominees must be reasonably acceptable to the Company. In this regard, the parties have further agreed that:
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in addition to the Liberty Directors, the Board will initially include Ted Wang, Brad Halverson, and another person designated by Mr. Kargieman who is reasonably acceptable to the Liberty Investor, and in compliance with NASDAQ listing requirements;
the Liberty Investor has the right to nominate one Liberty Director to serve on each committee of the Board, subject to certain conditions;
for so long as Mr. Kargieman and his affiliates beneficially own at least one-third of the number of shares of the Company owned by him on the date of the Closing (subject to customary adjustments for corporate events), Mr. Kargieman will have the right to designate two directors for election to the Board by the Company’s shareholders, one of whom will be Mr. Kargieman and the other shall be reasonably acceptable to the Liberty Investor and the Sponsor, who will initially be Marcos Galperin, and the Sponsor and the Liberty Investor will vote any shares held by them in favor of the election of such persons; and
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for so long as the Sponsor and its affiliates beneficially own at least one-third of the number of shares of the Company owned by them on the date of the Closing (subject to customary adjustments for corporate events), Mr. Lutnick will be nominated for election by the Board to the Company’s shareholders and Mr. Kargieman and the Liberty Investor will vote any shares held by them in favor of the election of Mr. Lutnick.
In addition, so long as Class B Ordinary Shares are outstanding, the Company will be required to obtain the written consent of the Liberty Investor if it were to issue in a transaction, or series of transactions, a number of shares that equals or exceeds 20% of its then-outstanding ordinary shares on a fully diluted basis (assuming exercise of all options and warrants of the Company); provided that no such consent shall be required if such issuance of shares is made in connection with:
any acquisition by the Company of any equity interests, assets, properties, or business of any person;
any merger, consolidation, or other business combination involving the Company;
any transaction or series of related transactions involving a change of control (as defined in the Liberty Letter Agreement); or
any equity split, payment of distributions, or any similar recapitalization.
An advisory fee is payable by the Company to the Liberty Manager in exchange for advisory services to be provided to the Company by the Liberty Manager (whereby the Liberty Investor will cause the Liberty Manager to be reasonably available to advise the Company from time to time until the occurrence of a Cessation Event). The advisory fee payable for such services include:
2,500,000 warrants, each providing the right to purchase one (1) Class A Ordinary Share at an exercise price of $10.00 per share (the “Liberty Advisory Fee Warrants”), which were issued on the Liberty Closing; and
for so long as a Cessation Event has not occurred, $1.25 million to be paid in cash on the eighteen (18) month anniversary of the Liberty Closing and on the last day (or, if not a business day, the immediately following business day) of each of the following five (5) successive three-month anniversaries of such 18-month anniversary (each, an “Advisory Fee Cash Payment” and, together, the “Advisory Fee Cash Payments”), representing aggregate Advisory Fee Cash Payments of up to $7,500,000. From and after a Cessation Event, no Advisory Fee Cash Payments shall be payable by the Company.
The Liberty Advisory Fee Warrants are exercisable as and from the one-year anniversary of, and will expire on the fifth anniversary of, the Liberty Closing (February 10, 2027). The Liberty Advisory Fee Warrants are subject to substantially the same terms the Liberty Share Warrants and the registration rights as they apply to the Liberty Securities pursuant to the Liberty Subscription Agreement also apply to the shares underlying the Liberty Advisory Fee Warrants. For so long as the Liberty Investor or its permitted transferees hold Liberty Share Warrants or Liberty Advisory Fee Warrants, such warrants will not be redeemable by the Company.
In connection with the Liberty Letter Agreement, the Company amended the Company Governing Documents to, among other things, modify the voting rights of the holders of Class B Ordinary Shares from ten votes per share to a number of votes per share such that, as of the Liberty Closing, the aggregate number of votes attributable to the Class B Ordinary Shares is equal to the aggregate number of votes attributable to Class A Ordinary Shares held by the Liberty Investor (subject to certain adjustments).
The Company has reimbursed the Liberty Investor for all reasonable and documented out-of-pocket expenses incurred by it in connection with the transaction contemplated by the Liberty Letter Agreement and the Liberty Subscription Agreement, in the amount of $250,000.
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In connection with the Liberty Restated Letter Agreement, the Company, Mr. Kargieman, Liberty and Sponsor agreed to take action to further modify the rights of the holders of Company Class B Ordinary Shares such that the number of votes attributable to each Company Class B Ordinary Share after giving effect to any forfeitures of Company Class B Ordinary Shares pursuant to Section 2.10 of the Merger Agreement shall equal (x) 20,000,000, divided by (y) (i) 13,662,658, minus (ii) the number of such forfeited Company Class B Ordinary Shares (in no event shall such forfeited shares be more than 651,596 Company Class B Ordinary Shares), but taking into account any adjustment that may have occurred theretofore pursuant to clause 7.2 of the Company’s Memorandum of Association. In the event that any Earnout Shares (as defined in the Merger Agreement) are issued to Mr. Kargieman pursuant to Section 2.11 of the Merger Agreement, the Company, Mr. Kargieman, Liberty and Sponsor agreed to take action to further modify the rights of the holders of Company Class B Ordinary Shares such that the number of votes attributable to each Company Class B Ordinary Share shall be adjusted such that the number of votes attributable to each Company Class B Ordinary Share is reduced in a manner that results in a vote per share as if a number of shares equal to such Earnout Shares had not been forfeited pursuant to Section 2.10 of the Merger Agreement.
Certain information called for by this Item 5, including a discussion of the results of operations for the year ended December 31, 20202021 compared to the year ended December 31, 20192020 has been reported previously in Amendment No. 1 to our final prospectusForm 20-F filed pursuant to Rule 424(b)(3) on November 15, 2021 under the section entitled “The Company’s Management’s Discussion and Analysis of Financial Condition and Results of Operation”May 16, 2022 and is not repeated herein.Such information can be found at https://www.sec.gov/Archives/edgar/data/1874315/000119312521328453/d178511d424b3.htm
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Key Factors Affecting Operating Results
Competitive Advantage
Our competitive advantages revolve around unit economics, design and technology, vertically integrated structure and high frequency remaps.
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We believe that these characteristics—the zero-marginal cost for data distribution, the consolidation of demand on the platform and the network effects on the accumulation of data in our catalog—will uniquely position us to capitalize on the significant total addressable market opportunities.
Growth Strategies
We plan to democratize access to geospatial data by providing planetary insights at what we believe to be the lowest cost in the industry, which we expect will ultimately drive better decision-making across a broad range of industries. Our growth strategy is driven by the following objectives:
Leverage the existing government and defense and intelligence market to help finance constellation build-out.
Expand the high resolution EO market and democratize access to data for the commercial market.
Continue investment in R&D to innovate product offerings and satellite re-design.
Leverage our modular satellite design, multiple-payload systems, scaled manufacturing and satellite operations to deliver novel data streams and services from orbit.
Execute strategic acquisitions and partnerships related to new, complimentary, or adjacent technologies as well as continued vertical integration within our existing supply chain.
Through our two unique and complementary products, existing high resolution EO and its commercial platform, we intend to derive substantially all our near-term revenues from providing geospatial intelligence, imagery and related data analytic products and services to governments, and in the longer-term, intend to expand our operations to serve commercial customers in a variety of markets and industries.
Key Components of Results of Operations
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Basis of Presentation
We are an early-stage revenue company with limited commercial operations, and our activities to date have been conducted in South America, Asia, Europe and North America. Currently, we conduct business through one operating segment. Our historical results are reportedThe Consolidated Financial Statements as of December 31, 2022 and 2021, and for the years ended December 31, 2022, 2021 and 2020 (“the Consolidated Financial Statements”) have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”)U.S. GAAP and the rules and regulations of the SEC. For more information about our basisHistorically the consolidated financial statements were prepared in accordance with IFRS. The change from reporting in IFRS to U.S. GAAP was treated as a change in accounting standard, whereby we retrospectively applied the change to all prior reporting periods. Where the adoption of presentation, see Note 1 (Description of Business and Basis of Presentation)U.S. GAAP resulted in a material change in an asset or liability, the adjustment was reported to the audited Consolidated Financial Statements.
Ouropening balance of accumulated deficit.
, unless stated otherwise.
Administrative
Administrative
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Finance costs, net
Embedded derivative expense
Embedded derivative expense consists of changesremeasurement to fair value at each balance sheet date. Changes in the fair value of these liabilities are recorded to the embedded derivative liabilities.
GainChange in fair value of financial instruments in the Consolidated Statements of Operations and Comprehensive Loss.
Gain
net
Key Financial Performance Indicators
(in thousands of US dollars) | Year Ended December 31, | 2022 vs 2021 | |||||||||||||||||||||||||||
2022 | 2021 | 2020 | $ Change | % Change | |||||||||||||||||||||||||
Revenue | $ | 6,012 | $ | 4,247 | $ | — | $ | 1,765 | 42 | % | |||||||||||||||||||
Costs and expenses | |||||||||||||||||||||||||||||
Cost of sales | 3,284 | 1,876 | — | 1,408 | 75 | % | |||||||||||||||||||||||
General and administrative expenses | 37,191 | 36,640 | 8,003 | 551 | 2 | % | |||||||||||||||||||||||
Research and development | 13,055 | 9,636 | 5,924 | 3,419 | 35 | % | |||||||||||||||||||||||
Depreciation expense | 14,326 | 10,728 | 3,031 | 3,598 | 34 | % | |||||||||||||||||||||||
Other operating expenses | 29,023 | 14,002 | 5,449 | 15,021 | 107 | % | |||||||||||||||||||||||
Total costs and expenses | 96,879 | 72,882 | 22,407 | 23,997 | 33 | % | |||||||||||||||||||||||
Operating loss | (90,867) | (68,635) | (22,407) | (22,232) | 32 | % | |||||||||||||||||||||||
Other income (expense), net | |||||||||||||||||||||||||||||
Finance costs, net | (652) | (9,738) | 35 | 9,086 | (93) | % | |||||||||||||||||||||||
Change in fair value of financial instruments | 58,311 | 17,983 | 9,637 | 40,328 | 224 | % | |||||||||||||||||||||||
Loss on extinguishment of debt | — | (37,216) | (9,240) | 37,216 | (100) | % | |||||||||||||||||||||||
Other income, net | 1,140 | 1,069 | 594 | 71 | 7 | % | |||||||||||||||||||||||
Total other income (expense), net | 58,799 | (27,902) | 1,026 | 86,701 | (311) | % | |||||||||||||||||||||||
Loss before income tax | $ | (32,068) | $ | (96,537) | $ | (21,381) | $ | 64,469 | (67) | % | |||||||||||||||||||
Income tax (expense) benefit | (4,573) | 232 | (148) | (4,805) | (2071) | % | |||||||||||||||||||||||
Net loss | $ | (36,641) | $ | (96,305) | $ | (21,529) | $ | 59,664 | (62) | % |
Year Ended December 31, | 2022 vs 2021 | ||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | 2022 | 2021 | 2020 | $ Change | % Change | ||||||||||||||||||||||||
General and administrative expenses | |||||||||||||||||||||||||||||
Professional fees related to Merger transaction | $ | 11,188 | $ | 16,236 | $ | — | $ | (5,048) | (31) | % | |||||||||||||||||||
Professional fees | 5,453 | 5,466 | 1,684 | (13) | — | % | |||||||||||||||||||||||
Stock-based compensation | 2,968 | 5,274 | 1,235 | (2,306) | (44) | % | |||||||||||||||||||||||
Salaries, wages, and other benefits | 6,250 | 4,432 | 3,377 | 1,818 | 41 | % | |||||||||||||||||||||||
Bad debt expense | 1,736 | 1,794 | — | (58) | (3) | % | |||||||||||||||||||||||
Insurance | 4,613 | 86 | — | 4,527 | 5264 | % | |||||||||||||||||||||||
Other administrative expenses | 4,983 | 3,352 | 1,707 | 1,631 | 49 | % | |||||||||||||||||||||||
Total | $ | 37,191 | $ | 36,640 | $ | 8,003 | $ | 551 | 2 | % |
Year Ended December 31, | 2022 vs 2021 | ||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | 2022 | 2021 | 2020 | Change | % Change | ||||||||||||||||||||||||
Research and development | |||||||||||||||||||||||||||||
Salaries, wages, and other benefits | $ | 6,963 | $ | 6,296 | $ | 4,634 | $ | 667 | 11 | % | |||||||||||||||||||
Stock-based compensation | 1,809 | 1,968 | 382 | (159) | (8) | % | |||||||||||||||||||||||
Professional fees | 968 | 91 | 489 | 877 | 964 | % | |||||||||||||||||||||||
Other research and development expenses | 3,315 | 1,281 | 419 | 2,034 | 159 | % | |||||||||||||||||||||||
Total | $ | 13,055 | $ | 9,636 | $ | 5,924 | $ | 3,419 | 35 | % |
Year Ended December 31, | 2022 vs 2021 | ||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | 2022 | 2021 | 2020 | Change | % Change | ||||||||||||||||||||||||
Other operating expenses | |||||||||||||||||||||||||||||
Salaries, wages, and other benefits | $ | 14,938 | $ | 6,800 | $ | 3,040 | $ | 8,138 | 120 | % | |||||||||||||||||||
Stock-based compensation | 3,590 | 3,639 | 115 | (49) | (1) | % | |||||||||||||||||||||||
Professional fees | 1,966 | 1,310 | 684 | 656 | 50 | % | |||||||||||||||||||||||
Software expenses | 4,504 | — | — | 4,504 | NM | ||||||||||||||||||||||||
Other operating income and expenses | 4,025 | 2,253 | 1,610 | 1,772 | 79 | % | |||||||||||||||||||||||
Total | $ | 29,023 | $ | 14,002 | $ | 5,449 | $ | 15,021 | 107 | % |
Year Ended December 31, | 2022 vs 2021 | ||||||||||||||||||||||||||||
(in thousands of U.S. dollars) | 2022 | 2021 | 2020 | $ Change | % Change | ||||||||||||||||||||||||
Finance costs, net | |||||||||||||||||||||||||||||
Interest expense | $ | (1,596) | $ | (8,729) | $ | (43) | $ | 7,133 | (82) | % | |||||||||||||||||||
Redeemable Series X preferred stock dividends | (97) | (974) | — | 877 | (90) | % | |||||||||||||||||||||||
Other finance costs | (123) | (71) | — | (52) | 73 | % | |||||||||||||||||||||||
Interest income | 1,164 | 36 | 78 | 1,128 | 3133 | % | |||||||||||||||||||||||
Total | $ | (652) | $ | (9,738) | $ | 35 | $ | 9,086 | (93) | % |
Year Ended December 31, | |||||||||||||||||
(in thousands of U.S. dollars) | 2022 | 2021 | 2020 | ||||||||||||||
Net loss | $ | (36,641) | $ | (96,305) | $ | (21,529) | |||||||||||
EBITDA (non-GAAP) | (16,146) | (77,080) | (18,307) | ||||||||||||||
Adjusted EBITDA (non-GAAP) | (56,041) | (31,799) | (17,566) | ||||||||||||||
Net cash used in operating activities | (68,462) | (28,439) | (11,174) | ||||||||||||||
Free Cash Flow | (95,714) | (39,672) | (26,961) |
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The results of certain key business metrics are as follows:
Year Ended December 31, | ||||||||||||
(in thousands of US dollars) | 2021 | 2020 | 2019 | |||||||||
Revenue | $ | 4,247 | $ | — | $ | — | ||||||
Net loss | $ | (117,741 | ) | $ | (113,926 | ) | $ | (20,765 | ) | |||
EBITDA | $ | (95,379 | ) | $ | (103,108 | ) | $ | (12,341 | ) | |||
Adjusted EBITDA | $ | (30,695 | ) | $ | (17,497 | ) | $ | (15,500 | ) | |||
Free cash flow | $ | (38,936 | ) | $ | (26,589 | ) | $ | (22,370 | ) |
Results of Operations
Comparison of Results for the years ended December 31, 2021 and 2020
Results of operations are as follows:
Year Ended December 31, | 2021 vs. 2020 | |||||||||||||||||||
(in thousands of US dollars) | 2021 | 2020 | 2019 | $ Change | % Change | |||||||||||||||
Statement of Profit or Loss Data |
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Revenue | $ | 4,247 | $ | — | $ | — | $ | 4,247 | 100 | % | ||||||||||
Cost of sales | (1,876 | ) | — | — | 1,876 | 100 | % | |||||||||||||
Administrative expenses | (36,649 | ) | (8,127 | ) | (4,324 | ) | 28,522 | 351 | % | |||||||||||
Research and development | (9,640 | ) | (5,879 | ) | (6,372 | ) | 3,761 | 64 | % | |||||||||||
Depreciation expense | (10,825 | ) | (3,182 | ) | (4,238 | ) | 7,643 | 240 | % | |||||||||||
Other operating expenses, net | (14,002 | ) | (5,475 | ) | (5,763 | ) | 8,527 | 156 | % | |||||||||||
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Operating loss | $ | (68,745 | ) | $ | (22,663 | ) | $ | (20,697 | ) | $ | 46,082 | 203 | % | |||||||
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Finance costs, net | (11,769 | ) | (7,488 | ) | (4,103 | ) | 4,281 | 57 | % | |||||||||||
Embedded derivative (expense) income | (42,102 | ) | (84,224 | ) | 4,230 | (42,122 | ) | (50 | %) | |||||||||||
Gain on extinguishment of debt | 3,576 | — | — | 3,576 | 100 | % | ||||||||||||||
Other financial income (expense) | 1,067 | 597 | (112 | ) | 470 | 79 | % | |||||||||||||
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Loss before income tax | $ | (117,973 | ) | $ | (113,778 | ) | $ | (20,682 | ) | $ | 4,195 | 4 | % | |||||||
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Income tax benefit (expense) | 232 | (148 | ) | (83 | ) | (380 | ) | -257 | % | |||||||||||
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Net loss | $ | (117,741 | ) | $ | (113,926 | ) | $ | (20,765 | ) | $ | 3,815 | 3 | % | |||||||
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Revenue
During the year ended December 31, 2021, we began to recognize our first revenue primarily from the selling of our imagery to a single commercial space technology customer in an over-time revenue recognition arrangement. Revenue for the year ended December 31, 2021 increased to $4,247 thousand from zero revenue recognized for the year ended December 31, 2020.
See further discussion in Note 4 (Revenue from Contracts with Customers, Contract Liabilities and Remaining Performance Obligations) to the audited Consolidated Financial Statements.
Cost of sales
Cost of sales increased to $1,876 thousand for the year ended December 31, 2021 from zero cost of sales for the year ended December 31, 2020. The increase in cost of sales was primarily related to the agreement with a commercial space technology company.
Administrative Expenses
Administrative expenses increased $28,522 thousand, or 351%, to $36,649 thousand for the year ended December 31, 2021, compared to $8,127 thousand for the year ended December 31, 2020. The increase was primarily due to $16,263 thousand of professional and legal fees that were incurred during 2021 associated with the Business Combination. See Note 20 (Subsequent Events) to the audited
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Consolidated Financial Statements for more information on the Business Combination. The remaining increase was primarily driven by higher average headcount in 2021 as compared to 2020 which contributed to higher stock-based compensation expense and an increase in salaries and wages. We also recorded bad debt expense of $1,794 thousand related to delayed payments from our commercial space technology customer during the year ended December 31, 2021.
Research and Development Expenses
Research and development expenses increased $3,761 thousand, or 64%, to $9,640 thousand for the year ended December 31, 2021, compared to $5,879 thousand for the year ended December 31, 2020. The increase was driven by higher average headcount in 2021 as compared to 2020 which contributed to higher stock-based compensation expense and an increase in salaries and wages, partially offset by lower professional fees in 2021 as compared to 2020.
Depreciation expense
Depreciation increased $7,643 thousand, or 240%, to $10,825 thousand for the year ended December 31, 2021, compared to $3,182 thousand for the year ended December 31, 2020. The increase was due to the higher number of operating satellites in orbit in 2021 as compared to the previous period.
Other Operating Expenses, net
Other operating expenses, net increased $8,527 thousand, or 156%, to $14,002 thousand for the year ended December 31, 2021, compared to $5,475 thousand for the year ended December 31, 2020. The increase was primarily due to higher average headcount in 2021 as compared to 2020 which contributed to higher stock-based compensation expense and an increase in salaries and wages.
Finance Costs, net
Finance costs, net increased $4,281 thousand, or 57%, to $11,769 thousand for the year ended December 31, 2021, compared to $7,488 thousand for the year ended December 31, 2020. The increase was due to interest expense associated with the dividend for the Nettar Series X Preferred Shares and the issuance of promissory notes, both of which did not have any interest expense in the prior year.
Embedded Derivative Expense
Embedded derivative expense decreased $42,122 thousand, or 50%, to $42,102 thousand for the year ended December 31, 2021, compared to $84,224 thousand of embedded derivative expense for the year ended December 31, 2020. The decrease of expense was primarily driven by a lower increase in the fair value of the bifurcated derivative component (conversion features) of the notes debt and Nettar Series X Preferred Shares compared to the prior year, based on valuation techniques. The change in the fair value was recognized as an expense through the Consolidated Statement of Profit and Loss and Comprehensive Loss. See Note 15 (Financial Instrument Risk) and Note 17 (Debt) to the audited Consolidated Financial Statements for additional details.
Gain on Extinguishment of Debt
On March 8, 2021, we entered into an exchange transaction with a former shareholder. Pursuant to the exchange transaction, the former shareholder exchanged its shares and promissory notes for a loan of $40,089 thousand and issuance of a warrant. We recognized a gain on debt extinguishment of $3,258 thousand in the Consolidated Statement of Profit and Loss and Comprehensive Loss for the year ended December 31, 2021, related to the transaction. See Note 17 (Debt) to the audited Consolidated Financial Statements for additional details.
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In addition, in April 2021 we agreed with our note holders, to extend the maturity dates of the 2018 and 2019 convertible notes with original due dates in April 2021 and September 2021, respectively, to April 2022. We recognized a gain on extinguishment of debt of $318 thousand in the Consolidated Statement of Profit and Loss and Comprehensive Loss for the year ended December 31, 2021, related to the agreement. See Note 17 (Debt) to the audited Consolidated Financial Statements for additional details.
Other Financial Income
Other financial income increased $470 thousand, or 79%, to $1,067 thousand for the year ended December 31, 2021, compared to $597 thousand for the year ended December 31, 2020. The increase was due to foreign currency exchange differences primarily generated by foreign exchange rates effects in operating activities (where expense is denominated in a foreign currency) of the foreign subsidiaries of Nettar.
Income Tax Expense
Income tax expense decreased $380 thousand, or 257%, to a tax benefit of $232 thousand for the year ended December 31, 2021, compared to a tax expense of $148 thousand for the year ended December 31, 2020. The decrease was due to higher stock-based compensation with minimal stock option exercises and the establishment of a bad debt allowance.
Non-IFRSNon-GAAP Financial Measure Reconciliations
EBITDA excludes charges related to finance costs and finance income, income taxes, depreciation and amortization.
Adjusted EBITDA excludes charges related to finance costs and finance income, income taxes, depreciation, amortization, merger-related transaction fees, foreign currency exchange fluctuations, debt extinguishments, changes in the fair value
Free Cash Flow is defined as net cash provided by (used in) operating activities less payments for capital expenditures.
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The following table presents a reconciliation of Non-GAAP EBITDA and Non-GAAP Adjusted EBITDA to itsour net loss for the periods indicated.
Year Ended December 31, | ||||||||||||
(in thousands of US dollars) | 2021 | 2020 | 2019 | |||||||||
Net loss | $ | (117,741 | ) | $ | (113,926 | ) | $ | (20,765 | ) | |||
Plus finance costs, net | 11,769 | 7,488 | 4,103 | |||||||||
Less income tax (benefit) expense | (232 | ) | 148 | 83 | ||||||||
Plus depreciation expense | 10,825 | 3,182 | 4,238 | |||||||||
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EBITDA | $ | (95,379 | ) | $ | (103,108 | ) | $ | (12,341 | ) | |||
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Plus professional fees related to merger transaction | 16,263 | — | — | |||||||||
Less other financial (income) expense | (1,067 | ) | (597 | ) | 112 | |||||||
Less gain on extinguishment of debt | (3,576 | ) | — | — | ||||||||
Plus embedded derivative expense (income) | 42,102 | 84,224 | (4,230 | ) | ||||||||
Plus share-based compensation | 10,962 | 1,984 | 959 | |||||||||
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Adjusted EBITDA | $ | (30,695 | ) | $ | (17,497 | ) | $ | (15,500 | ) | |||
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Year Ended December 31, | |||||||||||||||||
(in thousands of U.S. dollars) | 2022 | 2021 | 2020 | ||||||||||||||
Net loss | $ | (36,641) | $ | (96,305) | $ | (21,529) | |||||||||||
Plus interest expense | 1,596 | 8,729 | 43 | ||||||||||||||
Plus income tax expense (benefit) | 4,573 | (232) | 148 | ||||||||||||||
Plus depreciation | 14,326 | 10,728 | 3,031 | ||||||||||||||
Non-GAAP EBITDA | $ | (16,146) | $ | (77,080) | $ | (18,307) | |||||||||||
Plus Merger transaction costs | 11,188 | 16,236 | — | ||||||||||||||
Less other income, net | (1,140) | (1,069) | (594) | ||||||||||||||
Less change in fair value of financial instruments | (58,311) | (17,983) | (9,637) | ||||||||||||||
Plus loss on extinguishment of debt | — | 37,216 | 9,240 | ||||||||||||||
Plus stock-based compensation | 8,368 | 10,881 | 1,732 | ||||||||||||||
Non-GAAP Adjusted EBITDA | $ | (56,041) | $ | (31,799) | $ | (17,566) |
(in thousands of US dollars) | Year Ended December 31, | |||||||||||
2021 | 2020 | 2019 | ||||||||||
Net cash flows Used in Operating Activities | $ | (27,720 | ) | $ | (17,330 | ) | $ | (14,069 | ) | |||
Less purchases of satellites and other property and equipment | 11,216 | 9,259 | 8,301 | |||||||||
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Free Cash Flow | $ | (38,936 | ) | $ | (26,589 | ) | $ | (22,370 | ) | |||
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Year Ended December 31, | |||||||||||||||||
(in thousands of U.S. dollars) | 2022 | 2021 | 2020 | ||||||||||||||
Net cash used in operating activities | $ | (68,462) | $ | (28,439) | $ | (11,174) | |||||||||||
Less purchases of property and equipment | (27,252) | (11,233) | (15,787) | ||||||||||||||
Non-GAAP Free Cash Flow | $ | (95,714) | $ | (39,672) | $ | (26,961) |
We expect our As of December 31, 2022, we have $76.5 million in cash and cash equivalents on hand, and no debt.
used in operating activities of $68.5 million. The net losses we have incurred since inception, and the recent elevated cash used in operating activities, are consistent with our strategyexpectations and budget.
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Cash Flows Summary
Year Ended December 31, | ||||||||||||
(in thousands of US dollars) | 2021 | 2020 | 2019 | |||||||||
Net cash flows: | ||||||||||||
Net cash flows used in operating activities | $ | (27,720 | ) | $ | (17,330 | ) | $ | (14,069 | ) | |||
Net cash flows used in investing activities | (11,213 | ) | (9,245 | ) | (8,301 | ) | ||||||
Net cash flows from financing activities | 27,900 | 17,780 | 27,016 | |||||||||
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Net change in cash and cash equivalents | $ | (11,033 | ) | $ | (8,795 | ) | $ | 4,646 | ||||
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Year Ended December 31, | |||||||||||||||||
(in thousands of U.S. dollars) | 2022 | 2021 | 2020 | ||||||||||||||
Net cash flows: | |||||||||||||||||
Net cash flows used in operating activities | $ | (68,462) | $ | (28,439) | $ | (11,174) | |||||||||||
Net cash flows used in investing activities | (30,852) | (11,230) | (15,773) | ||||||||||||||
Net cash flows from financing activities | 164,336 | 28,636 | 18,150 | ||||||||||||||
Net change in cash, cash equivalents and restricted cash | $ | 65,022 | $ | (11,033) | $ | (8,797) |
Year Ended December 31, | ||||||||||||
(in thousands of US dollars) | 2021 | 2020 | 2019 | |||||||||
Net loss | $ | (117,741 | ) | $ | (113,926 | ) | $ | (20,765 | ) | |||
Adjustments for the impact of non-cash items (1) | 72,288 | 95,883 | 5,395 | |||||||||
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Net loss adjusted for the impact of non-cash items | (45,453 | ) | (18,043 | ) | (15,370 | ) | ||||||
Changes in assets and liabilities | ||||||||||||
Accounts receivable - trade(2) | (2,986 | ) | 7 | 12 | ||||||||
Prepaids and other current assets(3) | (1,706 | ) | (228 | ) | (170 | ) | ||||||
Accounts payable - trade(4) | 2,135 | 555 | (251 | ) | ||||||||
Other(5) | 20,290 | 379 | 1,710 | |||||||||
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Net cash provided by operating activities | $ | (27,720 | ) | $ | (17,330 | ) | $ | (14,069 | ) | |||
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(in thousands of US dollars) | Year Ended December 31, | ||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Net loss | $ | (36,641) | $ | (96,305) | $ | (21,529) | |||||||||||
Adjustments for the impact of non-cash items (1) | (22,295) | 49,462 | 3,534 | ||||||||||||||
Net loss adjusted for the impact of non-cash items | (58,936) | (46,843) | (17,995) | ||||||||||||||
Changes in assets and liabilities | |||||||||||||||||
Accounts receivable(2) | (1,928) | (4,691) | (221) | ||||||||||||||
Prepaid expenses and other current assets(3) | (1,855) | 21 | (14) | ||||||||||||||
Accounts payable(4) | (3,202) | 1,421 | 6,474 | ||||||||||||||
Other(5) | (2,541) | 21,653 | 582 | ||||||||||||||
Net cash used in operating activities | $ | (68,462) | $ | (28,439) | $ | (11,174) |
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Net cash used in investing activities was $11,213 thousand$30.9 million for the year ended December 31, 20212022, compared to $9,245 thousand$11.2 million for the year ended December 31, 2020.2021. The increase in cash used in investing activities of $1,968 thousand or 21%, was primarily driven by an increase in purchases of satellite components, laboratory equipment and other property and equipment.
Net cash provided by financing activities was $27,900 thousand for the year ended December 31, 2021 comparedpreferred stock.
Debt
We finance our operations and capital expenditures with borrowings. As of December 31, 2021, we had $246,189 thousand of outstanding indebtedness comprised of notes debt, promissory note, Nettar Series X Preferred Shares and the Cantor Loan.
In December 2021, we entered into the Promissory Note with CF Securities and incurred a loan for an aggregate total amount of $7,500 thousand.
In April 2021, we incurred $20,332 thousand of indebtedness related to the issuance of Nettar Series X Preferred Shares.
In April 2021, we agreed with our note holders to extend the maturity date of the 2018 and 2019 convertible notes with original due dates in April and September 2021, respectively, to April 2022.
On March 8, 2021, we signed an Exchange Agreement in conjunction with a Loan and Security Agreement and Warrant with a holder of Preferred Shares and convertible notes (the “Investor”). Prior to such date, the Investor had been a note holder under the 2018 and 2019 note purchase agreements, and also owned Series A, B and B-1 preference shares. Pursuant to the Exchange Agreement the Investor sold back to the Company all its shares and convertible notes, in exchange for a loan in the principal amount of $40,089 thousand and the issuance of a warrant with an aggregate exercise price of $40,089 thousand, subject to adjustment in the event of changes in the outstanding shares of the Company (e.g., recapitalizations, mergers etc.). The exercise period of warrant is the earlier of 25 years from the effective date of the warrant (March 8, 2021) and the date on which the warrant is exercised in full. The warrant is freestanding, can be separately exercised from the debt and as of December 31, 2021 is transferrable subject to a right of first refusal in favor of the Company.
The preferred shareholder transaction resulted in the derecognition of the convertible promissory notes and related embedded derivative amounting to $30,332 thousand during the year ended December 31, 2021, and recognition of a liability related to the new loan, treasury shares and a warrant classified as an equity financial instrument.
We and CF Securities entered into a Secured Promissory Note, dated December 23, 2021 (as modified by that certain letter agreement, dated December 30, 2021, and as further amended, amended and restated, supplemented or otherwise modified from time to time, the “Promissory Note”), pursuant to which CF Securities agreed to loan to us (i) $7,500,000 (the “Initial Loan”) and (ii) if requested by us, up to an additional $7,500,000, which we had the right to request until the earlier to occur of (A) the closing of the Transactions and the permitted equity issuance, and (B) February 15, 2022 (the “Additional Loan” and together with the Initial Loan, the “Loans”).
On January 18, 2022, we, CF Securities and Nettar entered into the Promissory Note Waiver Letter pursuant to which we and CF Securities agreed that we would repay the Initial Loan, including all principal and interest, by the issuance of 788,021 Class A Ordinary Shares and such repayment occurred on the Closing Date.
See Note 17 (Debt) to the audited Consolidated Financial Statements for additional details.
a discussion of our debt at December 31, 2021 and prior to the Merger. As of December 31, 2022, we had no outstanding debt.
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as well as the reported expenses incurred during the reporting periods.statements. Our estimates are based on itsour historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
While our significant accounting policies are described in the notes to our financial statements, we believe that the following accounting policies require a greater degree of management’s judgment and complexity and are the most critical to understanding its financial condition and historical and future results of operations.
Share-Based Compensation
Prior to completion of the Business Combination, as the Ordinary Shares were not listed on a public marketplace, the calculation of the fair value of the Ordinary Shares was subject to a greater degree of estimation in determining the basis for share-based awards that were issued. Given the absence of a public market, we were required to estimate the fair value of the Ordinary Shares at the time of each grant. We considered objective and subjective factors in determining the estimated fair value and utilized third-party valuation experts to determine the grant date share price using a Black-Scholes model. Under the Black-Scholes model, we determined the value of the Ordinary Shares based on interpolating from the valuations in the most recent external equity financing rounds and, when applicable, an expected valuation for an initial public offering of the Ordinary Shares, subject to discounts for the probability and timing of an exit event and lack of marketability, among other factors.
complexity.
Convertible Notes, Cantor Loan, Embedded Derivatives
measurement of revenue requires the use of judgments and estimates. Specifically, judgment is used in interpreting complex arrangements with nonstandard terms and conditions and determining when all criteria for revenue recognition have been met. We primarily generate revenue from the sale of imagery and related services. Identifying the performance obligations contained in a contract, determining transaction price, allocating transaction price, and determining when performance obligations are satisfied can require the application of significant judgment.
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the asset group.
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5.B Liquidity and Capital Resources
See Item 5.A “Operating Results – Liquidity and Capital Resources” for liquidity and capital resources information.
5.C Research and Development, Patents and Licenses Etc.
SeeItem 4. “Information on the Company – Business Overview – Satellites and Technology”
5.D Trend Information
See Item 5.A “Key Factors Affecting Operating Results.”
5.E Critical Accounting Estimates
See Item 5.A “Operating Results – Critical Accounting Policies and Estimates”
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Name | Age | Committees | ||||||||||||||||||
Emiliano Kargieman | 47 | III | ||||||||||||||||||
Ted Wang | 53 | I | ||||||||||||||||||
Marcos Galperin | 50 | III | ||||||||||||||||||
| 62 | III | Audit (Chairperson); Finance | |||||||||||||||||
Howard Lutnick | 61 | II | ||||||||||||||||||
Steven | 60 | I | ||||||||||||||||||
Joseph Dunford | 67 | I | ||||||||||||||||||
Tom Killalea | 51 | II | ||||||||||||||||||
Miguel Gutiérrez | 64 | II |
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Ted Wang. Mr. Wang has been a partner at Cowboy Ventures, a venture capital fund focused on enterprise and consumer orientedconsumer-oriented software-driven companies since February 2017. Prior to joining Cowboy Ventures, Mr. Wang was a partner at Fenwick & West LLP, focusing his practice on emerging technology companies from October 2006 to January 2017. In addition to serving as our Chairman of the Board, Mr. Wang also serves on the boards of directors of several private companies, including companies providing robotic automation software, developer operations software and software applying artificial intelligence. Mr. Wang holds a B.A. in history and Latin from Duke University and a J.D. from the University of Virginia.
Virginia School of Law.
Brad
He is on the board of directors of Easterseals Foundation.
Steven Terner Mnuchin. Secretary
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Former Secretary Mnuchin played a pivotal role in advancing the Administration’s economic agenda, including the passage and implementation of the Tax Cuts and JOBS Act and the CARES Act. He also led the U.S. Treasury Department’s regulatory reform efforts. Former Secretary Mnuchin was chair of the Committee on Foreign Investment in the United States (CFIUS) and was a member of the National Security Council. He was responsible for using economic tools to combat terrorist financing and other threats to the United States and its allies. Prior to his confirmation, he served as Founder, Chairman, and Chief Executive Officer of Dune Capital Management. He founded OneWest Bank Group LLC and served as its Chairman and Chief Executive Officer until its sale to CIT Group Inc. Earlier in his career, Former Secretary Mnuchin worked at The Goldman Sachs Group, Inc., where he was a Partner and served as Chief Information Officer. He has extensive experience in global financial markets and investments.
Joseph Dunford. General
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Miguel Gutiérrez. Miguel Gutiérrez is a Partner and a Co-Chief Investment Officer at The Rohatyn Group.Group (TRG). He is a member of TRG’s Executive Committee and is based in Montevideo.
Mr. Gutiérrez has over 30 years of experience in international financial markets, with the majority of this time dedicated to emerging markets. Prior to joining TRG in October 2004, Mr. Gutiérrez served as the Chairman and CEO of the Telefónica Group in Argentina and Chairman of Grupo Concesionario del Oeste S.A. He also served as the non-executive Chairman of YPF S.A. from April 2016 to December 2019. Earlier in his career, Mr. Gutiérrez held numerous senior positions at J.P. Morgan over 21 years, most recently as the Head of Global Emerging Markets Sales, Trading, and Research and prior to that as the Head of Latin America Emerging Markets. Under Mr. Gutiérrez’s direction, J.P. Morgan established and cemented its leadership position in emerging markets sales, trading, and research. At the beginning of his time with J.P. Morgan, Mr. Gutiérrez held various senior positions, including Head of European Interest Rate Management and Treasury Manager in both Madrid and Buenos Aires. Mr. Gutiérrez holds an AdvanceAdvanced Management Program – AMP degree from IAE – Universidad Austral in Argentina.
•appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm;
•discussing with our independent registered public accounting firm their independence from management;
•reviewing, with our independent registered public accounting firm, the scope and results of their audit;
•approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;
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•overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the annual financial statements that we file with the SEC;
•overseeing our financial and accounting controls and compliance with legal and regulatory requirements;
•reviewing our policies on risk assessment and risk management;
•reviewing related person transactions; and
•establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters.
The Company’s audit committee
The Company’s Committee
Determining•determining the qualifications, qualities, skills and other expertise required to be a director and to develop, and recommend to the Board for its approval, criteria to be considered in selecting nominees for director.
Evaluating•evaluating the current composition, organization and governance of the Board and its committees, determining future requirements and making recommendations to the Board for approval consistent with the criteria approved by our Board.
Searching•searching for, identifying, evaluating and selecting, or recommending for selection by the Board, candidates to fill new positions or vacancies on the Board consistent with the criteria approved by our Board, and reviewing any candidates recommended by shareholders.
Reviewing•reviewing and considering any nominations of director candidates validly made by stockholders in accordance with applicable laws, rules and regulations and the provisions of the Company’sour certificate of incorporation and bylaws.
Evaluating•evaluating the performance of individual members of the Board eligible for re-election, and selecting, or recommending for the selection of the Board, the director nominees by class for election to the Board by the shareholdersstockholders at the annual meeting of shareholdersstockholders or any special meeting of shareholdersstockholders at which directors are to be elected.
Considering•considering the Board’s leadership structure, including the appointment of a lead independent director of the Board, for specific purposes, and making such recommendations to the Board with respect thereto as the Nominating and Corporate Governance Committee deems appropriate.
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Developing•developing and reviewing periodically the policies and procedures for considering stockholder nominees for election to the Board.
Evaluating
Approving,•approving, or recommending to the Board for approval, and periodically reviewing the policies and procedures for director candidates, the stockholder communications policy and the external communications policy, and approve,approving, or recommendrecommending to the Board for approval, any changes deemedthe Nominating and Corporate Governance Committee deems appropriate.
The Company’s
Compensation
Our compensation committee will be responsible for, among other things:
reviewing and approving the corporate goals and objectives, evaluating the performance of and reviewing and approving (either alone or, if directed by the Board, in conjunction with a majority of the independent members of the Board) the compensationability of our Chief Executive Officer;
overseeing an evaluation of the performance of and reviewing and setting or making recommendationsFinance Committee to conduct its business in our Board regarding the compensation of our other executive officers;
reviewing and approving or making recommendations to our Board regarding our incentive compensation and equity-based plans, policies and programs;
reviewing and approving all employment agreement and severance arrangements for our executive officers;
making recommendations to our Board regarding the compensation of our directors; and
retaining and overseeing any compensation consultants.
best interests. The Board will adopt a new written charter for the compensation committee, which will beFinance Committee is available on the Company’sour website after adoption.at https://investors.satellogic.com. The reference to the Company’sour website address in this Report does not include or incorporate by reference the information on the Company’sour website into this Report.
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The Company’s
the grant date. There are no arrangements with any directors for the payment of any fees after termination.
Name | Age | Title | |||||||||||||||||
Emiliano Kargieman | Chief Executive Officer | ||||||||||||||||||
Rick Dunn | Chief Financial Officer | ||||||||||||||||||
Aviv Cohen | Chief Operations Officer | ||||||||||||||||||
Gerardo Richarte | Chief Information Security Officer | ||||||||||||||||||
Matthew Brannen | 40 | Vice President - Legal | |||||||||||||||||
Matthew Tirman | 42 | Chief Commercial Officer |
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Aviv Cohen. Mr. Cohen has served as our Chief Operations Officer of the Company since January 2021 and previously served in various roles at Nettar, including as Interim Vice President of Engineering from September 2019 to February 2020, Vice President of Sales from January 2019 to August 2019 and in various business development roles from August 2016 until December 2018. Previously, Mr. Cohen held business development and engineering roles at Nettar. Before joining the Company,us, Mr. Cohen ran operations and sales for several technology startups, including Fraud Sciences (acquired by PayPal) and Core Security Technologies, where he was instrumental in growing the businesses from a very early start-up stage to a position of industry leadership in their respective markets. Subsequent to the PayPal acquisition, he headed Risk Management for PayPal’s European business unit. Earlier in his career, Mr. Cohen focused on software development and technology.
Rebeca Brandys. Ms. Brandys
$2,137.
Name | Grant Date | Number of Shares of Stock or Units (#) (1) | Exercise or Base Price of Option or RSU Awards ($/Share) | Grant Date Fair Value of Stock and Option Awards (4) | ||||||||||||||||||||||
Emiliano Kargieman | — | $ | — | $ | — | |||||||||||||||||||||
Rick Dunn | 12/2/2022 | 75,072 | (2) | 4.38 | 328,815 | |||||||||||||||||||||
Aviv Cohen | — | — | — | |||||||||||||||||||||||
Gerardo Richarte | 12/2/2022 | 92,568 | (3) | 4.38 | 405,448 | |||||||||||||||||||||
Matthew Brannen | — | — | — | |||||||||||||||||||||||
Matthew Tirman | — | — | — | |||||||||||||||||||||||
Total | 167,640 | $ | 734,263 |
Name | Grant Date | Expiration Date | Exercise Price | Number of Options Outstanding at December 31, 2022 (#) | Number of Options Exercisable at December 31, 2022 (#) | |||||||||||||||||||||||||||
Emiliano Kargieman | (1) | — | — | |||||||||||||||||||||||||||||
Rick Dunn | 3/27/2019 | 3/26/2029 | $ | 1.03 | (2) | 482,975 | 462,851 | |||||||||||||||||||||||||
2/20/2021 | 2/20/2031 | $ | 1.27 | (3) | 28,787 | 28,787 | ||||||||||||||||||||||||||
Aviv Cohen | 10/10/2017 | 10/9/2027 | $ | 0.54 | (4) | 214,682 | 214,682 | |||||||||||||||||||||||||
5/1/2020 | 4/30/2030 | $ | 1.23 | (5) | 207,208 | 142,453 | ||||||||||||||||||||||||||
2/8/2021 | 2/8/2031 | $ | 1.27 | (6) | 118,884 | 70,686 | ||||||||||||||||||||||||||
Gerardo Richarte | 10/6/2019 | 10/5/2029 | $ | 0.91 | (7) | 212,608 | 212,608 | |||||||||||||||||||||||||
Matthew Brannen | (1) | — | — | |||||||||||||||||||||||||||||
Matthew Tirman | 1/31/2021 | 1/31/2031 | $ | 1.27 | (8) | 168,862 | 77,394 | |||||||||||||||||||||||||
Total | 1,434,006 | 1,209,461 |
105
Employment Agreements
Messrs.
The Company intends
The Company has 327 full-time employees, distributed across 13 countries.
106
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•each person known to by us to be the beneficial owner of more than 5% of the Ordinary Shares;
•each of our directors and executive officers; and
•all of our directors and executive officers as a group.
power.
17, 2023.
Name and Address of Beneficial Owner** | Class A Ordinary Shares Number of Shares Beneficially Owned | % of Class | Class B Ordinary Shares Number of Shares Beneficially Owned | % of Class | Approximate Percentage of Outstanding Class A Ordinary Shares | |||||||||||||||
Directors and Executive Officers(1) | ||||||||||||||||||||
Emiliano Kargieman | — | — | 13,662,658 | 100.0 | % | 15.1 | % | |||||||||||||
Rick Dunn (2) | 673,431 | * | % | — | — | % | * | % | ||||||||||||
Aviv Cohen (3) | 523,790 | * | % | — | — | % | * | % | ||||||||||||
Gerardo Richarte (4) | 1,806,364 | 2.3 | % | — | — | % | 1.9 | % | ||||||||||||
Rebeca Brandys (5) | 67,154 | * | % | — | — | % | * | % | ||||||||||||
Ted Wang (6) | 578,296 | * | % | — | — | % | * | % | ||||||||||||
Marcos Galperin | 26,328 | * | % | — | — | % | * | % | ||||||||||||
Brad Halverson | — | * | % | — | — | % | — | % | ||||||||||||
Steven Terner Mnuchin(7) | 40,000,000 | 41.2 | % | — | — | % | 36.1 | % | ||||||||||||
Howard Lutnick(8) | 13,776,353 | 17.8 | % | — | — | % | 15.1 | % | ||||||||||||
Joseph Dunford | — | — | % | — | — | % | — | % | ||||||||||||
Tom Killalea | 325,635 | * | % | — | — | % | * | % | ||||||||||||
Miguel Gutiérrez | — | — | % | — | — | % | — | % | ||||||||||||
All executive officers and directors as a group (13 individuals) | 57,777,351 | 58.4 | % | 13,662,658 | 100 | % | 63.4 | % | ||||||||||||
5% or More Shareholders: | ||||||||||||||||||||
Cantor Fitzgerald L.P.(8) | 13,776,353 | 17.8 | % | — | — | % | 15.1 | % | ||||||||||||
Pitanga Invest Ltd.(9) | 10,656,546 | 13.8 | % | — | — | % | 11.8 | % | ||||||||||||
Hannover Holdings S.A.(10) | 7,558,158 | 9.8 | % | — | — | % | 8.3 | % | ||||||||||||
Liberty Strategic Capital (SATL) Holdings, LLC(7) | 40,000,000 | 41.2 | % | — | — | % | 36.1 | % |
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BVI
Name and Address of Beneficial Owner | Class A Common Stock Number of Shares Beneficially Owned | % of Class | Class B Ordinary Shares Number of Shares Beneficially Owned | % of Class | |||||||||||||||||||||||||
Directors and Executive Officers(1) | |||||||||||||||||||||||||||||
Emiliano Kargieman | — | — | 13,582,642 | 100.0 | % | ||||||||||||||||||||||||
Rick Dunn | 141,936 | * | — | — | % | ||||||||||||||||||||||||
Aviv Cohen | — | — | % | — | — | % | |||||||||||||||||||||||
Gerardo Richarte | 1,555,600 | 2.1 | % | — | — | % | |||||||||||||||||||||||
Matt Tirman | — | — | % | — | — | % | |||||||||||||||||||||||
Matthew Brannen | — | — | % | — | — | % | |||||||||||||||||||||||
Ted Wang | — | — | % | — | — | % | |||||||||||||||||||||||
Marcos Galperin | 27,198 | * | — | — | % | ||||||||||||||||||||||||
Brad Halverson | — | — | % | — | — | % | |||||||||||||||||||||||
Steven Terner Mnuchin (5) | 20,000,000 | 26.4 | % | — | — | % | |||||||||||||||||||||||
Howard Lutnick (2) | 13,380,873 | 17.7 | % | — | — | % | |||||||||||||||||||||||
Joseph Dunford | — | — | % | — | — | % | |||||||||||||||||||||||
Tom Killalea | 339,949 | * | — | — | % | ||||||||||||||||||||||||
Miguel Gutiérrez | — | — | % | — | — | % | |||||||||||||||||||||||
All executive officers and directors as a group | 35,445,556 | 46.8 | % | 13,582,642 | 100 | % | |||||||||||||||||||||||
5% or More Stockholders(1) | |||||||||||||||||||||||||||||
Pitanga Invest Ltd. - PO Box 309, Ugland House, Cayman Islands (3) | 10,594,133 | 14.0 | % | — | — | % | |||||||||||||||||||||||
Hannover Holdings S.A. - 58, rue Charles Martel, L-2134, Luxembourg (4) | 7,513,892 | 9.9 | % | — | — | % | |||||||||||||||||||||||
Liberty Strategic Capital (SATL) Holdings, LLC - 2001 Pennsylvania Ave NW, Washington, DC (5) | 20,000,000 | 26.4 | % | — | — | % | |||||||||||||||||||||||
Cantor Fitzgerald L.P. - 110 E 59th St New York, NY (2) | 13,380,873 | 17.7 | % | — | — | % |
Lock-up Agreement
Concurrently with the execution of the Merger Agreement, CF V and the Company entered into separate Lock-Up Agreements with a number of Nettar Shareholders and23 holders of Convertible Notes, pursuant to which the Ordinary Shares to be received by such Nettar Shareholders and holders of Convertible Notes are locked-up and subject to transfer restrictions for a period of time following the Closing, as described below, subject to certain exceptions. The Ordinary Shares held by such Nettar Shareholders and holders of Convertible Notes are locked-up commencing from the Closing until the earliest of: (i) the one year anniversary of the date of the Closing, (ii) the date on which the closing price of the Ordinary Shares equals or exceeds $20.00 per share (adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), for any 20 Trading Days within any 30-Trading Day period commencing at least 180 days after the Closing Date, (iii) with respect to 25% of the Lock-Up Securities owned by such Company Shareholder or holder of Convertible Notes, the date on which the closing price of the Ordinary Shares equals or exceeds $15.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 Trading Days within any 30-Trading Day period commencing at least 180 days after the Closing Date, and (iv) the date which the Company consummates a liquidation, merger, capital stock exchange, reorganization, or other similar transaction which results in all of the Company’s shareholders having the right to exchange their Ordinary Shares for cash, securities or other property.
108
Financing Engagement Letter
Pursuant to an engagement letter dated August 26, 2021 (the “Financing Engagement Letter”), the Company engaged CF&Co. to act as exclusive financial advisor, placement agent and arranger in respect of one or more debt financing(s) contemplated by the Company from time to time, in connection with which CF&Co. agreed to perform certain customary services for the Company. Pursuant to the Financing Engagement Letter, CF&Co. will be entitled to a fee equal to 2.0% of the aggregate maximum principal amount of any senior or first lien debt committed or available to be committed to the Company, and 3.0% of the aggregate maximum principal amount of any subordinated debt or other junior capital committed or available to be committed to the Company. The fees payable in connection with the Financing Engagement Letter were paid on the Closing Date.
Sponsor PIPE Subscription Agreement in connection with PIPE Investment
Contemporaneously with the execution of the Merger Agreement, CF V entered into the PIPE Subscription Agreements with the PIPE Investors, including the Sponsor. Pursuant to the Sponsor’s PIPE Subscription Agreement, the Sponsor agreed to purchase 2,316,770 Ordinary Shares (subject to adjustment) for a purchase price of $10.00 per share and a purchase price of approximately $23.2 million. The PIPE Shares were issued on the Closing Date.
Amended and Restated Forward Purchase Contract
Contemporaneously with the execution of the Merger Agreement, CF V, the Company and the Sponsor entered into the Amended and Restated Forward Purchase Contract, pursuant to which the Sponsor agreed to purchase, and the Company agreed to issue and sell to the Sponsor, 1,250,000 Class A Ordinary Shares (subject to adjustment) and 333,333 Warrants to purchase Ordinary Shares for $11.50 each, for an aggregate purchase price of $10,000,000. On the Closing Date, the Forward Purchase Securities were issued to the Sponsor.
On April 1, 2022, the Company informed Continental Stock Transfer & Trust Company that pursuant to Section 4.3.2 of the $8.63 Warrant Agreement as modified and assumed by the Assignment and Assumption Agreement that the Warrant Price (as defined in the $8.63 Warrant Agreement) with respect to the $8.63 Warrants issued and outstanding under the $8.63 Warrant Agreement will be adjusted from $11.50 to $8.63 and the Redemption Price (as defined in the $8.63 Warrant Agreement) of the $8.63 Warrants will be adjusted from $18.00 to $13.50.
Cantor Fees
On January 18, 2022, CF V, Nettar and CF&Co. entered into the CF Fee Letter pursuant to which they agreed that of the CF V Transaction Expenses payable to CF&Co., which in aggregate total approximately $21.94 million (comprised of $5.0 million of M&A advisory fees, $8.75 million of business combination marketing fees, and approximately $8.19 million of placement agent fees), only the M&A advisory fees would be paid in cash while the remainder would be paid in the form of an aggregate of 2,058,229 newly-issued Class A Ordinary Shares issued on the Closing Date. Such payments and issuances were made on the Closing Date.
Pursuant to the Cantor Fee Letter, CF&Co would be entitled to receive Additional Shares if the Adjustment Period VWAP is less than $10.00 (up to a maximum of 150,000 Additional Shares if the Adjustment Period VWAP is less than $8.00). Based on the 30-day volume weighted average pricerecord of our Class A Ordinary Sharesordinary shares in the United States, representing approximately 54% of $8.75 on April 25, 2022 85,714 Additional Shares would be issued to CF&Co.
109
Promissory Note Waiver Letter
On January 18, 2022, CF Securities, the Company and Nettar entered into the Promissory Note Waiver Letter pursuant to which the Company and CF Securities agreed that the Company would repay the Initial Loan, including all principal and interest on the Closing of the Business Combination, by the issuance of 788,021our outstanding Class A Ordinary Shares. Theordinary shares, issuable pursuant to this agreement were issued on the Closing Date.
Pursuant to the Promissory Note Waiver Letter, CF Securities will be entitled to receive Additional Shares if the Adjustment Period VWAP is less than $10.00 (up to a maximumand no holders of 197,005 Additional Shares if the Adjustment Period VWAP is less than $8.00). Based on the 30-day volume weighted average pricerecord of our Class A Ordinary SharesB ordinary shares in the United States. To the Company’s knowledge, the majority of $8.75 on April 25,the Company’s voting securities are held by holders located outside of the United States.
Liberty Letter Agreement
On January 18, 2022, the Company, Liberty and Sponsorwe entered into the Liberty Letteran Investment Agreement pursuant to which the Company agreed that, for so long as the Liberty Investor (or affiliates managed by the Liberty Manager or its affiliates) hold,with OS, a company engaged in the aggregate, at least 6,666,666 Class A Ordinary Shares, (i) the Liberty Investor will havedesign and production of telescopes and opto-mechanical and aerospace instrumentation for ground and space-based applications, to purchase 5% of OS’s outstanding common shares for $3.7 million. Additionally, OS issued 524,715 stock warrants to us, giving us the right to nominate two Liberty Directors for electionconvert each warrant into a single common share over a period of up to 36 months. We appointed Emiliano Kargieman, our Chief Executive Officer, to OS’s board of directors. The investment was completed on September 30, 2022.
110
In connection with the Liberty Restated Letter Agreement, the Company, Mr. Kargieman, Liberty and Sponsor agreed to take action to further modify the rights of the holders of Company Class B Ordinary Shares such that the number of votes attributable to each Company Class B Ordinary Share after giving effect to any forfeitures of Company Class B Ordinary Shares pursuant to Section 2.10 of the Merger Agreement shall equal (x) 20,000,000, divided by (y) (i) 13,662,658, minus (ii) the number of such forfeited Company Class B Ordinary Shares (in no event shall such forfeited shares be more than 651,596 Company Class B Ordinary Shares), but taking into account any adjustment that may have occurred theretofore pursuant to clause 7.2 of the Company’s Memorandum of Association. In the event that any Earnout Shares (as defined in the Merger Agreement) are issued to Mr. Kargieman pursuant to Section 2.11 of the Merger Agreement, the Company, Mr. Kargieman, Liberty and Sponsor agreed to take action to further modify the rights of the holders of Company Class B Ordinary Shares such that the number of votes attributable to each Company Class B Ordinary Share shall be adjusted such that the number of votes attributable to each Company Class B Ordinary Share is reduced in a manner that results in a vote per share as if a number of shares equal to such Earnout Shares had not been forfeited pursuant to Section 2.10 of the Merger Agreement.
See “EXPLANATORY NOTE – Liberty Letter Agreement.”
C. InterestsofExpertsandCounsel
Not applicable.
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111
U.S. generally accepted accounting principles.
Limited
from 2017 to 2022.
F-1
(Expressed in thousands of US dollars, except per share amounts)
Year Ended December 31, | ||||||||||||||
Notes | 2021 | 2020 | 2019 | |||||||||||
Revenue | 4 | $ | 4,247 | $ | — | $ | — | |||||||
Cost of sales | (1,876 | ) | — | — | ||||||||||
Administrative expenses | 5 | (36,649 | ) | (8,127 | ) | (4,324 | ) | |||||||
Research and development | 5 | (9,640 | ) | (5,879 | ) | (6,372 | ) | |||||||
Depreciation expense | 8 | (10,825 | ) | (3,182 | ) | (4,238 | ) | |||||||
Other operating expenses, net | 5 | (14,002 | ) | (5,475 | ) | (5,763 | ) | |||||||
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Operating loss | (68,745 | ) | (22,663 | ) | (20,697 | ) | ||||||||
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Finance costs, net | 6 | (11,769 | ) | (7,488 | ) | (4,103 | ) | |||||||
Embedded derivative (expense) income | 17 | (42,102 | ) | (84,224 | ) | 4,230 | ||||||||
Gain on extinguishment of debt | 17 | 3,576 | — | — | ||||||||||
Other financial income (expense) | 6 | 1,067 | 597 | (112 | ) | |||||||||
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Loss before income tax | (117,973 | ) | (113,778 | ) | (20,682 | ) | ||||||||
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Income tax benefit (expense) | 7 | 232 | (148 | ) | (83 | ) | ||||||||
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Net loss (1) | $ | (117,741 | ) | $ | (113,926 | ) | $ | (20,765 | ) | |||||
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Other comprehensive loss | ||||||||||||||
Exchange differences on translation of foreign operations | (86 | ) | — | — | ||||||||||
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Total comprehensive loss (1) | $ | (117,827 | ) | $ | (113,926 | ) | $ | (20,765 | ) | |||||
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Loss per share | ||||||||||||||
Basic and diluted, loss for the period attributable to ordinary equity holders of the parent | 13 | $ | (23.35 | ) | $ | (23.47 | ) | $ | (4.30 | ) |
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Year Ended December 31, | |||||||||||||||||
(in thousands of U.S. dollars, except share and per share amounts) | 2022 | 2021 | 2020 | ||||||||||||||
Revenue | $ | 6,012 | $ | 4,247 | $ | — | |||||||||||
Costs and expenses | |||||||||||||||||
Cost of sales, exclusive of depreciation shown separately below | 3,284 | 1,876 | — | ||||||||||||||
General and administrative expenses | 37,191 | 36,640 | 8,003 | ||||||||||||||
Research and development | 13,055 | 9,636 | 5,924 | ||||||||||||||
Depreciation expense | 14,326 | 10,728 | 3,031 | ||||||||||||||
Other operating expenses | 29,023 | 14,002 | 5,449 | ||||||||||||||
Total costs and expenses | 96,879 | 72,882 | 22,407 | ||||||||||||||
Operating loss | (90,867) | (68,635) | (22,407) | ||||||||||||||
Other income (expense), net | |||||||||||||||||
Finance costs, net | (652) | (9,738) | 35 | ||||||||||||||
Change in fair value of financial instruments | 58,311 | 17,983 | 9,637 | ||||||||||||||
Loss on extinguishment of debt | — | (37,216) | (9,240) | ||||||||||||||
Other income, net | 1,140 | 1,069 | 594 | ||||||||||||||
Total other income (expense), net | 58,799 | (27,902) | 1,026 | ||||||||||||||
Loss before income tax | (32,068) | (96,537) | (21,381) | ||||||||||||||
Income tax (expense) benefit | (4,573) | 232 | (148) | ||||||||||||||
Net loss available to common stockholders | $ | (36,641) | $ | (96,305) | $ | (21,529) | |||||||||||
Other comprehensive loss | |||||||||||||||||
Foreign currency translation loss, net of tax | (226) | (86) | — | ||||||||||||||
Comprehensive loss | $ | (36,867) | $ | (96,391) | $ | (21,529) | |||||||||||
Basic loss per share for the period attributable to common stockholders | $ | (0.44) | $ | (5.78) | $ | (1.34) | |||||||||||
Basic weighted-average common shares outstanding | 83,188,276 | 16,655,634 | 16,029,826 | ||||||||||||||
Diluted loss per share for the period attributable to common stockholders | $ | (0.66) | $ | (5.78) | $ | (1.34) | |||||||||||
Diluted weighted-average common shares outstanding | 83,798,149 | 16,655,634 | 16,029,826 |
F-2
(Expressed in thousands of US dollars)
Year Ended December 31, | ||||||||||
Notes | 2021 | 2020 | ||||||||
Current assets | ||||||||||
Cash and cash equivalents | $ | 8,533 | $ | 17,267 | ||||||
Accounts receivable - trade | 1,196 | 4 | ||||||||
Prepaids and other current assets | 9 | 2,695 | 772 | |||||||
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Total current assets | 12,424 | 18,043 | ||||||||
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Non-current assets | ||||||||||
Property and equipment | 8 | 33,586 | 34,872 | |||||||
Right-of-use assets | 18 | 2,663 | 1,341 | |||||||
Deferred income tax assets | 7 | 1,640 | 48 | |||||||
Other financial assets and other non-current assets | 369 | 314 | ||||||||
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Total non-current assets | 38,258 | 36,575 | ||||||||
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Total assets | $ | 50,682 | $ | 54,618 | ||||||
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Current liabilities | ||||||||||
Accounts payable - trade | 6,650 | 2,858 | ||||||||
Debt | 17 | 246,189 | 125,085 | |||||||
Lease liabilities | 18 | 891 | 362 | |||||||
Contract liabilities | 4 | 935 | 455 | |||||||
Accrued expenses and other liabilities | 12 | 23,435 | 2,582 | |||||||
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Total current liabilities | 278,100 | 131,342 | ||||||||
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Non-current liabilities | ||||||||||
Accounts payable - trade | 2,200 | 4,697 | ||||||||
Debt | 17 | — | 33,795 | |||||||
Lease liabilities | 18 | 1,908 | 1,036 | |||||||
Contract liabilities | 4 | 1,000 | 1,000 | |||||||
Other non-current liabilities | 12 | 352 | 36 | |||||||
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Total non-current liabilities | 5,460 | 40,564 | ||||||||
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Total liabilities | $ | 283,560 | $ | 171,906 | ||||||
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Shareholders’ equity | ||||||||||
Ordinary shares | — | — | ||||||||
Preferred Shares | — | — | ||||||||
Treasury shares | (170,949 | ) | — | |||||||
Additional paid-in capital | 62,045 | 61,253 | ||||||||
Other paid-in capital | 12,432 | 2,464 | ||||||||
Warrants | 161,432 | — | ||||||||
Foreign currency translation reserve | (86 | ) | — | |||||||
Retained earnings | (297,752 | ) | (181,005 | ) | ||||||
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Equity attributable to equity holders of the parent | $ | (232,878 | ) | $ | (117,288 | ) | ||||
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Total equity (deficit) | $ | (232,878 | ) | $ | (117,288 | ) | ||||
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Total liabilities and shareholders’ equity | $ | 50,682 | $ | 54,618 | ||||||
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BALANCE SHEETS
December 31, | |||||||||||
(in thousands of U.S. dollars, except per share amounts) | 2022 | 2021 | |||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | 76,528 | $ | 8,533 | |||||||
Restricted cash | 126 | — | |||||||||
Accounts receivable, net of allowance of $3,237 and $1,794, respectively | 1,388 | 1,196 | |||||||||
Prepaid expenses and other current assets | 3,198 | 2,695 | |||||||||
Total current assets | 81,240 | 12,424 | |||||||||
Property and equipment, net | 47,981 | 32,530 | |||||||||
Operating lease right-of-use assets | 8,171 | 2,955 | |||||||||
Deferred income tax assets | — | 1,640 | |||||||||
Other non-current assets | 6,463 | 369 | |||||||||
Total assets | $ | 143,855 | $ | 49,918 | |||||||
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||||||||
Current liabilities | |||||||||||
Accounts payable | $ | 9,850 | $ | 6,650 | |||||||
Debt | — | 108,473 | |||||||||
Warrant liabilities | 8,335 | 143,237 | |||||||||
Earnout liabilities | 1,353 | — | |||||||||
Operating lease liabilities | 2,176 | 985 | |||||||||
Contract liabilities | 1,941 | 935 | |||||||||
Accrued expenses and other liabilities | 6,417 | 23,435 | |||||||||
Total current liabilities | 30,072 | 283,715 | |||||||||
Operating lease liabilities | 6,063 | 2,083 | |||||||||
Contract liabilities | 1,000 | 1,000 | |||||||||
Other non-current liabilities | 522 | 2,552 | |||||||||
Total liabilities | 37,657 | 289,350 | |||||||||
Commitments and contingencies (Note 20) | |||||||||||
Redeemable preferred stock, $0.0001 par value | — | 21,306 | |||||||||
Stockholders' equity (deficit) | |||||||||||
Preferred stock, $0.0001 par value | — | — | |||||||||
Common stock, $0.0001 par value | — | — | |||||||||
Treasury stock, at cost | (8,603) | (170,949) | |||||||||
Additional paid-in capital | 337,928 | 96,471 | |||||||||
Accumulated other comprehensive loss | (312) | (86) | |||||||||
Accumulated deficit | (222,815) | (186,174) | |||||||||
Total stockholders’ equity (deficit) | 106,198 | (260,738) | |||||||||
Total liabilities, redeemable preferred stock and stockholders' equity (deficit) | $ | 143,855 | $ | 49,918 |
F-3
(Expressed in thousands (DEFICIT)
Share capital | ||||||||||||||||||||||||||||||||||||||||||||||||
Ordinary shares | Value | Preferred Shares | Value | Treasury shares | Additional paid-in capital | Other paid-in capital | Warrants | Retained earnings | Foreign currency translation reserve | Attributable to the equity holders of the parent | Total equity (deficit) | |||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2019 | 4,823,645 | $ | — | 8,740,398 | $ | — | $ | — | $ | 60,014 | $ | 753 | $ | — | $ | (46,426 | ) | $ | — | $ | 14,341 | $ | 14,341 | |||||||||||||||||||||||||
Exercise of stock options (Note 10) | 9,136 | — | — | — | — | 16 | — | — | — | — | 16 | 16 | ||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (20,765 | ) | — | (20,765 | ) | (20,765 | ) | |||||||||||||||||||||||||||||||||
Share-based compensation (Note 11) | — | — | — | — | — | — | 852 | — | 107 | — | 959 | 959 | ||||||||||||||||||||||||||||||||||||
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Balance as of December 31, 2019 | 4,832,781 | $ | — | 8,740,398 | $ | — | $ | — | $ | 60,030 | $ | 1,605 | $ | — | $ | (67,084 | ) | $ | — | $ | (5,449 | ) | $ | (5,449 | ) | |||||||||||||||||||||||
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Issuance of shares (Note 10) | 96,481 | — | — | — | — | 1,223 | — | — | — | — | 1,223 | 1,223 | ||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (113,926 | ) | — | (113,926 | ) | (113,926 | ) | |||||||||||||||||||||||||||||||||
Share-based compensation (Note 11) | — | — | — | — | — | — | 859 | — | 5 | — | 864 | 864 | ||||||||||||||||||||||||||||||||||||
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Balance as of December 31, 2020 | 4,929,262 | $ | — | 8,740,398 | $ | — | $ | — | $ | 61,253 | $ | 2,464 | $ | — | $ | (181,005 | ) | $ | — | $ | (117,288 | ) | $ | (117,288 | ) | |||||||||||||||||||||||
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Exercise of stock options (Note 10) | 333,806 | — | — | — | — | 792 | — | — | — | — | 792 | 792 | ||||||||||||||||||||||||||||||||||||
Preferred shareholder transaction (Note 17) | — | — | (4,128,413 | ) | — | (170,949 | ) | — | — | 161,432 | — | — | (9,517 | ) | (9,517 | ) | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | — | (117,741 | ) | — | (117,741 | ) | (117,741 | ) | |||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | — | — | — | (86 | ) | (86 | ) | (86 | ) | |||||||||||||||||||||||||||||||||
Share-based compensation (Note 11) | — | — | — | — | — | — | 9,968 | — | 994 | — | 10,962 | 10,962 | ||||||||||||||||||||||||||||||||||||
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Balance as of December 31, 2021 | 5,263,068 | $ | — | 4,611,985 | $ | — | $ | (170,949 | ) | $ | 62,045 | $ | 12,432 | $ | 161,432 | $ | (297,752 | ) | $ | (86 | ) | $ | (232,878 | ) | $ | (232,878 | ) | |||||||||||||||||||||
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Redeemable Series X Preferred Stock | Shares | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
(in thousands of U.S. dollars, except share information) | Shares | Amount | Preferred stock | Common stock | Additional paid-in capital | Treasury stock | Accumulated other comprehensive loss | Accumulated deficit | Total stockholders' equity (deficit) | |||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 | — | $ | — | 8,740,398 | 15,961,703 | $ | 61,635 | $ | — | $ | — | $ | (67,084) | $ | (5,449) | |||||||||||||||||||||||||||||||||||||||||
Adjustment to beginning balance related to adoption of U.S. GAAP | — | — | — | — | (123) | (1,261) | (1,384) | |||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of stock | — | — | — | 318,657 | 802 | — | — | — | 802 | |||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (21,529) | (21,529) | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 1,727 | — | — | 5 | 1,732 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2020 | — | — | 8,740,398 | 16,280,360 | 64,041 | — | — | (89,869) | (25,828) | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Redeemable Series X preferred stock | 2,033,230 | 20,332 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Dividends on Redeemable Series X preferred stock | — | 974 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Extinguishment of Convertible Notes | — | — | — | — | 39,009 | — | — | — | 39,009 | |||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | 1,102,494 | 791 | — | — | — | 791 | |||||||||||||||||||||||||||||||||||||||||||||||
Preferred stockholder transaction (Note 11) | — | — | (4,128,413) | — | (18,251) | (170,949) | — | — | (189,200) | |||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (96,305) | (96,305) | |||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive loss | — | — | — | — | — | — | (86) | — | (86) | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 10,881 | — | — | — | 10,881 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2021 | 2,033,230 | 21,306 | 4,611,985 | 17,382,854 | 96,471 | (170,949) | (86) | (186,174) | (260,738) | |||||||||||||||||||||||||||||||||||||||||||||||
Hannover Holdings Transaction (Note 11) | — | — | (149,817) | (51,700) | — | (5,853) | — | — | (5,853) | |||||||||||||||||||||||||||||||||||||||||||||||
Merger transaction and Reverse Recapitalization | — | — | (4,462,168) | 22,630,545 | (165,804) | 170,949 | — | — | 5,145 | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A ordinary shares upon conversion of Convertible Notes | — | — | — | 17,980,954 | 64,051 | — | — | — | 64,051 | |||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Series X preferred stock accrued dividends | — | 97 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
Conversion of redeemable Series X preferred stock and accrued dividends in connection with the Reverse Recapitalization | (2,033,230) | (21,403) | — | 2,140,340 | 21,403 | — | — | — | 21,403 | |||||||||||||||||||||||||||||||||||||||||||||||
Reclassification of Columbia Warrant to equity | — | — | — | — | 124,805 | — | — | — | 124,805 | |||||||||||||||||||||||||||||||||||||||||||||||
Repayment of Columbia Loan | — | — | — | — | (3,418) | — | — | — | (3,418) | |||||||||||||||||||||||||||||||||||||||||||||||
Reclassification of Forfeiture Earnout Liability to equity | — | — | — | — | 1,005 | — | — | — | 1,005 | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A ordinary shares upon conversion of Cantor Loan | — | — | — | 788,021 | 7,880 | — | — | — | 7,880 | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A ordinary shares in connection with Forward Purchase Agreement | — | — | — | 1,250,000 | 10,000 | — | — | — | 10,000 | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A ordinary shares in connection with PIPE, net | — | — | — | 6,108,332 | 47,028 | — | — | — | 47,028 | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Class A ordinary shares in connection with Liberty Subscription Agreement, net | — | — | — | 20,619,835 | 120,506 | — | — | — | 120,506 | |||||||||||||||||||||||||||||||||||||||||||||||
Repurchase of shares | — | — | — | (516,123) | — | (2,750) | — | — | (2,750) | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon exercise of Public Warrants | — | — | — | 613,111 | 5,628 | — | — | — | 5,628 | |||||||||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | — | (36,641) | (36,641) | |||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | — | — | — | — | (226) | — | (226) | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of additional shares related to Cantor Loan Earnout | — | — | — | 26,050 | 167 | — | — | — | 167 | |||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options and RSUs vested | — | — | — | 223,218 | 144 | — | — | — | 144 | |||||||||||||||||||||||||||||||||||||||||||||||
Withholding of stock units to satisfy tax withholding obligations upon the vesting of restricted stock units and exercise of stock options | — | — | — | — | (306) | — | — | — | (306) | |||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | 8,368 | — | — | — | 8,368 | |||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2022 | — | $ | — | — | 89,195,437 | $ | 337,928 | $ | (8,603) | $ | (312) | $ | (222,815) | $ | 106,198 |
F-4
(Expressed in thousands of US dollars)
Year Ended December 31, | ||||||||||||||
Notes | 2021 | 2020 | 2019 | |||||||||||
Cash flows from operating activities: | ||||||||||||||
Net loss | $ | (117,741 | ) | $ | (113,926 | ) | $ | (20,765 | ) | |||||
Adjustments to reconcile Net loss to net cash flows used in operating activities: | ||||||||||||||
Depreciation expense | 8 | 10,825 | 3,182 | 4,238 | ||||||||||
Depreciation on right-of-use assets | 18 | 477 | 286 | — | ||||||||||
Income tax (benefit) expense | 7 | (232 | ) | 148 | 83 | |||||||||
Share-based compensation | 11 | 10,962 | 1,984 | 959 | ||||||||||
Interest expense and other | 6 | 11,684 | 7,509 | 4,501 | ||||||||||
Embedded derivative expense (income) | 17 | 42,102 | 84,224 | (4,230 | ) | |||||||||
Gain on debt extinguishment | 17 | (3,576 | ) | — | — | |||||||||
Interest on lease liabilities | 18 | 49 | 57 | — | ||||||||||
Foreign exchange differences | (2,385 | ) | (1,507 | ) | (156 | ) | ||||||||
Disposals of property and equipment | 8 | 588 | — | — | ||||||||||
Allowance for bad debts | 5 | 1,794 | — | — | ||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable - trade | (2,986 | ) | 7 | 12 | ||||||||||
Prepaids and other current assets | (1,706 | ) | (228 | ) | (170 | ) | ||||||||
Accounts payable - trade | 2,135 | 555 | (251 | ) | ||||||||||
Contract liabilities | 480 | 455 | 1,000 | |||||||||||
Accrued expenses and other liabilities | 19,810 | (76 | ) | 710 | ||||||||||
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Net cash used in operating activities | (27,720 | ) | (17,330 | ) | (14,069 | ) | ||||||||
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Cash flows from investing activities: | ||||||||||||||
Capital expenditures | (11,216 | ) | (9,259 | ) | (8,301 | ) | ||||||||
Other financial assets | 3 | 14 | — | |||||||||||
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Net cash used in investing activities | (11,213 | ) | (9,245 | ) | (8,301 | ) | ||||||||
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Cash flows from financing activities: | ||||||||||||||
Proceeds from loans, Series X Preferred Shares and issuance of convertible notes debt | 17 | 27,832 | 18,047 | 27,000 | ||||||||||
Payments of lease liabilities | 18 | (447 | ) | (370 | ) | — | ||||||||
Contributed capital and additional paid-in capital | 515 | 103 | 16 | |||||||||||
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Net cash provided by financing activities | 27,900 | 17,780 | 27,016 | |||||||||||
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Net increase (decrease) in cash and cash equivalents | (11,033 | ) | (8,795 | ) | 4,646 | |||||||||
Effect of foreign exchange rate changes | 2,299 | 1,507 | 156 | |||||||||||
Cash and cash equivalents - beginning of period | 17,267 | 24,555 | 19,753 | |||||||||||
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Cash and cash equivalents - end of period | $ | 8,533 | $ | 17,267 | $ | 24,555 | ||||||||
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Year Ended December 31, | |||||||||||||||||
(in thousands of U.S. dollars) | 2022 | 2021 | 2020 | ||||||||||||||
Cash flows from operating activities: | |||||||||||||||||
Net loss | $ | (36,641) | $ | (96,305) | $ | (21,529) | |||||||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||||
Depreciation expense | 14,326 | 10,728 | 3,031 | ||||||||||||||
Operating lease expense | 2,015 | 548 | 298 | ||||||||||||||
Deferred tax expense (benefit) | 1,601 | (1,619) | (38) | ||||||||||||||
Stock-based compensation | 8,368 | 10,881 | 1,732 | ||||||||||||||
Interest expense | 1,693 | 9,703 | 43 | ||||||||||||||
Change in fair value of financial instruments | (58,311) | (17,983) | (9,637) | ||||||||||||||
Loss on debt extinguishment | — | 37,216 | 9,240 | ||||||||||||||
Expenses related to Merger | 9,859 | — | — | ||||||||||||||
Foreign exchange differences | (4,578) | (2,385) | (1,507) | ||||||||||||||
Loss on disposal of property and equipment and right of use assets | 996 | 579 | 372 | ||||||||||||||
Bad debt expense | 1,736 | 1,794 | — | ||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Accounts receivable | (1,928) | (4,691) | (221) | ||||||||||||||
Prepaid expenses and other current assets | (1,855) | 21 | (14) | ||||||||||||||
Accounts payable | (3,202) | 1,421 | 6,474 | ||||||||||||||
Contract liabilities | 1,006 | 480 | 455 | ||||||||||||||
Accrued expenses and other liabilities | (1,562) | 21,622 | 497 | ||||||||||||||
Operating lease liabilities | (1,985) | (449) | (370) | ||||||||||||||
Net cash used in operating activities | (68,462) | (28,439) | (11,174) | ||||||||||||||
Cash flows from investing activities: | |||||||||||||||||
Acquisitions of property and equipment | (27,252) | (11,233) | (15,787) | ||||||||||||||
Equity investment in OS | (3,653) | — | — | ||||||||||||||
Other | 53 | 3 | 14 | ||||||||||||||
Net cash used in investing activities | (30,852) | (11,230) | (15,773) | ||||||||||||||
Cash flows from financing activities: | |||||||||||||||||
Proceeds from issuance of redeemable Series X preferred stock | — | 20,332 | — | ||||||||||||||
Proceeds from issuance of debt | — | 7,513 | 17,348 | ||||||||||||||
Repurchase of stock | (8,603) | — | — | ||||||||||||||
Proceeds from exercise of Public Warrants | 5,291 | — | — | ||||||||||||||
Proceeds from sale of common stock | 167,504 | — | — | ||||||||||||||
Proceeds from exercise of stock options | 144 | 791 | 802 | ||||||||||||||
Net cash provided by financing activities | 164,336 | 28,636 | 18,150 | ||||||||||||||
Net increase in cash, cash equivalents and restricted cash | 65,022 | (11,033) | (8,797) | ||||||||||||||
Effect of foreign exchange rate changes | 4,237 | 2,299 | 1,507 | ||||||||||||||
Cash, cash equivalents and restricted cash - beginning of period | 8,533 | 17,267 | 24,557 | ||||||||||||||
Cash, cash equivalents and restricted cash - end of period | $ | 77,792 | $ | 8,533 | $ | 17,267 |
F-5
NETTAR GROUP
The
We also intend to leverage our ability to quickly build and launch high quality, sub-meter satellites at a low cost by selling satellites to certain key customers.
Nettar Group, Inc., and CF Acquisition Corp. V (Nasdaq: CFV) (“CF V”), a special purpose acquisition company sponsored by Cantor Fitzgerald, announced on July 5, 2021 that they have entered into a definitive merger agreement that will result in Satellogic Inc (a new entity of the Group, formed for the purpose of participating in the merger transaction with CF V) becoming a publicly traded company. Further information related to the merger transaction of the Group consummated after December 31, 2021, see Note 20 (Subsequent Events). Such transaction was initially filed by Satellogic Inc., a whole-owned subsidiary of the Groupaccompanying Consolidated Financial Statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 (“the Consolidated Financial Statements”) have been prepared in accordance with generally accepted accounting principles in the USUnited States (“U.S. GAAP”) and the rules and regulations of the U.S. Securities and Exchange Commission (SEC) on(“SEC”). The Company conducts business through one operating segment.
Basis of Presentation
consolidation. The Consolidated Financial Statements have beenare presented in United States dollars (hereinafter “U.S. dollars” or “$”).
The Consolidated Financial Statements, we have been prepared onour consolidated financial statements in accordance with U.S. GAAP. The change from reporting in IFRS to U.S. GAAP was treated as a historical cost basis, except for certain financial instruments that are measured at fair values atchange in accounting standard, whereby we retrospectively applied the end of eachchange to all prior reporting period, as explainedperiods contained in the significant accounting policies below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Thethese Consolidated Financial Statements are presentedStatements. Where the initial adoption of U.S. GAAP resulted in United States dollars (hereinafter “US dollars”a material change in an asset or “$”).
The Consolidated Statementsliability, the adjustment was reported to the opening balance of Profit or Lossaccumulated deficit and Other Comprehensive Loss, Consolidated Statements of Changes in Equity and Consolidated Statements of Cash Flows are presented for the years ended December 31, 2021, 2020 and 2019 for comparative information. The Consolidated Statements of Financial Position are presentedadditional paid-in capital as of December 31, 2021 and 2020January 1, 2020. Refer to Note 19 (Adoption of U.S. GAAP) for comparativeadditional information.
These Consolidated Financial Statements as of December 31, 2021 and 2020 and for each of the three years in the period ended December 31, 2021, were approved by the Group’s Board of Directors on April 29, 2022.
F-6
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Reclassification
Principlesnew or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of Consolidation
Thesecurities registered under the Securities Exchange Act of 1934, as amended) are required to comply with
Liquiditycapital resources to the development of our satellite constellation and Going Concern
The accompanying Consolidated Financial Statements have been prepared on a going concern basis, which contemplates continuityimage technologies. As of operations,December 31, 2022, we had an accumulated deficit of $222.8 million. For the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying Consolidated Financial Statements for the yearsyear ended December 31, 2021, 20202022, we had net cash used in operating activities of $68.5 million. As of December 31, 2022, we had cash and 2019, respectively,cash equivalents of $76.5 million.
2. Significant Accounting Judgements, Estimateslonger term may require us to alter, or scale back, our capital expenditures and Assumptions andcould have a material adverse effect on our ability to achieve its intended business objectives.
Significant Accounting Judgements,
Other disclosures relating to the Group’s exposure to risks and uncertainties include:
Capital Management (Note 14)
Financial instruments risk management and policies (Note 15)
Sensitivity analyses disclosures (Note 15)
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty atexpenses during the reporting date, that have a significant riskperiod. Significant estimates and assumptions reflected in these Consolidated Financial Statements include, but are not limited to, revenue recognition; determination of causing auseful lives of property and equipment; valuation of warrant liabilities, earnout liabilities, stock options; and determination of income tax. We evaluate our estimates and assumptions on an ongoing basis. Actual results could differ from those estimates and such differences may be material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Group based its assumptions and estimates on parameters available when the Consolidated Financial Statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond theStatements.
F-7
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Share-based options
Estimating fair value for share-based options requirescontract; (ii) determination of whether the most appropriate valuation model, which depends onpromised goods are performance obligations, including whether they are distinct in the terms and conditionscontext of the grant. This estimate also requires determinationcontract; (iii) measurement of the most appropriate inputstransaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the valuation modelperformance obligations; and making assumptions about them. The Group used the Black Scholes model for measuring the fair value(v) recognition of equity settled awards with employees under the “2015 Share Plan amended June 14, 2016 and June 10, 2019 (the “Plan”)” for the years ended 2021, 2020 and 2019. The assumptions and models used for estimating fair value for share-based payment transactions are disclosed in Note 11 (Share-based Compensation).
Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in the Statement of Financial Position cannot be measured based on quoted prices in active markets, their fair valuerevenue when (or as) we satisfy each performance obligation.
Taxes
Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant judgment by management is required to determinerevenues the amount of deferred tax assetsthe transaction price that can be recognized, based upon the likely timing and the level of future taxable profits, together with future tax planning strategies.
The Group has $9,124 thousand and $4,434 thousand of deferred income tax assets as of December 31, 2021 and 2020, respectively. Based on estimations by the Group’s management, the Group has booked an allowance of $7,484 thousand and $4,386 thousand as of December 31, 2021 and 2020, respectively, to reduce the valuation of the net deferred income tax asset to is probable recovery value.
Summary of Significant Accounting Policies
Revenue Recognition
The Group is building a proprietary satellite constellation with the capability to generate insights from images and information, with focus on multi-temporal analysis and high frequency of revisits.
The Group accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and collectability of consideration is probable.
The Group recognizes revenue under a contract once control of the deliverable has passedallocated to the customer. The following indicatorsrespective performance obligation when or as the performance obligation is satisfied. Generally, our performance obligations are evaluatedtransferred to customers at a point in determining when control has passed to the customer: (i) the Group has a right to payment for the imagery, (ii) the Group has made available the imagery to the customer, (iii) the customer has the right to deploy the imagery in its activities, and (iv) the customer receives the rewards of obtaining the imagery. The Group’stime, typically upon delivery. Our satellite imagery can be delivered to the customers in two ways, either by providing access on the Group’svia our platform or via electronic delivery.
F-8
NETTAR GROUP
The Group provides a satellite-as-a-service offering to its customers which allows the customer continued access to a platform to obtain the latest imagery generated by the Group’s satellites throughout a contractual term. The Group has fulfilled its performance obligation when the customer receives and consumes the benefit of access to the latest imagery over the contractual term. The Group recognizes revenue on a straight-line basis over the contractual term to reflect the continued benefit to the customer of access to the Group’s satellite imagery.
The Group also provides imagery related to specific requested tasks from customers. The Group’ performance obligation under the contract is met and it recognizes revenue from these transactions at the point-in-time when control of the specific imagery has passed to the customer, which is usually upon delivery of the imagery to the customer.
At times, the Group may grant the customer the ability to name certain satellites. The naming rights of the satellites provides marketing value over the contractual term to the customer and is considered a distinct performance obligation. The Group recognizes the revenue related to the naming rights on a straight-line basis over the contractual period.
The Group also provides technical support of satellite data downlink for customers’ ground stations. The Group considers this service to be a distinct performance obligation. Technical support provides a stand-ready obligation to the customer for any technical issues that may arise in connection with the accessing and downloading of images. The Group recognizes revenue on a straight-line basis over the contractual period.
The Group may also sell some of its imagery as part of contractual arrangements containing multiple deliverables. For each deliverable that represents a distinct performance obligation, total arrangement consideration is allocated based upon the determined selling prices of each performance obligation. When naming rights are present in a contract, the Group may use a third-party valuation specialist to determine the fair value of this right. The Group will then ascribe a proportion of the contract consideration to this performance obligation.
The Group evaluates
The Group excludes
F-9
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Contract liabilities consist of payments received from customers, or such consideration that is contractually due, in advance of providing the product or performing services. Contract liabilities are comprised of an advance payment from the Group’s contract with a commercial space technology customer.
The Group currently does not incur any incremental direct costs from obtaining customer contracts.
The Group has elected to use the practical expedient for its performance obligations table to include only those customer contracts that are longer than 12 months at the time of contract inception and those contracts that are non-cancelable.
The Group requests payments for its imagery in advance or with the delivery of the imagery. The Group
Current Versus Non-current Classification
The Group presents
Fair Value Measurement
Financial instruments, such as money market funds and derivative financial liabilities, are measuredcarried at fair value at each balance sheet date. Fair value is the price that would be receivedin accordance with U.S. GAAP.
In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest. In determining the fair value, valuation techniques are used which maximizes the use of relevant observable inputs and minimizes the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the Consolidated Financial Statements are categorized within a fair value hierarchy. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:
F-10
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Level 1: Quoted (unadjusted) marketquoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Financial instruments carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:
•Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
•Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
Foreign Currencies
The Group’s functional currency
For those entitiesin substance, a separate award. The expense calculation includes estimated forfeiture rates, which have been developed based upon historical experience.
For those entities withLoss (included in other thanincome, net) and resulted in gains of $1,576, $1,022, and $594 during the US dollar as their functional currency, all assetsyears ended December 31, 2022, 2021, and liabilities denominated in foreign currencies are translated to US dollar2020, respectively.
Leases
The Group enters into lease contracts, as assessed at contract inception, primarily for real estate and equipment.inception. On the lease commencement date, the Group recognizeswe recognize a right-of-use (“ROU”) asset and lease liability.liability related to operating type leases. The cost of right-of-useROU assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. LeaseOperating lease liabilities are recorded based on the present value of the future lease fixed payments. In determining the present value of future lease payments, the Group uses itswe use our incremental borrowing rate applicable to the economic environment and the duration of the lease based on the information available at the commencement date.date as the majority of leases do not provide an implicit rate. For real estate and equipment contracts, the Groupwe generally
F-11
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
accounts account for the lease and non-lease components as a single lease component. In assessing the lease term, the Group includeswe include options to renew only when it iswe are reasonably certain that itsuch option(s) will be exercised; a determination which is at theour sole discretion of the Group.discretion. Variable lease payments are recognized as expenses in the period incurred. For leases with an initial term of 12 months or less, the Group haswe have elected to not record a right-of-usean ROU asset and lease liability. The Group recordsWe record lease expense on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets, beginning on the commencement date.
Financial Instruments
Financial assets
Classification and initial measurementin the assessment of financialwhether we will exercise a lease option. We assess ROU assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction priceimpairment in accordance with IFRS 15, all financial assetsour long-lived asset impairment policy.
Financial assetsnot based on an observable index and lease agreements with an original duration of less than 12 months are classified into one of the following categories:
amortized cost
fair value through profit or loss (“FVTPL”), or
fair value through other comprehensive income (“FVOCI”).
InFor the periods presented, the Group doeswe do not have any financial assets categorized as FVOCI.
The classification is determinedfinancing type leases.
the entity’s business modelcustomer, net of allowances for managingestimated doubtful accounts, discounts, returns and rebates. We measure the financial asset,allowance for doubtful accounts based on the estimated loss.
the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognized in the Statement of Profit or Loss and Other Comprehensive Loss are presented within finance costs, embedded derivative (expense) income, finance income or other financial items, except for an aging method. We assess impairment of trade receivablesaccounts receivable on a collective basis as they possess shared credit risk characteristics which is presented within Administrative expenses.
have been grouped based on the days past due.
NETTAR GROUP
Subsequent measurement of financial assets
Financial assets at amortized cost:
Financial assets
allowance account when they are held within a business model whose objective isdetermined to holdbe no longer collectible. The following table shows the financial assets and collect its contractual cash flows, and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortized cost using the effective interest method (“EIR”). Discounting is omitted where the effect of discounting is immaterial.
Financial assets at fair value through profit or loss (FVTPL):
Financial assets held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorized at FVTPL. Further, irrespective of the business model used, financial assets whose contractual cash flows are not solely payments of principal and interest are accounted for at FVTPL. All derivative financial instruments of the Group fall into this category.
Assetsactivity in this category are measured at fair value with gains or losses recognized in profit or loss. The fair values of financial assets in this category are determined by reference to active market transactions or using a valuation technique where no active market exists.
Impairment of Financial Assets
For financial assets at amortized cost, the Group recognizes an allowance for expected credit losses (“ECLs”)doubtful accounts for all financial assets instruments not held at fair value through the Consolidated Statement of Profit or Lossyears ended December 31, 2022 and Comprehensive Loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms.
ECLs are recognized in two stages. For credit exposures for which there has not been a significant increase in credit risk since initial recognition, ECLs are provided for credit losses that result from default events that are possible within the next 12-months. For those credit exposures for which there has been a significant increase in credit risk since initial recognition, a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the timing of the default.
The Group considers a financial asset in default when contractual payments are 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. In certain cases, the Group may also consider a financial asset to be in default when internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into account any credit enhancements held by the Group. A financial asset is written off when there is no reasonable expectation of recovering the contractual cash flows.
Classification and measurement of financial liabilities
Financial liabilities include borrowings, trade and other payables and derivative financial instruments.
F-13
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
All financial liabilities are recognized initially at fair value, including notes debt which is recognized net of directly attributable transaction costs.
Subsequently, financial liabilities are measured at amortized cost using the effective interest method except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at fair value with gains or losses recognized in the Consolidated Statement of Profit or Loss and Comprehensive Loss.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in the Statement of Profit or Loss and Comprehensive Loss are included within finance costs or finance income.
December 31, 2022 2021 Allowance for doubtful accounts as of beginning of period $ 1,794 $ — Provision 1,736 1,794 Write-offs — — Foreign exchange and other (293) — Allowance for doubtful accounts as of end of period $ 3,237 $ 1,794
and Restricted Cash
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Cash and cash equivalents | $ | 76,528 | $ | 8,533 | |||||||
Restricted cash | 126 | — | |||||||||
Restricted cash included in Other non-current assets | 1,138 | — | |||||||||
Total cash, cash equivalents and restricted cash | $ | 77,792 | $ | 8,533 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Cash paid during the period for: | |||||||||||||||||
Income tax, net of refunds | $ | 758 | $ | 96 | $ | 59 | |||||||||||
Interest | $ | 3,520 | $ | 49,283 | $ | 27,286 |
Property and Equipment
Property and equipment producedmodifications or acquired are stated at their productionexchanges occurring on or acquisition cost, which includes all costs directly attributable to makingafter the asset ready for use, less accumulated depreciation and any accumulated impairment losses.
Satellite costs include all expenses incurred for the building of individual satellites and comprise the manufacturing, launch and related launch-insurance costs and costs directly attributable to software programming. The Advances for satellites and satellites under construction primarily consist of percentage completion payments for the construction of future satellites and advances paid in respect of launch vehicles and related launch-insurance costs. Studies, direct labor costs, consultancy fees and other costs incurred directly in connection with satellite construction are also capitalized.
The Group calculates depreciation expense using the straight-line method over the estimated useful liveseffective date of the assets.
amendments. We adopted this guidance as of January 1, 2022. The useful livesimpact of the categories of property and equipment are as follows:
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The remaining useful lives of property and equipment are reviewed annually based on the satellites forecast utilization and the technical assessment of their useful lives. In instances of significant changesadopting this new guidance was not material to the estimated remaining useful, the remaining carrying valueconsolidated financial statements.
NETTAR GROUPSATELLOGIC INC.
Accounts payable – trade
Accounts payable-trade are recognized when
Provisions
Provisions are recognized whenan earlier recognition of losses than under the Group hascurrent incurred loss approach, which requires waiting to recognize a present obligation (legal or constructive) as a result of a past event,loss until it is probable that an outflow of resources embodying economic benefitsbeing incurred. This standard is effective for us beginning January 1, 2023 and will be requiredadopted using the modified retrospective transition method through a cumulative-effect adjustment to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the Consolidated Statement of Profit or Loss and Comprehensive Loss, net of any reimbursement. All provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate of the Group’s management.
Share-based Compensation
The Group measures all equity-based payments using a fair-value-based methodretained earnings as of the award grant date and vesting conditions and records Share-based compensation expense overeffective date. Upon adoption, the requisite service period for each award using the straight-line method in its Consolidated Financial Statements. The expense calculation includes estimated forfeiture rates, which have been developed based upon historical experience. As the Group records Share-based compensation expense, a corresponding increasestandard is recorded to Other paid-in-capital, a component of Shareholders’ Equity.
Taxes
Current Income Tax
Current income tax assets and/or liabilities are those amounts expected to be recovered from or paidonly impact our account for credit losses related to taxation authorities at each reporting or prior reporting date. The current tax payable is measured on taxable income that differs fromaccounts receivable. In preparation for the Consolidated Statements of Profit and Loss due to permanent and/or temporary timing differences. The tax rates and tax laws used to calculate the current tax are those that are enacted or substantively enacted at the reporting date in the countries where the Group operates and generates taxable income.
Deferred Income Tax
Deferred income tax is determined using the liability method of accounting for income tax. The deferred income tax reflects the temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the respective tax basis at the reporting date.
Deferred tax is recognized for all taxable temporary differences, except:
when the deferred tax liability arises from the initial recognition of goodwill, or an asset or liability (other than in a business combination) and, at the timeadoption of the transaction, affects neither the accounting profit nor taxable profit or loss;new standard, we have updated certain policies and
F-15
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint arrangements, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences, unused tax credit carry forwards and unused tax losses can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.
Deferred tax assets and liabilities relating to items recognized outside of the Consolidated Statements of Profit or Loss and Comprehensive Loss are recognized in correlation to the underlying transaction either in Other comprehensive income or directly in Shareholders’ Equity.
Deferred income tax assets and liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.
Uncertain Tax Positions
Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation. Where it is determined that it is not probable that a tax authority will accept an uncertain tax position, the Company reflects the tax effect using one of the following methods, dependent upon the method expected to better predict the resolution of the uncertainty:
the most likely amount; or
the expected value.
3. Recent Accounting Pronouncements
The following IFRS amendments and interpretations are effective from January 1, 2021 related processes, but theywe do not have a material impact on the Group’s consolidated financial statements:
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 – Interest Rate Benchmark Reform – Phase 2
Amendments to IFRS 16 – Covid-19-related Rent Concessions beyond 30 June 2021
The new and revised standards and interpretations that are issued but are not yet effective for the periods presented were not early adopted by the Group in preparing these consolidated financial statements.
F-16
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
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The Group is still evaluating the potential impact of these issued, but not yet effective new and revised standards and interpretations; however, the Group does not expect the adoption these standards toof this new guidance will have a material impact on the Consolidated Financial Statements.
Company stockholders | Shares | ||||
Class A stockholders immediately prior to merger | 17,215,336 | ||||
Series A preferred stockholders | 7,968,316 | ||||
Series B preferred stockholders | 4,597,928 | ||||
Series B-1 preferred stockholders | 2,171,399 | ||||
2018 convertible noteholders | 5,581,416 | ||||
2019 convertible noteholders | 7,846,333 | ||||
2020 convertible noteholders | 4,553,205 | ||||
Redeemable Series X preferred stockholders | 2,140,340 | ||||
Liberty investors | 20,000,000 | ||||
PIPE investors | 5,816,770 | ||||
Shares issued for Cantor loan repayment | 788,021 | ||||
Shares issued to Sponsor under Forward Purchase Securities Agreement | 1,250,000 | ||||
Issuance of shares for transaction fees | 2,058,229 | ||||
CF V shares | 6,837,354 | ||||
88,824,647 |
The Group’s revenue is derived from selling imagery and its only business activity is building of$4.4 million was recognized at a satellite constellation to support the selling of imagery.point-in-time. During the year ended December 31, 2021, the Groupwe recognized revenue of $4,247 thousand,$4.2 million, of which $3,858 thousand$3.8 million was recognized over time and $389 thousand$0.4 million was recognized at a point-in-time. The Group was pre-revenue prior We did not recognize any revenue in 2020.
The Group’s segmentConsolidated Financial Statements
unless otherwise stated)
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Revenue by geography (1) | ||||||||||||
Asia Pacific | $ | 3,988 | $ | — | $ | — | ||||||
North America | 201 | — | — | |||||||||
Other | 58 | — | — | |||||||||
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Total revenue | $ | 4,247 | $ | — | $ | — | ||||||
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The Group has one customer that
Year Ended December 31, | |||||||||||
2022 | 2021 | ||||||||||
Revenue by geography (1) | |||||||||||
Asia Pacific | $ | 1,531 | $ | 3,988 | |||||||
North America | 3,438 | 201 | |||||||||
Other | 1,043 | 58 | |||||||||
Total revenue | $ | 6,012 | $ | 4,247 |
F-17
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
basis, in exchange for $38,236 thousand of cash consideration, which is inclusive of VAT, and the right to use a building for an Assembly, Integration and Test facility. The Group also has the ability to earn additional consideration if the customer requests imagery in excess of the service cap. The Group agreed to collect the cash consideration, through quarterly payments of $797 thousand over ten years, which started in November 2021, with the remaining cash consideration collected as upfront milestone payments. The Group has collected $2,072 thousand, of which $1,000 thousand is included as a non-current contract liability, from this customer as of December 31, 2021.
In November 2021, the Group entered a 5-year noncancellable agreement with a technology company that requires the customer to purchase a minimum of $4,000 thousand of multispectral, hyperspectral, full-motion video or private delivery uplift products each year. The Group recognizes revenue as products are delivered to the customer. The customer pays the Group in non-cash consideration in the form of a license to a proprietary software platform, which the Group uses in its internal operations. The access to the platform is granted to the Group regardless of the level of products ordered. The customer has the option of purchasing additional products from the Group in exchange for cash consideration at the Group’s non-discounted standard price. For the year ended December 31, 2021,2022. One customer accounted for more than 10% of our revenue totaling $3.9 million for the Group recognized an insignificant amount of revenue related to this contract.
year ended December 31, 2021.
The Group’s
Year Ending December 31, | ||||||||
2021 | 2020 | |||||||
Non-current | $ | 1,000 | $ | 1,000 | ||||
Current | 935 | 455 | ||||||
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Total | $ | 1,935 | $ | 1,455 | ||||
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December 31, | |||||||||||
2022 | 2021 | ||||||||||
Non-current | $ | 1,000 | $ | 1,000 | |||||||
Current | 1,941 | 935 | |||||||||
Total | $ | 2,941 | $ | 1,935 |
Within 1 Year | Years 1-2 | Years 2-3 | Thereafter | |||||||||||||
Remaining performance obligations | $ | 7,048 | $ | 14,096 | $ | 13,956 | $ | 19,050 |
F-18
Within 1 Year | Years 1-2 | Years 2-3 | Thereafter | ||||||||||||||||||||
Remaining performance obligations | $ | 6,422 | $ | 11,296 | $ | 3,860 | $ | — |
NETTAR GROUP
5. Cost of sales
Liberty Warrants and Liberty Advisory Fee Warrant | PIPE Warrant | Columbia Warrant | $8.63 Warrants | Total Warrant Liabilities | |||||||||||||||||||||||||
As of December 31, 2021 | $ | — | $ | — | $ | 143,237 | $ | — | $ | 143,237 | |||||||||||||||||||
Warrants issued | $ | 30,853 | $ | 1,312 | $ | — | $ | 4,872 | $ | 37,037 | |||||||||||||||||||
Change in fair value of financial instruments | (24,662) | (1,001) | (18,635) | (2,702) | (47,000) | ||||||||||||||||||||||||
Write-off of deferred costs | — | — | 203 | — | 203 | ||||||||||||||||||||||||
Settlements | — | — | — | (337) | (337) | ||||||||||||||||||||||||
Reclassification to equity | — | — | (124,805) | — | (124,805) | ||||||||||||||||||||||||
As of December 31, 2022 | $ | 6,191 | $ | 311 | $ | — | $ | 1,833 | $ | 8,335 |
Cost of sales
Cost of sales includes direct costs related to ground stations, cloud and infrastructure costs, and digital image processing. During the year ended December 31, 2021, the Group began to recognize cost of sales primarily related to a single customer with a commercial space technology company.
Administrative expenses
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Administrative expenses | ||||||||||||
Professional fees related to merger transaction (1) | $ | (16,263 | ) | $ | — | $ | — | |||||
Professional fees | (5,439 | ) | (1,684 | ) | (669 | ) | ||||||
Share-based compensation | (5,355 | ) | (1,371 | ) | (330 | ) | ||||||
Salaries, wages, and other benefits | (4,432 | ) | (3,377 | ) | (1,763 | ) | ||||||
Allowance for doubtful accounts (2) | (1,794 | ) | — | — | ||||||||
Other administrative expenses | (3,366 | ) | (1,695 | ) | (1,562 | ) | ||||||
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Total | $ | (36,649 | ) | $ | (8,127 | ) | $ | (4,324 | ) | |||
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Research and development
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Research and development | ||||||||||||
Salaries, wages, and other benefits | $ | (6,296 | ) | $ | (4,413 | ) | $ | (4,676 | ) | |||
Share-based compensation | (1,968 | ) | (471 | ) | (597 | ) | ||||||
Professional fees | (91 | ) | (489 | ) | (543 | ) | ||||||
Other research and development expenses | (1,285 | ) | (506 | ) | (556 | ) | ||||||
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Total | $ | (9,640 | ) | $ | (5,879 | ) | $ | (6,372 | ) | |||
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F-19
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Other operating expenses, net
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Other operating expenses, net | ||||||||||||
Salaries, wages, and other benefits | $ | (6,800 | ) | $ | (3,040 | ) | $ | (3,165 | ) | |||
Share based compensation expenses | (3,639 | ) | (142 | ) | (33 | ) | ||||||
Professional fees | (1,310 | ) | (684 | ) | (714 | ) | ||||||
Other operating income and expenses | (2,253 | ) | (1,609 | ) | (1,851 | ) | ||||||
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Total | $ | (14,002 | ) | $ | (5,475 | ) | $ | (5,763 | ) | |||
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6. Finance Costs, net and Other Financial Income (Expense)
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Finance costs, net | ||||||||||||
Interest expense | $ | (9,326 | ) | $ | (7,466 | ) | $ | (4,468 | ) | |||
Accrued dividends - Series X | (2,367 | ) | — | — | ||||||||
Other finance costs, net | (76 | ) | (22 | ) | 365 | |||||||
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Total | $ | (11,769 | ) | $ | (7,488 | ) | $ | (4,103 | ) | |||
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Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Other financial income (expense) | ||||||||||||
Foreign exchange differences | $ | 1,019 | $ | 597 | $ | (112 | ) | |||||
Other financial income | 48 | — | — | |||||||||
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Total | $ | 1,067 | $ | 597 | $ | (112 | ) | |||||
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7. Income Tax
Net income tax provision summary
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Current Tax Provision | $ | (1,387 | ) | $ | (186 | ) | $ | (93 | ) | |||
Deferred Tax Benefit | ||||||||||||
Benefit relating to origination and reversal of temporary differences | 1,592 | 38 | 10 | |||||||||
Adjustments in respect of temporary differences of previous years (and currency fluctuations) | 27 | — | — | |||||||||
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Net Income Benefit/(Expense) | $ | 232 | $ | (148 | ) | $ | (83 | ) | ||||
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F-20
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Current income tax for the years ended December 31, 2021, 2020 and 2019 is an annual tax levied at 30% in Argentina (25% - 30%, depending on taxable income), 25% in China, 23% in Israel, 25% in Spain, 21% in the United States and 25% in Uruguay. A reconciliation of differences between the product of the accounting loss/income multiplied by the weighted average tax rate, as discussed below,Liberty Warrants and the income tax expense:
Rate reconciliation summary
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Loss before income tax expense | $ | (117,973 | ) | $ | (113,778 | ) | $ | (20,682 | ) | |||
Income tax calculated using weight average applicable statutory rates: | 4,050 | 2,221 | 2,165 | |||||||||
U.S. State and Local Income Taxes | (5 | ) | 4 | — | ||||||||
U.S. - Foreign Derived Intangible Income Deduction | 200 | — | — | |||||||||
Argentina Tax Inflation Adjustment | 381 | 198 | 288 | |||||||||
Other Permanent Differences | 4 | 20 | 1 | |||||||||
Non-Recognition of Deferred Tax Assets | (3,648 | ) | (1,198 | ) | (898 | ) | ||||||
Effect of Rates Different than Statutory | (750 | ) | (1,393 | ) | (1,639 | ) | ||||||
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Total | $ | 232 | $ | (148 | ) | $ | (83 | ) | ||||
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The weighted average statutory rate for 2021, 2020, and 2019 is 3.38%, 1.95%, and 10.47%, respectively. The weighted average statutory rates fluctuate due to the mix of earnings between taxable and tax-free jurisdictions. In 2021, 2020, and 2019, approximately 88%, 93%, and 65%, respectively, of the consolidated group’s activity is generated in the British Virgin Islands, where the statutory tax rate is 0% and Uruguay, where the Group operates in a free trade zone, leaving a minimal total weighted average statutory rate.
Year Ending December 31, | ||||||||
2021 | 2020 | |||||||
Deferred Tax Assets: | ||||||||
Stock Options | $ | 1,112 | $ | 43 | ||||
Bad Debts | 407 | — | ||||||
Deferred Financing Costs | — | — | ||||||
Other | 14 | 5 | ||||||
Net Operating Loss | 107 | — | ||||||
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Total Net Deferred Tax Assets/(Liabilities) | $ | 1,640 | $ | 48 | ||||
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Items for which no deferred tax asset/liability has been recognized: |
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Stock Options | 941 | 89 | ||||||
Other Temporary Items | 405 | 428 | ||||||
Net Operating Loss | 6,138 | 3,869 | ||||||
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|
| |||||
Total | $ | 7,484 | $ | 4,386 | ||||
|
|
|
|
F-21
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
The assessment of the realizability of the deferred tax assets is based on all available positive and negative evidence. Such evidence includes, but is not limited to, recent cumulative earnings or losses, expectations of future taxable income by taxing jurisdiction, and the carry-forward periods available for the utilization of deferred tax assets. The assessment of the recoverability of deferred tax assets will not change until there is sufficient evidence to support their realizability. The Group will continue to assess and record any necessary changes to align its deferred tax assets to their realizable value.
Expiration | Amount Carried Forward (USD) | Amount Recognized as of December 31, 2021 | ||||||||
Argentina Net Operating Loss | December 31, 2022 - December 31, 2026 | $ | 20,460 | $ | — | |||||
China Net Operating Loss | December 31, 2026 | 401 | 100 | |||||||
Netherlands Net Operating Loss | December 31, 2027 | 16 | 4 | |||||||
Uruguay Net Operating Loss | December 31, 2026 | $ | 10 | $ | 3 |
8. Property and Equipment
Property and equipment consists of the following:
Satellites | Advances for satellites and satellites under construction | Research and development | Other | Total | ||||||||||||||||
Cost | ||||||||||||||||||||
Balance as of January 1, 2020 | $ | 10,325 | $ | 18,399 | $ | 3,404 | $ | 1,524 | $ | 33,652 | ||||||||||
Additions | — | 15,277 | 392 | 274 | 15,943 | |||||||||||||||
Transfers | 26,421 | (26,421 | ) | — | — | — | ||||||||||||||
Disposals | — | (289 | ) | — | — | (289 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance as of December 31, 2020 | 36,746 | 6,966 | 3,796 | 1,798 | 49,306 | |||||||||||||||
Additions | — | 8,815 | 202 | 1,109 | 10,126 | |||||||||||||||
Transfers | 4,700 | (4,700 | ) | — | — | — | ||||||||||||||
Disposals | — | (522 | ) | (11 | ) | — | (533 | ) | ||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance as of December 31, 2021 | $ | 41,446 | $ | 10,559 | $ | 3,987 | $ | 2,907 | $ | 58,899 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Depreciation | ||||||||||||||||||||
Balance as of January 1, 2020 | $ | 9,248 | $ | — | $ | 1,242 | $ | 678 | $ | 11,168 | ||||||||||
Depreciation expense | 2,427 | — | 463 | 292 | 3,182 | |||||||||||||||
Disposals and other | — | — | 84 | — | 84 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance as of December 31, 2020 | 11,675 | — | 1,789 | 970 | 14,434 | |||||||||||||||
Depreciation expense | 10,086 | — | 389 | 350 | 10,825 | |||||||||||||||
Disposals and other | — | — | 54 | — | 54 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance as of December 31, 2021 | $ | 21,761 | $ | — | $ | 2,232 | $ | 1,320 | $ | 25,313 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Carrying amount | ||||||||||||||||||||
Balance as of December 31, 2021 | $ | 19,685 | $ | 10,559 | $ | 1,755 | $ | 1,587 | $ | 33,586 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Balance as of December 31, 2020 | $ | 25,071 | $ | 6,966 | $ | 2,007 | $ | 828 | $ | 34,872 | ||||||||||
|
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|
|
|
|
|
|
|
|
F-22
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Information of the Group’s non-current assets by geography is as follows:
Year Ending December 31, | ||||||||
2021 | 2020 | |||||||
Non-current assets by geography (1) (2) (3) | ||||||||
Uruguay | $ | 34,062 | $ | 34,518 | ||||
Argentina | 1,166 | 819 | ||||||
Spain | 787 | 839 | ||||||
Other countries | 234 | 37 | ||||||
|
|
|
| |||||
Total non-current assets | $ | 36,249 | $ | 36,213 | ||||
|
|
|
|
|
|
|
9. Prepaids and Other Current Assets
Year Ending December 31, | ||||||||
2021 | 2020 | |||||||
Prepaids and other current assets | ||||||||
Prepaids | $ | 1,153 | $ | 243 | ||||
Advances to suppliers | 829 | 426 | ||||||
Other current assets | 713 | 103 | ||||||
|
|
|
| |||||
Total | $ | 2,695 | $ | 772 | ||||
|
|
|
|
10. Issued Capital and Reserves
During 2021, 2020 and 2019, there are no amendments to Group capital, except for the issuance of Nettar Series X Preferred Shares (classified as liabilities as further described below in this note), the repurchase of Series A, B and B-1 preference shares owned by a former shareholder (see Note 17), and the exercise of stock options and stock awards. The breakdown of each class of share capital as of such dates is as follows:
Shares issued and fully paid
Year Ending December 31, | ||||||||||||
Shares issued and fully paid | 2021 | 2020 | 2019 | |||||||||
Ordinary Shares | 53 | 49 | 48 | |||||||||
Series A preference shares | 25 | 47 | 47 | |||||||||
Series B preference shares | 14 | 31 | 31 | |||||||||
Series B-1 preference shares | 7 | 9 | 9 | |||||||||
Series X Preferred Shares | 20 | — | — | |||||||||
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|
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| |||||||
119 | 136 | 135 | ||||||||||
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|
|
|
F-23
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Except for the number of Ordinary Shares and Nettar Series X Preferred shares which changed in 2021 as explained below, the number of shares authorized for each class remained unchanged for the years in 2019 and 2020 as follows:
Authorized shares
Authorized shares | Number of shares | Face value per share | ||||||
Ordinary Shares | 20,000,000 | 0.00001 | ||||||
Series A preference shares | 4,723,330 | 0.00001 | ||||||
Series B preference shares | 3,117,915 | 0.00001 | ||||||
Series B-1 preference shares | 899,153 | 0.00001 | ||||||
Series X Preferred Shares | 2,500,000 | 0.00001 |
The number of authorized Ordinary Shares in year 2021 increased from 15.5 million to 20 million and the Nettar Series X Preferred Shares increased by 2.5 million, while the rest of the classes of authorized Preferred shares remained unchanged.
Ordinary shares issued and fully paid
Ordinary shares | Number of shares | Face value per share | Total | |||||||||
At January 1, 2019 | 4,823,645 | 0.00001 | 48 | |||||||||
Issuance of shares | 9,136 | 0.00001 | — | |||||||||
|
|
|
| |||||||||
At December 31, 2019 | 4,832,781 | 0.00001 | 48 | |||||||||
Issuance of shares | 96,481 | 0.00001 | 1 | |||||||||
|
|
|
| |||||||||
At December 31, 2020 | 4,929,262 | 0.00001 | 49 | |||||||||
Issuance of shares | 333,806 | 0.00001 | 4 | |||||||||
|
|
|
| |||||||||
At December 31, 2021 | 5,263,068 | 0.00001 | 53 | |||||||||
|
|
|
|
Preferred shares
Preferred shares | Series A | Series B | Series B-1 | Series X | Face value per share | Total | ||||||||||||||||||
At January 1, 2019 | 4,723,330 | 3,117,915 | 899,153 | — | 0.00001 | 87 | ||||||||||||||||||
Redemption / Issuance of shares | — | — | — | — | 0.00001 | — | ||||||||||||||||||
|
|
|
|
|
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|
|
|
|
|
| |||||||||||||
At December 31, 2019 | 4,723,330 | 3,117,915 | 899,153 | — | 0.00001 | 87 | ||||||||||||||||||
Redemption / Issuance of shares | — | — | — | — | 0.00001 | — | ||||||||||||||||||
|
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|
|
|
|
|
|
|
|
|
| |||||||||||||
At December 31, 2020 | 4,723,330 | 3,117,915 | 899,153 | — | 0.00001 | 87 | ||||||||||||||||||
Treasury shares(2) | (2,176,000 | ) | (1,725,784 | ) | (226,629 | ) | — | 0.00001 | (41 | ) | ||||||||||||||
Issuance of shares | — | — | — | 2,033,230 | (1) | 0.00001 | 20 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
At December 31, 2021 | 2,547,330 | 1,392,131 | 672,524 | 2,033,230 | 0.00001 | 66 | ||||||||||||||||||
|
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|
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|
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|
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|
|
In accordance with the Articles of Association of Nettar Group Inc., the Purchase Agreements and the Investors’ Right Agreements (hereinafter, the Agreements), each holder of Preferred Shares shall be entitled to convert any or all of its Preferred Shares at any time, without the payment of any additional consideration, into such number of fully paid Ordinary Shares per Preferred Share as is determined by dividing the applicable Original Purchase Price by the applicable Conversion Price determined for each series of Preferred and Preference Shares. Furthermore, the Agreements states the events which trigger the automatic conversion of the Preferred and Preference Shares into Ordinary Shares, such as the closing of a Qualified initial public offering (IPO), or with a Requisite Vote to convert all Preferred Shares at the then-effective Conversion Price.
F-24
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
In April 2021, the Group entered into an agreement with investors, through which the Group would issue up to 2,500,000 Nettar Series X Preferred Shares, $0.00001 par value per share, at a purchase price of $10.00. The Nettar Series X Preferred Shares carry an annual 7% cumulative dividend, payable upon a liquidation, dissolution, winding up or upon the conversion or redemption of the Nettar Series X Preferred Shares. During the year ended December 31, 2021, a total of 2,033,230 Nettar Series X Preferred SharesLiberty Advisory Fee Warrant were issued.
Since the Series X Preferred Shares contain a contractual obligation to deliver cash or another financial asset (e.g., variable number of common shares), multiple conversion events are based on the occurrence or non-occurrence of events beyond the issuer’s control (e.g., acquisition by a SPAC, next equity financing, an IPO or conversion at the optional election of shareholders), the Preferred Shares were accounted forinitially recognized as a liability. For those conversion options in the Preferred Shares agreement that are considered derivatives under IFRS 9, whose economic risks are expected not to be closely related to the financial instrument, the Group has recognized a separate derivative measured at fair value.
As further detailed in Note 20 (Subsequent Events), and in connection with the merger transaction closed in January 2022, all of the Group’s Preferred Shares outstanding immediately prior to the effective time of the Initial Merger (other than dissenting shares) were converted into a number of Class A Ordinary Shares as determined in the merger agreement.
11. Share-based Compensation
Employees, including senior executives, of the Group receive incentives in the form of share-based options, whereby employees render services as consideration for equity instruments (equity-settled transactions). The Group maintains a plan under which the share-based option awards are issued or modified. The Plan provides for the direct allocation as well as the sale of shares and the granting of options for the purchase of shares, at the discretion of the Group’s Board of Directors, to certain employees, advisors and/or independent directors. The option incentives are usually granted for a four-year vesting term and have a maximum term of ten years.
The Group recognized share-based compensation expense of $10,962 thousand, $1,984 thousand and $959 thousand for the years ended December 31, 2021, 2020 and 2019 respectively. The following components of Shareholders’ equity were increased as follows:
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Other paid-in capital | $ | 9,968 | $ | 859 | $ | 852 | ||||||
Additional paid-in capital | — | 1,120 | — | |||||||||
Forfeiture options (reclassified to retained earnings) | 994 | 5 | 107 | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 10,962 | $ | 1,984 | $ | 959 | ||||||
|
|
|
|
|
|
There were no cancellations or modifications to the granted awards in 2021, 2020 and 2019.
F-25
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
The following table illustrates the number and weighted average exercise prices (“WAEP”) of, and movements in, share options during the years 2021, 2020 and 2019:
Number 2021 | WAEP 2021 | Number 2020 | WAEP 2020 | Number 2019 | WAEP 2019 | |||||||||||||||||||
Outstanding at January 1st | 1,421,314 | $ | 2.75 | 1,238,025 | $ | 2.41 | 678,677 | $ | 1.79 | |||||||||||||||
Granted during the year | 1,080,491 | 10.45 | 348,444 | 4.14 | 617,173 | 3.04 | ||||||||||||||||||
Forfeited during the year | (72,115 | ) | 4.21 | (104,152 | ) | 3.93 | (22,278 | ) | 1.79 | |||||||||||||||
Excercised during the year | (333,806 | ) | 2.25 | (56,577 | ) | 1.82 | (9,136 | ) | 1.79 | |||||||||||||||
Expired during the year | (17,475 | ) | 2.53 | (4,426 | ) | 2.37 | (26,411 | ) | 1.79 | |||||||||||||||
Outstanding at December 31st | 2,078,409 | $ | 6.79 | 1,421,314 | $ | 2.75 | 1,238,025 | $ | 2.41 | |||||||||||||||
Excersisable at December 31st | 1,001,770 | $ | 3.00 | 992,024 | $ | 2.35 | 771,631 | $ | 2.08 |
The accumulated amounts related to Share-based options recognized as Other paid-in capital in equity for the years ended December 31, 2021, 2020 and 2019 were 12,432 thousand, 2,464 thousand and 1,605 thousand, respectively. See the Consolidated Statement of Changes in Equity.
The weighted average remaining contractual life for the share options outstanding were 7.95 years, 7.20 years and 7.88 years as of December 31, 2021, 2020 and 2019, respectively.
The following table list the inputs used for the measurement of the Plan during the years ended December 31, 2021, 2020 and 2019, respectively:
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Weighted average fair values at the measurement date (grant date) | $ | 23.36 | $ | 6.31 | $ | 2.05 | ||||||
Dividend yield (%) | — | — | — | |||||||||
Expected volatility (%) | 61 - 72 | 59 - 61 | 52 - 61 | |||||||||
Risk-free interest rate (%) | 0.5 - 1.4 | 0.4 - 0.5 | 1.3 - 2.2 | |||||||||
Contractual life of share options (years) | 10 | 10 | 10 | |||||||||
Weighted average share price (USD) | $ | 6.79 | $ | 2.75 | $ | 3.04 | ||||||
Model used | Black Scholes | Black Scholes | Black Scholes |
The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.
As further detailed in Note 20 (Subsequent Events), and in connection with the merger transaction closed in January 2022, all options to purchase the Group’s ordinary shares were assumed by Satellogic Inc., the new listed company, and became options to purchase Class A Ordinary Shares of Satellogic Inc., as determined in accordance with the Merger Agreement.
F-26
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
12. Accrued Expenses and Other Liabilities
Year Ending December 31, | ||||||||
2021 | 2020 | |||||||
Accrued expenses and other liabilities | ||||||||
Accrued professional fees related to merger transaction(1) | $ | (16,263 | ) | $ | — | |||
Provisions | (2,934 | ) | (462 | ) | ||||
Payroll and employee benefits payable | (2,545 | ) | (1,717 | ) | ||||
Other taxes payable | (2,045 | ) | (439 | ) | ||||
|
|
|
| |||||
Total | $ | (23,787 | ) | $ | (2,618 | ) | ||
|
|
|
| |||||
Total current | (23,435 | ) | (2,582 | ) | ||||
|
|
|
| |||||
Total non-current | $ | (352 | ) | $ | (36 | ) | ||
|
|
|
|
|
13. Earnings (loss) per Share (“EPS”)
Basic EPS is calculated by dividing the profit (loss) for the year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by dividing the profit (loss) attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.
The Group identified four financial instruments that qualify as potential ordinary shares: 1) the Preferred and Preference Shares described in Note 10 (Issued Capital and Reserves), 2) the share-based options awards mentioned in Note 11 (Share-based Compensation), 3) the warrant described in Note 17 (Debt) and 4) the Notes debt described in Note 17 (Debt). Each of these potential ordinary shares are antidilutive since their conversion to ordinary shares would decrease loss per share from continuing operations. Basic and diluted EPS are equal since the calculation of diluted earnings per share does not assume conversion, exercise, or other issue of potential ordinary shares that would have an antidilutive effect on earnings (loss) per share.
The following table reflects the income (loss) and share data used in the basic and diluted EPS calculations:
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Loss for the year attributable to Equity holders of the parent (basic and diluted) | $ | (117,741 | ) | $ | (113,926 | ) | $ | (20,765 | ) | |||
Weighted average number of ordinary shares (basic and diluted) | 5,042,885 | 4,853,668 | 4,829,625 | |||||||||
|
|
|
|
|
| |||||||
Loss per share basic and diluted | $ | (23.35 | ) | $ | (23.47 | ) | $ | (4.30 | ) | |||
|
|
|
|
|
|
14. Capital Management
For the purpose of the Group’s capital management, capital includes issued capital, convertible Preferred and Preference Shares, additional paid in capital, treasure shares, warrants, all other equity reserves attributable to the equity holders of the parent, and debt disclosed in Note 17 (Debt). The Group considers both capital and net debt as relevant components of funding. The Group manages its capital to ensure the Group will be able to continue as a going
F-27
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
concern while maximizing the shareholders’ value through the optimization of the debt and equity balance. The Group manages its capital structure and makes adjustments in light of changes in economic conditions. To maintain or adjust the capital structure, the Group may search for new sources of funding (either equity or debt), issue new shares or new convertible promissory notes. The Group has historically funded its operations principally through notes payable, common stock and preferred stock issuances.
The breakdown of the Group capital structure for capital management purposes is as follows:
Year Ending December 31, | ||||||||
2021 | 2020 | |||||||
Treasury shares | $ | (170,949 | ) | $ | — | |||
Additional paid-in capital | 62,045 | 61,253 | ||||||
Other paid-in capital | 12,432 | 2,464 | ||||||
Warrants | 161,432 | — | ||||||
Foreign currency translation reserve | (86 | ) | — | |||||
Retained earnings | (297,752 | ) | (181,005 | ) | ||||
|
|
|
| |||||
Total equity | $ | (232,878 | ) | $ | (117,288 | ) | ||
|
|
|
| |||||
Current debt | $ | 246,189 | $ | 125,085 | ||||
Non-current debt | — | 33,795 | ||||||
|
|
|
| |||||
Total debt | $ | 246,189 | $ | 158,880 | ||||
|
|
|
| |||||
Total capital management structure | $ | 13,311 | $ | 41,592 | ||||
|
|
|
|
No changes were made in the objectives, policies, or processes for managing capital during the years ended December 31, 2021, 2020 and 2019.
15. Financial Instruments Risk
Risk management objectives and policies
The Group is subject to a number of risks associated with emerging, technology-oriented companies with a limited operating history, including, but not limited to, dependence on key individuals, a developing business model, initial and continued market acceptance of the Group’s services, protection of the Group’s proprietary technology, competition from substitute products and services.
The Group´s activities expose it to a variety of financial risks, including fair value risk, market risk, interest rate risk, credit risk, foreign currency risk and liquidity risk. The Group’s senior management oversees the management of these risks. The Group’s senior management conducts this oversight in close co-operation with the board of directors and focuses on actively securing the entity´s short to medium term cash flows by minimizing the exposure to financial markets. The Group does not actively engage in the trading of financial assets for speculative purposes.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarized below.
F-28
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Fair value risk
The Group is subject to fair value risk related to the conversion options contained in the Group’s convertible notes debt and Nettar Series X Preferred Shares and the make-whole premium of the Cantor Loan. Fluctuations in the fair value of these financial instruments may arise from changes significant unobservable inputs detailed below (see Description of significant unobservable inputs to valuation).
All of the Group’s outstanding Notes debt, Nettar Series X Preferred Shares and Cantor Loan balances were converted into a number of Class A Ordinary Shares as determined in the merger agreement in connection with the merger transaction with CF Acquisition Corp. V (see Note 20 Subsequent Events).
Fair value measurement hierarchy
The following table provides the fair value measurement hierarchy of the Group’s assets and liabilities.
There were no transfers between Level 1 and Level 2 during 2021 and 2020.
Fair value of financial instruments that are not measured at fair value (but fair value disclosures are required)
Set out below is a comparison, by class, of the carrying amounts and fair values of the Group’s financial instruments, other than those with carrying amounts that are reasonable approximations of fair values.
F-29
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Fair value measurement using | ||||||||||||||||||||
Financial instruments | Date of valuation | Total | Quoted prices in active markets (Level 1) | Significant observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||
Assets for which fair values are disclosed | ||||||||||||||||||||
Fixed term deposit | December 31, 2021 | 53 | — | 53 | — | |||||||||||||||
Accounts receivables | December 31, 2021 | 1,196 | — | 1,196 | — | |||||||||||||||
Other receivables (guarantee deposits) | December 31, 2021 | 135 | — | 135 | — | |||||||||||||||
Liabilities measured at fair value | ||||||||||||||||||||
Notes debt - Embedded derivative | December 31, 2021 | 117,622 | — | — | 117,622 | |||||||||||||||
Series X Preferred Shares - Embedded derivative | December 31, 2021 | 188 | — | — | 188 | |||||||||||||||
Cantor Loan - Embedded derivative | December 31, 2021 | 579 | — | — | 579 | |||||||||||||||
Liabilities for which fair values are disclosed | ||||||||||||||||||||
Notes debt | December 31, 2021 | 61,856 | — | 61,856 | — | |||||||||||||||
Promissory notes | December 31, 2021 | 40,925 | — | 40,925 | — | |||||||||||||||
Series X Preferred Shares | December 31, 2021 | 20,465 | — | 20,465 | — | |||||||||||||||
Cantor Loan | December 31, 2021 | 6,943 | — | 6,943 | — | |||||||||||||||
Trade, accruals and other payables | December 31, 2021 | 27,866 | — | 27,866 | — | |||||||||||||||
Assets measured at fair value | ||||||||||||||||||||
Cash equivalents - Money market funds | December 31, 2020 | 1,088 | 1,088 | — | — | |||||||||||||||
Assets for which fair values are disclosed | ||||||||||||||||||||
Fixed term deposit | December 31, 2020 | 56 | — | 56 | — | |||||||||||||||
Accounts receivables | December 31, 2020 | 4 | — | 4 | — | |||||||||||||||
Other receivables (guarantee deposits) | December 31, 2020 | 130 | — | 130 | — | |||||||||||||||
Liabilities measured at fair value | ||||||||||||||||||||
Notes debt - Embedded derivative | December 31, 2020 | 96,096 | — | — | 96,096 | |||||||||||||||
Liabilities for which fair values are disclosed | ||||||||||||||||||||
Notes debt | December 31, 2020 | 55,280 | — | 55,280 | — | |||||||||||||||
Trade and other payables | December 31, 2020 | 7,478 | — | 7,478 | — |
Year Ending December 31, 2021 | Year Ending December 31, 2020 | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | |||||||||||||
Financial assets measured at amortized cost | ||||||||||||||||
Other receivables | $ | 156 | $ | 135 | $ | 157 | $ | 130 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 156 | $ | 135 | $ | 157 | $ | 130 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Financial liabilities measured at amortized cost | ||||||||||||||||
Notes debt | $ | 61,456 | $ | 61,856 | $ | 62,784 | $ | 55,280 | ||||||||
Promissory notes | 38,095 | 40,925 | — | — | ||||||||||||
Series X Preferred Shares | 21,183 | 20,465 | — | — | ||||||||||||
Cantor Loan | 7,066 | 6,943 | — | — | ||||||||||||
Trade, accruals and other payables | 28,047 | 27,866 | 7,981 | 7,478 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 155,847 | $ | 158,055 | $ | 70,765 | $ | 62,758 | ||||||||
|
|
|
|
|
|
|
|
F-30
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
The Group assessed that the fair values of fixed term deposits, accounts receivables, current other receivables, and current trade and other payables approximate their carrying amounts largely due to the short-term maturities of these instruments.
The following methods and assumptions were used to estimate the fair values:
The carrying values of the fixed term deposits and the accounts receivables are considered to approximate their fair values.
The fair values of the other receivables and trade and other payables have been estimated using a discounted cash flow model. The valuation requires management to make certain assumptions about the model inputs, including forecast cash flows, the discount rate, credit risk and volatility. The probabilities of the various estimates within the range can be reasonably assessed and are used in management’s estimate of fair value for these receivables.
The fair values of the Group’s Notes debt, Nettar Series X Preferred Shares and Cantor Loan are determined by using the “with” and “without” method. As of each Measurement Date, the Group first valued the Notes and Nettar Series X Preferred Shares with the Conversion Options and the Cantor Loan with the make-whole premium in certain scenarios (the “with” scenario) and subsequently valued the Notes and Nettar Series X Preferred Shares without the Conversion Options and the Cantor Loan without the make-whole premium in certain scenarios (the “without” scenario). The difference between the fair values of the Notes in the “with” and “without” scenarios was the concluded fair value of the Conversion Options of the Notes and Nettar Series X Preferred Shares and the make-whole premium of Cantor Loan as of the Measurement Date.
The carrying value of the lease liabilities is calculated as the present value of lease payments, discounted at its incremental borrowing rate at the lease commencement date. The Group considers that the incremental borrowing rate remained unchanged, therefore the carrying amount of this liability approximate its fair value.
The fair values of the guarantee deposits have been estimated using the discounted cash flow model. Since these deposits relate to leasing activities with similar terms of maturity, they have been discounted at the incremental borrowing rate used for these lease liabilities.
Description of significant unobservable inputs to valuation
The significant unobservable inputs used in the fair value measurements categorized within Level 3 of the fair value hierarchy included the following:
Notes debt embedded derivative:
fair value of one Series B preference share,
discount rate, and
volatility.
When applying a reasonably possible range for alternative assumptions to each unobservable input, a +/- 20% increase/(decrease) in fair value fair value of one Series B preference share would result in an increase/(decrease) in fair value of the liability of approximately $36.1 million / ($36.1) million and $30.0 million / ($30.0) million for the years ended December 31, 2021 and 2020, respectively. No material changes in the liability resulted from sensitivity analyses related to the discount rate (i.e., 1% increase/decrease in rate) or volatility (i.e., 10% increase/decrease in volatility).
F-31
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Series X embedded and Cantor Loan derivatives:
one common share value on fully diluted basis in delayed exit/stay private scenario (for Series X)
discount rate, and
volatility.
No material changes in the liability resulted when applying a reasonably possible range for alternative assumptions to each unobservable input in the respective sensitivity analyses (i.e, 1% increase/decrease in discount rate, 10% increase/decrease in volatility, 20% increase/decrease in the value of the common share).
Reconciliation of Level 3 fair value measurements of financial instruments
Fair value - embedded derivative liability(2) | ||||
At January 1, 2020 | $ | 7,139 | ||
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| |||
Remeasurement loss (1) | 84,224 | |||
Issues | 4,733 | |||
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At December 31, 2020 | $ | 96,096 | ||
|
| |||
Remeasurement (gain) - Series X (1) | (1,328 | ) | ||
Remeasurement loss - Notes debt (1) | 43,428 | |||
Remeasurement loss - Cantor Loan (1) | 2 | |||
Issues - Series X | 1,516 | |||
Settlements – Notes debt | (21,902 | ) | ||
Issues - Cantor Loan | 577 | |||
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At December 31, 2021 | $ | 118,389 | ||
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There were no transfers in or out of Level 3 during the years ended December 31, 2021, 2020 and 2019.
Market risk analysis
The Group is exposed to market risk through its use of financial instruments and specifically to price risk, currency risk and interest rate risk, which result from both its operating and investing activities.
Refer to fair value risk section for sensitivity analyses.
F-32
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Foreign currency sensitivity
The Group has determined its financial assets and liabilities are primarily held in US dollars; however, certain foreign subsidiaries of the Group maintain financial assets and liabilities in non-USD functional currencies.
The primary exposure to foreign currency rate fluctuations occurs when the Group incurs transactions other than its functional currency. To mitigate the Group’s exposure to foreign currency risk, exchange rate exposures are managed within approved policy parameters.
The Group’s exposure to currency risk from foreign currency denominated financial assets and financial liabilities as of December 31, 2021 and 2020 are as follows:
Financial Assets (1) | Financial Liabilities (1) | |||||||||||||||
Year Ending December 31, | Year Ending December 31, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Argentine Peso | 438 | 353 | (54 | ) | (28 | ) | ||||||||||
Euro | 143 | 155 | (369 | ) | (694 | ) | ||||||||||
Renminbi | 130 | 310 | (13 | ) | (28 | ) |
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Financial assets and liabilities denominated in Uruguayan pesos and Israeli new shekel were deemed to be immaterial.
Management determined that a reasonably possible change in foreign currency exchange rates in these non-US dollar functional currencies would not have a material impact to the financial statements and does not represent a material risk to the Group.
Interest rate sensitivity
The Group’s policy is to minimize interest rate cash flow risk exposures on long-term financing. Longer-term borrowings are therefore usually at fixed rates. The exposure to interest rates for the Group’s borrowings is considered immaterial. Additionally, all of the Group’s outstanding notes debt, Nettar Series X Preferred Shares and Cantor Loan balances were converted into a number of Class A Ordinary Shares as determined in the merger agreement in connection with the merger transaction with CF Acquisition Corp. V (see Note 20 Subsequent Events).
Credit risk analysis
Credit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to credit risk from financial assets including cash and cash equivalents held at banks, trade and other receivables.
Credit risk management
The credit risk is managed on a group basis based on the Group’s credit risk management policies and procedures. Credit risk of any entity doing business with the Group is systematically analyzed, including aspects of a qualitative nature. The measurement and assessment of the Group total exposure to credit risk covers all financial instruments involving any counterparty risk.
F-33
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
The credit risk in respect of cash balances held with banks and deposits with banks are managed via diversification of bank deposits and are only with major reputable financial institutions.
As the Group’s risk exposure is mainly influenced by the individual characteristics of each customer, it continuously analyzes the creditworthiness of significant debtors. Accounts receivable—trade consist of a select number of customers in various geographical areas. Accounts receivable—trade are non-interest bearing and generally on terms of 30 to 90 days. Satellite imagery customers typically pay the annual amount of the service upfront, mitigating the credit risk. See Note 4 (Revenue from Contracts with Customers, Contract Liabilities and Remaining Performance Obligations)for further details on the Group’s significant customer contracts.
Liquidity risk analysis
Liquidity risk is that the Group might be unable to meet its obligations. The Group manages liquidity risk by using funding obtained mainly from shareholders and other liabilities. See Note 1 (Description of Business and Basis of Presentation) and Note 17 (Debt) for additional information.
The Group manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business.
The table below summarizes the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments:
Financial Liability | Carrying amount | Total undiscounted payments | Less than 3 months | 3 to 12 months | 1 to 2 years | More than 2 years | ||||||||||||||||||
2021 | ||||||||||||||||||||||||
Trade and other payables | $ | 8,850 | $ | 8,850 | $ | 5,193 | $ | 1,458 | $ | 2,200 | $ | — | ||||||||||||
Notes debt | 61,456 | 65,073 | 65,073 | — | — | — | ||||||||||||||||||
Promissory note | 38,095 | 41,896 | 41,896 | — | — | — | ||||||||||||||||||
Cantor Loan | 7,066 | 7,558 | 7,558 | — | — | — | ||||||||||||||||||
Series X | 21,183 | 21,427 | 21,427 | — | — | — | ||||||||||||||||||
Accrued expenses and other liabilities (1) | 19,197 | 19,197 | 18,269 | 576 | 65 | 287 | ||||||||||||||||||
Lease liabilities | 2,799 | 2,944 | 305 | 661 | 1,593 | 384 | ||||||||||||||||||
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| |||||||||||||
Total | $ | 158,646 | $ | 166,945 | $ | 159,721 | $ | 2,695 | $ | 3,858 | $ | 671 | ||||||||||||
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2020 | ||||||||||||||||||||||||
Trade and other payables | $ | 7,555 | $ | 7,555 | $ | 606 | $ | 2,252 | $ | 1,244 | $ | 3,453 | ||||||||||||
Notes debt | 62,784 | 72,160 | — | 55,607 | 16,553 | — | ||||||||||||||||||
Accrued expenses and other liabilities (1) | 462 | 462 | 426 | — | — | 36 | ||||||||||||||||||
Lease liabilities | 1,398 | 1,485 | 103 | 293 | 224 | 864 | ||||||||||||||||||
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| |||||||||||||
Total | $ | 72,199 | $ | 81,662 | $ | 1,135 | $ | 58,152 | $ | 18,021 | $ | 4,353 | ||||||||||||
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As stated in Note 1 (Description of Business and Basis of Presentation) and Note 17 (Debt) all of the Group’s outstanding Notes debt, Nettar Series X Preferred Shares and Cantor Loan balances were converted into a number of Class A Ordinary Shares as determined in the merger agreement in connection with the merger transaction in 2022, which materially reduced the Group’s liquidity risk (see Note 20).
F-34
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
16. Related Party Disclosures
The Group has Notes debt with certain related parties. The following table provides the notes debt balances and associated finance costs as follows:
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Convertible notes debt from related parties | ||||||||||||
Amounts owed to related parties | $ | 36,690 | $ | 48,598 | $ | 20,590 | ||||||
Interest expense | $ | 1,010 | $ | 2,999 | $ | 1,419 |
There are no sales or purchases transactions with entities with significant influence over the Group and key management personnel of the Group.
Compensation of key management personnel of the Group
Year Ending December 31, | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Short-term employee benefits | $ | 1,854 | $ | 2,206 | $ | 1,858 | ||||||
Termination benefits | 157 | 202 | — | |||||||||
Share-based payment transactions | 1,286 | 1,286 | 416 | |||||||||
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Total compensation paid to key management personnel | $ | 3,297 | $ | 3,694 | $ | 2,274 | ||||||
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The amounts disclosed in the table are the amounts recognized as an expense during the reporting periods related to key management personnel.
Directors’ interests in the share-based compensation Plan
Share options held by executive members of the Board of Directors under the share-based compensation Plan have the following expiry dates and exercise prices:
Shares outstanding | ||||||||||||||||||||
Year Ending December 31, | ||||||||||||||||||||
Grant Date | Expiration | Weighted average exercise price | 2021 | 2020 | 2019 | |||||||||||||||
2016 | 2026 | $ | 1.79 | 33,600 | 33,600 | 33,600 | ||||||||||||||
2019 | 2029 | $ | 3.14 | 97,972 | 97,972 | 97,972 | ||||||||||||||
2021 | 2031 | $ | 4.18 | 67,200 | — | — |
See Note 11 (Share-based Compensation) for further details on the plan.
F-35
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
17. Debt
Preferred Shareholder Transaction
On March 8, 2021, the Group signed an Exchange Agreement in conjunction with a Loan and Security Agreement and Warrant with a holder of preference shares and convertible notes (the “Investor”). Prior to such date, the Investor had been a note lender under the 2018 and 2019 note purchase agreements, and also owned Series A, B and B-1 preference shares. The Exchange Agreement requires the Investor to sell back to the Group all its outstanding shares and Notes debt, including the cancellation of the convertible feature of the promissory note (as part of the sale of such notes to Nettar Group Inc.) with a fair value of $21,902 thousand, in exchange for a loan$30.9 million. The Liberty Warrants and security interest in the principal amount of $40,089 thousand (the “Loan”), including unpaid accrued interest,Liberty Advisory Fee Warrant remain unexercised and a warrant with a transactionwere remeasured to fair value of $161,432 thousand. $6.2 million as of December 31, 2022.
The Investor transaction resulted in the derecognition of the convertible notes and related embedded derivative amounting to $30,332 thousand, and recognition of a liability related to the new loan (Promissory Note), treasury shares and a warrant classified as an equity financial instrument.
Debt and Amendments
In September 2020, the Group signed a Note Purchase Agreement (the “NPA”) with certain lenders, which included a compound annual interest rate of 5% with a maturity of 2 years. Such 2020 notes together with the 2018 NPA and 2019 Amended & Restated NPA with similar conditions (compound annual interest rate of 5% with 2 years of maturity) are all the Notes debt issued by the Group.
In April 2021, the Group´s management agreed with its note holders, to extend the maturity date of the 2018 and 2019 convertible notes with original due date in April and September 2021, respectively. The new maturity date for the 2018 and 2019 notes was agreed to be in April 2022. The Group2021. We recognized a gain on extinguishmentfrom the remeasurement of debtthe Columbia Warrant of $318 thousand on the Consolidated Statement of Profit and Loss and Comprehensive Loss$18.6 million for the year ended December 31, 2021, related to the agreement.
In April 2021, the Group incurred $20,332 thousand of indebtedness related to the issuance of Nettar Series X Preferred Shares. See Note 10 (Issued Capital and Reserves).
In December 2021, the Group entered into the Promissory Note with Cantor Fitzgerald Securities (“CF Securities”) and incurred a loan (“Cantor Loan”) for an aggregate total amount of $7,500 thousand.
F-36
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
The breakdown of the debt outstanding as of December 31, 2021 and December 2020, is as follows:
December 31, 2021 | Annual interest rate | Maturity | Principal | December 31, 2020 | Annual interest rate | Original Maturity | Principal | |||||||||||||||||||||||
Current debt | Current debt | |||||||||||||||||||||||||||||
Notes debt 2018 | 5 | % | 2022 | $ | 16,540 | Notes debt 2018 | 5 | % | 2020 | $ | 19,540 | |||||||||||||||||||
Notes debt 2019 | 5 | % | 2022 | 25,000 | Notes debt 2019 | 5 | % | 2021 | 30,000 | |||||||||||||||||||||
Notes debt 2020 | 5 | % | 2022 | 15,047 | Non-current debt | |||||||||||||||||||||||||
Series X | 7 | % | 2023 | 20,332 | Notes debt 2020 | 5 | % | 2022 | 15,047 | |||||||||||||||||||||
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Cantor Loan | 7 | % | 2022 | 7,500 | Total debt | $ | 64,587 | |||||||||||||||||||||||
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Promissory notes | 5 | % | 2046 | 40,089 | ||||||||||||||||||||||||||
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Total | $ | 124,508 | ||||||||||||||||||||||||||||
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Conversion features
The Group determined the conversion features of the debt instruments represented a derivative instrument, which are not clearly and closed related to the debt host contracts, and therefore were required to be accounted for separately. The convertible debt instruments were separated into debt and conversion options at issuance and a fair value was assigned to each component.
The fair values of the Group’s Notes debt, Nettar Series X Preferred Shares and Cantor Loan are determined by using the “with” and “without” method. As of each Measurement Date, the Group first valued the Notes and Nettar Series X Preferred Shares with the Conversion Options and the Cantor Loan with the make-whole premium in certain scenarios (the “with” scenario) and subsequently valued the Notes and Nettar Series X Preferred Shares without the Conversion Options and the Cantor Loan without the make-whole premium in certain scenarios (the “without” scenario). The difference between the fair values of the Notes in the “with” and “without” scenarios was the concluded fair value of the Conversion Options of the Notes and Nettar Series X Preferred Shares and the make-whole premium of Cantor Loan as of the Measurement Date.
To estimate the fair value of the Convertible Notes, Nettar Series X Preferred Shares and Cantor Loan in the “with” scenario, management considered the Group’s expectations regarding future financings. Management used expectations regarding a next qualified equity financing scenario, SPAC scenario and a dissolution scenario to estimate the fair value of the Convertible Notes, Nettar Series X Preferred Shares and Cantor Loan in the “with” scenario.
Regarding the “without” scenario, the Group also considered scenarios: the next equity financing scenario, SPAC scenario and the dissolution scenario, in order to estimate the fair value of the Convertible Notes, Nettar Series X Preferred Shares and Cantor Loan.
After initial recognition, the host debt is accounted for at amortized cost and effective interest rate is calculated considering residual value assigned.2022. The fair value of the conversion featureColumbia Warrant of $124.8 million was reclassified to additional paid-in capital in connection with the Merger.
The changes in Convertible Notes (Notes debt), Promissory notes, Nettar Series X Preferred Shares and Cantor Loan forprivate placement Warrants, the years ended December 31, 2021, 2020 and 2019 that arose from financial activities:
F-37
NETTAR GROUP
January 1, 2021 | Cash flows | Extinguishment | Exchange of instruments | Interest / Dividend | Changes in fair value | December 31, 2021 | ||||||||||||||||||||||
Notes debt | $ | 62,784 | $ | — | $ | (8,749 | ) | $ | — | $ | 7,421 | $ | — | $ | 61,456 | |||||||||||||
Notes debt - Embedded derivative liability | 96,096 | — | (21,902 | ) | — | — | 43,428 | 117,622 | ||||||||||||||||||||
Promissory notes | — | — | — | 36,333 | 1,762 | — | 38,095 | |||||||||||||||||||||
Series X | — | 18,816 | — | — | 2,367 | — | 21,183 | |||||||||||||||||||||
Series X - Embedded derivative liability | — | 1,516 | — | — | — | (1,328 | ) | 188 | ||||||||||||||||||||
Cantor Loan | — | 6,923 | — | — | 143 | — | 7,066 | |||||||||||||||||||||
Cantor Loan - Embedded derivative liability | — | 577 | — | — | — | 2 | 579 | |||||||||||||||||||||
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Total | $ | 158,880 | $ | 27,832 | $ | (30,651 | ) | $ | 36,333 | $ | 11,693 | $ | 42,102 | $ | 246,189 | |||||||||||||
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Total non-current | — | |||||||||||||||||||||||||||
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Total current | $ | 246,189 | ||||||||||||||||||||||||||
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January 1, 2020 | Cash flows | Extinguishment | Exchange of instruments | Interest | Changes in fair value | December 31, 2020 | ||||||||||||||||||||||
Notes debt | $ | 42,004 | $ | 13,314 | $ | — | $ | — | $ | 7,466 | $ | — | $ | 62,784 | ||||||||||||||
Notes debt - Embedded derivative liability | 7,139 | 4,733 | — | — | — | 84,224 | 96,096 | |||||||||||||||||||||
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Total | $ | 49,143 | $ | 18,047 | $ | — | $ | — | $ | 7,466 | $ | 84,224 | $ | 158,880 | ||||||||||||||
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Total non-current | 33,795 | |||||||||||||||||||||||||||
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Total current | $ | 125,085 | ||||||||||||||||||||||||||
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January 1, 2019 | Cash flows | Extinguishment | Exchange of instruments | Interest | Changes in fair value | December 31, 2019 | ||||||||||||||||||||||
Notes debt | $ | 17,431 | $ | 20,105 | $ | — | $ | — | $ | 4,468 | $ | — | $ | 42,004 | ||||||||||||||
Notes debt - Embedded derivative liability | 4,474 | 6,895 | — | — | — | (4,230 | ) | 7,139 | ||||||||||||||||||||
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Total | $ | 21,905 | $ | 27,000 | $ | — | $ | — | $ | 4,468 | $ | (4,230 | ) | $ | 49,143 | |||||||||||||
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Total non-current | 28,495 | |||||||||||||||||||||||||||
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Total current | $ | 20,648 | ||||||||||||||||||||||||||
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18. Leases
Group as a lessee
The Group has leases for real estate and equipment. Lease terms range from 2 and 10 years.
Changes in the Group’s right-of-use assets carrying amounts were as follows:
2021 | 2020 | |||||||
Balance as of January 1, | $ | 1,341 | $ | — | ||||
Depreciation expense | (477 | ) | (286 | ) | ||||
Additions | 1,824 | 1,627 | ||||||
Transfers | (25 | ) | — | |||||
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Balance as of December 31, | $ | 2,663 | $ | 1,341 | ||||
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F-38
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Changes in the Group’s lease liabilities carrying amounts were as follows:
2021 | 2020 | 2019 | ||||||||||
Balance as of January 1, | $ | 1,398 | $ | — | $ | — | ||||||
Additions to lease liabilities | 1,799 | 1,711 | — | |||||||||
Accretion of interest | 49 | 57 | — | |||||||||
Payments | (447 | ) | (370 | ) | — | |||||||
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Balance as of December 31, | $ | 2,799 | $ | 1,398 | $ | — | ||||||
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Total non-current | 1,908 | 1,036 | — | |||||||||
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Total current | $ | 891 | $ | 362 | $ | — | ||||||
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For information regarding the maturity profile of the Group’s leases liabilities, see Note 15 (Financial Instruments Risk).
The Group recognized in the Consolidated Statement of Profit or Loss the following expenses related to its leases for the years end December 31, 2021, 2020 and 2019:
2021 | 2020 | 2019 | ||||||||||
Depreciation expense | $ | 477 | $ | 286 | $ | — | ||||||
Interest expense on lease liabilities | 49 | 57 | — | |||||||||
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Total lease expense | $ | 526 | $ | 343 | $ | — | ||||||
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19. Subsidiaries of the Group
Country of | % equity interest | |||||||||||
Name | Principal activities | incorporation | 2021 | 2020 | ||||||||
Urugus S.A. | Manufacturing, Assembly, Integration, Test and Exports | Uruguay | 100 | % | 100 | % | ||||||
Nettar S.A. | Intermediate Holding | Uruguay | 100 | % | 100 | % | ||||||
Satellogic USA, Inc. | Sales and marketing, Product strategy and business development | United States | 100 | % | 100 | % | ||||||
Telluric Ltd. | Image analytics and user interfaces | Israel | 100 | % | 100 | % | ||||||
Satellogic S.A. | Research and development services and builds prototypes | Argentina | 100 | % | 100 | % | ||||||
Satellogic Overseas, Inc. | Supplies fund for non-recurrent expenses management | BVI | 100 | %(1) | 100 | %(1) | ||||||
Satellogic Solutions S.L. | Data science solutions and machine learning over the satellite images | Spain | 100 | %(1) | 100 | %(1) | ||||||
Satellogic China, LTD | Sales and marketing | China | 100 | %(2) | 100 | %(2) | ||||||
Satellogic China Beijing Branch | Sales and marketing | China | 100 | %(3) | 100 | %(3) | ||||||
Satellogic North America LLC | Sales and Marketing | United States | 100 | %(4) | (7) | |||||||
Satellogic Netherlands B.V. | High throughput plant | The Netherlands | 100 | %(5) | (7) | |||||||
Satellogic, Inc | Created to consummate the transaction with CF V | BVI | 100 | % | (7) | |||||||
MergerSub 1 | Created to consummate the transaction with CF V | BVI | 100 | %(6) | (7) | |||||||
MergerSub 2 | Created to consummate the transaction with CF V | United States | 100 | %(6) | (7) |
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F-39
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
20. Subsequent Events
Liberty Subscription Agreement
On January 18, 2022, Satellogic Inc (the “Company”) and Satellogic V Inc (formally known as CF Acquisition Corp. V) (“CF V”) entered into an agreement (“Liberty Subscription Agreement”) with Liberty Strategic Capital (SATL) Holdings, LLC (“Liberty Investor”), pursuant to which the Liberty Investor agreed to purchase, and the Company agreed to issue and sell to the Liberty Investor, following satisfaction or waiver of the conditions in the Liberty Subscription Agreement, certain securities of the Company, including (i) 20,000,000 Class A Ordinary Shares (the “Liberty Shares”), (ii) 5,000,000 warrants, each warrant providing the holder thereof the right to purchase one (1) Class A Ordinary Share at an exercise price of $10.00 per share (the “$10.00 Liberty Share Warrants”), and (iii) 15,000,000 warrants, each warrant providing the holder thereof the right to purchase one (1) Class A Ordinary Share at an exercise price of $15.00 per share (the “$15.00 Liberty Warrants” and, together with the $10.00 Liberty Share Warrants, the “Liberty Share Warrants”), in a private placement for an aggregate purchase price of $150 million. The Liberty Share$8.63 Warrants are exercisable as and from February 10, 2022, will expire on February 10, 2027, or the fifth anniversary of the closing.
The closing of the Liberty transaction occurred on February 10, 2022.
Cantor Fees and Loan
On January 18, 2022, CF V, the Company and Cantor Fitzgerald & Co. (“CF&Co.”) entered into an agreement to which they agreed that of the out-of-pocket fees and expenses related to the negotiation, documentation and consummation of the merger agreement payable to CF&Co., which in aggregate was approximately $21.9 million and comprised of $8.8 million of business combination marketing fees, $8.2 million of placement agent fees and $5.0 million of mergers and acquisitions advisory fees, only the mergers and acquisitions advisory fees would be paid in cash while the remainder would be paid in the form of an aggregate of 2,058,229 newly-issued Satellogic Inc. Class A Ordinary Shares, which were issued on January 25, 2022 (“Closing Date”), consisting in part of 600,000 Class A Ordinary Shares issued in connection with the placement fee due on the Liberty Investment.
On January 18, 2022, CF Securities, the Company and the Group entered into an agreement pursuant to which the Company and CF Securities agreed that the Company would repay the $7.5 million Cantor Loan executed in December 2021, including all principal and interestgoverned by the issuance of 788,021 Class A Ordinary Shares of Satellogic Inc., which repayment occurred on the Closing Date.
Merger Transaction with CF V
OnExisting Warrant Agreement. The $8.63 Warrants became exercisable 30 days after the Closing Date, or February 25, 2022, and will expire five years after the Group consummated the transactions (“Business Combination”) contemplated by that previously announced Agreement and Plan of Merger dated as of July 5, 2021 (the “Merger Agreement”)Closing Date (January 25, 2027), by and among the Group, CF V, Ganymede Merger Sub 1 Inc., a business company with limited liability incorporated under the laws of the British Virgin Islands (BVI) and a direct wholly owned subsidiary of Nettar Group Inc. (“MergerSub 1”), Ganymede Merger Sub 2 Inc., a US Delaware corporation and a direct wholly owned subsidiary of Nettar Group Inc. (“MergerSub 2”), and Nettar Group Inc.
F-40
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
Beginning on January 26, 2022, the combined company began trading under the name Satellogic, Inc. Its common stock trades on Nasdaq under the ticker symbol “SATL” and its warrants trade on Nasdaq under the ticker symbol “SATLW”.
The Group believes that its cash on hand following the consummation of the Business Combination will be sufficient to meet its working capital and capital expenditure requirements for a period of at least 12 months from the end of the reporting period.
Management expects the Business Combination will be accounted in 2022 for$8.63 Warrants were initially recognized as a capital reorganization under IFRS. Under this method of accounting, CF V will be treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of the Group issuing shares for the net assets of CF V, accompanied by a recapitalization.
Management expects that since CF V does not meet the definition of a business in accordance with IFRS 3, the transaction will be considered a capital reorganization, similar to a reverse acquisition under IFRS 3, alongliability with a share-based payment accounted for within the scope of IFRS 2. Any excess of fair value of the Company shares issued over the fair value of the net assets acquired would represent compensation for the service of a stock exchange listing for its shares and would be expensed as incurred. The net assets would be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination would be deemed to be those of the Group.
Adjustment of Warrant Price and Warrant Redemption Price
$4.9 million. On April 1, 2022, the Company informed Continental Stock Transfer & Trust Company thatwe determined pursuant to a warrant agreement executed by CF V on January 28, 2021, as modified and assumed by an assignment and assumption agreement executed on January 25, 2022, that the warrant price with respect to the $8.63 warrants issued and outstanding will bewas adjusted from $11.50 to $8.63 and the redemption price the $8.63 Warrants will bewas adjusted from $18.00 to $13.50.
Hannover Holdings S.A.
Sponsor Earnout | Forfeiture Earnout | Total Earnout Liabilities | |||||||||||||||
As of December 31, 2021 | $ | — | $ | — | $ | — | |||||||||||
Additions | $ | 8,022 | $ | 6,135 | $ | 14,157 | |||||||||||
Change in fair value of financial instruments | (6,669) | (5,130) | (11,799) | ||||||||||||||
Reclassification to equity | — | (1,005) | (1,005) | ||||||||||||||
As of December 31, 2022 | $ | 1,353 | $ | — | $ | 1,353 |
Hannover. The Sponsor Earnout is subject to potential forfeiture to us for no consideration until the occurrence of each tranche’s respective earnout triggering event. The earnout triggering events related to achieving a closing price at or above $12.50, $15.00 and $20.00 per share, respectively, for any 10 trading days over a 20 trading day period were not satisfied during the year ended December 31, 2022. As a result, the 1,775,962 Class A ordinary shares were not vested and are subject to transfer restrictions and contingent forfeiture provisions.
January 25, | December 31, | ||||||||||
2022 | 2022 | ||||||||||
Expected term (in years) | 5.00 | 4.07 | |||||||||
Dividend yield (%) | — | — | |||||||||
Expected volatility | 30 | % | 50.4 | % | |||||||
Risk-free interest rate | 1.6 | % | 4.1 | % | |||||||
Expected number of shares | 1,842,759 | 1,775,962 |
Estimated Useful Life (in years) | December 31, | ||||||||||||||||
2022 | 2021 | ||||||||||||||||
Satellites in orbit | 3 | $ | 54,370 | $ | 43,716 | ||||||||||||
Satellites under construction | Not applicable | 22,194 | 10,558 | ||||||||||||||
Leasehold improvements | 5-10 | 6,433 | 769 | ||||||||||||||
Other property and equipment | 3-10 | 4,146 | 2,138 | ||||||||||||||
Total property and equipment | 87,143 | 57,181 | |||||||||||||||
Less: Accumulated depreciation | (39,162) | (24,651) | |||||||||||||||
Property and equipment, net | $ | 47,981 | $ | 32,530 |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Uruguay | $ | 43,134 | $ | 33,208 | |||||||
Argentina | 1,346 | 1,250 | |||||||||
Spain | 729 | 791 | |||||||||
Netherlands | 9,471 | — | |||||||||
Other countries | 1,472 | 236 | |||||||||
Total (1) (2) (3) | $ | 56,152 | $ | 35,485 |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Prepaid expenses and other current assets | |||||||||||
Prepaid expenses | $ | 1,767 | $ | 1,153 | |||||||
Advances to suppliers | 588 | 829 | |||||||||
Other current assets | 843 | 713 | |||||||||
Total | $ | 3,198 | $ | 2,695 |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Accrued expenses and other liabilities | |||||||||||
Accrued professional fees related to Merger(1) | $ | — | $ | 16,263 | |||||||
Provisions | 71 | 2,934 | |||||||||
Payroll and benefits payable | 3,289 | 2,545 | |||||||||
Other taxes payable | 3,128 | 2,045 | |||||||||
Other | 451 | 2,200 | |||||||||
Total | $ | 6,939 | $ | 25,987 | |||||||
Total current | $ | 6,417 | $ | 23,435 | |||||||
Total non-current | $ | 522 | $ | 2,552 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Finance costs, net | |||||||||||||||||
Interest expense | $ | (1,596) | $ | (8,729) | $ | (43) | |||||||||||
Redeemable Series X preferred stock dividends | (97) | (974) | — | ||||||||||||||
Other finance costs | (123) | (71) | — | ||||||||||||||
Interest income | 1,164 | 36 | 78 | ||||||||||||||
Total | $ | (652) | $ | (9,738) | $ | 35 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Current | $ | 2,972 | $ | 1,387 | $ | 186 | |||||||||||
Deferred | 1,601 | (1,619) | (38) | ||||||||||||||
Total provision for (benefit from) income tax | $ | 4,573 | $ | (232) | $ | 148 |
Year Ended December 31, | ||||||||||||||
2022 | ||||||||||||||
Balance at January 1 | $ | — | ||||||||||||
Increases (decreases) in tax positions related to the current period | — | |||||||||||||
Increases (decreases) in tax positions related to prior periods | 3,889 | |||||||||||||
Increases (decreases) related to prior year tax positions as a result of lapse of statute | — | |||||||||||||
Balance at December 31 | $ | 3,889 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Loss before income tax | $ | (32,068) | $ | (96,537) | $ | (21,381) | |||||||||||
Provision for (benefit from) income tax at weighted-average statutory rates | — | — | — | ||||||||||||||
U.S. state and local income tax, net of federal benefit | (3) | 5 | (4) | ||||||||||||||
U.S. foreign-derived intangible income deduction | (141) | (200) | — | ||||||||||||||
Argentina Tax Inflation Adjustment | 239 | (381) | (198) | ||||||||||||||
Change in valuation allowances | 4,283 | 3,648 | 1,198 | ||||||||||||||
Uncertain tax positions | 2,293 | — | — | ||||||||||||||
Change in carryforward attributes | (1,740) | — | — | ||||||||||||||
Effect of rates different than statutory | (423) | (3,300) | (828) | ||||||||||||||
Tax credits | (112) | — | — | ||||||||||||||
Other | 177 | (4) | (20) | ||||||||||||||
Total | $ | 4,573 | $ | (232) | $ | 148 |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Deferred income tax assets: | |||||||||||
Stock-based compensation | $ | 3,023 | $ | 2,053 | |||||||
Bad debt expense | 415 | 407 | |||||||||
Deferred financing costs | 806 | — | |||||||||
Other | 193 | 419 | |||||||||
Net operating loss carryforwards | 1,365 | 6,245 | |||||||||
Total deferred income tax assets | 5,802 | 9,124 | |||||||||
Valuation allowance | (5,802) | (7,484) | |||||||||
Total deferred income tax assets (liabilities), net | $ | — | $ | 1,640 |
Net Operating Loss | Expiration | Gross Amount Carried Forward | Net Amount Recognized as of December 31, 2022 | |||||||||||||||||
Argentina | December 31, 2023 - December 31, 2027 | $ | 7,864 | $ | — | |||||||||||||||
Netherlands | Indefinite | 2,856 | — | |||||||||||||||||
China | December 31, 2026 - December 31, 2027 | 2,258 | — | |||||||||||||||||
United States | Indefinite | 280 | — | |||||||||||||||||
Uruguay | December 31, 2026 - December 31, 2027 | 19 | — |
Hannover sought appraisal, entitling it2022 and 2021, we had $13.3 million and $20.9 million of net operating loss (“NOL”) carryforwards, respectively.
F-41
NETTAR GROUP INC.
Notes to Consolidated Financial Statements
(Expressed in thousands of US dollars, except per share data, unless otherwise stated)
ruling was issued on January 21, 2022, and the statutory time for appeal of such orderaccounting acquirer in the BVI has passed without Hannover exercising their right to appeal. On April 6, 2022, a statutory appraisal process conducted pursuant to the laws of the BVI, to determine the “fair value” with respect to a total of 51,700 ordinary shares, 134,735 Series A preference shares, and 15,082 Series B-1 preference shares (Appraised Shares), in each case of Nettar Group Inc. held by Hannoverreverse recapitalization, all periods prior to the consummation of the Business Combination, resultedMerger reflect the balances and activity of Satellogic Inc. (other than shares which were retroactively restated in connection with the Merger).
Authorized Shares (prior to Merger) | Issued and Outstanding Shares (as of December 31, 2021) | ||||||||||
Series A preferred stock | 4,723,330 | 2,547,330 | |||||||||
Series B preferred stock | 3,117,915 | 1,392,131 | |||||||||
Series B-1 preferred stock | 899,153 | 672,524 | |||||||||
Total preferred stock | 8,740,398 | 4,611,985 |
Number of Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (years) | Intrinsic Value (in thousands) | ||||||||||||||||||||
Balance as of December 31, 2021 | 6,864,563 | $2.05 | 2.36 | ||||||||||||||||||||
Granted | — | — | |||||||||||||||||||||
Forfeited | (574,299) | 4.56 | |||||||||||||||||||||
Exercised | (102,825) | 1.12 | |||||||||||||||||||||
Expired | (120,126) | 2.60 | |||||||||||||||||||||
Outstanding at December 31, 2022 | 6,067,313 | $1.83 | 2.07 | $ | 10,818 | ||||||||||||||||||
Exercisable at December 31, 2022 | 4,449,152 | $1.31 | 1.92 | $ | 8,832 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Weighted-average fair value of options at the measurement date (grant date) | $ | — | $ | 23.36 | $ | 6.31 | |||||||||||
Dividend yield (%) | — | — | — | ||||||||||||||
Expected volatility (%) | — | % | 61 - 72 | 59 - 61 | |||||||||||||
Risk-free interest rate (%) | — | % | 0.5 - 1.4 | 0.4 - 0.5 | |||||||||||||
Weighted average share price | $ | — | $ | 6.79 | $ | 2.75 |
Number of RSUs | Intrinsic Value (in thousands) | ||||||||||
Outstanding unvested RSUs at December 31, 2021 | — | ||||||||||
Granted during the year | 1,640,496 | ||||||||||
Forfeited during the year | (60,823) | ||||||||||
Vested during the year | (120,393) | ||||||||||
Expired during the year | — | ||||||||||
Outstanding unvested RSUs at December 31, 2022 | 1,459,280 | $1,940 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
General and administrative expenses | $ | 2,406 | $ | 5,274 | $ | 1,235 | |||||||||||
Research and development | 3,631 | 1,968 | 382 | ||||||||||||||
Other operating expenses | 2,331 | 3,639 | 115 | ||||||||||||||
Total | $ | 8,368 | $ | 10,881 | $ | 1,732 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Net loss attributable to common stockholders | $ | (36,641) | $ | (96,305) | $ | (21,529) | |||||||||||
Basic weighted-average common shares outstanding (1) | 83,188,276 | 16,655,634 | 16,029,826 | ||||||||||||||
Basic loss per share for the period attributable to common stockholders | $ | (0.44) | $ | (5.78) | $ | (1.34) | |||||||||||
Effect of dilutive securities: | |||||||||||||||||
Adjustment to numerator - Change in fair value of Columbia Warrant liability | $ | (18,635) | $ | — | $ | — | |||||||||||
Dilutive numerator | $ | (55,276) | $ | (96,305) | $ | (21,529) | |||||||||||
Columbia Warrant | 609,873 | — | — | ||||||||||||||
Diluted weighted-average common shares outstanding | 83,798,149 | 16,655,634 | 16,029,826 | ||||||||||||||
Diluted loss per share for the period attributable to common stockholders | $ | (0.66) | $ | (5.78) | $ | (1.34) |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Warrants | 49,184,868 | 15,931,360 | — | ||||||||||||||
Sponsor earnout shares | 1,775,962 | — | — | ||||||||||||||
Stock options | 6,067,313 | 6,864,563 | 4,694,314 | ||||||||||||||
Restricted stock units | 1,459,280 | — | — | ||||||||||||||
Redeemable convertible preferred stock | — | 6,645,215 | 8,740,398 | ||||||||||||||
Total | 58,487,423 | 29,441,138 | 13,434,712 |
As of December 31, 2022 | Fair value measurement using | |||||||||||||||||||
Financial instruments | Quoted prices in active markets (Level 1) | Significant observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||
$8.63 Warrants liability | $ | 1,833 | $ | — | $ | — | ||||||||||||||
PIPE Warrant liability | — | — | 311 | |||||||||||||||||
Liberty Warrants and Liberty Advisory Fee Warrant liability | — | — | 6,191 | |||||||||||||||||
Total Warrant Liabilities | $ | 1,833 | $ | — | $ | 6,502 | ||||||||||||||
Sponsor Earnout liability | $ | — | $ | — | $ | 1,353 |
As of December 31, 2021 | Fair value measurement using | |||||||||||||||||||
Financial instruments | Quoted prices in active markets (Level 1) | Significant observable inputs (Level 2) | Significant unobservable inputs (Level 3) | |||||||||||||||||
Liabilities measured at fair value | ||||||||||||||||||||
Cantor Loan | $ | — | $ | — | $ | 7,522 | ||||||||||||||
Columbia Warrant liability | — | — | 143,237 | |||||||||||||||||
Liabilities for which fair values are disclosed | ||||||||||||||||||||
Notes | $ | — | $ | 180,356 | $ | — | ||||||||||||||
Promissory notes | — | 40,925 | — |
Status of Registration Statement
Pursuant to the registration provisions of various agreements to which the Company is a party (the “Registration Provisions”), the Company agreed with the relevant investors that the registration statement registering their Company securities, including the Additional Shares which the issuance of is determined based on the effective date of the registration statement, would be filed on or before February 25,years ended December 31, 2022 and would be declared effective on or before April 25, 2022. Although2021 were as follows:
Liberty Warrants and Liberty Advisory Fee Warrant | PIPE Warrant | Columbia Warrant | Sponsor Earnout | Forfeiture Earnout | Cantor Loan | ||||||||||||||||||||||||||||||
At January 1, 2021 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||||||||||
Issues | — | — | 161,432 | — | — | 7,513 | |||||||||||||||||||||||||||||
Remeasurement (gain)/loss(1) | — | — | (17,992) | — | — | 9 | |||||||||||||||||||||||||||||
Amortization of deferred costs | — | — | (203) | — | — | — | |||||||||||||||||||||||||||||
At December 31, 2021 | — | — | 143,237 | — | — | 7,522 | |||||||||||||||||||||||||||||
Issues | 30,853 | 1,312 | — | 8,022 | 6,135 | — | |||||||||||||||||||||||||||||
Remeasurement (gain)/loss(1) | (24,662) | (1,001) | (18,635) | (6,669) | (5,130) | 488 | |||||||||||||||||||||||||||||
Write-off of deferred costs | — | — | 203 | — | — | — | |||||||||||||||||||||||||||||
Settlements (2) | — | — | (124,805) | — | (1,005) | (8,010) | |||||||||||||||||||||||||||||
At December 31, 2022 | $ | 6,191 | $ | 311 | $ | — | $ | 1,353 | $ | — | $ | — |
Russian Federation Military Action Against Ukraine
In February 2022, the Russian Federation and Belarus commenced a military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. The impact on the Group’s financial position, results of operations, and cash flows is also not determinable as of the date of these financial statements.
F-42
Legal Proceedings
Hannover holds Class A Ordinary Shares which amount to approximately 8.3% of the issued and outstanding Ordinary Shares as of April 6, 2022. Hannover sought appraisal, entitling it to be paid the “fair value” for its shares in cash, with respect to all of its holdings in Nettar(2)These liabilities were settled in connection with the Initial Merger which formedMerger. See Note 4 (Recapitalization Transaction).
December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Convertible notes debt from related parties | |||||||||||||||||
Amounts owed to related parties | $ | — | $ | 13,028 | $ | — | |||||||||||
Interest expense | $ | 554 | $ | 620 | $ | 591 |
December 31, 2021 | |||||
2018 Convertible Notes | $ | 19,862 | |||
2019 Convertible Notes | 27,498 | ||||
2020 Convertible Notes | 15,294 | ||||
Cantor Loan | 7,522 | ||||
Columbia Loan | 38,297 | ||||
Total debt | 108,473 | ||||
Less deferred financing costs | — | ||||
Total debt less deferred financing fees | 108,473 | ||||
Less: Current portion | — | ||||
Total non-current debt, net of deferred financing fees | $ | 108,473 |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Balance as of beginning of period | $ | 2,955 | $ | 1,403 | |||||||
Lease expense | (1,701) | (494) | |||||||||
Foreign exchange differences | 115 | (48) | |||||||||
Additions | 7,171 | 2,119 | |||||||||
Disposals | (322) | — | |||||||||
Transfers | (47) | (25) | |||||||||
Balance as of end of period | $ | 8,171 | $ | 2,955 |
December 31, | |||||||||||
2022 | 2021 | ||||||||||
Balance as of beginning of period | $ | 3,068 | $ | 1,415 | |||||||
Additions to operating lease liabilities | 7,171 | 2,119 | |||||||||
Lease expense | 314 | 54 | |||||||||
Foreign exchange differences | (293) | (48) | |||||||||
Disposals | (329) | — | |||||||||
Payments | (1,692) | (472) | |||||||||
Balance as of end of period | $ | 8,239 | $ | 3,068 | |||||||
Total current | $ | 2,176 | $ | 985 | |||||||
Total non-current | 6,063 | 2,083 |
Year Ended December 31, | |||||||||||||||||
2022 | 2021 | 2020 | |||||||||||||||
Right-of-use assets | $ | 1,701 | $ | 494 | $ | 247 | |||||||||||
Operating lease liabilities | 314 | 54 | 51 | ||||||||||||||
Total lease expense | $ | 2,015 | $ | 548 | $ | 298 |
Operating leases | |||||
Years Ended | |||||
2023 | $ | 2,484 | |||
2024 | 2,235 | ||||
2025 | 824 | ||||
2026 | 603 | ||||
2027 and thereafter | 3,166 | ||||
Total remaining lease payments | 9,312 | ||||
Less imputed interest | (1,073) | ||||
Present value of lease liability | $ | 8,239 | |||
Total current | $ | 2,176 | |||
Total non-current | $ | 6,063 |
Year Ended December 31, 2021 | |||||||||||||||||||||||
IFRS | Adjustments/ Reclassifications | Note | U.S. GAAP | ||||||||||||||||||||
Revenue | $ | 4,247 | $ | — | $ | 4,247 | |||||||||||||||||
Costs and expenses | |||||||||||||||||||||||
Cost of sales | 1,876 | — | 1,876 | ||||||||||||||||||||
General administrative expenses | 36,649 | (9) | a, c | 36,640 | |||||||||||||||||||
Research and development | 9,640 | (4) | b | 9,636 | |||||||||||||||||||
Depreciation expense | 10,825 | (97) | b | 10,728 | |||||||||||||||||||
Other operating expenses, net | 14,002 | — | 14,002 | ||||||||||||||||||||
Total costs and expenses | 72,992 | (110) | 72,882 | ||||||||||||||||||||
Operating loss | (68,745) | 110 | (68,635) | ||||||||||||||||||||
Other income (expense), net | |||||||||||||||||||||||
Finance costs, net | (11,769) | 2,031 | c, d | (9,738) | |||||||||||||||||||
Change in fair value of financial instruments | (42,102) | 60,085 | d | 17,983 | |||||||||||||||||||
Gain (loss) on extinguishment of debt | 3,576 | (40,792) | d | (37,216) | |||||||||||||||||||
Other income (expense), net | 1,067 | 2 | c | 1,069 | |||||||||||||||||||
Total other income (expense), net | (49,228) | 21,326 | (27,902) | ||||||||||||||||||||
Loss before income tax | (117,973) | 21,436 | (96,537) | ||||||||||||||||||||
Income tax | 232 | — | 232 | ||||||||||||||||||||
Net loss available to common stockholders | $ | (117,741) | $ | 21,436 | $ | (96,305) | |||||||||||||||||
Other comprehensive loss | |||||||||||||||||||||||
Foreign currency translation loss, net of tax | (86) | — | (86) | ||||||||||||||||||||
Comprehensive loss | $ | (117,827) | $ | 21,436 | $ | (96,391) | |||||||||||||||||
Basic loss for the period attributable to common stockholders | $ | (7.07) | $ | 1.29 | e | $ | (5.78) | ||||||||||||||||
Basic weighted-average common shares outstanding | 16,655,634 | — | e | 16,655,634 | |||||||||||||||||||
Diluted loss for the period attributable to common stockholders | $ | (7.07) | $ | 1.29 | e | $ | (5.78) | ||||||||||||||||
Diluted weighted-average common shares outstanding | 16,655,634 | — | e | 16,655,634 |
Year Ended December 31, 2020 | |||||||||||||||||||||||
IFRS | Adjustments/ Reclassifications | Note | U.S. GAAP | ||||||||||||||||||||
Revenue | $ | — | $ | — | $ | — | |||||||||||||||||
Costs and expenses | |||||||||||||||||||||||
Cost of sales | — | — | — | ||||||||||||||||||||
General administrative expenses | 8,127 | (124) | a, c | 8,003 | |||||||||||||||||||
Research and development | 5,878 | 46 | a, b | 5,924 | |||||||||||||||||||
Depreciation expense | 3,182 | (151) | b | 3,031 | |||||||||||||||||||
Other operating expenses, net | 5,476 | (27) | a, b | 5,449 | |||||||||||||||||||
Total costs and expenses | 22,663 | (256) | 22,407 | ||||||||||||||||||||
Operating loss | (22,663) | 256 | (22,407) | ||||||||||||||||||||
Other income (expense), net | |||||||||||||||||||||||
Finance costs, net | (22) | 57 | c, d | 35 | |||||||||||||||||||
Change in fair value of financial instruments | (84,224) | 93,861 | d | 9,637 | |||||||||||||||||||
Gain (loss) on extinguishment of debt | (7,466) | (1,774) | d | (9,240) | |||||||||||||||||||
Other income (expense), net | 597 | (3) | c | 594 | |||||||||||||||||||
Total other income (expense), net | (91,115) | 92,141 | 1,026 | ||||||||||||||||||||
Loss before income tax | (113,778) | 92,397 | (21,381) | ||||||||||||||||||||
Income tax | (148) | — | (148) | ||||||||||||||||||||
Net loss available to common stockholders | $ | (113,926) | $ | 92,397 | $ | (21,529) | |||||||||||||||||
Other comprehensive loss | |||||||||||||||||||||||
Foreign currency translation loss, net of tax | — | — | — | ||||||||||||||||||||
Comprehensive loss | $ | (113,926) | $ | 92,397 | $ | (21,529) | |||||||||||||||||
Basic loss for the period attributable to common stockholders | $ | (7.11) | $ | 5.76 | e | $ | (1.34) | ||||||||||||||||
Basic weighted-average common shares outstanding | 16,029,826 | — | e | 16,029,826 | |||||||||||||||||||
Diluted loss for the period attributable to common stockholders | $ | (7.11) | $ | 5.76 | e | $ | (1.34) | ||||||||||||||||
Diluted weighted-average common shares outstanding | 16,029,826 | — | e | 16,029,826 |
IFRS | Adjustments / Reclassifications | Note | U.S. GAAP | ||||||||||||||||||||
ASSETS | |||||||||||||||||||||||
Current assets | |||||||||||||||||||||||
Cash and cash equivalents | $ | 8,533 | $ | — | $ | 8,533 | |||||||||||||||||
Accounts receivable | 1,196 | — | 1,196 | ||||||||||||||||||||
Prepaid expenses and other current assets | 2,695 | — | 2,695 | ||||||||||||||||||||
Total current assets | 12,424 | — | 12,424 | ||||||||||||||||||||
Property and equipment, net | 33,586 | (1,056) | b | 32,530 | |||||||||||||||||||
Operating lease right-of-use assets | 2,663 | 292 | c | 2,955 | |||||||||||||||||||
Deferred income tax assets | 1,640 | — | 1,640 | ||||||||||||||||||||
Other non-current assets | 369 | — | 369 | ||||||||||||||||||||
Total assets | $ | 50,682 | $ | (764) | $ | 49,918 | |||||||||||||||||
LIABILITIES, REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||||||||||||||||||
Current liabilities | |||||||||||||||||||||||
Accounts payable | $ | 6,650 | $ | — | $ | 6,650 | |||||||||||||||||
Debt | 246,189 | (137,716) | d | 108,473 | |||||||||||||||||||
Warrant liabilities | — | 143,237 | d | 143,237 | |||||||||||||||||||
Operating lease liabilities | 891 | 94 | c | 985 | |||||||||||||||||||
Contract liabilities | 935 | — | 935 | ||||||||||||||||||||
Accrued expenses and other liabilities | 23,435 | — | 23,435 | ||||||||||||||||||||
Total current liabilities | 278,100 | 5,615 | 283,715 | ||||||||||||||||||||
Operating lease liabilities | 1,908 | 175 | c | 2,083 | |||||||||||||||||||
Contract liabilities | 1,000 | — | 1,000 | ||||||||||||||||||||
Other non-current liabilities | 2,552 | — | 2,552 | ||||||||||||||||||||
Total liabilities | 283,560 | 5,790 | 289,350 | ||||||||||||||||||||
Redeemable preferred stock | — | 21,306 | d | 21,306 | |||||||||||||||||||
Stockholders' equity (deficit) | |||||||||||||||||||||||
Treasury stock | (170,949) | — | (170,949) | ||||||||||||||||||||
Additional paid-in capital | 235,909 | (139,438) | a, d | 96,471 | |||||||||||||||||||
Accumulated other comprehensive loss | (86) | — | (86) | ||||||||||||||||||||
Accumulated deficit | (297,752) | 111,578 | (186,174) | ||||||||||||||||||||
Total stockholders’ equity (deficit) | (232,878) | (27,860) | (260,738) | ||||||||||||||||||||
Total liabilities, redeemable preferred stock and stockholders' equity (deficit) | $ | 50,682 | $ | (764) | $ | 49,918 |
Year Ended December 31, | |||||||||||
(Consolidated Statement of Operations and Comprehensive Loss) | 2021 | 2020 | |||||||||
General and administrative expenses | $ | (80) | $ | (136) | |||||||
Research and development | — | (89) | |||||||||
Other operating expenses | — | (27) | |||||||||
Increase (decrease) to loss before income tax | $ | (80) | $ | (252) |
(Consolidated Balance Sheet) | December 31, 2021 | ||||
Additional paid-in-capital | $ | 542 | |||
Adjustment to accumulated deficit | (542) | ||||
Total liabilities, redeemable preferred stock and stockholders' equity (deficit) | $ | — |
Year Ended December 31, | |||||||||||
(Consolidated Statement of Operations and Comprehensive Loss) | 2021 | 2020 | |||||||||
Research and development | $ | (4) | $ | 135 | |||||||
Depreciation expense | (97) | (151) | |||||||||
Other operating expenses | — | — | |||||||||
Increase (decrease) to loss before income tax | $ | (101) | $ | (16) |
(Consolidated Balance Sheet) | December 31, 2021 | ||||
Property and equipment, net | $ | (1,056) | |||
Total assets | $ | (1,056) | |||
Adjustment to accumulated deficit | $ | (1,056) | |||
Total liabilities, redeemable preferred stock and stockholders' equity (deficit) | $ | (1,056) |
Year Ended December 31, | |||||||||||
(Consolidated Statement of Operations and Comprehensive Loss) | 2021 | 2020 | |||||||||
General and administrative expenses | $ | 71 | $ | 12 | |||||||
Less: Finance costs, net | (49) | (57) | |||||||||
Less: Other income, net | (2) | 3 | |||||||||
Increase (decrease) to loss before income tax | $ | 20 | $ | (42) |
(Consolidated Balance Sheet) | December 31, 2021 | ||||
Operating lease right-of-use assets | $ | 292 | |||
Total assets | $ | 292 | |||
Operating lease liabilities | $ | 94 | |||
Non-current operating lease liabilities | 175 | ||||
Adjustment to accumulated deficit | 23 | ||||
Total liabilities, redeemable preferred stock and stockholders' equity (deficit) | $ | 292 |
Year Ended December 31, | |||||||||||
(Consolidated Statements of Operations and Comprehensive Loss) | 2021 | 2020 | |||||||||
Less: Finance costs, net | $ | (1,982) | $ | — | |||||||
Less: Change in fair value of financial instruments | (60,085) | (93,861) | |||||||||
Less: Gain (Loss) on extinguishment of debt | 40,792 | 1,774 | |||||||||
Increase (decrease) to loss before income tax | $ | (21,275) | $ | (92,087) |
Dividend Policy
U.S. dollars, except share and per share information, unless otherwise stated)
(Consolidated Balance Sheet) | December 31, 2021 | ||||
Debt | $ | (137,716) | |||
Redeemable Series X preferred stock | 21,306 | ||||
Warrant liability | 143,237 | ||||
Additional paid-in capital | (139,980) | ||||
Adjustment to accumulated deficit | 113,153 | ||||
Total liabilities, redeemable preferred stock and stockholders' equity (deficit) | $ | — |
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adoption of U.S. GAAP as described in items a-d above impacted net loss per share as follows:
Year Ended December 31, | |||||||||||
2021 | 2020 | ||||||||||
Net loss attributable to common stockholders | $ | (96,305) | $ | (21,529) | |||||||
Basic weighted-average common shares outstanding (1) | 16,655,634 | 16,029,826 | |||||||||
Basic loss per share for the period attributable to common stockholders | $ | (5.78) | $ | (1.34) | |||||||
Dilutive numerator | $ | (96,305) | $ | (21,529) | |||||||
Diluted weighted-average common shares outstanding | 16,655,634 | 16,029,826 | |||||||||
Diluted loss per share for the period attributable to common stockholders | $ | (5.78) | $ | (1.34) |
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Merger Agreement
The descriptiontwo years immediately preceding the date of the Merger Agreement is includedForm 20-F other than those entered into in the Form F-4 in the section entitled “The Business Combination Proposal – The Merger Agreement” which is incorporated herein by reference.
Ancillary Agreements
The descriptionordinary course of other material agreements relating to the Business Combination is included in the Form F-4 in the section entitled “The Business Combination Proposal – Related Agreements” which is incorporated herein by reference.
Other Agreements
Liberty Investment
The description of the Liberty Investment is included in the Supplement in the section entitled “Recent Developments-Liberty Investment” which is incorporated herein by reference.
Loan Extension
The description of the Loan Extension is included in the Supplement in the section entitled “Recent Developments-Loan Extension” which is incorporated herein by reference.
113
Promissory Note
The description of the Promissory Note is included in the Supplement in the section entitled “Recent Developments-Promissory Note” which is incorporated herein by reference.
Cantor Fee Letters
The description of the fees payable by the Company to the Sponsor and its affiliates are included in the Supplement in the section entitled “Recent Developments-Cantor Fee Letters” which is incorporated herein by reference.
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The Company
All instruments relating to transactions in respect of the shares, debt obligations or other securities of the Company and all instruments relating to other transactions relating to theour business of the Company are exempt from the payment of stamp duty in the BVI.
114
There are currently no withholding taxes or exchange control regulations in the BVI applicable to the companyus or itsour securityholders.
United States
•U.S. expatriates and former citizens or long-term residents of the United States;
•persons subject to the alternative minimum tax;
•persons holding our Class A Ordinary Sharesordinary shares or Warrants to acquire our Class A Class A Ordinary Sharesordinary shares as part of a hedge, straddle or other risk reduction strategy or as part of a conversion transaction or other integrated transaction;
•banks, insurance companies and other financial institutions;
•brokers, dealers or traders in securities;
•“controlled foreign corporations,”corporations” (“CFC”), “passive foreign investment companies” (“PFIC”), and corporations that accumulate earnings to avoid U.S. federal income tax;
•tax-exempt organizations or governmental organizations;
•persons subject to special tax accounting rules as a result of any item of gross income with respect to Class A Ordinary Sharesordinary shares or Warrants to acquire our Class A Ordinary Sharesordinary shares being taken into account in an applicable financial statement;
•U.S. holders whose functional currency is not the U.S. dollar;
•holders actually,independently, or through attribution, owning 5% or more (by vote or value) of the Class A Ordinary Shares;
•regulated investment companies or real estate investment trusts;
115
•qualified retirement plans, individual retirement accounts or other tax-deferred accounts; and
•“qualified foreign pension funds,” as defined in Section 897(l)(2) of the Code, and entities all of the interests of which are held by qualified foreign pension funds.
•an individual who is a citizen or resident of the United States,
•a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) organized in or under the laws of the United States, in any state thereof or the District of Columbia,
•an estate, the income of which is subject to U.S. federal income tax regardless of its source, or
•an entity treated as a trust that (1) is subject to the primary supervision of a U.S. court and the control of one or more “United States persons” (within the meaning of Section 7701(a)(30) of the Code) or (2) was in existence on August 20, 1996 and has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.
116
U.S. Holders
117
foreign tax credits are complex and U.S. holders are urged to consult their tax advisers regarding the creditability of foreign taxes in their particular circumstances. In lieu of claiming a foreign tax credit, a U.S. holder may, in certain circumstances, deduct foreign taxes in computing their taxable income, subject to generally applicable limitations under U.S. federal income tax law. Generally, an election to deduct foreign taxes instead of claiming foreign tax credits applies to all foreign taxes paid or accrued in the taxable year.
ordinary shares.
118
acquire Class A Ordinary Shares.ordinary shares. If the cashless exercise were treated as not being a realization event, it is unclear whether a U.S. holder’s holding period in the Class A Ordinary Sharesordinary shares will commence on the date following the date of exercise or on the date of exercise of the Warrant. If the cashless exercise were treated as a recapitalization, the holding period of the Class A Ordinary Sharesordinary shares would include the holding period of the Warrants to acquire Class A Ordinary Shares.
ordinary shares.
119
Ordinary Shares ordinary shares that would be obtained upon exercise) as a result of a distribution of cash to the holders of Class A Ordinary Sharesordinary shares, which is taxable to such holders as described under “—Dividends and Other Distributions on Our Class A Ordinary Shares” above. Such constructive distribution would be subject to tax as described under that section in the same manner as if the U.S. holders of the Warrants to acquire Class A Ordinary Sharesordinary shares received a cash distribution from the Companyus equal to the fair market value of such increased interest.
120
would be subject to the rules described in the following paragraphs. After the deemed sale election, so long as the Company doeswe do not become a PFIC in a subsequent taxable year, our Class A Ordinary Sharesordinary shares with respect to which such election was made will not be treated as shares in a PFIC and, as a result, the U.S. holder will not be subject to the rules described below with respect to any “excess distribution” it receives from the Companyus or any gain from an actual sale or other disposition of our Class A Ordinary Shares.ordinary shares. U.S. holders are strongly urged to consult their tax advisors as to the possibility and consequences of making a deemed sale election if the Company iswe are and then ceasescease to be a PFIC and such an election becomes available.
•the excess distribution or recognized gain will be allocated ratably over the U.S. holder’s holding period for Class A Ordinary Shares;
•the amount of the excess distribution or recognized gain allocated to the taxable year of distribution or gain, and to any taxable years in the U.S. holder’s holding period prior to the first taxable year in which the Company waswe were treated as a PFIC, will be treated as ordinary income; and
•the amount of the excess distribution or recognized gain allocated to each other taxable year will be subject to the highest tax rate in effect for individuals or corporations, as applicable, for each such year and the resulting tax will be subject to the interest charge generally applicable to underpayments of tax.
121
any lower-tier PFICs’) net capital gains (as long-term capital gain) and other earnings and profits (as ordinary income), on a current basis, in each case whether or not distributed, in the first taxable year of the U.S. holder in which or with which the Company’sour taxable year ends and each subsequent taxable year. A U.S. holder generally may make a separate election to defer the payment of taxes on undistributed income inclusions under the QEF rules, but if deferred, any such taxes will be subject to an interest charge.
122
A U.S. holder generally makes a QEF election by attaching a completed IRS Form 8621 (Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund), including the information provided in a PFIC Annual Information Statement, to a timely filed U.S. federal income tax return for the tax year to which the election relates. Retroactive QEF elections generally may be made only by filing a protective statement with such return and if certain other conditions are met or with the consent of the IRS. U.S. holders are urged to consult their tax advisors regarding the availability and tax consequences of a retroactive QEF election under their particular circumstances.
123
The application of the PFIC rules to Warrants to acquire our Class A Ordinary Sharesordinary shares is unclear. Proposed Treasury regulations issued under the PFIC rules generally treats an “option” (which would include a Warrant to acquire Class A Ordinary Shares)ordinary shares) to acquire the stock of a PFIC as stock of the PFIC, while final Treasury regulations issued under the PFIC rules provides that the QEF election does not apply to options and no mark-to-market election (discussed above) is currently available with respect to options. Therefore, if the proposed Treasury regulations are finalized in their current form, U.S. holders of Warrants to acquire our Class A Ordinary Sharesordinary shares would be subject to the PFIC rules described above but would not be able to make any PFIC elections with respect to Warrants to acquire Class A Ordinary Shares.
ordinary shares.
ordinary shares.
124
ordinary shares.
•the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. holder maintains a permanent establishment or fixed place of business in the United States to which such gain is attributable); or
125
•the non-U.S. holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the redemption and certain other requirements are met.
ordinary shares.
126
Copies of information returns that are filed with the IRS may be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the non-U.S. holder resides or is established. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against a non-U.S. holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.
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See “Item 5.A Operating Results - Quantitative and Qualitative Disclosures about Market Risk”.
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Adjustment of Warrant Price and Warrant Redemption Price
Class B Votes per Share
See “EXPLANATORY NOTE – Business Combination – Liberty Letter Agreement.”
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128
The Company’sOur disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and, as indicated in the preceding paragraph, the CEO and CFO believe that the Company’sour disclosure controls and procedures are effective at that reasonable assurance level, although the CEO and CFO do not expect that the disclosure controls and procedures or internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The CompanyWe will continue to periodically review itsour disclosure controls and procedures and internal control over financial reporting and may make such modifications from time to time as it considers necessary.
provide such report.
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The Company has
129
The
Refer to Item 16F, below.
Amounts in thousands US$ | 2021 | 2020 | ||||||
Audit Fees(1) | $ | 562 | $ | 341 | ||||
Audit-Related Fees | — | 1 | ||||||
Tax Fees(2) | 2 | 21 | ||||||
All Other Fees | — | 0 | ||||||
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$ | 564 | $ | 363 | |||||
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2021:
(in thousands of U.S. dollars) | 2022 | 2021 | |||||||||
Audit Fees(1) | $ | 1,249 | $ | 562 | |||||||
Audit-Related Fees | — | — | |||||||||
Tax Fees(2) | 4 | 2 | |||||||||
All Other Fees | — | — | |||||||||
$ | 1,253 | $ | 564 |
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Pre-approved
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Period | Total Number of Class A Ordinary Shares Purchased | Average Price Paid Per Class A Ordinary Share | Total Number of Class A Ordinary Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum (Approximate Dollar Value) of Class A Ordinary Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||||||||
January - March 2022 | 61,940 | $ | 6.27 | 61,940 | $ | 4,611,678 | ||||||||||||||
April - June 2022 | 454,183 | $ | 5.16 | 454,183 | $ | 2,266,040 | ||||||||||||||
July - September 2022 | — | $ | — | — | $ | 2,266,040 | ||||||||||||||
October - December 2022 | — | $ | — | — | $ | 2,266,040 | ||||||||||||||
516,123 | $ | 5.30 | 516,123 |
131
Under BVI corporate law, members of a company have a general right to amend the memorandum of association or articles of association of the company by a members’ resolution. This ability to amend can (subject to certain limited exceptions) be restricted, for example: (a) by providing in the memorandum of association that specified provisions of the memorandum of association or the articles of association mymay not be amended; (b) by requiring a greater majority than simply in excess of 50% to amend the memorandum of association or articles of association or specified provisions in either; or (c) providing that certain provisions may only be amended if specified conditions are met. Under BVI corporate law the directors of a company may amend the memorandum and articles of association of the company where the memorandum of association permits them to do so. However, notwithstanding anything contained in the memorandum and articles of association the directors do not have the power to amend the memorandum of association or articles of association: (a) to restrict the rights of members to amend; (b) to change the percentage of members required to pass a resolution to amend; or (c) in circumstances where the members themselves cannot amend the memorandum or articles of association.
our members.
Shareholder
132
Sale of Assets
133
rata issuance of stock of the surviving corporation to the holders of the stock of the parent corporation on surrender of any certificate therefor. If the parent corporation does not own all of the stock of the subsidiary corporation immediately prior to the merger, the minority shareholdersstockholders of the subsidiary corporation party to the merger have appraisal rights as set forth in § 262 of the Delaware General Corporation Law.
134
board of directors pursuant to the resolution of directors approving the creation of such Preference Shares, and in any such resolution of directors the board of directors shall agree to amend and restate our Company Governing Documents to fully set out such rights and instruct theour registered agent of the Company to file the amended and restated Company Governing Documents with the BVI Registrar of Corporate Affairs; or (b) with the sanction of a resolution passed by the holders of the shares of that class at a separate meeting of the holders of the shares of that class where not less than two thirds of the issued shares of that class were represented and voted to pass the resolution. For the purposes of a separate class meeting, unless otherwise prohibited by the rights conferred on the holders of a particular class of shares, the directors may treat two or more or all the classes of shares as forming one class of shares if the directors consider that such class of shares would be affected in the same way by the proposals under consideration, but in any other case shall treat them as separate classes of shares.
135
Mergers
136
Under BVI law, members of the general public, on payment of a nominal fee, can obtain copies of the public records of a company available at the office of the British Virgin Islands Registrar of Corporate Affairs, including the company’s certificate of incorporation, its memorandum and articles of association (with any amendments), a list of the names of its directors, records of license fees paid to date, any notice of appointment of liquidators, any articles of merger and any register of registered charges filing made in respect of the company.
137
138
BVI law has no comparable provision. However, although BVI law does not regulate transactions between a company and its significant shareholders, it does provide that these transactions must be entered into in the bona fide best interests of the company and not with the effect of constituting a fraud on the minority shareholders.
Shareholders’
139
or substantially all net proceeds to be distributed to the shareholders in accordance with their respective interest within one year after the date of disposition, or (c) a transfer pursuant to the power of the directors to transfer assets for the protection thereof; (iv) a redemption of 10% or fewer of the issued shares of the company required by the holders of 90% or more of the shares of the company pursuant to the terms of the BVI Act; and (v) an arrangement, if permitted by the court.
The Company intends
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15.3* | ||||||||
99.1* | ||||||||
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101 .SCH* | Inline XBRL Taxonomy Extension Schema Document. | |||||||
101 .CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |||||||
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |||||||
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |||||||
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |||||||
104* | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
* | Filed herewith. | |||||||
** | Previously filed. | |||||||
# | ||||||||
## | Certain confidential portions of this exhibit were omitted by means of marking such portions with brackets and asterisks because the identified confidential portions (i) are not material and (ii) would be competitively harmful if publicly disclosed, or constituted personally identifiable information that is not material. | |||||||
143
SATELLOGIC INC. | ||||||||
By: | /s/ Rick Dunn | |||||||
Name: | Rick Dunn | |||||||
Title: | Chief Financial Officer |
Date: April 27, 2023 | ||||||||
Signature: | /s/ Emiliano Kargieman | |||||||
Emiliano Kargieman | ||||||||
Chief Executive Officer |
Date: April 27, 2023 | ||||||||
Signature: | /s/ Rick Dunn | |||||||
Chief Financial Officer |
144
Date: April 27, 2023 | ||||||||
Signature: | /s/ Emiliano Kargieman | |||||||
Emiliano Kargieman | ||||||||
Chief Executive Officer |
Date: April 27, 2023 | ||||||||
Signature: | /s/ Rick Dunn | |||||||
Rick Dunn | ||||||||
Chief Financial Officer |